Some European businesses in SA had put projects on hold while others were investigating relocating to other African countries as a result of the uncertainty created by the Promotion and Protection of Investment Bill, Parliament was told on Wednesday.
The bill has been years in the making, with the latest version approved by the Cabinet in July. The bill seeks to do away with, and replace, SA’s bilateral investment treaties with other countries.
Some treaties with European countries have been withdrawn.
Stefan Sakoschek, the executive director of the European Union (EU) Chamber of Commerce in SA, told MPs that European firms were long-term investors that pumped resources into transformational and societal programmes.
He was speaking during public hearings held by the portfolio committee on trade and industry.
"We are aware of a number of projects that are pending due to the degree of uncertainty related to the investment framework.
"As we speak, some of our members are investigating other destinations such as Namibia, Nigeria and Kenya for their regional African operations. The current bill promotes discomfort, leading to discouragement related to new investments," Mr Sakoschek said.
The chamber was concerned that the bill did not offer the same treatment to all classes of investors, and gave inadequate protection.
"The EU business community plays a key role in the creation of sustainable jobs and economic growth and development in SA. We remain committed to a mutually advantageous long-term relationship with the South African government and … people.
"The withdrawal of SA’s (bilateral treaties) with EU member states has sent an alarming message to the EU business community regarding the standard of protection of investments. The new bill does not sufficiently allay those concerns," said Mr Sakoschek.
In sharp contrast, the National Union of Metalworkers of SA said: "(Bilateral treaties) extend far into developing countries’ policy space, imposing damaging investment rules with far-reaching consequences for sustainable development." In addition, new investment rules did not allow developing countries to demand training, skills transfer and local sourcing.
Fola Adeleke, of the Mandela Institute at the University of the Witwatersrand, said it appeared that provisions in SA’s bilateral investment treaty with China were inconsistent with the bill.
The SA-China treaty provides that if a company is expropriated, compensation shall be at market value, while the bill follows the Constitution, which provides for prompt, adequate and effective compensation.
If a Chinese firm invested now, it would still enjoy the heightened protection of the treaty.
Dr Adeleke said the institute supported the bill’s intention.