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South Africa Opposition Condemns Red Tape

by Carla Johnson, Investors, London

24 October 2007

A statement was this week issued by Pierre Rabie, Democratic Alliance spokesperson on Trade & Industry, with regard to the impact of 'red tape' on economic growth and job creation in South Africa.

Mr. Rabie argued that:

"For South Africans to have more job opportunities and more freedom to pursue their economic aspirations, the instruments of economic opportunity available to South Africa need to be as varied and as freely accessible as possible. Red-tape must be limited to an absolute minimum and government policies need to encourage access to investment in job-creating projects in as many areas of our economy as possible. "

He continued: "In South Africa the government has not been successful in determining to what extent and in what manner it should intervene in the economy to make it conducive to job-creating economic growth."

"According to the World Bank’s survey, Doing Business 2008, South Africa – compared to other countries, particularly its income peers and, in certain instances, other African countries – is underperforming in four key areas: the ease with which cross-border trade (imports and exports) can be done; the ease with which workers can be employed; the ease with which business properties are registered; and, in terms of tax regulations."

Looking to the future, Mr Rabie suggested that: "For South Africa’s economy to become more competitive in attracting foreign direct investment and thereby becoming more conducive to job-creating economic growth, a series of firm and decisive action-steps need to be taken."

According to Rabie, there are three steps which would make a significant difference:

"Regulations that would make South Africa less welcoming to foreign direct investment should only be implemented if it is in the best interests of the absolute majority of South Africans."

"Fiscal policy should be revised to bring taxes on profits (i.e. corporate tax and secondary tax on companies) in line with other more competitive countries amongst South Africa’s global economic peers (emerging and upper-middle income countries)."

"And lastly, best practice with respect to the administration procedures involved with corporate tax, unemployment insurance and VAT amongst more competitive countries needs to be investigated and implemented in order to rapidly reduce the amount of time required to ensure compliance with the necessary regulations."

He concluded:

"There is no question that, with these steps in place, South Africa will be much better positioned to attract foreign direct investment, and that our regulatory environment will be much more conducive to economic growth and job creation."

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