Bilateral Chamber Consultative Committee: briefing

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Trade and Industry

21 October 2004
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Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
22 October 2004
BILATERAL CHAMBER CONSULTATIVE COMMITTEE: BRIEFING
 


Chairperson: Mr B Martins (ANC)

Documents handed out:

BCCC: Statement to the Media
BCCC Investor Survey 2004: PowerPoint Presentation
BCCC Investor Survey 2004: Fact Sheet

SUMMARY
The Bilateral Chamber Consultative Committee (BCCC) briefed the Committee on the results of a recent member survey to establishing opinions on current issues affecting the local business-operating climate. Some of these results were compared to the results of their last survey in 2002. The bilateral chambers that participated in the survey were the German, French, British, Italian, Swedish, Netherlands and Finnish chambers of commerce.

The Committee responded with questions for nearly one hour. The Chair asked the BCCC to return next year with the results of a similar survey, but thought they produce more empirical data in future. The Chair said that the Committee appreciated the opportunity of hearing the views of foreign businesses operating in South Africa.

MINUTES

Bilateral Chamber Consultative Committee briefing
The Bilateral Chamber Consultative Committee (BCCC) was represented by Ms Sandra van Lingen (CEO, British Chamber of Business in SA and from the BCCC Secretariat) accompanied by Mr Patrick McLaughlin (Hof Communications Parliamentary consultant for British Chamber).

 

Mr McLaughlin reported that the BCCC represented a networking alliance of 21 Chambers of Commerce, which in turn represented some 3 000 business operating in South Africa. The survey itself was conducted by seven of the Chambers, mainly European and Scandinavian. These businesses employed over 120 000 mainly South African employees.

In their survey results, BCCC reported that 78% of respondents had found the economy 'satisfactory to excellent', as compared with 31% who found it 'good to excellent' in 2002. 95% saw the situation improving and had "confidence" in the economy. 53% had increased confidence in the SA government, whereas in 2002, 32% had expressed such increased confidence.

60% of BCCC respondents had said their investment in SA would be increased, whilst 72% said the same in 2002 when the global economic climate was better. 14% had said that they will disinvest, whereas 3% had said the same in 2002. However, 7% wanted to go elsewhere in Southern Africa, whereas none wanted to do so previously. 10% wanted to re-locate elsewhere in South Africa.

70% viewed corruption as the most significant future concern in SA, followed in descending order by a concern about the competency of the public service, flexible labour relations, and crime and violence (60%). There was significant confidence (70%) that South Africa would remain a market-driven economy, and 53% felt that balanced taxation would be retained. 46% felt that the current form of democracy would be retained. 34% were confident in the political leadership of South Africa, and 32% expressed confidence that foreign companies would be treated equally in the future.

Most BCCC respondents were relatively happy about future returns on investment, cheap electricity, and the fact that South Africa would remain as a free-market environment. Most respondents were ambivalent or despondent about any improvement in the area of incentives, accountability of unions, ability to transfer more funds out of South Africa, and equal opportunities for foreign business.

Factors seen as essential if South Africa were to compete better for further foreign direct investment, were low levels of crime, absence of political and criminal violence, maintenance of educational standards, protection of the environment and lack of air pollution. They were most pessimistic about better workforce productivity and maintenance of existing transport infrastructure. They were still relatively pessimistic about incentives and accountability of trade unions.

On international events impacting on South Africa, 73% had experienced problems as a result of volatility of the Rand, and 59% had been negatively affected in some way by events in Zimbabwe. 48% had been similarly affected by events in Zimbabwe in 2002.

On black economic empowerment (BEE), respondents were asked for additional comment as well as rating their views and actions. 90% responded that they had embraced BEE in employment issues. 80% reported that they were considering, implementing or had implemented some sort of empowerment plan.

55% found ownership equity aspects of BEE the most difficult to implement for various reasons, and 32% found the human resources aspects, such as workforce composition, employee representation and the development of skills, the most difficult to implement. 13% said that they found indirect empowerment factors such as affirmative procurement, enterprise development, social development and specific industry measures, difficult to apply.

51% reported that BEE had no effect on their business. 37% said that it had a negative effect on their businesses. From the comments, most respondents had clearly adopted all aspects of BEE, but were unsure that government will achieve the broad-based empowerment hoped for.

There had been a 79% " bad to very bad" impression on government's policy towards the HIV/AIDS issue. In general, respondents felt government was not 'hearing' business with regard to the HIV/AIDS pandemic, and that government should move urgently to counter the perception that it was doing too little.


