10TH BRICS SUMMIT

A Review of South Africa’s Trade and

Investment Relationship with BRIC
3
Foreword - Deloitte
BRICS has become the global ranking
standard for the first tier of emerging
markets. What began as a loose grouping
of sizeable developing countries with
robust long-term growth trajectories is now
increasingly becoming a geo-economic
grouping of states seeking common
economic interests. Its loose alliance is
becoming more coherent in the face of
current global trade tensions and anti-
globalisation sentiments.
BRICS is an emerging bloc that seeks to
represent the interests of the developing
world. We will hear at the Johannesburg
Summit the need for a restructuring of the
global economic architecture, one that
takes into greater cognisance the needs
of the developing world. This is especially
true when considering the potential
disruption in global trade resulting from
rising protectionist sentiments. The opening
of the global economy and the promotion
of liberalised trade have underpinned
emerging economies’ growth. Many
emerging countries stand to lose a lot if
globalisation is reversed.
The BRICS are becoming more
institutionalised. The alliance is both
“deepening” as well as “widening” hence
the inclusion of other emerging countries
that have been invited to attend the
Johannesburg Summit. As a common
interest centred around the management
of trade and investment flows emerges,
4
the BRICS will increasingly serve as a
counterweight to established traditional Dr Martyn Davies
interests. Managing Director,
Emerging Markets &
The world is indeed rapidly changing, Africa
creating both arising challenges and new Deloitte Africa
opportunities for developing countries and
the broader Africa region alike. How these
are managed and grasped will shape our
respective economic futures. Good political
governance and management must always Nazeer Essop
apply, and this will determine a country’s Public Sector Industry
economic success. Leader
Deloitte Africa
In support of the Department of Trade
& Industry, Deloitte is proud to be
the Knowledge Partner of the BRICS
Business Forum at this 10th BRICS
Summit in Johannesburg. We look forward
to supporting BRICS companies and
governments in their endeavours to expand
their relationships with each other into the
future.
Table of Contents

Key Highlights of South 06

Africa’s Trade and Investment
Relationship with BRIC
Since 2001

Key Agreements Supporting 07

Trade and Investment Between
South Africa and BRIC

Trade Developments 08

Investment Developments 18

Key Takeouts on South Africa’s 32

Trade and Investment Relations
with BRIC Since 2001

Doing Business in BRICS 33

Key Highlights of
South Africa’s Trade
and Investment Rela-
tionship with BRIC
Since 2001
• Formation of the New Development
Bank (NDB): In late March 2013, during
the 5th BRICS summit in Durban, South
Africa, the BRICS member countries
agreed to create a global financial insti-
tution which they intended to rival the
western-dominated IMF and World Bank.
After the summit, the BRICS stated that
they planned to finalise the arrangements
for this New Development Bank by 2014.
Then in 2014 at the BRICS 6th summit
in Fortaleza, Brazil, the member states
signed the long-anticipated document
to create the US$100bn NDB (formerly
known as the “BRICS Development
Bank”) and a reserve currency pool (the
BRICS Contingent Reserve Arrangement)
worth over another US$100bn. The
member states also signed documents on
cooperation between BRICS export credit
agencies and an agreement of coopera-
tion on innovation. Finally the 7th BRICS
summit in July 2015 marked the entry
into force of the Agreement on the New
Development Bank and in 2016 the bank
opened its Headquarters in Shanghai.
• Formation of the BRICS Contingent
Reserve Arrangement (CRA): The CRA
was established in 2015 by the BRICS
countries as a framework for providing
protection against global liquidity
pressures. The legal basis was formed
by the Treaty for the Establishment of a
6
BRICS Contingent Reserve Arrangement,
signed at Fortaleza, Brazil on 15 July
2014. With its inaugural meetings of the
BRICS CRA Governing Council and
Standing Committee, held on September
4, 2014, in Ankara, Turkey it entered
into force upon ratification by all BRICS
states, announced at the 7th BRICS
summit in July 2015. Once the CRA was
established, South Africa contributed
US$5bn, China US$40bn and India,
Brazil and Russia US$18bn each.
• South Africa receives 2nd BRICS
• South Africa receives 1 BRICS
st
Development Bank loan: In the 1st
year of operation (2016), the NDB
Board of Directors approved seven
projects in all member states of the
bank involving financial assistance of
over US$1.5bn. Out of this South Africa
received US$180m as a sovereign
guaranteed project loan to ESKOM for a
renewable energy transmission project.
On completion the project is expected to
increase ESKOM’s capacity by 670 MW
avoiding 1.3m tonnes in CO2 emissions
per year.
• South Africa launches BRICS first
regional office: In 2017 the NDB,
committed US$1.5bn over 18 months
towards South Africa’s development
projects as it launched the groups first
regional office in Sandton, Johannesburg.
The regional office is known as the Africa
Regional Centre and it is expected to
be the face of the NDB on the continent
and aid with identifying key infrastructure
projects for the country.
Development Bank loan: In May 2018
Finance Minister Nhlanhla Nene was
elected as chairperson of the board
of governors of the New Development
Bank (NDB). Upon his election the
board approved a US$200m loan to the
South African government. The loan was
approved to finance the Durban container
terminal berth reconstruction project. The
reconstruction project is aimed at helping
the transport parastatal Transnet to
enhance capacity of its port in Durban.
Key Agreements Supporting Trade and
Investment Between South Africa and BRIC

