foreign investment in the economy

[suetax]

Hey,

can someone give me a nice explaination of why foreign investment in sa is so important for the economy... I can see the logic behind it but Id like to hear it put in an easy to understand way...

[Dave A]

Can we really say that all forms of foreign investment are good for the SA economy? The aluminium smelter deals and what seems to be emerging out of the upcoming toll system around Jhb has me doubting.

Bonds - that's easy. It raises capital for investment in local infrastructure at a fairly low fixed price.

Direct foreign investment in manufacturing - that seems to be mixed.
Investment in the local motor industry looks good. We get lots of jobs, ancillary small business development, export potential...
The aluminium smelters? I don't know so much. Yes, there's some jobs, but they're really here to suck our power generation capability which is being sold to them at so close to cost, are we really winning here?

Property? Definitely needs a long reply - certainly more than I've got time to put down just at the moment.

And then we have the selling off of money spinners at bargain basement prices - telecoms and the Gauteng tolling project come to mind. It's hard to see how this improves the South African economy, although it does line the pockets of a few local connecteds rather well

[Melvin0101]

Foreign investment can play a crucial role in a country's growth and in fact the people who opt for foreign investment get better returns on the money invested. I invest my money overseas every year and i get superb returns on it.

[AmithS]

Like Dave said, is it really benefiting us or not?

The thing is it is very important in my view especially for a country like ours that has alot of growth potential and needs the extra funding.

The problem ends up being, how it is managed!!!!! - is it benefiting the entire country and the economy or just a few individuals.

But to answer the question simply jobs, SMEs etc... leading to increased spending power.... leading to GDP growth

[Newretailer]

I agree with what Dave says as well. I think a looooot of pockets get lined for many deals. In many cases the benefits may be short term with cash coming into the country, but in the longer term dividends go out.

Off Topic:
I worked in Standard Bank's IT department when they sold 20% off to a Chinese bank. I really couldn't see the benefit of that and recently moved my personal banking account to Capitec as I have moral issues with the way Standard Bank operates.

They have a policy in place where they firstly employ black people (no problem with that), then people on contract here from India and then whites in their IT department. The sad thing is that the Indian people are being paid higher rates than any of the South Africans and trust me, the quality of their work is not better, quite the reverse. I have to wonder about business decisions like that in a country with such a high unemployment rate. Only thing that I can think of is that pockets get lined along the way.

[AmithS]

@Newretailer, its not only something that Standard Bank does and it goes across the board with most countries\nationalities, if you look at the power stations being built? the Gautrain? the Tolling? a lot of the engineers etc... (not the low wage guys) are foreigners!!!

[Newretailer]

JWalker, this is why I support smaller business wherever I can, even if I have to pay more. Unfortunately this is not always possible.