Companies, individuals have more freedom.

PRETORIA - Treasury has announced several measures designed to reduce the administrative burden of exchange controls. The limits of some exchange controls have also been relaxed, allowing individuals and business more freedom to put money overseas.

The Mini-Budget Statement says that South Africa continues to welcome foreign direct investment and encourages local firms that wish to diversify offshore from a domestic base .

One of the proposed reforms is to increase the amount a company may invest offshore tenfold, from the current limit of R50m to R500m. For individuals, the foreign capital allowance has been increased from R2m to R4m. The single discretionary allowance has been increased from R500 000 to R750 000.

The following relaxations are proposed for business transactions:

• SA companies will be allowed to invest in Southern African Development Community (SADC) member countries through offshore intermediaries. The relaxation excludes investment in member states that are part of the Common Monetary Area.
• Increasing the current R50m limit for company applications to undertake outward investment to R500m. Applications below this limit will be processed by authorised dealers, subject to all existing criteria and reporting obligations.
• Removing the 180-day rule requiring companies to convert their foreign exchange into rand. However, South African companies are still required to repatriate export proceeds to South Africa. 
• Doing away with the R250 000 limit on advance payments for imports.
• Allowing South African companies to open foreign bank accounts for permissible purposes without prior approval, subject to reporting obligations.
• Replacing the current paper-based monitoring system of exports (Form F178) with a more efficient electronic system in due course.

Treasury is also trying to boost foreign direct investment by relaxing borrowing restrictions for non-residents. It has abolished a rule which restricts borrowing for foreign direct investment by non-residents to a ratio of 3:1. According to this rule, non-residents must invest R1 for every R3 borrowed locally. After it's abolishment, they will be able to finance 100% of their investment. However, the relaxation does not apply to emigrants, the acquisition of residential properties by non-residents, or any other financial transactions - such as portfolio investments, securities lending, hedging or repurchase agreements - by non residents. For these cases, the existing finance ratio of 1:1 still applies.

More announcements on these reforms will be provided in due course by the Reserve Bank, whose task is to police exchange controls.

Write to Julius Cobbett: julius@moneyweb.co.za

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Its still useless! Its the paperwork and delays, not the amount! At least drop EXCON for individuals. by Tuscanite on October 27 2009, 14:33 Find this comment inappropriate? Report it

free my money! Why is it that I've been trying (unsuccessfully) for 2 weeks to get a tax clearance certificate from SARS so that I can send R100K of MY money overseas???? I've had to stand in a queue which is about 300 metres long in PE (in the cold & wind) . .more outside the main "Allied" tax headquarters for hours on end on 3 different days, to no avail. In reaction, I phoned the Pta headoffice (call centre) to protest :- their response was a joke, to say the least. On the one day that I did manage to get INSIDE the SARS building, I was given a red slip with a number on it and told to join yet another queue (that looked as if it would last at least 2 hours) - needless to say I gave up and posted the forms - however I'm still waiting for a response... and I'm a taxpayer "in good standing" !!! And it's MY money that I want to invest offshore. Is this what freedom is all about???????? . .less by Dylan Macdonald on October 27 2009, 19:06 Find this comment inappropriate? Report it

The knuckle heads. Small business is still hammered. Until I can open up a paypal account for SELLING on the internet and have a simple safe system to send goods overseas as per Australia and others, jobs willl not be created and RSA remain captured by the tribal mentality of the ANC. Grow up guys. . .more The people want to do business. What are they scared off? The remaining tiny number of wealthy Brandon Huntleys? . .less by Free the Rand on October 27 2009, 19:15 Find this comment inappropriate? Report it

The treasury hates small entrepreneurs Why eles would they seperate small traders from their gobal market with a wall of red tape. Investment protects wealth. Small business trading globally creates wealth. Our Bureacrats want to sit thru a global conectivity revolution that will . .more enforce non racial enterprise values on South Africa. Why does the treasury persist with the ideas of jobs for race groups when the trend is to shed jobs in favour of independent activity responding to the question: what can I give the world community?. . .less by Free the Rest on October 28 2009, 08:23 Find this comment inappropriate? Report it

@ Dylan Why not book a cheapie flight to London,- buy as many Trav. cheques as you require and take them over yourself. by Pioneer on October 28 2009, 11:01 Find this comment inappropriate? Report it

did not move quickley the previous gov should have relaxed the exchange control laws before they gave the country to the clowns. by dutchie on October 28 2009, 11:19 Find this comment inappropriate? Report it

Wouldn't it be interesting..... .....to know how many government ministers / members of parliament are moving their money (now up to 4m) overseas. That would provide a pretty good insight into our future. by Cynic on October 28 2009, 15:15 Find this comment inappropriate? Report it

Exchange control If government was really interested in eliminating exchange control and the negative impact on jobs and the economy it would open up a permanent website for interaction and communication with the public. This would enable those with little knowledge . .more or experience of business to get feedback as to how destructive to the economy Excon really is. Its mere existence is self defeating. The problem with a Berlin wall is it makes the other side so much greener. . .less by Rob on October 28 2009, 22:31 Find this comment inappropriate? Report it

Exchange control Rob you can interact with the SARB Exchange Control Department at the following email SARBEXCON@resbank.co.za by JJ on October 29 2009, 15:41 Find this comment inappropriate? Report it

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