Doing Business In... 2023

Doing Business In... 2023 – Global Overview

The fifth edition of Chambers Global Practice Guides: Doing Business In... is issued while the world’s economy is facing many uncertainties.

The world economy is moving from one crisis to another. The direct effects of the COVID-19 pandemic have now faded, and international trade and investments were back to a high level in 2022. But inflation and high interest rates create a new challenge for the world economy. According to the World Bank, global growth is projected to decelerate from 3.1% in 2022 to 2.1% in 2023.

In advanced economies, the World Bank expects growth to slow down sharply, from 2.6% in 2022 to 0.7% in 2023. The US economy is affected mainly by the prolonged impact of the sharp rise in interest rates in 2022, while the euro area suffers from the effect of monetary policy tightening and energy-price increases, the latter being in large part caused by the war in Ukraine and the resulting sanctions against Russia.

In emerging and developing economies, the latest forecasts by the World Bank indicate that the overlapping shocks of the pandemic, the war in Ukraine, and the tight global financial conditions will also have a negative effect on growth. Outside China, growth is expected to slow to 2.9% from 4.1% in 2022. East and South Asia seem to be exceptions and are expected to fuel the world economy and international trade.

In terms of legal and regulatory framework, barriers to foreign direct investments and cross-border M&A continue to increase in some parts of the world. A notable trend in the past few years has been the strengthening of foreign investment screening rules to protect national companies and their technology in sensitive industries. This development occurred mainly in Europe, in the USA and in some parts of Asia. During the height of the COVID-19 pandemic, some countries introduced new restrictions to foreign investment or strengthened existing restrictions to try to prevent unwelcome attempts by foreign companies to acquire weakened national champions. Despite these new regulatory constraints, the cross-border M&A activity in developed economies experienced a rebound after the 2020 slowdown caused by the COVID-19 pandemic.

A major new regulation coming from the European Union and entered into force in January of 2023 should be monitored as it places additional constraints on foreign investment. The Foreign Subsidies Regulation is meant to address distortions caused by foreign subsidies in the context of the following activities in the European Union: mergers and acquisitions, public procurement procedures and other market situations. The regulation gives the Commission the power to investigate financial contributions granted by non-EU countries to companies engaging in such activities in the European Union and redress, if needed, their distortive effects. Given that its scope is very broad and the powers granted to the Commission are extensive, it has potential to affect foreign investments into the European Union.

Despite all these hurdles, people, companies and markets continue to remain highly interconnected. Business continues to be conducted across borders. However, investors must keep up to date with the many changes in laws and regulations that are taking place at the moment.

Governments are taking a long-term view of economic recovery and are anticipating new trends. Whether the goal is to modernise bankruptcy law, corporate law, employment law or tax rules, each country must tailor their response based on their own situation and resources.

There is no doubt that the legal framework in many countries is in the process of undergoing changes. However, other long-lasting circumstances are also shaping laws and business regulations across the world. In this highly integrated world, national laws are required to constantly adapt to the international environment. Governments look at best practices from other countries in an effort to make their legal framework more attractive or to protect their national interests. The speed at which technology evolves is another key factor affecting laws and regulations. The opportunities associated with technological progress cannot be ignored in today’s economy, but they also create legal challenges and require adaptation in many areas of the law. Finally, building more environmentally friendly economies has become a globally accepted goal, which requires an appropriate legal framework.

With this background in mind, the 2023 edition of the Doing Business In... guide sets forth the legal framework to doing business in many countries around the world, including laws and regulations enacted as a response to the pandemic. We hope this guide will serve as a reference for lawyers and investors looking to understand the basic principles guiding the legal system of the contemplated jurisdictions. Because the experts for each jurisdiction have followed a common template, readers can easily compare the rules applicable in each jurisdiction. Continuing the new feature introduced in 2022, this year’s edition contains additional content addressing recent changes in certain markets that are of particular importance and will be of valuable consideration for those doing business in these markets.

We would like to thank all the participating contributors for their efforts in keeping this Doing Business In... guide up to date, year after year, making it an essential piece of the Chambers Global Practice Guides series.