Government seems determined to scare off investment in SA

23 June 2014 - 02:53 By The Times Editorial
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There was a bit of good news last week amid all the economic gloom and concerns about the lack of policy certainty under President Jacob Zuma' s new administration.

The new minister of mineral resources, Ngoako Ramatlhodi, announced that he had asked the president to delay signing the Minerals and Petroleum Resources Development Act Amendment Bill.

According to Business Day, Ramatlhodi has a number of worries about the bill, including that it might not pass constitutional muster because it was not processed correctly when it was rushed through the legislature ahead of the May 7 election.

Even more critical, however, seems to be the belated realisation that, if enacted, it would scare off investors in the potentially massively lucrative oil and gas sector. This is because the ANC has used its majority to increase the state's proposed ''free-carry'' interest in future oil and gas projects from 20% to 100%.

The upshot of this iniquitous provision is that investors could pump billions into a project only to see it taken over wholesale by the state. The result: little or no investment would happen - despite Zuma's repeated assurances that fracking in the Karoo, for example, could be a ''game-changer'' for our stuttering economy.

Since he took over the reins at Mineral Resources, Ramatlhodi has been a breath of fresh air, injecting new urgency into attempts to resolve the devastating platinum strike of which his predecessor was little more than a spectator.

It is to be hoped that some of the minister's pragmatism rubs off on his cabinet colleagues.

The Security Bill, which is also waiting for Zuma's signature, is a case in point. An attempt to force foreign-owned security firms to cede 51% of their ownership to South Africans, it could expose the country to economic sanctions and result in large-scale job losses and rocketing security costs.

A radical proposal to strip farmers of 50% of their land in favour of farmworkers will also set the alarm bells ringing.

If it really wants to boost investment and create jobs, the government must think again.

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