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Presentation to Acer Group, Inc.

Presentation to Acer Group, Inc. Topics in Emerging Financial Markets: Direct Investment. Alan Jaffe • Yelena Leyderman Alex Raytburg • Elina Stunis. Hourly Compensation Growth: Historical Trends. Taiwan Mexico Portugal Sri Lanka. Hourly Compensation Growth: Other Factors.

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Presentation to Acer Group, Inc.

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  1. Presentation to Acer Group, Inc. Topics in Emerging Financial Markets: Direct Investment Alan Jaffe • Yelena Leyderman Alex Raytburg • Elina Stunis

  2. Hourly Compensation Growth: Historical Trends Taiwan Mexico Portugal Sri Lanka

  3. Hourly Compensation Growth: Other Factors The Next 5 Years • Projections Methodology • Compound Growth Rate Calculation • Comparison with the United States • In 1998 US Labor Cost was $18.56 • By 2003 it will rise even higher • Exchange Rate Issues • Union Strength, Labor Specialization • Logistics • Labor Productivity: “Real Wage Rate” Growth2003 Wage Taiwan 11.80% $9.15 Mexico 0.96% $1.92 Sri Lanka 2.28% $0.53 Portugal 5.56% $7.18

  4. * These rankings are based on counties’ infrastructure, education, and technological progress • ** The overall ranking is based on the country’s economic conditions, such as government savings rate, reliability of banking sector and the overall stability of the economy. Notes Economic Statistics: Competitiveness Rankings MICI Ranking * 1999 1998 Competitiveness Ranking ** 1999 1998 1997 Country Portugal 29 33 27 26 29 Mexico 34 39 31 32 32 Sri Lanka 50 43 48 39 48

  5. Trade policies in Portugal are likely to be brought in alignment with the common EU rules. • Trade policies in Mexico follow NAFTA policies. Notes Economic Statistics: At a Glance Portugal Mexico Sri Lanka Agriculture Industry Services

  6. Mexico experienced a significant devaluation in 1994-95 • Portugal joined the European Union and has hitched its hopes to the Euro • Taiwan tracked Portugal rather closely throughout the period • And Sri Lanka has steadily eroded relative to the USD Notes Exchange Rates: A Time Series Analysis Since 1990, the situation was very different for the four sample currencies. Rate MXN: Currency Crisis PTE/XEU SLS TWD

  7. Political Risk: Rankings Rating (10/98) Socioeconomic Conditions Internal Conflict Law & Order Ethnic Tensions Bureaucracy Quality Country Corruption Taiwan 50 75 100 67 84 75 Portugal 84 67 100 84 100 75 Mexico 50 84 58 33 84 75 Sri Lanka 67 84 25 50 17 50 80 91 68 59 Political Risk: Rankings • In Sri Lanka, “…The Tigers have been waging a bloody guerilla campaign to establish a homeland for the island Tamil Hindu minority. This conflict has claimed 61,000 people and displaced more than a million of the country’s 19 million inhabitants…”

  8. Political Risk (Continued) • Degree of political stability (elections, party agendas) • Civil wars or guerilla activity • Respect for law and order (functioning court system) • Strong tradition of civilian government (no juntas in recent history) • Anti-foreign feelings • Overall “feel” of the nation...

  9. Political Risk Wage Growth Trade Barriers Productivity Economic Factors Corruption Infrastructure/ Communications Numerous Factors Have to Be Weighed Properly Investment Decision

  10. Economic & Financial Labor & Productivity • Wage Growth • Productivity Growth • Population Growth • GDP Growth • Trade Barriers • Financial Markets • Ties with Clients Political & Social • Domestic Tranquility • Corruption • Faith in Government • Foreign Policy Key Objectives: • Safety of Investment • Returns on the Investment • Long-Term Future of the Investment Analysis of the Various Aspects of the Decision Decision Factors Breakdown ~25% ~50% ~25%

  11. And the Winner Is…

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