Counterparty Agreements Main Objective/Terms

The IBSA Dialogue Forum aims to promote South-South cooperation and increasing the trade
opportunities between India, South Africa and Brazil, as well as facilitate trilateral exchange of
IBSA
information, technologies and skills to complement each others strengths. It also aims to explore
Brazil MERCOSUR avenues to promote cooperation in broad range of areas, which include agriculture, climate change,
Preferential Trade culture, defence, education, energy, health, information society, science and technology, social
Agreement (PTA) development, trade and investment, tourism and transport.
Tariff reductions on about 1 000 product lines on each side of the border.

Generalised System of Specified industrial and agricultural products from South Africa qualify for preferential market
Russia
Preferences (GSP) access.

(See details under Brazil)

IBSA
India SACU and India are in the process of exchanging tariff requests but once ratified the agreement
India-SACU
will entail tariff reductions on selected goods

MOU with People’s

The Memorandum of Understanding between the Government of the Republic of South Africa and
Republic of China
the Government of the People’s Republic of China and the CSPA serves to promote bilateral trade
and to support SA
China and economic co-operation between the two countries. The MOU and CSPA China aim to promote
and Comprehensive
industrialisation and value-added South African exports to China and increased inward investment
Strategic Partnership
in projects for beneficiation.
Agreement (CSPA)

The bank aims to contribute to development plans established nationally through projects that
are socially, environmentally and economically sustainable. Taking this into account, the main
objectives of the NDB can be summarised as follows:
New
• Promote infrastructure and sustainable development projects with a significant development
Development
BRICS impact in member countries.
Bank
• Establish an extensive network of global partnerships with other multilateral development
institutions and national development banks.
• Build a balanced project portfolio giving proper respect to their geographic location, financing
requirements and other factors.

7
Trade Developments
Trade Developments Figure 1. BRICS Share of Global Trade

Between BRICS and

the Rest of the World
19%
18% 18% 18%
• Over the last 15 years, BRICS has 15% 15%
16%
15%
17%
15%
17%
16% 16% 16%
15%
14%
emerged as a key player in global 12%
13%
12%
13%

Share (%)
11% 10% 11%
trade. Between 2001 and 2015, BRICS 9%
10%
8%
9% 10%
8%
contribution to global exports and imports 7% 7%

increased from 8% to 18% and 7% to

15%, respectively.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

• BRICS overall trade with the world BRICS Share of Global Exports BRICS Share of Global Imports

increased more than sixfold during the pe-

riod under review, peaking at US$6.5tr in
2014. Throughout these sixteen years, the
group recorded a trade surplus with the
rest of the world, which peaked at about
US$640bn in 2015. Figure 2. Total BRICS Trade with the Rest of World

• While BRICS trade with the rest of the

world showed a strong upwards trend
between 2001 and 2016, the group’s trade 4
3,5
suffered two small setbacks following 3,2
3,4
3,1 3,1 3,0 3,1
the global financial crisis in 2008 and the 3 2,8 3,0 2,9
US$ (trillion)

