Risk Analysis: Australia vs. Colombia and the Democratic Republic of Congo

1208 WordsJan 6, 20185 Pages
Risk analysis: Australia versus Colombia and the Democratic Republic of Congo New taxes are always worrisome, and the Australian government's recent decision to pass a 30 percent tax on profits from iron ore and coal have left many investors scurrying in search of other investment opportunities in alternate countries with lower tax rates and labor costs (Scott 2011). However, simply looking at a balance sheet to determine average tax rates and wages is only a small component of deciding whether a country is a worthwhile investment. With this caveat in mind, it must be cautioned that the proposed decision to shift resources to investing in the coal mining sector in Colombia and the iron ore sector in the Democratic Republic of Congo is neither viable nor cheaper in the long run. In fact, given the marked political instability in both regions, such a move could cause great potential losses. The Democratic Republic of Congo is so volatile that travelers are asked not to venture there, as the "ability to provide consular services" in the wake of an emergency is limited (Travel warning: DRC, 2012, US State Department). The lack of personal safety and security will make employees very unwilling to relocate to the Congo to supervise operations. The DRC is a veritable 'wild, wild West' of lawlessness: the government has a tenuous hold upon power and there is little popular respect for the formal institutions and laws necessary for economic progress. Moreover, "armed groups,
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