Sure Kamhunga

Companies Editor

An umbrella body representing more than 900 large commercial and industrial property owners added its voice yesterday to criticism of the government’s draft expropriation law, which it said could damage efforts to attract domestic and foreign investment.

Commercial property association Sapoa said that while it supported land reforms to redress past injustices, it did not believe the government was aware of the negative consequences of the draft bill on investment and the country's image.

'Sapoa supports the land reform process but has serious concerns about the proposed amendments in the latest draft that has been circulated,' Sapoa CE Neil Gopal said yesterday.

'International investors are concerned about the way in which the bill is drafted, and in particular about the definition of property and compensation for expropriated property, which needs further clarity.'

He said SA needed long-term job-creating investment to deal with the unemployment crisis, and the last thing the country needed was to make international investors nervous with opaque legislation.

Gopal said the definition of property in the present draft bill could include movable property or rights in property.

Typically, such a definition would imply that the government would have powers to 'expropriate' companies or shares in listed companies.

'We need clarification on this because our members are concerned about their investments.'

The bill seeks to allow for the expropriation in the public interest rather than for public purposes. Experts say if this were approved it would constrain the courts in their ability to rule on fair compensation.

The agricultural sector has expressed concern about the bill, saying it would hurt investment in farming and affect food production at a time when SA is grappling with high food prices.

Alarmists have gone as far as to warn of a Zimbabwe-style land grab, referring to Harare's disastrous land reform that chased productive commercial farmers away from their properties and brought food shortages to that country.

The Freedom Front Plus also recently said it was not happy with the draft bill, which it said would undermine property rights and scare off foreign investors.

Gopal said the constitution provided protection for land and property owners, something the draft bill seemed to ignore and should respect.

'The constitution is, after all, the dominant legislation when it comes to expropriation and any secondary legislation must yield to the constitution.

'Critically, we think sections 25 and 33 of the constitution make the introduction of a separate expropriation policy superfluous.

'These sections already define the concept of public interest and enshrine the right for everyone to have recourse through the Promotion of Administrative Justice Act.

'The constitution says compensation must be just and equitable and reflect an equitable balance between the public interest and the affected parties, taking due consideration of the market value of the property.

'We urge the public works department to ensure the bill reflects the constitution,' he said.

Gopal said another sticking point in the bill was the lack of independent recourse.

Other organisations that have weighed in with their concerns include AfriForum, the FW de Klerk Foundation, Agri-SA, Transvaal Agricultural Union SA, Solidarity, the Agricultural Employers Organisation, the National Tax Payers Union and the Democratic Alliance.

Source: Business Day