Discussion
Mr P Nefolovhodwe (APO) said it was difficult to assess the results without being able to see the questions first. He wanted to know how representative BCCC was in relation to foreign investment in the country's economy, and further asked how the results of the survey would be used by the various BCCC participant members. He lastly asked about any BCCC member contributions in dealing with the HIV/AIDS problem.

Mr Patrick McLaughlin (BCCC) responded that copies of the survey questionnaire would be circulated by the Committee Secretary immediately after the meeting. The questions were very simple - mainly "yes/no" questions. The survey results did not reflect 'just perceptions' as some Members were suggesting.

On investment in South Africa, he pointed out that the United Kingdom had invested R281 billion, the German Chamber R22 billion, the Dutch Chamber R11 billion, French Chamber R3 billion and the Italian Chamber R1 billion, into the South African economy. Thus their representation was over R300 billion.

Mr McLaughlin said that the results of the survey would be shared with the Department of Trade and Industry to make them aware of the views of business surveyed. Mrs van Lingen added that the results would be handled with extreme sensitivity with foreign bodies and institutions overseas. However, she thought most of the results were positive. Most of the responses related to trade and investment, and the BCCC did not represent foreign governments.


Mr McLaughlin said that the questions on HIV/AIDS in the survey were business-to-business questions, and were not on medical matters related to the illness. On contributions in this area, he said that the total South African investment in community social investment (CSI) and welfare programmes were estimated at around R4 billion. The American Chamber alone had also invested R1.5 billion in such matters. If one was to add the European, Scandinavian and Asian company investments then the Health contributions by foreign companies must run into billions of rands.


Mr E Nkem-Abonta (DA) asserted that they had presented some contradictions in the levels of optimism about the future of the economy. He wanted to know why there was so much confidence in some areas in the economy but less in the South African government itself.

Mr McLaughlin agreed that there might seem to be contradictions because in general, there was certainly optimism on major economic issues. However, on closer questioning, there were certain matters that came in for criticism. Clearly the 'general feeling' among the companies surveyed was that they were "upbeat" but when asked specific questions on the future, particularly on the areas of corruption and crime levels, flexible labour regulations and competence in the public service, they were pessimistic.

Ms E Chang (IFP) asked if BCCC was involved in export matters and dealt with trade agreement matters.

Ms van Lingen responded that BCCC, as a networking alliance, met in Johannesburg from time to time to discuss such matters. However, most matters involving trade were dealt by each Chamber individually, although such matters could be discussed at BCCC level.


Mr J Maake (ANC) asked if BCCC existed elsewhere in Africa. He felt the BCCC survey reflected perceptions and not necessarily realities and did not suggest any ways forward. He further asked about business expectations from the South African government and voters in relation to Zimbabwe. Finally, he commented that if businesses felt black economic empowerment was a negative, they should suggest alternatives to government.

Ms van Lingen responded that the BCCC was similar to many such alliances world-wide, particularly in developing economies. BCCC had a very strong southern African focus, although it existed only in South Africa. It represented the informal co-operation between overseas business chambers in South Africa, but most of its members had foreign links into other economies. The survey had sought to measure investor confidence and to evaluate the environment, not to make suggestions on how the South African government should do its job.

Ms Mabe (ANC) was concerned about the impact of the survey results on the South African trade agreement with the European Union. She also asked about the BCCC's history in terms of resistance to apartheid. She asked why the BCCC had singled out Zimbabwe as the one country to ask questions about. Why not Nigeria, for example?

Ms Mabe also asked what proportion of BCCC's 120 000 'employees' came from previously disadvantaged backgrounds, particularly from rural areas. She also wanted to know whether employee numbers had increased or decreased, and finally asked for more clarification about the Zimbabwe-related concerns.

Mr McLaughlin replied that the 120 000 employees referred to, only related to the seven Chambers surveyed. BCCC was not a Chamber, but a loose body meeting occasionally. Such a relationship had been in existence for some twenty years, with some members leaving and others joining.

He continued that all 21 foreign Chambers in the alliance could obtain such information on employee residence and income factors, but he doubted if this would be useful or relevant in the context of the issues looked at by BCCC surveys.

Mr McLaughlin said that the nearly 60% of respondents had said in response to a straightforward question, that the situation in Zimbabwe affected their businesses. Zimbabwe was in the Southern African Development Community (SADC) and as this country was an immediate and large trading neighbour, there was deep concern about business and trading issues, and these affected the investment climate.

The Chairperson reiterated that the Committee interaction with the BCCC was welcome as it was an important stakeholder. In future, the BCCC should present more substantial, empirical data. The BCCC media release was of grave concern to Members because it published mere speculation. He added that BCCC members should be concerned about their businesses in Zimbabwe in concrete terms, but Zimbabwe was an independent country and there were limitations to how far South Africa could intervene.

The meeting was adjourned.

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