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Forbes: South Carolina a model foreign investment magnet

Oct. 9, 2007
Charleston Regional Business Journal
By Dan McCue
South Carolina’s pro-business, pro-opportunity mindset is the biggest reason the state has become a magnet for investments like the $600 million vote of confidence it recently received from Jafza International, according to Steve Forbes, president and CEO of Forbes Inc.

“South Carolina has been a pioneer at this going back at least to the 1980s. Then-Gov. Carroll Campbell and others were very much onto this,” Forbes told the Charleston Regional Business Journal.

“When you try to make it easy for investors to get all the permits they need, and take the approach of not being onerous in terms of taxation and regulation, people feel you’re rolling out the welcome mat for them,” he said.

Although Forbes was being interviewed in his role as national co-chair and senior policy adviser for former New York City Mayor Rudy Giuliani’s presidential campaign, talk of politics, governance, economic policy and South Carolina inevitably touched on Orangeburg. It is there that the Dubai-based Jafza International is planning to build a $600 million to $700 million logistics center.

Jafza officials estimate that when the project is completed and the center full of corporate tenants, the project will create between 8,000 and 10,000 jobs in the state’s most economically depressed region.

“It seems to me that South Carolina is a prime example of what’s really happening in the global economy,” Forbes said. “Although you’d never know it, America gets a lot more from insourcing that it loses through outsourcing.”

“I think, nationally, if we have the right economic policy, we’ll be seen as a magnet and a platform of real investment opportunities,” he continued. “South Carolina embraced that philosophy early on and, as a result, not only secured a BMW plant for itself but also saw investments in facilities by chemical companies and others. Other states are only now embracing the approach South Carolina has taken.”

Forbes said while proposals like Jafza International’s won’t necessarily result in construction of a new textile plant near where an old one stood in the state, “you will get new industries coming in (and) new facilities being put up, including many in the traditional areas of manufacturing.

“Just look at the auto sector,” he said. “We all know what’s happened to Detroit, but in the rest of the country, thanks to foreign investment, it’s flourishing: We’ve got BMW in Greer (and) Mercedes and Hyundai in Alabama, just to cite a few examples.

“These kinds of investments are a reaffirmation that we can compete in manufacturing, high-tech, biotech, and in the services industry,” Forbes said. “So long as we have the right kind of business climate, we’ll continue to be up there, ahead of the rest of the world.”

Forbes, who himself was a Republican candidate in the presidential primaries in 1996 and 2000, said he believes Giuliani can be an agent for creating an industry-friendly environment.

“When he was elected mayor, he said, ‘We’re going to do business differently in this city,’ and he did,” Forbes said. “He initiated major spending restrictions and he reduced the size of the city bureaucracy—something that never really happened before except during the 1970s, when the city nearly went bankrupt.

“At the same time, and while increasing the number of police on the street and teachers in the classroom, he cut taxes 23 different times at a time when the New York City Council was 9-to-1 Democrat,” he continued. “And, of course, on Sept. 11, he demonstrated that he could deal with an unprecedented crisis. In light of all these things, I figure this is the kind of guy we need in Washington right now.”

Forbes said in his view, the key to continuing the current level of increased foreign investment in the United States is to continue Giuliani’s policies on the macro level.

“The problem in Washington isn’t a lack of revenues; the revenue is pouring in,” he said. “During the past three fiscal years, we’ve seen record revenues, and revenues increasing well above the rate of inflation. The problem in Washington is they get the money and take it as a license to spend more.

“It’s like getting a $10,000 raise and spending $20,000,” Forbes added. “That’s a spending problem, not an income problem.”

Forbes believes that as he did in New York, Giuliani will rein in spending while reducing the cost of government by taking advantage of the aging of the baby boom generation.

“Half or a third of the federal work force will retire over the next few years, so just by careful attrition you’re going to get some major savings while not having to cut back on some of the services government provides,” he said.

“And of course, one of the best things the government in Washington can do for the economy is not to put an onerous tax burden on the American people. They’re already overtaxed. It’s already been demonstrated that when you reduce the tax burden, the government actually winds up with more revenue because the economy is more prosperous and the country is stronger.”

Turning his thoughts back to South Carolina, and, in this instance, back to both foreign investment and venture capital investment in the state, Forbes recalled the words of Walter B. Wriston, the late former chairman and CEO of Citicorp and a founding director of Forbes Inc.

“As a great banker once said, ‘Capital will always go where it’s welcome and stay where it’s well treated. Capital is not just money, it’s also talent and ideas,’” he said. 		related information