Government welcomes the A.T. Kearney’s 2014 Foreign Direct Investment Confidence Index, in which South Africa climbed two spots to become the 13th most attractive destination for foreign direct investment. Government is humbled by this ranking, which shows that South Africa’s strategic partnership with foreign investors is gaining momentum.

Acting GCIS CEO, Phumla Williams, said “The report which cites South Africa as the only country in Africa on the list of top 25 countries, demonstrates that our country’s blueprint on development is yielding results.

South Africa offers lucrative value and opportunities for international investor partnerships, as the country is uniquely positioned as the gateway into Africa. We also boast a distinctive combination of developed first-world economic infrastructure and an emergent market economy that gives rise to a healthy entrepreneurial and vibrant investment environment.”

More companies internationally are finding South Africa as an investment destination of choice; the country has a fertile business environment and infrastructure in a number of sectors including, finance and telecommunications.

“South Africa has heeded President Jacob Zuma’s call to focus on changing negative perceptions held by foreign investors and thereby attract further investment. Our tax relief incentives, announced in 2011, have also contributed in attracting foreign direct investment. The strengthened synergies between government and other strategic stakeholders, like business, are supporting the National Development Plan as it provides policy certainty for investors,” said Williams.

South Africa’s commitment to the Renewable Energy Independent Power Provider Programme has been identified as one of the key drivers of its improved rating on the Index.  The programme has been designed to contribute towards increasing the supply of electricity through renewable energy. It is also aimed at addressing socio-economic and environmentally sustainable growth.

“As we celebrate 20 Years of Freedom, South Africans are encouraged to embrace foreign direct investment and join hands with government’s initiatives that aim to achieve the country’s economic vision. This advancement proves that South Africa is indeed a better place to live in,” Williams said.

Enquiries:
Phumla Williams
Cell: 083 501 0139

 by Mustaqeem de Gama

IN JULY 2010, the Cabinet approved a range of measures to update and modernise South Africa’s investment policy framework in line with international law standards.

This occurred against a changing international backdrop that saw fundamental changes to investment regimes and coincided with urgent international calls from both civil society and government circles for the reform of international investment treaties, their underlying policy frameworks, and the legal frameworks for adjudication and enforcement of investment agreements.

South Africa’s recently released Investment Promotion and Protection Bill responds to this dynamic and provides broad guarantees to all investors.

There are various perceptions that the draft bill falls short of acceptable international standards.

This is not so. The draft bill, released for public comment in November, specifies that all foreign investors are protected irrespective of whether a bilateral investment treaty (BIT) exists between their home country and South Africa. The draft bill also embeds non-discrimination by providing national treatment for all foreign investors.

While there is no reference to the investment law standard known as "fair and equitable" treatment, all investors have access to procedural and substantive due process provided for by the South African constitution.

The constitutional dispensation on expropriation, as set out in the draft bill, is very much in line with international law. Market value is still a determining factor in the calculation of damages. In respect of indirect expropriation, nothing in the draft bill deviates from international best practice. Instead, it draws from innovations in new-generation investment agreements that countries such as the US, Canada and Japan are concluding.

The US, for example, has changed its model BIT to specify that any reference to "fair and equitable treatment" must align to the customary international law minimum standard of treatment for foreigners (which the draft bill complies with); circumscribes indirect expropriation; and refines the definition of "investment" and contains a self-judging essential security clause. In short, there is nothing unusual about the provisions in the draft bill.

Increasingly, investment treaties and national investment laws now routinely carve out regulatory space for governmental actions implemented to achieve public interest objectives.

The draft bill confirms that investors have access to numerous remedies for any violation of their investments by the state. Arbitration legislation has now been updated, and two draft bills covering domestic and international arbitration are ready for public comment.

In recent years, the legitimacy of the international arbitration system has been questioned, raising concerns about its neutrality. Recurring episodes of inconsistent findings and divergent interpretation of identical of similar treaty provisions are common. Erroneous decisions on important questions of law are made without the possibility of effective review or appeal.

The fragmentation of international law in general and the particular nature of investment arbitration necessitate some uniform norms. However, every arbitral award is binding on the parties to the dispute only, and in the absence of a binding system of international precedent, concerns about the legitimacy, transparency and predictability of the international investment arbitration system will continue.

Arbitration costs have escalated alarmingly in recent years and have become prohibitive, where 82% of the cost of a case was said in a recent publication by the United Nations (UN) Conference on Trade and Development to be composed of legal fees, with an average cost exceeding $8m per case.

States are exposed to liability for legitimate public interest measures that run into billions of dollars.

A recent publication by the UN Conference on Trade and Development puts the number of cases at 450 in 2011, and by 2012 there were at least 40 known cases where $1bn or more was claimed by investors. Therefore, international arbitration is not a panacea in light of the many structural and institutional problems that exist within the international investment law system. International arbitration cannot replace domestic law as the primary legal framework for the regulation of investor-state relations.

• De Gama is a director in the Department of Trade and Industry.

