Promotion & protection of investment bill passed

The bill seeks to replace several bilateral investment treaties South Africa concluded with various countries when they lapse.

Despite fears expressed by the Democratic Alliance and several bodies representing international businesses that the bill would deter foreign investment, trade and industry minister Rob Davies told MPs “South Africa makes no apology” for being an active participant in discussions across the globe on reform to the international investment system.

Davies said the current model of the international investment system was litigious in that it gave investors the right to take governments to international arbitrating panels for “legitimate policy decisions and regulations”.

“This model offers investors guarantees against direct expropriation as well as expansively and vaguely defined guarantees against indirect expropriation, and rights to fair and equitable treatment,” he said.

Davies implied the bill would have very little if no impact on investment in the country.

“Looking back it is now apparent from our own experience, as well as that of many other countries, that there is in fact no real correlation between the existence or non-existence of a bilateral treaty and actual inflows of investment.”

“South Africa already provides strong protection to investments in terms of the framework provided by the Constitution and other legislation.”

Davies directly addressed fears of international investors, insisting the Constitution provided them with adequate protection against “arbitrary expropriation and deprivation of their property”.

Democratic Alliance MP Geordin Hill-Lewis disagreed, calling it a “bad bill”.

“It is a bad bill because it does not allay the concerns of investors, in fact, it adds to them. And it gives absolutely no protection to foreign investors beyond that which is already available under general South African law,” Hill-Lewis said.

“Every foreign investor that came to our Committee told us in unambiguous terms that if this bill passes, they will be less likely to invest in South Africa. More than 80 percent of all foreign investors in South Africa, representing an enormous R2 trillion in investment over the past 20 years, told us that this is a bad bill.”

The Economic Freedom Fighters’ Floyd Shivambu said his party would also reject the bill, but for different reasons.

Shivambu said government should be imposing a “developmental agenda” on investors.

“It should be that they must all implement a minimum wage of R4500 so that wealth is redistributed..that at least 51 percent of all these companies must be owned by workers,” he suggested.

In the end, however, the bill was pushed through by the ANC majority with 181 MPs voting in favour of it and 33 against. There was one abstention.

The bill will now go to the National Council of Provinces for assent.