The World Bank

The World Bank is a repository of excellent information regarding investing offshore. Whether you are contemplating foreign direct investment or buying stocks via ADRs, the World Bank has very useful information to help evaluate a country for investment. A useful page of results from the World Bank business project is the ease of doing business index page which ranks nations from 1 to 189 for a composite of factors that make doing business easy or difficult.

Ease of doing business ranks economies from 1 to 189, with first place being the best. A high ranking (a low numerical rank) means that the regulatory environment is conducive to business operation. The index averages the country’s percentile rankings on 10 topics covered in the World Bank’s Doing Business. The ranking on each topic is the simple average of the percentile rankings on its component indicators.

Interestingly Singapore ranks number one in this regard and Hong Kong is number two. The USA is number four and our little country of Panama ranks 55. This page takes you via hyperlinks to a great deal of useful info for any given country and breakdowns of the data used for the general ranking, such as ease of hiring and firing, available credit and ease of importing and exporting.

Travel Is a Good Thing

No matter how much you read about another country there is nothing like a trip to Warsaw, Bogotá or Ho Chi Min City to get a feel for a country and help evaluate a country for investment. Language is always an issue which is why we mentioned the little country of Panama where English is the official second language and where there was no recession following the 2008 market crash! Some time back we wrote about investment and the Panama Canal expansion. There are places in the world that are easy to get to, easy to navigate and where the economy holds promise. Fly down to Tocumen Airport in Panama, stay at the Marriott or Hotel Panamá and see the city. The same applies to Bogotá, Warsaw or Ho Chi Min City. You simply need to check out travel arrangements and find accommodations where you can deal with an English speaker.

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Growth Leads to Profitable Investments

Some time back our offshore investment advice was that one consider investing in middle class growth in Latin America. Strong economies commonly develop strong middle classes and the purchasing power of the middle class further drives the economy. Latin America has been growing and so has its middle class. The middle class has grown by a forth in the last ten years. Per capita income south in Latin America has gone up from $7,000 a year range to just under $12,000 a year. Things have slowed since the 2008 market crash and recession but the middle class has not lost ground. Investing in growing foreign economies is not limited to Latin America. Economic growth is slowing in China and around Asia but there are still lots of opportunities.

Taking Cues from the American Experience

Great stocks to invest in during the early twentieth century in the USA included the likes of General Electric, AT&T, Coca Cola, and virtually any public utility. As infrastructure was developed, those doing the work were rewarded. As people earned money they spent it and companies like Coca Cola learned to cater to the American taste for soft beverages. Our basic offshore investment advice is to take a look at developing economies in Asia and Latin America and find out who is likely to profit as infrastructure is improved and made more widely available.

They Do Not Make Any More Land

One of the basic tenets of investing in property is that there is a limited supply. Good farmland in northern Iowa used to sell for one hundred dollars an acre, and then a thousand, and now commonly $10,000 an acre. Land in downtown Tokyo is exorbitantly expensive but was not always so. Land used to be cheap in the banking district of Panama City, Panama and now goes for thousands of dollars a square meter. Good offshore investment advice is to look where the action is and is likely to be and buy property before the prices go into the stratosphere. But, what do you do when the price goes up? Do you sell?

Offshore Investment Advice about Taxes

US tax on foreign source investment income can be significant but as a rule income must be realized in order to be taxed. If you are lucky enough to buy downtown property in a place like Panama City, Panama, Rio de Janeiro, Brazil or even Manizales, Colombia before prices go up you do not need to cash in and take your profits. A reasonable way to benefit from your good fortune is to set up a long term lease with a local business, collect and pay taxes on the rent checks, and let the property increase in value over the years.

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