Pretoria - Denel’s decision to cut ties with VR Laser sends a message of the commitment by state-owned enterprises to good governance, said Finance Minister Malusi Gigaba.
He was speaking to journalists following a briefing on the outcomes of a meeting with the steering committee of the CEO Initiative.
“I welcome the decision of Denel to cut ties with Denel Asia and to call off the case with National Treasury.”
Gigaba said the decision demonstrates to the investor community and everyone in South Africa that state-owned enterprises (SOEs) are committed to good governance, said Gigaba.
The state-owned company announced on Friday that it was ending the joint venture with VR Laser given the negative attention the brand suffered, locally and internationally.
For Denel’s commercial mandate to be sustained into the future there is no other way but to look beyond the borders of our country. Our business strategy was thus designed at the back of a decline in the local market.
“Since its establishment, Denel Asia has not traded due to differences of opinion with National Treasury, which have been widely covered in the media, at times based on perceptions and not fact,” the defence company said.
Asia was identified as a focus area part of the company’s international growth strategy. However, Denel conducted continuous assessments of the “untenable atmosphere” caused by the establishment of the joint venture and decided to explore alternative market approaches to access the Asia Pacific market.
“This therefore brings us to a point where we can officially report that Denel SOC has ended its involvement in the Denel Asia JV. We have exited the joint venture.”
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.