No changes in FDI policy for countries sharing land border with India: Sources
These remarks are important as certain reports have stated that the approval process for FDI applications from China has been streamlined.
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Daily Maverick
a day ago
- Daily Maverick
Running on empty – OECD, banks and business warn SA of stagnation
The OECD's latest Economic Survey, backed by Treasury, leading economists, the RMB/BER Business Confidence Index and the recently released Kearney Global Economic Outlook, warns that failure to implement urgent structural reforms risks tipping South Africa into an entrenched economic stall. South Africa's economic growth is not just slowing – it's stalling. The OECD's 2025 Economic Survey is a mirror that few policymakers want to face, and reinforces much of the analysis of South Africa's economic trajectory – and the answer is not good. GDP per capita remains lower than it was in 2007. South Africa is the only G20 country whose investment rate has declined over the past decade. That's not just a warning sign – it's an indictment. The RMB/BER Business Confidence Index, compiled by the Bureau for Economic Research, shows confidence remains below the 50-neutral mark across sectors, with manufacturers and retailers especially pessimistic about fixed investment prospects. RMB Macroeconomist Keabetswe Mojapelo told Daily Maverick, 'It's not just interest rates – it's policy unpredictability and grid instability weighing on business decisions'. What's new is the institutional alignment. Treasury, economists consulted by Daily Maverick, and the OECD itself now converge around a single diagnosis. As economist Dawie Roodt put it: 'We know what needs to be done, but the politics always get in the way.' Can we grow below water? The OECD projects just 1.5% GDP growth in 2025 – a figure too weak to reduce unemployment, too shallow to sustain revenue and far below peer economies. India has averaged above 6% for the past decade. South Africa, by contrast, is now 0.7% smaller than it was in 2019 in real per capita terms. The Kearney Global Economic Outlook, published in May 2025, places South Africa in the 'low potential' quadrant, citing sluggish domestic reform momentum, capital flight risk and tepid FDI inflows despite global capital rotation. Public investment has collapsed – down 26% since 2016. 'It's been a lost decade for growth… there's a risk this becomes the new normal,' says Izak Odendaal, chief investment strategist at Old Mutual Wealth. Debt dominates our fiscal table Debt-to-GDP stands at 77.4%. Crucially, interest payments now absorb 5.2% of GDP, outpacing allocations to school infrastructure and police services combined, and noted as 'fiscally unsustainable' in the OECD's report. 'The electricity reform is the clearest example of a reform that is actually working… But now it's time for phase two: fixing the grid, getting the transmission constraints resolved and ensuring that independent power producers can come fully online,' says Odendaal. Treasury acknowledges the bind, but has yet to commit to a fiscal anchor. Options include an expenditure ceiling, a primary surplus path, or a hard cap linked to GDP, but no model has been confirmed, which means no clear roadmap to solving our economic crisis. 'We're waiting for a crisis,' says Roodt. 'Just like with load shedding.' Electricity retrospectively a core constraint Load shedding cut 1.5 percentage points from GDP in 2023. The number of blackout days has dropped – from 289 in 2023 to just 69 so far in 2024 – but fragility remains. Grid access for IPPs is constrained, Eskom's debt is unresolved, and municipal billing failures compound the risk, particularly in metros where Eskom's non-payment battles have delayed revenue and planning cautions that while the load-shedding reprieve has helped sentiment, 'corporate boards remain wary. Private investment in energy hinges on regulatory transparency and a credible path to grid upgrades.''Restoring energy security remains essential to unlocking growth,' Deputy Finance Minister Ashor Sarupen said at the OECD report launch. The OECD highlights overdue steps: transmission unbundling, tariff reform, and substation investment. Sarupen confirmed alignment with the Just Energy Transition Investment Plan (JET-IP) but warned of slow procurement cycles. Good plans, but slow hands The OECD praises Operation Vulindlela's design: 74% of phase one reforms are complete or on track. But execution lags in core infrastructure – rail, water, ports. Delays in freight rail liberalisation and digital spectrum rollout are holding back productivity. 'We're shifting water and electricity to utility models,' said Sarupen. Yet, as Odendaal notes, 'There's a danger in mistaking plans for outcomes.' The OECD calls for binding timelines, stronger intergovernmental coordination, and clarity on cost-recovery mechanisms for state internal sentiment tracking finds infrastructure policy scepticism remains high among surveyed CFOs and investors, despite recognition of Operation Vulindlela's design integrity. Jobs, grants, fiscal issues Unemployment is 32.6%. Among youth, it's over 60%. Over half of South Africans now rely on social grants. 'It's not just unemployment,' Roodt observes. 'Absolute poverty is rising too.' The OECD warns that job creation 'remains insufficient to absorb new entrants,' and that the labour market is structurally exclusionary. South Africa's employment-to-population ratio is far below its emerging market peers – not a temporary downturn, but a reflection of deep systemic failure. Informal work remains the fallback for millions, yet remains under-supported and outside the tax, training, and credit warns that 'continued joblessness and poor training-to-work transitions are not just economic drags, they risk becoming political liabilities.' Odendaal highlights the risk to institutional stability: 'The legitimacy of the entire system is increasingly under pressure. If a third of your population can't find a job and more than half are on grants, what kind of social contract is that?' He adds: 'We risk ending up with a situation where unemployment isn't just a growth or budget issue anymore – it starts undermining trust in public institutions.' Treasury points to youth employment schemes, such as the Presidential Employment Stimulus and SETA-linked training. But uptake is low, and outcomes are poorly tracked, with the subsequent risk being these programmes becoming little more than a political goodwill gesture. Education and the fragile foundation The OECD report