Foreign investment has many advantages like creating an additional income for the country which would be reflected on the national economy in many ways such as the wages of local workers that may exceed 25% of the volume of the foreign project's capital; there is also the direct tax ((20-25%)) and the profits after tax ((10%)).Yet, it has another side that we need to be cautious of and that is the mismanagement of this investment either by the state hosting it or by the investors and the foreign investing companies themselves.. So, the precautions are as follows:
•The nature of the foreign investment activity should not be similar to that of a local one. Otherwise, this will create an irregular and dishonest competition that will terminate the local industries originated by the private sector, in particular, or even the ones developed by the state.
•Caution from involving foreign investors in local industries that already have sufficient investment conditions inside the state (whether the were big or small projects)..Otherwise, it will only drain the human and material resources of the developed country (the host).
•The main purpose for any foreign investment is to gain profits; therefore, it is able to control the prices of the produced goods. This will be directly reflected on the final consumer ((the final victim)) of this apparently normal politics. Thus, either there should be no investment in goods that are in direct contact with the consumer's life or the state should deal with this defect through the regular ways or through adopting the local investment projects that have similar activities. Also, avoid taking up loans from well-known foreign financing sources like The International Bank for Reconstruction and Development.
•The hosting state should be cautious of involving in Arabic and foreign investments that have the form of far away dictations or do not serve the national interests.
•Legislator of the foreign investment law should either prevent the right to own the land where the foreign investment project is set or grant it for a specific period of time that does not exceed 50 years at the most. Afterwards, the ownership of land and project goes back to the state; unless, there is what is called reciprocation which means that the country of the foreign investor should grant the local investor the right to own the land and establish investment projects on it of the same kind and size.
•The terms of granting a license to the foreign investor for investing must serve the national interests in the first place. The legislator of such investment projects should look far into the future and not be confined to the current phase or a little beyond.
•Caution of leaving the foreign investor all alone making service or consumer projects which the state could carry out by itself. It is better to utilize foreign investment in carrying out projects able to create an additional income to the national economy as well as being technically high and too impossible to be done by local efforts.
•The legislator should distinguish between the local investor and the foreign one when issuing licenses to establish investment projects, unless the investing state in the hosting country does not distinguish between the two as well.
•Legislating too many investment projects' laws in one country may create an uneven investment opportunities among the regions of that country. This is normal due to their different natures, but it is quite incorrect because they oppose the laws of the central state. Therefore, one law is much better and it could be included some exceptional articles concerning some regions.
•Never give full freedom to the foreign investor because this will allow him to interfere with official performances of the state. Therefore, this freedom should be limited within the investment work only.
•Allowing the foreign investor to invest in sectors that do not affect the economy of the state or manipulate it. In other words, this investment should not include gas or oil sectors, for example.
•Never neglect the local investors and capital owners that are able to carry out high-cost investments. How ever, their deals with foreign investors must be submitted to a suitable form for both sides put by the state.
•Never let political parties and under any names to access the investment field, unless they are out of the decision authority.
Such procedures and adjustments require constitutional legislations. Even if that meant reconsidering the articles of the constitution, before issuing the law of foreign investment in the country.
Generally speaking, our country is capable of developing its economy through local projects of positive outputs. This is to provide a suitable atmosphere for local investment soon, with the help of partial or total reliability on foreign scientific technology that could be obtained through many ways known to the specialists.(Source)AlSabah