South Africa is making a concerted effort to cut more red tape, both to enable businesses to increase their competitiveness and to promote increased foreign and local investment, Finance Minister Pravin Gordhan told Parliament on Wednesday.
Tabling his 2014 Budget in Parliament, Gordhan said that investment by both the public and private sectors was key to creating jobs and growth, adding that the government was committed to providing policy certainty and a sound investment environment for domestic and foreign investors.
Gordhan said a new framework for investment was being finalised by Trade and Industry Minister Rob Davies, and added that this would place investment at the centre of the country’s economic growth plan.
“We have a number of incentives in place, which have provided substantial benefits to both foreign and domestic investors.
“Moreover, under the guidance of Minister Davies, a new Promotion and Protection of Investment Bill has been released for public comment. This entrenches the rights of all investors, ensuring that property rights are protected, in line with the Constitution.”
Making it easier to do business
Gordhan said the government had been engaging business on steps it could take to make it easier to do business in the country.
“Arising out of that process, we will now streamline regulatory licensing approvals for environmental impact assessments, water licences and mining licences.
“As announced by President Jacob Zuma, Parliament is finalising amendments to give effect to this very positive development, which will cut the time it takes to start a mine – from application to final approval – to under 300 days.”
Gordhan said there was further work in progress to lower the cost structure of the economy through, for instance, improved efficiencies in freight logistics.
“[Communications] Minister Yunus Carrim has published a new policy on broadband, which will in due course lead to modernisation of our communications capabilities,” he said. “Several cities are bringing WiFi connectivity to their environs. [The SA Revenue Service] is taking further steps to lower the cost of tax compliance in South Africa.”
Doing business with the rest of Africa
Gordhan said that with South African investment into Africa reaching R36-billion a year, and with 29% of South Africa’s exports going to the continent – resulting in 12% of the country’s dividends arising from the continent – it was time to open up trade and investment for non-listed South African companies.
“Increasing these inflows will be crucial for closing the current account deficit. Foreign assets owned by South African firms are an important source of income, and reduce our vulnerability to future domestic downturns.
“Today, further steps to simplify trade and investment with Africa are announced. The HoldCo regime for African and offshore operations will be extended to unlisted companies, and the limits for listed companies will be increased.”
Gordhan said the new regime would create a simplified tax and foreign exchange framework for companies that traded with Africa.
“South Africa is an important centre for financial services such as fund and asset management. We propose new ‘Foreign Members Funds’, which will simplify foreign exposure rules.
“These funds will support South Africa as a hub for African fund management and provide a domestically regulated channel for investors to obtain foreign exposure.”