Our special economic zones don’t lure enough investors
GLOBAL Spotlight
100 000 because of security concerns.
A Singaporean business delegation was robbed as they travelled from the airport to the hotel. What type of message does that send?
The media also needs to be more responsible and send out positive messages as opposed to a constant stream of negativity, which feeds into fear-mongering overseas.
The second major issue deterring investment is the lack of incentive policy written into law. Any investor will tell you that incentives are everything, but in South Africa there is no law approved by Parliament and the president that ensures profits to investors for the long term.
In the South African Economic Zones Act, there is only one sentence devoted to SEZ policy. It merely says that the minister may determine policy for SEZS and, when necessary, can review the policy. This means that the policy can change at any time, which doesn’t instil much investor confidence.
If we look at Egypt, three pages in their investment law are devoted to investment incentives. There are incentives to do with significant discounts off investment costs for labour-intensive projects, small and medium enterprises, projects on renewable energy, tourism, electricity generation, car manufacturing, agricultural products and engineering, to name a few.
Egypt has been particularly effective in speeding up investment and industrialisation. Ultimately, investors come to make profits and an incentive policy is key to attracting them.
The third major area of concern is government services. The Department of Trade and Industry has already made some headway in creating a framework for a onestop shop like China has, which is a single place where investors can go and deal with Home Affairs, immigration, police, tax authority, customs and electricity.
But the procedure in dealing with all the government services takes far too long. The Chinese embassy is trying to assist by sending 48 South African government officials to China this year for a workshop on how to make a one-stop shop operational and efficient.
When Asians look at where to invest, they see South Africa with a population of 55 million and a growth rate of 1%.
Compare that to the Philippines with a population of 103 million and a growth rate of 6.9%, and Indonesia with a population of 261 million and a growth rate of 5%.
Asian countries are within the same time zone, and not more than a three-hour flight from each other.
How will South Africa make itself attractive to Asian investors?
Being on the southernmost tip of Africa we are in the best location, straddling two oceans. We have a plethora of mineral resources, agricultural land and human resources. Now we just have to work out what incentives we can offer.
It does not need to be a race to the bottom, where we lower our minimum wage, but perhaps we can be creative. We could subsidise electricity for the SEZS like Malaysia does, or make the red tape involved in government services far less cumbersome.