Following what the Department of Trade and Industry (DTI) describes as “an extensive public consultation process”, the draft Promotion and Protection of Investment Bill – which government says will seek to promote inward investment, clarify the level of protection for investors in South Africa and ensure that the country remains open to foreign investment – has been tabled in Parliament.
The Parliamentary Committee will now conduct a public process during which interested stakeholders will be invited to submit comments on the proposed Bill, which has been criticised by opposition party, the Democratic Alliance, over what it claims are insufficient investment protection provisions.
Trade and Industry Minister Dr Rob Davies, however, continues to support the introduction of the legislation, noting in a statement that it aims to confirm government’s right to pursue constitutionally driven national development objectives and recognises the right of governments to regulate in the public interest.
The DTI further argues that the Bill includes provisions that express South Africa’s commitment to maintaining an open and transparent environment for foreign investors, while recognising the importance of ensuring sufficient scope for government to regulate all investments to fulfil legitimate national policy objectives.
“In addition, it promotes a balance between the rights and obligations of investors and ensures the equal treatment [of] foreign and domestic investors. It also provides clarity for the standards of protection applied to investment,” he says.
According to Davies, the Bill builds on “already robust” investor protection by clarifying standards of protection routinely found in international investment treaties and bringing these into alignmentwith South Africa’s legal framework.
This has emerged amid a growing global discussion on the approach to investment regulation by governments, he says.
“In the 2015 World Investment Report (WIR), the United Nations Conference on Trade and Development argues that the process of reform of international investment agreements needs to be synchronised at national, bilateral, regional and multilateral level.
“The draft Promotion and Protection of Investment Bill defines international investment law concepts such as national treatment, protection and security, and the transfer of funds in line with constitutional principles and applicable norms. It further confirms the right to property,” he maintains.
The 2015 WIR presents various policy options, which include safeguarding the right to regulate in the public interest so that limits on State sovereignty imposed by international investments agreements do not constrain public policymaking.
It further points to the reform of investment dispute settlement mechanisms to deal with the crisis regarding the legitimacy of the current system and calls for the expansion of investment promotion and facilitation in international investment agreements.
The report also identifies the need to ensure “responsible” investment and enhance the systemic consistency of the international investment agreement regime to overcome gaps and overlaps, as well as establish coherent investment relationships.
“The provision on ‘national treatment’ ensures nondiscrimination between dom- estic and foreign investors that are in ‘like circumstances’. “This clarifies that government may undertake certain measures for, inter alia, purposes of economic transformation and the advancement of certain categories of persons.
“Foreign investors can further expect a level of security as may be generally provided for domestic investors under the provision on ‘security of investment’. Investors further have their right to property reaffirmed in terms of Section 25 of the Constitution. “The Bill in no way interferes with the protection afforded investors under the existing bilateral investment treaties,” the Minister concludes.