SA is a re­li­able in­vest­ment des­ti­na­tion

CityPress - - Busi­ness - ROB DAVIES busi­ness@city­

Much has been said about the flight of cap­i­tal from South Africa in re­cent weeks, sug­gest­ing that the coun­try has be­come an in­vest­ment pariah.

This sen­ti­ment has been cou­pled with the de­ci­sion by rat­ings agen­cies to down­grade South Africa’s in­vest­ment sta­tus. We are cog­nisant of the do­mes­tic and in­ter­na­tional fac­tors that have con­trib­uted to con­cerns about the sta­bil­ity of South Africa’s econ­omy.

As we con­clude 2015, it is im­por­tant to con­tex­tu­alise some of the suc­cesses we have had in build­ing an in­vestor-friendly en­vi­ron­ment.

We have fi­nalised the new Pro­tec­tion of In­vest­ment Bill, which aims to bal­ance the rights and obli­ga­tions of in­vestors and gov­ern­ment while also pre­serv­ing the right of gov­ern­ment to em­bark on reg­u­la­tions in the pub­lic’s in­ter­est.

One of our most sig­nif­i­cant in­ter­ven­tions has been the es­tab­lish­ment of a one-stop in­ter­de­part­men­tal clear­ing house that will pro­vide ef­fi­cient sup­port to in­vestors to en­sure that South Africa of­fers an in­vest­ment-friendly en­vi­ron­ment.

We are also im­ple­ment­ing in­cen­tives and sup­port ser­vices for in­vestors through our Spe­cial Eco­nomic Zones pro­gramme. As part of the suite of these eco­nomic zones, the six in­dus­trial de­vel­op­ment zones es­tab­lished be­tween 2002 and 2014 have at­tracted a to­tal of 59 in­vestors with an in­vest­ment value of more than R10.7 bil­lion.

This is im­por­tant for the coun­try’s growth and de­vel­op­ment agenda be­cause re­search shows that in­vest­ment is the most re­li­able pre­dic­tor of fu­ture eco­nomic growth and the coun­try’s gross do­mes­tic fixed in­vest­ment (GDFI) to gross do­mes­tic prod­uct (GDP) stands at about 20%.

This is bench­marked against the in­ter­na­tional norm where the fastest-grow­ing de­vel­op­ing coun­tries have GDFI-to-GDP ra­tios of above 30%.

The tar­get in the Na­tional Devel­op­ment Plan (NDP) for for­eign di­rect in­vest­ment (FDI) is also set against this in­ter­na­tional bench­mark of 30%.

In­so­far as South Africa’s abil­ity to at­tract in­vest­ment goes, it bodes well for our coun­try that de­spite a global trend, which in­di­cates de­clin­ing FDI lev­els, we have been able to at­tract more than R140 bil­lion in the 2013/14 fi­nan­cial year.

This is al­most dou­ble the amount of FDI in 2012. South Africa was also the re­cip­i­ent of $3.31 bil­lion (R50 tril­lion at the cur­rent ex­change rate) in FDI from Jan­uary 2015 to July 2015, which also saw the cre­ation of 5 037 jobs.

Our ef­forts to cre­ate an in­vestor-friendly en­vi­ron­ment are bear­ing fruit and we have de­vel­oped a ro­bust in­vest­ment pipe­line over the past five years. We have con­verted a num­ber of these projects into com­mit­ted in­vest­ments and launched them this year.

We are mind­ful of our chal­lenges and goals set out in the NDP. We are com­mit­ted to im­ple­ment­ing the nine-point plan for South Africa to achieve a higher level of in­clu­sive growth.

As we come to the end of this year, we are con­fi­dent that South Africa will con­tinue to pro­vide a re­li­able and at­trac­tive in­vest­ment des­ti­na­tion for multi­na­tion­als who con­tinue to use South Africa as a base for their re­gional and con­ti­nen­tal op­er­a­tions.

We have laid the plat­form for Re­gional In­te­gra­tion and In­tra-Africa Trade and the roll-out of the in­fra­struc­ture pro­gramme will serve as a cat­a­lyst to boost trade and in­vest­ment on the con­ti­nent.

Global eco­nomic con­di­tions are af­fect­ing all coun­tries and in an in­creas­ingly in­ter­con­nected world, no coun­try is im­mune from its ef­fects.

What I am con­fi­dent of is that South Africa will re­main an at­trac­tive in­vest­ment des­ti­na­tion that is open for busi­ness.

Davies is min­is­ter of trade and in­dus­try

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