It is interesting how the only thing for sure that is repeated throughout news reports is that the new Promotion and Protection of Investment Bill will deter foreign investors from wanting to invest in South Africa, yet no one fully explains the role or purpose of the Bill.
So, while reports are filled with angst and disagreement from local representatives of various councils who are convinced that foreign investors will be pursuing their investment interests elsewhere, bdlive reported what United Nations Conference on Trade and Development head of international investment agreements Elisabeth Tuerk had to say:
The proposals are in line with the trend for governments to rework their foreign-investment regimes to expand their policy space.
The bill, which will eventually replace the bilateral investment treaties SA has terminated, aims to establish a universally applicable investment protection regime. It will deal with expropriation and the arbitration of disputes.
40 to 50 governments wanted to reform their investment regimes. In some cases this was to increase their policy space and to ensure foreign investment was sustainable and contributed to social upliftment.
So the foreign investment that will most likely be deterred are those with selfish interests? Interesting. Yet Elisabeth noted that:
When there was intense public debate about the South African government’s intention to change its foreign investment law, the flow of foreign investment into the country had increased, despite warnings by business that the contrary would occur
So as it stands, the Bill might have some positive implications, but are there any negatives? Of course there are:
Taken on its own the investment law might not be a cause for concern but when considered together with a host of other laws or planned laws on migration and foreign landownership, a discouraging cumulative message was sent to foreign investors.
What else do we know about the Bill?
The bill gave foreign investors the same protection as domestic investors in like circumstances. The provisions on expropriation and compensation were aligned to the constitution, with expropriation subject to compensation that was just and equitable.
The bill specifies that government may take measures to, among other things: redress inequalities; preserve cultural heritage; foster economic development and industrialisation; achieve socio economic right.
It will establish greater clarity on the balance between the rights of investors to protection alongside the right of government to regulate and safeguard the public interest
So would we rather have all the money or some concious investment? It’s clear who wants what:
The bill confirmed the existing practice of allowing investors to freely repatriate returns, subject to taxation and applicable legislation.
Where a foreign investor wanted to challenge a government measure, any competent South African court, statutory body or independent tribunal would have jurisdiction.
The government was also discussing the possibility of introducing a screening mechanism to evaluate potentially damaging investments.
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