Sound regulatory and business support programmes make South Africa your preferred investment destination

8 article

• South Africa has a diversified economic base and an economy that offers world class business services in areas such as information and communication technology, transport and logistics, and financial and professional services. We have strong and transparent public institutions, and are committed to responsible macroeconomic management of the economy.

• South Africa has a sound regulatory framework that provides protection for investors and our commercial and legal practices are in line with those in the rest of the developed world. South Africa ranks 14 out of 140 countries in the WEF Global Competitiveness Report 2015/16 in terms of the efficiency of our legal framework in settling disputes, and comes 24th in terms of judicial independence. In the same report, South Africa also ranks high in the enforcement of property rights, coming in at 24th place.

• In terms of our attractiveness as an investment destination, the World Economic Forum’s Global Competitiveness Index 2015/16 indicates that:

• South Africa has improved by two places in terms of its business sophistication environment and now stands at 33rd out 140 countries.

• South Africa also stands at 50th out of 140 countries in terms of technological readiness (up 16 places from 2014/15).  In terms of innovation, South Africa improved by 5 places to stand at 38th.

• In terms of financial market development South Africa stands at number 12 of 140 countries, and is the most diversified on the continent.

• To support investment into the country, government has finalised the new Protection of Investment Bill, which aims to balance the rights and obligations of investors and government while also preserving the right of government to regulate in the public interest.

• One of our most significant interventions has been the establishment of a One Stop Inter-Departmental Clearing House which will provide efficient support to investors to ensure that South Africa offers an investment friendly environment.  This will be operational by the end of 2016.

• Incentives and support services for investors in the Special Economic Zones programme are also being developed by the DTI.

• South Africa will attract investors in the manufacturing sector through the DTI-led incentives such as the Manufacturing Competitiveness Enhancement Programme and the Manufacturing Investment Programme. Over the medium term, and starting in 2016, government will review all incentives to assess their effects on economic growth, productivity, competitiveness, the balance of trade and employment.

• The Industrial Policy Action Plan (IPAP) remains a central component of government’s strategy to diversify the economy. This includes direct transfers and tax incentives. In the 2015/16 fiscal year, government set aside R24 billion in tax incentives and R16.2 billion in direct funding to support industry.

• New growth sectors such as oil and gas, metal engineering and capital equipment and agro-processing will be targeted for intensive government support.

• Recalibration of industrial finance will aim to strengthen the package of government and development finance institutions’ support for the productive sectors.

• Growing the oceans economy with a focus on marine transport and manufacturing remains a central component of South Africa’s industrial imperatives.

• Operation Phakisa was launched in 2014 to ensure rapid economic development in key sectors.  The first sector to be identified was the ocean’s economy which currently contributes R54 billion to GDP but has the potential to contribute R177 billion.

• Mining Phakisa is currently underway which will contribute to South Africa’s drive to add more value to its mineral resources. This could be achieved through the beneficiation of our mineral resources (focussing on five value chains i.e. platinum group metals, iron & steel, titanium, polypropylene and capital equipment for the mining sector).

• Education Phakisa is also currently being implemented.  This will ensure South Africa is able to make the right investments in identified areas to produce the skills required to drive the economy. Producing the right skills for the economy will contribute positively to the market’s ability to absorb skills while equally producing the required skills.

• Many international companies have increased their investment and expanded their South African operations:

    • Mercedes has invested R 2.4 billion
    • General Motors has invested R 1 billion
    • Ford has invested R 3.6 billion
    • Metair Group has invested R 400m
    • Goodyear R 670 million
    • BMW has recently increased its investment by R6 billion
    • VW has increased its investment by R4.5 billion
    • Beijing Automobile International Corporation (BAIC) announced an investment of R11 billion in a vehicle manufacturing plan
    • Hisense has expanded its South African operations and has recently started exporting into the SADC region from its South African base
    • Marriot Hotels has announced it will increase its South African footprint
    • Starbucks, Dunkin Donuts, Krispy Kreme and Facebook have chosen to set up office in South Africa