BCCC Investor Confidence Survey 2004

1. BCCC 2004 Investor Survey BCCC Investor Confidence Survey 2004 presentation to Trade & Industry Portfolio Committee PARLIAMENT OF SOUTH AFRICA October 2004 Bilateral Chamber Consultative Committee

2. Who is BCCC? Bilateral Chamber Consultative Committee • 21 private sector business groupings • representing some 3,000 companies • 20 years in SA as an informal group BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

3. Broader Objectives BCCC debates and networks on the contribution made by its members to the following issues: • Growth in South African economy & market place • Creation of jobs, skills training and empowerment • Two- way trade opportunities between countries • Sharing of information and technologies BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

4. The following chambers or associations American Angolan Australian Austrian Belgian British Canadian Central&East. European Danish Finnish French German Indian Irish Israeli Italian Japanase Netherlands Polish Swedish Swiss Who is involved in BCCC? BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

5. Functions of BCCC • joint business networking • surveys of attitudes & needs • representation on common issues • co-operation on projects with SA BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

6. Committee & Secretariat • secretariat: currently British Chamber • chair: currently German Chamber • meetings: Johannesburg BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

7. Background to Investor Survey • European & Scandinavian profile • Employees represented: +- 120,000 • Similar previous survey in 2002 • Surveys only in part comparable • Americans declined this year BCCC 2004 Investor Survey Bilateral Chamber Consultative Committee

8. Recall • Chambers participating: German, British, Italian, French, Netherlands, Finnish, Swedish • Total companies reporting: 252 • Breakdown of these companies: 46% small ( 1- 50) 35% med (50 – 299) 19% large (300 +) BCCC Investor 2004 Survey Bilateral Chamber Consultative Committee

9. Comments on Recall (S) The survey response came from 22% of total base of group mentioned • Similar to other surveys, this is no better and no worse • The highest % response came from the German Chamber • Survey format based on German model used for 10 years • The questionnaire was sent out in May 2004 • Questions answered in climate prevailing June/July 2004 BCCC Investor 2004 Survey Bilateral Chamber Consultative Committee

10. SA economic climate - 2004 Respondents found the SA economy significantly better • 78% - satisfactory to excellent • 22% -mediocre to bad In 2002 - 31% good to excellent - 69% flat or variable BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

11. Prospects ahead - 2004 More confident in economy & country in general • 95% - economy same to better • 5% - expect it to be worse In 2002 - 46% - will improve - 54% will stay the same BCCC Investor 2004 Survey Bilateral Chamber Consultative Committee

12. Confidence in SA government Significant increase in confidence • 53% had increased confidence In 2002 - 32% had increased confidence BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

13. Investment climate - 2004 • 60% said investment in SA would be increased • 47% said that they had created new jobs in SA In 2002 - 72% said they were increasing investment ( and probably did subsequently) N.B. The fall is probably due to the general increased “globalisation” of business BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

14. Disinvestment possibilities - 2004 • 14% want to disinvest from SA • 86% said they would not disinvest • 7% wanted to re-locate in Southern Africa • 10% wanted to re-locate elsewhere in SA In 2002 - 3% said they would disinvest, 97% said not None wished to move elsewhere in Southern Africa BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

15. Confidence in a future South Africa Significant concern was expressed on the future of: • corruption - 70% were pessimistic or worse • competent civil service - 63% as above • flexible labour regulations – 61% as above • crime and violence – 60% as above In 2002 - no comparable questions BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

16. Confidence in a future South Africa Relative confidence was expressed on the future of: • market driven economy - 70% were confident or better • balanced taxation – 53% as above • democracy – 46% as above • political leadership– 34% as above • equal opportunities for foreign business – 32% as above In 2002 - no comparable questions BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

17. Confidence in basic economic feature There was significant confidence in the following features: • reasonable ROI – 66% confident or better • cheap & reliable electricity – 61% as above • competitive marketplace – 57% as above In 2002 - no comparable questions BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