dedicates an entire chapter to education. South Africa performs below comparable middle-income countries in foundational literacy and numeracy. Grade 4 reading levels are among the lowest globally, as shown in the PIRLS (Progress in International Reading Literacy Study). Without basic education reform, the OECD warns, 'skills shortages will persist, and inequality will deepen.' Fixing the early learning pipeline is no longer optional. What climate transition? The carbon tax rate is R236 per tonne, but exemptions currently shield around 95% of emissions, including Eskom, which remains exempt until 2026. The OECD argues this undermines pricing signals and fiscal potential. Sarupen says allowances will be phased down: 'From 2026, exemptions will narrow. We're preparing the industry for a just transition.' Odendaal is less sanguine: 'The real political heat comes when those exemptions fall away.' The OECD warns that without enforcement, the carbon tax becomes symbolic. With enforcement, it becomes politically explosive. Monetary policy highlighting credibility The OECD recommends tightening the SARB's inflation band from 3-6% to 3-5%, and eventually to 2-4%. Roodt supports the move: 'The Reserve Bank already sees 3% as the midpoint. It's the right signal.' The global trend is toward narrower bands: Brazil and India target 4%; the US Fed anchors at 2%. South Africa's wide range weakens predictability. Disinflation and declining oil prices have opened a window, but anchoring expectations requires follow-through and communication. Broken municipalities Only 15% of municipalities received clean audits, according to the 2023/24 Auditor-General report. Treasury's municipal formula is under review, and Section 139 interventions have risen, but with limited impact. Odendaal is blunt: 'Local government isn't just failing – it's actively deterring investment.' The OECD agrees: municipal dysfunction is a top-tier risk to housing, infrastructure and basic services. SOEs face parallel crises. Eskom and Transnet's bailouts continue, but performance lags. The OECD calls for hard budget constraints, better board vetting and enforced turnaround all datasets – from the OECD survey to bank confidence trackers and global macro outlooks – the signals are converging. South Africa's structural constraints are no longer abstract policy concerns. They are now active barriers to private investment, job creation and political in the private sector, hope is cautious. Mojapelo notes that while sentiment indicators remain weak, 'credible movement on energy, logistics and fiscal clarity could shift the dial – but the window is narrowing.' It's reform or relapse This is not a technical debate, but an economically existential one. The OECD warns that without implementation credibility, South Africa risks falling into a low-growth trap that becomes ever more permanent.'Growth must be inclusive, climate-aligned and reform-led,' Sarupen said.
Malaysia Sun
a day ago
- Malaysia Sun
Brunei seasoning market attracts Indian FDI
BANDAR SERI BEGAWAN, June 5 (Xinhua) -- India is strengthening cooperation with Brunei in the food seasoning market, according to a local media report. Atoll Agro & Cold Storage Sdn Bhd, a foreign direct investment (FDI) initiative led by an Indian entrepreneur, aims to reduce Brunei's reliance on imports and contribute to regional exports, news website Biz Brunei reported on Tuesday. The project has reached a production capacity of 2 tons per day, and further investment and market expansion in Brunei will be pursued in the future, the report said. Rajendrasinh A. Jadav, technical director of Atoll Group, said food security has become very important for all countries, and Brunei also wants to ensure self-sufficiency within the country to meet the population's needs. "We are starting with seven products, including tomato ketchup, chili sauce, soy sauce, Korean sauce, and some premium products," he said. Brunei is located in the northern part of Borneo Island in Southeast Asia and is rich in oil and natural gas resources. In recent years, the Brunei government has actively attracted FDI to promote economic diversification, with agriculture, food, digital economy, and tourism emerging as key development sectors.
Fibre2Fashion
a day ago
- Fibre2Fashion
Foreign investment in Vietnam up 51.1% YoY in Jan-May 2024
Foreign direct investment (FDI) into Vietnam in the first five months this year saw a significant surge, with total registered capital reaching nearly $18.4 billion—up by 51.1 per cent year on year (YoY). The sharp rise includes newly registered capital, adjustments to existing projects and capital contributions or share purchases by foreign investors, according to the Foreign Investment Agency under the Ministry of Planning and Investment. FDI into Vietnam in January-May 2025 rose significantly, with total registered capital reaching $18.4 billionâ€'up by 51.1 per cent YoY. The number of newly registered projects was 1,549â€'up by 14.1 per cent YoY, totalling over $7.02 billion in capital. The manufacturing and processing sector led in attracting FDI, drawing in $10.39 billion, or 56.5 per cent of total registered investment. The number of newly registered projects during the five months was 1,549—up by 14.1 per cent YoY, totalling over $7.02 billion in capital. Six hundred and seventy two projects adjusted capital upward, with an additional $8.51 billion—3.4 times higher than the same period last year. The number of share purchases and capital contributions was 1,358, totalling $2.85 billion, nearly 1.8 times higher YoY, a domestic news agency reported. The manufacturing and processing sector led in attracting FDI, drawing in $10.39 billion, or 56.5 per cent of total registered investment during the period, followed by real estate with $4.99 billion, more than double the amount in the same period last year. Singapore maintained its top position with over $4.38 billion in FDI—up by 30.1 per cent YoY. South Korea followed with $2.93 billion—2.47 times higher YoY. Other major investors included China, Japan and Malaysia. Hanoi attracted the most FDI among localities, registering $3.2 billion—up by nearly 2.8 times, followed by Bac Ninh and Ho Chi Minh City, with both seeing investments surge by over 2.5 times compared to the same period last year. Meanwhile, outbound investment by Vietnamese businesses also increased significantly, with $317.3 million invested in overseas ventures—over 2.3 times the amount in the same period last year. Key destinations included Laos, Indonesia and the Philippines. Fibre2Fashion News Desk (DS)
