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THE promise by Trade and Industry Minister Rob Davies of a new approach to foreign investment will be widely welcomed.
Davies told a UN Conference on Trade and Development meeting in Johannesburg last week that bilateral investment treaties signed soon after the 1994 elections would be reviewed and terminated or re-negotiated on the basis of a new model. He referred to the need for regulations to make sure investment from abroad contributed to sustainable development.
As Davies points out, the benefits to the host country of foreign investment are not automatic; far from it. South Africa abounds with examples of foreign investors who have sucked out profits from this country without providing the minimum benefits listed by Davies – skills development, research, technology transfer, or local linkages.
A glance at the discussion document on a framework for foreign investment published by the National Treasury in February 2011 shows that South Africa is unusually undemanding when it comes to foreign investors. Our partners in BRICS, for instance, are much more assertive. In Brazil, foreign investment is prohibited in nuclear energy and aerospace, health, posts and telegraphs, and security; conditions are applied to the purchase of land by foreigners and there are limits to investment in air and road transport, fishing, banking, mining, broadcasting and print media and telecommunications. In Russia, foreign investment is controlled in a list of strategic sectors from media to aviation, meteorology, telecommunications, car manufacturing, banking, fisheries, and forestry.
India has traditionally applied limits to foreign investment across much of the economy but is now shifting to target “strategic sectors” including aerospace, agriculture and fisheries, nuclear energy, telecommunications, financial services, and transport, among others.
China applies limits or regulations on foreign investment in agriculture and fisheries, media, energy, financial services, natural resources, real estate, telecommunications, and transport.
The National Treasury’s framework, currently being re-drafted in the light of submissions from the public, must be made tough enough to protect South Africa from further plunder.