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D R . J E F F R E Y VA N D E TTA8 / 7 / 2 0 1 1

Pharma Heal Corporation:FDI Environment, Regulation, & Challenges in Target Countries

IntroductionThe Challenges of

Competition and Regulation

• Regulatory environment comprises• Formal Factors

• Written Policies & Laws• Informal /Unwritten Policies

• Operational Investment Code

Pharma Heal Corp. faces strong competition in the target countries• Mexico• India• Thailand• Albania• Zimbabwe

Mexico

Mexico is open to foreign direct investment

The 1993 Foreign Investment Law is the basic statute Foreign Investment Law

Mexico has open conversion and transfer policies Based on NAFTA

Automated clearinghouse for cross-border financial transactions Established by U.S. Fed &

Bank of Mexico

Expropriation and Compensation

Dispute settlement

No expropriation of property under NAFTA

Expropriations are governed by international law

Investors have the right to international arbitration under NAFTA

NAFTA provision for settlement of investment disputes

UNCITRAL rules Mexican government &

courts recognize and enforce arbitral awards

Mexico (cont.)

Mexico (cont.)

Export requirements limited

Flat rate corporate tax Most taxes are federal

IMMEX exempts companies import duties and VAT taxes on inputs and

components on exported

manufactured goods

India

In the world’s top five destinations for foreign investment.

Its currency is fully convertible for current account transactions to the USD and other

currencies around the world.

India (cont.)

Investors have the rights to own and establish businesses with restrictions in some sectors.

India’s regulatory system is questionable as investors often complain of lack of transparency in the system.

Expropriation is not a common occurrence in India and where it happened compensation was paid.

Thailand

Restrictions on FDI Alien Business Law

(ABL)Treaty of Amity and

Economic Relations Exemptions for

American companies Attracting FDI Targeted assistance

programs Tax incentives Import duty

exemptions Support Services

Thailand (cont.)

Strong investment environment

Incentives for high-tech industry PHC research &

development opportunityU.S.-Thailand Treaty of

Amity and Economic Relations (AER)

Albania

Foreign and domestic investors are subject to the same treatment

FDI encouragedALBINVEST

Incentives Information

Equal property and real estate ownership rights for foreign investors

Albania (cont.)

Laws to protect property rights of both foreign and domestic investors

Slow and inefficient legal system affects settlement of disputes

Expropriation is rare except for land when done for public

use as required by law.

Compensation available as Restitution Compensation with property

of similar value in a different location

Cash settlement/financial compensation.

Zimbabwe

• Defensive toward foreign investors.

• Tax and tariff exemptions and incentives.

• Repatriation of earnings is problematic• Conversion

difficulties• Depreciating local

currency. • Very little transparency

within its organizations and regulations

Zimbabwe (cont.)

Reserve Bank of Zimbabwe must license all financial

institutions responsible for banking

regulations.

Aggregation allows for firms to be

viewed as a separate entity from its holding company.

Current economic climate may hinder PHC objectives severe socio-economic

hardship political instability

Political alliances important

Prior clearance from Zimbabwe Investment Authority

Seeing the Big Picture

A complete FDI Strategy includes Formal investment code Operational investment

codeHolistic understanding

of each country’s Unique government

structure Allocations of power Nuances of legal system

Conclusion

References

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http://www.state.gov/e/eeb/rls/othr/ics/2010/138024.htm Ernst & Young Global Limited (n.d.). Eye on Africa. Retrieved from

http://www.ey.com/Publication/vwLUAssets/Eye_on_Africa_-_Volume_one/ Export Finance & Insurance Corporation (2010) Thailand: Overview. Retrieved from

http://www.efic.gov.au/country/countryprofiles/Pages/thailand.aspx Export.gov (2011). Thailand Market Profile. http://export.gov/thailand/doingbusinessinthailand/index.asp LonZim (n.d.). Risks Relating to investing in Zimbabwe. Retrieved from

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from http://www.nccommerce.com/Portals/5/Documents/MexicoCountryCommercialGuide2010.pdf U.S. Department of Commerce (2004). Pharmaceutical price controls in OECD countries: Implications for U.S. consumers,

pricing, research and development, and innovation. Retrieved from http://www.trade.gov/td/health/DrugPricingStudy.pdf U.S. Department of State (2011.). Background note: Thailand. Retrieved from http://www.state.gov/r/pa/ei/bgn/2814.htm Wikipedia (2011). BRIC. Retrieved from http://en.wikipedia.org/wiki/BRIC Zimbwa, C. (2005). An empirical assessment of corporate transparency in Zimbabwe. Retrieved from

http://eprints.bournemouth.ac.uk/3147/1/424.pdf