FDI ‘calamity’ beckons

2011-11-14 14:28

There will be more certainty about foreign direct investment (FDI) in South Africa within the next year, Finance Minister Pravin Gordhan said today.

“Within the next year, we’ll have a very clear legal framework within which FDI [foreign direct investment] can operate,” the minister told Business Unity SA’s annual general meeting in Joburg.

This would “give foreign investors a clear and consistent picture within which to work”.

Gordhan made his comment in light of confusion created by government’s response to United States giant Walmart’s R16.5-billion acquisition of a controlling stake in local retailer Massmart.

Although he did not want to comment specifically on the Walmart matter, which is before the Competition Appeal Court, he said some of the issues raised by the deal were correct.

These included the government’s wish to promote procurement and small businesses, and to prevent job losses.

The National Treasury had released a discussion document on guidelines for FDI, titled A Review Framework for Cross-border Direct Investment into South Africa.

Within the next year to 18 months, a clear policy document on FDI would be available.

This would “clearly identify what we see as strategic industries where a particular set of rules apply” and other industries in which government had no strategic interests.

In those areas where the government had strategic interests, “there will be clear and transparent and consistent rules in terms of which we would work as a country and which we would expect investors to understand before they come into South Africa as well”.

“Walmart now takes place within that context“, Gordhan said.

The Competition Appeal Court is considering whether to impose more stringent conditions on the Walmart-Massmart transaction, after an appeal by the departments of economic development, trade and industry, and agriculture, forestry, and fisheries.

The SA Commercial, Catering, and Allied Workers’ Union filed a separate appeal against the approval of the takeover of Massmart on the grounds that the Competition Tribunal had failed to take adequate consideration of the public interest.

The tribunal approved the deal in May, subject to certain conditions.

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