Home / Foreign Market Access Report 2006 / South Africa Tools: Save | Print | E-mail | Most Read
4. Barriers to investment
Adjust font size:

According to the relevant laws in South Africa, certain groups of South African companies are restricted in access to financing through local credit institutions, which include companies with 75 percent or more of capital or assets held by foreign investors, companies with 75 percent or more of business earnings distributed to non-residents, and companies with 75 percent or more of voting rights or controlling sharing or 75 percent or more of capital, assets or earnings held or represented by non-residents.

The limit of loans, namely, the so-called local financial support, is calculated as a percentage as follows according to the valid capital of the company:

Percentage of valid capital = 100 percent + 100 percent ×{Shares held by local companies (%)/Shares held by foreign investors(%)}

The definition of the above-said loans covers a broad range, in practice including various kinds of loans and credits such as bank loans, overdraft from banks, credit leases and financial leases, but does not apply to trade credits extended by commodity dealers and service providers. As Chinese companies have shifted from trade investment to manufacturing investment in South Africa, the above measures have greatly restricted Chinese-invested enterprises in their capacity to finance locally. In addition to financing restrictions, other notable factors also obstruct China's investment in South Africa. A grievance often voiced by many Chinese enterprises is South Africa's visa system. It often takes considerable time to be granted an entry visa, thus seriously hindering the transfer of personnel on the part of Chinese-funded enterprises in South Africa. More annoyingly, South Africa also subjects transit Chinese nationals to visas. As from 1 December 2005, the new South African Immigration Act requires that people from China and other 16 countries should apply for a visa when they visit South Africa for transit, whereas people from the rest of the world do not need to have a visa issued in the case of transit. As South Africa is a gateway to many other African countries, the discriminatory transit visa policy has caused much inconvenience to the Chinese who are going to other countries via South Africa, including Chinese official delegations holding diplomatic and business passports as well as business people holding ordinary passports. In November 2005, the Chinese Foreign Ministry took up the matter with South Africa's Department of Internal Affairs. China will continue to pay close attention to the progress made by South Africa in solving this problem.

A number of incidences involving criminal violence against Chinese business people and Chinese-invested enterprises have occurred in South Africa over the past few years, which have considerably weakened the confidence of the Chinese business community in investing in South Africa. As the economic and trade relations grow between the two countries, the Chinese side hopes that the South African government will take adequate measures to protect the interest of the Chinese people and enterprises doing business in South Africa.

Tools: Save | Print | E-mail | Most Read

Related Stories
SiteMap | About Us | RSS | Newsletter | Feedback
Copyright © China.org.cn. All Rights Reserved     E-mail: webmaster@china.org.cn Tel: 86-10-88828000 京ICP证 040089号