Johannesburg – The Southern African-German Chamber of Commerce and Industry has expressed concern over the government's termination of South Africa's bilateral investment treaty with Germany on October 23.
According to the chamber, the treaty functioned effectively in promoting and protecting German investments in South Africa.
More than 600 companies from both countries are members of the SA-German Chamber.
"The SA-German Chamber regrets the unilateral termination of the BIT (bilateral investment treaty). This decision could have a negative impact on general investor confidence," the chamber said in a statement.
"BITs are of particular importance to small and medium sized companies, which are the majority of German companies in South Africa."
Although current investments will remain protected for a further 20 years, limiting the immediate effects on existing German investment, the chamber said the psychological effect on prospective new investors should not be underestimated.
"Legal uncertainty for potential investors has been created by the termination of a system which has been proven to be effective, without a new system being implemented," the chamber said.
"In the absence of a legal framework dedicated to the protection of investments, new entrants might be deterred from a commitment to South Africa’s economy."
The chamber said it is convinced that investment flows benefit both developed and developing countries, creating opportunities for investors and assisting developing countries in achieving sustainable development.
"South Africa has proven to be a strategic investment partner for Germany and a gateway to sub-Sahara Africa," the chamber said.
Germany is South Africa’s second most important trading partner, with trade volume amounting to around €14bn (R180bn).
With investments totalling more than €6bn (R81bn), Germany is among the largest investors in SA.
German companies in the country employ more than 90 000 people.
The government has already cancelled bilateral investment treaties with Belgium, Spain and Luxembourg as part of plans to change its investment policy.
- Fin24
According to the chamber, the treaty functioned effectively in promoting and protecting German investments in South Africa.
More than 600 companies from both countries are members of the SA-German Chamber.
"The SA-German Chamber regrets the unilateral termination of the BIT (bilateral investment treaty). This decision could have a negative impact on general investor confidence," the chamber said in a statement.
"BITs are of particular importance to small and medium sized companies, which are the majority of German companies in South Africa."
Although current investments will remain protected for a further 20 years, limiting the immediate effects on existing German investment, the chamber said the psychological effect on prospective new investors should not be underestimated.
"Legal uncertainty for potential investors has been created by the termination of a system which has been proven to be effective, without a new system being implemented," the chamber said.
"In the absence of a legal framework dedicated to the protection of investments, new entrants might be deterred from a commitment to South Africa’s economy."
The chamber said it is convinced that investment flows benefit both developed and developing countries, creating opportunities for investors and assisting developing countries in achieving sustainable development.
"South Africa has proven to be a strategic investment partner for Germany and a gateway to sub-Sahara Africa," the chamber said.
Germany is South Africa’s second most important trading partner, with trade volume amounting to around €14bn (R180bn).
With investments totalling more than €6bn (R81bn), Germany is among the largest investors in SA.
German companies in the country employ more than 90 000 people.
The government has already cancelled bilateral investment treaties with Belgium, Spain and Luxembourg as part of plans to change its investment policy.
- Fin24