Foreign Investment and BEE/Employment Equity (actual 25% req and directorships)

[Citizen X]

There's always an opportunity somewhere. Just do not get Govt as a business partner. The upside may be additional orders if they are not sleeping, but the downside is having to wait for a board meeting before you may spend money to pay for emergency repairs on a critical machine or process. People in government never seem to be able to grasp the urgency of a situation, even if the place is falling apart.

Blurock, I agree with you 100%!Well, under the auspices of urgent meeting, you could use the blue light brigade to ride some innocent character over!
The Government as a Business partner, wow, what a partnership, what a business success model! The product costs R10 wholesale, you give a tender to some character who has know experience in that sector whatsoever, he then sub contracts, you eventually pay R100 for the very same product in the name of openness and transparency...

[Dave A]

they touched on BEE very briefly in essence saying it worked out somewhat differently than expected enriching the few instead of making the country feel like the investments are a partnerships to involve people.

True, although in hindsight I'm not sure whether it's a case of " somewhat differently than expected" or "somewhat differently than advertised".

There is one other core concept of the policy that also hasn't worked out as advertised too; that the goaled changes in demographics would be achieved by growth of the total market rather than redistribution.

Wondering how your property bubble unfolds

I think we're pretty locked in to current levels. My description of the SA property market at the moment would be "subdued, but stable."

[cyppok]

http://mg.co.za/article/2012-09-28-0...urity-industry

The Private Security Industry Regulation Amendment Bill proposes that South African citizens must own at least 51% of all *private security firms operating in the country.

It also grants the minister of police power to determine the different percentages of ownership across different categories of security services.

Significant investment
"This has not been very well thought through," said Conradie. "It is targeting a significant investment into South Africa."

The majority of the sector is already black-owned, he said, and all the major operators have already conducted black economic empowerment transactions.

The industry is the biggest supplier of entry-level jobs in the labour market and the Bill will threaten employment, he argued.

According to the police ministry, the sector has about 10 000 active private security companies, which government regulates through the Private Security Industry Regulatory Authority. The regulator has more than 1.9-million security officers on its database, of which more than 400000 are active security officers.

Slowly but surely the creeping hand of whom must own what in which sector.

I think BEE is very destructive. Any manufacturer that has to put in capital for capital equipment to get production going is incentivized to do it in any neighboring country lets say Nigeria, Botswana, Kenya, etc...
My opinion is that if you put in $5 million to buy equipment another $2-3 for working capital to pay for raw materials and wages to start it up and then have to give for free in essence 1/4th of that amount to someone for doing absolutely nothing simply to comply with law it simply means that there is a tax on foreign investment in the amount of 25%.
Compared to Brazil and Argentina which tax capital investment at far lower rates and then if its long enough they hypothetically rebate it the situation is very absurd.

BEE in itself is basically a protectionistic matter that is not only on current investment like I mentioned above but also inter-temporal. Ergo say you give up 25% today and you are compliant, in 5 years when those people whom made you compliant slowly liquidate their investment assuming its a public firm you have to dilute your current shareholders again by 25% so theoretically its an asset tax that is periodically invoked.

[Dave A]

Not really a BEE issue by the looks of it, but perhaps a reflection of the rather narrow-minded thinking in the corridors of power at the moment.

Either that, or they're getting seriously paranoid.

[cyppok]

Not really a BEE issue by the looks of it, but perhaps a reflection of the rather narrow-minded thinking in the corridors of power at the moment.

Either that, or they're getting seriously paranoid.

http://www.fin24.com/Economy/Revised...brows-20121003
I m going to pat myself on the back for smelling the improvements ahead of time. See the problem with tasting a little bit of wealth via expropriation is that there is incentive to nudge it a little bit higher. Its like a drug you steal a little from your fellow man and then you want a little more, because hey "you deserve it!". And so the wonderful spiral of absurdity starts up.

Notice the following 7 items at 40% compliance, theoretically if you hold the median in each that is about 6% compliance rate per item.
If you go to 5 items it goes up to 8% compliance per item.
If you got 3 items it goes to 13% compliance per item. In essence it will consolidate inching parasitism.
Also notice now you have minimum targets for ownership and whatnot. So you need to give up ownership. Eventually that 10% goes to 20 or 30.

Theoretically if you have working capital and a large business at this point as in right now would be the time to simply earn it out at full clip and not replace it because each dollar you take out is a dollar you don't looze through induced 'sharing'. Capital investment will simply skyrocket at this point, I mean collapse irreversibly.

http://www.fin24.com/Economy/Banking...s-BEE-20120902
Like I said before once BEE owners cash out you need to give out more BEE to remain compliant so you have to constantly dilute your shareholders once old BEE owners leave to give new BEE owners equity.
Thus, BEE becomes an Asset tax in essence that is redistributed.

In August, black investors in retail lender Absa, represented by Batho Bonke Capital, discussed a special resolution to cash in their 3.9% stake, worth R2.2bn after tax.

If they did and the once-empowered rule were to change, Absa would need to enter into a new BEE deal.

Viva la revolucion!