Business Day is a national daily newspaper in South Africa, published from Monday to Friday and also available as an e-paper. It is edited by Peter Bruce and published by BDFM Publishers, which is also the parent company of the Financial Mail magazine and Business Day TV. BDFM Publishers is owned by Times M

R1bn investment sees new Corolla roll off the line

5 February 2014

Toyota South Africa Motors on Monday started full production of the new Toyota Corolla - the 11th generation of the world's best-selling car - following a R1-billion investment in its Prospecton manufacturing plant in Durban.

Toyota South Africa Motors CEO Johan van Zyl said the company's R1-billion investment was the second to be announced in the current phase of a capital expansion programme that started with a R363-million new parts distribution centre in Gauteng province in 2012.

This followed a R8-billion investment programme that was completed in 2008 and that saw Toyota's local production capacity increase to 220 000 units. In December, the company celebrated the production of its 1-millionth South African produced Corolla.

"It is hard to believe that a mere two generations of the Corolla ago we were a manufacturing operation with South Africa as our sole market," Van Zyl said in a statement. "Today the Corolla, a good example of leading-edge technology, is manufactured in high volumes for both the local and the export markets."

The new Corolla will be built in both left- and right-hand drive variants for the local and sub-Saharan Africa export markets.

Van Zyl said the South African automotive industry's transformation from local manufacturing and assembly operations to globally focussed manufacturing facilities was due in large part to the successful implementation of the government's Motor Industry Development Programme (MIDP), which was designed to encourage high-volume local manufacturing and export programmes.

"The environment created by the MIDP, and subsequently the challenges posed by the new Automotive Production and Development Programme (APDP), allows vehicle manufacturing facilities to invest in long-term projects that have long investment horizons," he said.

"The decision to invest in the production of the new Toyota Corolla was one taken well in advance of the start of production and one that considered the future economic prospects of South Africa and that of major Corolla export markets.

"We believe that despite the current economic slowdown and currency pressures, the South African built Corolla will prove to be a good long-term investment."

SAinfo reporter

South Africa's reputation has improved among the G8 countries since January, the Research Institute said on 20130926. "We are perceived very favourable by outsiders, by the G8 countries," Country Manager Trevor Ndlazi said at the WitsBusinessSchool in Johannesburg. "Our reputation is fragile. The things that we do, the things that we say can damage our reputation quite significantly." According to the report, South Africa's reputation dropped in January compared to the previous year, from 47.56 to 46.78 points, but increased to 51.24 in September. The reputation is scored in points, with 100 points being the highest. In the same study, South Africans gave the county 33.69 points, 17.55 below the G8 countries. "We are perceived very negatively by ourselves," he said. "This, I think, is a big cause of concern for our message that we are sending outside and how it is that we are talking to other people." He said reputation drove behaviour, and often what South Africans said about the country to people could affect their decision to visit or invest.

Mr Ndlazi said an additional study of South Africa's reputation was done in August and September to see if news events had affected how the country was seen. He said events like the deaths of 44 people in Marikana, North West, in strike related violence last August, and the arrest of Oscar Pistorius for the shooting of his girlfriend Reeva Steenkamp in February negatively affected South Africa's reputation and could have resulted in the drop in points. The visit of important dignitaries like US president Barack Obama to South Africa and the improvement of the health of former President Nelson Mandela could have positively affected the reputation figures, said Mr Ndlazi. The Reputation Institute's Country RepTrak is a global study of the reputations of 50 countries and is conducted annually in January among 27,000 consumers in the G8 countries. The G8 countries are the eight countries with the largest economic powers. They are Canada, France, Germany, Italy, Japan, Russia, the UK and the US. Mr Ndlazi said there were still areas in South Africa that needed work like safety, efficiency, effective Government and how South Africa performs in the global economy.

Reputation drivers for G8 respondents are the characteristic of being "friendly and welcoming" followed by a "safe environment" and "contribution to the global economy". South African respondents scored the country as performing well on only two attributes, "a beautiful country" and "an enjoyable country", but rated the country more poorly than the G8 countries did in the remaining 13 categories. Mr Ndlazi said that on the perception of "valuing education", South Africans' rating was 18.51 points compared to the 49.03 points by consumers in the G8. He said the second study was done on a smaller group of people in the G8 countries. Dominik Heil, from the Reputation Institute and Wits Business school, said the study should be seen as a reality check for South Africans. The Reputation Institute is a reputation consulting firm with a presence in 30 countries. On its website, the company said it was dedicated to advancing knowledge about reputation and shared best practices and current research through client engagement, membership, seminars, conferences and publications.

Global reputation will be defined by actions (BusinessDay, p3, In Brief, 20130927) – SA’s international reputation will be defined by the actions it takes to improve socio-economically, BrandSA CEO Miller Matola said yesterday. In future, SA’s brand would be further defined by how much effort was put into implementing the National Development Plan, he said. Speaking at the release of the Reputation Institute’s findings on the state of global perceptions of SA in 2013, he said that despite the existing perceptions of a country, it was the actions of countries that ultimately defined how they were viewed in the context of a global marketplace where both investment and human capital were highly contested. Despite being affected by South Africans who were highly pessimistic about their country, those seeking to visit or invest would ultimately take action more seriously, he said.