By: Willem Oberholzer
IN AN increasingly globalised world, international investments play a crucial role in diversifying portfolios, mitigating risks, and seeking growth opportunities beyond one’s domestic market. However, the landscape of international investing is fraught with complexities, particularly in regions where legislation prioritises political agendas over economic sustainability.
International investments offer several key benefits. Investing across different geographic regions can reduce the risk of a portfolio being overly dependent on the economic conditions of a single country.
This diversification can help protect investors from local economic downturns or political instability.
International investments expose investors to different currencies, which can serve as a hedge against domestic currency devaluation and inflation. Despite the benefits, international investing can be challenging, especially when faced with stringent legislation that appear to be designed to protect political interests rather than economic substance.
There is an alarming increase again in the restrictions on the movement of capital limiting the ability of investors to invest freely across borders. These controls may well seek to maintain currency stability or prevent capital flight, which I would venture in the current conditions would be the latter.
What is alarming is the changes in tax laws or regulatory frameworks that have become litigious, cumbersome, and, in some instances, have a smell of extortion. Stringent tax measures, such as pay now and argue later, or the monitoring of bank accounts, retention of VAT refunds and penalties and interest on, in some instances fictitious revised or additional assessments, may well be the last straw to a number of good citizens that would rather seek greener pastures than plugging holes in a sinking ship.
Let's be honest: would you want to invest in regions where there is political instability, corruption, stringent legislation and restrictive controls on capital movement? Do these practices not pose significant risks to inbound international investments?
Given these challenges, please seek specialist guidance when you are considering international investments. Specialists in international finance and law provide valuable expertise in navigating complex legal and regulatory environments.
Their knowledge is critical in assessing the political and economic risks of different markets, helping investors make informed decisions.
Navigating the seven seas of legal requirements of foreign jurisdictions can be daunting, so if you would not sail the seven seas without a sea captain, why then would you not seek a specialist to help you navigate?
International investments are a vital component of a diversified investment strategy, offering opportunities for growth, innovation, and risk mitigation. However, the challenges posed by stringent legislation and political uncertainties cannot be underestimated.
Specialist guidance is not just advisable but essential for navigating these complexities and safeguarding investments. In a world where economic substance can sometimes be sacrificed for political expediency, expert advice is the key to unlocking the full potential of international investments while mitigating the inherent risks.
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