Certain exchange control measures relaxed October 28, 2009
By Donwald Pressly
In an effort to reduce the cost of doing business in South Africa, the finance minister yesterday announced the relaxation of certain exchange control measures. More wide-ranging reforms are set to be revealed in the budget next February.
Under the measures announced yesterday by Pravin Gordhan, the R50 million limit for company applications to undertake outward investment will increase to R500m, while a R250 000 limit on advance payment for imports will be scrapped.
The rule requiring firms to convert their foreign exchange into rand within ' days will be removed, although local companies are still required to repatriate their export proceeds. South African companies will also be allowed to open foreign bank accounts for permissible purposes without prior approval but subject to reporting obligations.
A new "efficient" electronic system to monitor exports will replace the paper-based one.
In addition the foreign capital allowance for resident individuals has been increased from R2m to R4m and the single discretionary allowance from R500 000 to R750 000.
Treasury director-general Lesetja Kganyago reported in the medium-term budget policy statement that South Africa "continues to welcome foreign direct investment and encourages local firms that wish to diversify offshore from a domestic base".
Key proposals in modernising the investment framework will be announced in next February's budget.
The reforms announced yesterday were partly to promote regional integration.
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