18. Confidence in basic economic features Relative ambivalence was felt for the following features: (don’t know = lack of confidence) • accountability of unions – 86% very pessimistic or “don’t know” • higher productivity of workforce – 73% as above • Incentive programmes for investment – 62% as above • Free transfer of funds out of SA – 62% as above • Maintaining existing transport infrastructure – 58% as above In 2002 - no comparable questions BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

19. Living standards in SA Given a list of issues, respondents saw the following as very important to essential: • low levels of crime – 97% • absence of political & criminal violence - 97% • maintenance of educational standards – 92% • protection of the environment – 85% • absence of air pollution – 82% BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

20. Important value issues to business OPTIMISM was expressed on the following issues: • reasonable ROI – 92% very important to essential • cheap & reliable electricity – 66% as above • competitive marketplace – 85% as above BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

21. Important value issues to business PESSIMISM was expressed on the following issues: • higher productivity of workforce – 84% very important to essential • maintaining existing transport infrastructure – 83% as above • incentive programmes for investment – 71% as above • free transfer of funds out of SA – 70% as above • accountability of unions – 65% as above BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

22. Recent events impacting on business • The following events had a negative impact on business: • volatility of the exchange rate – 73% • Zimbabwe – 59% In 2002 Zimbabwe – 48% BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

23. Black Economic Empowerment • From the survey results, it is clear that respondents have embraced government’s transformation agenda. However, the purpose of this BCCC survey has been to identify problem areas for business to tackle. • In this context, paramount appears to be the problem that respondents are not convinced that current government measures will achieve the right kind of BEE outcomes. Bilateral Chamber Consultative Committee

24. Black Economic Empowerment employment equity/skills development • 90% are considering, in the process of, or have implemented measures to increase representativity in the workplace black economic empowerment • 80% are considering, in the process of, or have implemented BEE measures of various types BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

25. Black Economic Empowerment Respondents were given a list of “challenges” with regard to BEE and asked to rate the most difficult to achieve, based on the particular circumstances in which they operate. They were also asked for comments. • 55% found direct empowerment, i.e. ownership, management and control, the most difficult to achieve for any number of reasons • 32% found human resources matters, i.e skills development and workplace/employee equity the most difficult to achieve for any number of reasons • 13% found indirect empowerment, I.e procurement, SMME work, social development, community support, the least difficult. BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

26. Black Economic Empowerment Respondents were also asked to rate the impact of various recent developments in South Africa upon their businesses, one of which was BEE • 51% confirmed that BEE legislation had no effect • 37% said a negative to very negative effect • 12% said a positive to very positive effect BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

27. Black Economic Empowerment Overall, what should government note from the comments column? (non-disclosure of comments and individual names was a condition) • There appears more scope for government to better achieve its stated BEE objectives in the broad based areas of employment equity and indirect empowerment, in which areas business can also better achieve such partnerships • Government does not appear to be listening to business concerns that current directions taken in BEE legislation will result in BEE being insufficiently broad based BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

28. The comments column indicates that government is not hearing business on the need to remove any impressions of ambivalence on the part of government towards the pandemic. Comments also indicate that government must communicate urgently that it has policies and measures in place to counter its effects. HIV/Aids Bilateral Chamber Consultative Committee

29. HIV/Aids • Nearly half ( 48%) indicated that HIV/Aids had had some sort of impact upon their business. This “effect” was categorised as moderate to very little in 67% of these cases. • Nearly half again (48%) had implemented some sort of internal policy dealing with the effects of HIV/Aids but the majority of those respondents (69%) said that this was having very little to a moderate impact on their businesses. (this was a business to business survey not a medical questionnaire directed to qualified medical staff) BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

30. HIV/Aids In answer to the question how do you rate the government’s policy regarding HIV/Aids? 79% : bad to very bad BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee

31. BCCC Investor Survey- 2004 Bilateral Chamber Consultative Committee thanks the Trade & Industry Portfolio Committee for the opportunity to present these facts Bilateral Chamber Consultative Committee