Maravi

(HERALD ZW) Govt to relax FDI laws

COMMENT - More selling out from the MDC, of which FDI minister Mashakada is a member.

Govt to relax FDI laws?
Friday, 24 August 2012 00:00
Martin Kadzere Senior Business Reporter

CONSULTATIONS over the possible exemption of new investments from complying with indigenisation provisions are underway, as Government seeks to redesign the policy to encourage more Foreign Direct Investment, Economic Planning and Investment Promotion Minister Tapiwa Mashakada has said.

“We are working on a policy that may see new FDIs being exempted from the provisions of indigenisation,” he said at the launch of Zimbabwe Australia Business Council recently.

“I want to assure potential investors that we are doing all we can to improve the business environment.”

The Indigenisation and Economic Empowerment Act requires foreign investors to have a maximum shareholding of 49 percent in local entities. But in an interview, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere said some foreign investors were already getting “special dispensation”.

“ZIA and NIEEB are working on harmonising the laws (Investment and Indigenisation), so that there is smooth communication of these provisions to investors. With regards to exemptions of the FDIs from indigenisation, the ministry has granted special dispensation to some investments and the same can happen to future investments,” he said.

Some of the investments given special dispensation include the acquisition of Premier Banking Corporation by Ecobank and that of Ziscosteel, now NewZim Steel, by Essar Holdings.

Zimbabwe Investment Authority chief executive Mr Dominic Mbaiwa said in an interview yesterday the matter was under discussion.

“There is concern that some provisions of indigenisation might be stifling FDIs and we are in discussions with the responsible ministries and NIEEB to see the possibility of exempting new investments from the provisions of the indigenisation,” said Mr Mbaiwa.

He said business delegations coming to Zimbabwe on investment missions had raised concerns over the indigenisation policy.

Russia, for instance, wants a provision in the Bilateral Investment Protection and Promotion Agreement that it is negotiating with Zimbabwe that will exempt their investments from the indigenisation regulations.

A business delegation from Russia visiting Zimbabwe last month expressed strong interests in power, mining and infrastructural projects.

National Indigenisation and Economic Empowerment Board chairman Mr Wilson Gwatiringa confirmed “there are consultations with a view of harmonising certain sections of the Indigenisation Act and Investment Act that may be conflicting”.
But he could not give more details.

Last year, the ZIA approved investment projects worth more than US$6 billion. Zimbabwe has continued to lag behind in attracting FDIs when compared with other Southern African countries.

Last year, inflows rose by 133 percent to US$387 million, according to the United Nations Development Programme World Investment Report for 2012.

Although Zimbabwe’s FDI inflows more than doubled during the period under review, they remained low compared with other countries in the region, with Mozambique having received US$2 billion last year.

The Southern African region registered FDI inflows worth about US$6,3 billion, while that of the African continent stood at US$42,6 billion.

Analysts said investor confidence had been dented by the “increased uncertainty in policy implementation — mainly through the Indigenisation Act”.

“The empowerment drive has clearly reversed the optimism brought about by the formation of an inclusive Government,” said a Harare-based research firm.

“We strongly recommend that policymakers adopt investor friendly policies to attract much-needed Foreign Direct Investment.

“Attracting foreign capital remains critical to the recovery of the economy. Economic development and growth can be achieved through trade and investment. It is imperative that policymakers realise the negative impact recent policy announcements have had on investor sentiment,” the firm said.

Labels: FDI, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), NEOLIBERALISM

posted by MrK @ 11:57 PM