HOW THE NEW BILL CHANGED
The Promotion and Protection of Investment Bill largely looks like the boilerplate bilateral investment treaties it is replacing, but with important provisos.
For example, the definition of what constitutes an “investment” has been significantly trimmed.
In the old version, it expressly included intellectual property, licences and contracts, but expressly excluded sale or credit agreements.
The new version revolves around ownership of any entity that has “committed resources of economic value over a reasonable period of time, in anticipation of profit” – seeming to exclude old investments or ones that involved dubious real inflows of capital.
Another section of the bill that was meaningfully expanded is the list of caveats to the “national treatment” clause.
This clause is in practically all investment deals and says foreign investors will be treated “no less favourably” than local ones “in like circumstances”. In the new version, the dti can consider “effects on third parties”, the effect on employment and the environment when deciding whether foreign and local investors really do face “like circumstances”.
The part of the original bill that really spooked critics – a lengthy section on what is, and is not, “expropriation” – has been cut out altogether. That has now been superseded by the Expropriation Bill, which was published in February this year.