2,5 2,5
drop in commodity prices in 2014. China’s 2,4
2,2
2,0 1,9
global trade dominance cushioned BRICS 2 1,9
1,6 1,6 1,6
overall exposure to these two major 1,3 1,3
1,0 1,1
economic shocks. 1 0,70,6 0,9
0,5 0,4 0,6 0,5

Source: UNCTAD, 2018 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

BRICS Total Exports to the World BRICS Total Imports to the World

9
Trade Developments Figure 3. Member State Share of Total BRICS Exports to the World

Between BRICS and

the Rest of the World 4

• Between 2001 and 2016, BRICS total

0.09
0.10 0.23
0.24 0.32
0.10 0.34 0.50 0.07
0.11 0.24 0.53 2.3
trade with the rest of the world grew 3 0.26 0.29 2.2 0.19
0.26
0.30 0.52 0.34 0.07
0.52 2.0 2.3 0.19
1.9 0.26

US$ (trillion)
4.5-fold. South Africa, which marginally 0.08
0.20
0.29
2.1
0.07
0.20 0.22
outperformed Brazil but trailed Russia, 2 0.06
0.18
0.47
0.40
1.6
1.4 0.05
0.16
tripled its overall trade. Trade of these 0.05
0.15
0.35
1.2
0.15
0.18
0.30
0.14 1.2
three commodity-exporters grew slower 0.05
0.12
0.12
0.30
1.0
1 0.10
than the group’s average. 0.03
0.04
0.10
0.08
0.24
0.8
0.07 0.18
0.02 0.06 0.6
0.03 0.05
0.06 0.13
0.04 0.06 0.4
0.10 0.11
0.3 0.3

• South Africa, Brazil and Russia’s below- 2001 2004 2007 2010 2013 2016

average trade growth can be attributed to

overdependence on commodity exports, South Africa Brazil India Russia China

keeping their largely undiversified exports

highly vulnerable to external shocks.

• Throughout the years, South Africa’s

contribution to the group’s total trade has
Figure 4. Member State Share of Total BRICS Imports from the World
been continually the smallest in terms of
both exports and imports.
4

• China has been consistently the largest

contributor to the group’s total. The Asian 3 0.10
0.10
0.22
0.10
0.23
0.10 0.23 0.49 0.46
powerhouse contributed on average 60% 0.23
0.46
0.31
0.46
0.31
1.7
0.32
1.8
0.29
2.0
0.08
1.7 0.17
to exports and 53% to imports of BRICS 0.39 0.07
US$ (trillion)

0.08 0.18 0.14

0.18 1.7 0.36
2 0.35 0.18
throughout the review period. The growth 0.09
0.17
0.32
0.23
1.4
1.6

0.27 0.06
0.08
of its overall contribution also increased 0.12
0.22
1.1 0.33
0.27
0.17
0.07 0.20
0.09 1.0 1.0
more rapidly compared to that of the rest 1 0.06
0.07
0.18
0.16
0.05 0.14 0.8
0.06 0.13
of the group. 0.03 0.03
0.03
0.05
0.10
0.10
0.7
0.05 0.05 0.07 0.6
0.05 0.06 0.08
0.05 0.06 0.4
0.2 0.3

2001 2004 2007 2010 2013 2016

Source: UNCTAD, 2018

South Africa Brazil India Russia China

10
Trade Developments Figure 5. Total Trade between South Africa and BRIC

Between South Africa

and BRIC 25
20

US$ (billion)
• Since the turn of the century, South Africa 15
recorded a trade deficit with the rest of 10

BRICS. Its trade deficit increased eight- 5

fold between 2001 and 2016, with the

largest deficit recorded at US$10.5bn in
SA Exports to BRIC SA Imports to BRIC
2015.

• South African’s annual exports to BRICS Figure 6. SA Export Composition Figure 7. SA Imports Composition
peaked at about US$17bn in 2011 and with BRICS* with BRICS*
thereafter fell to US$10.6bn. The drop in
exports may be attributed to the sharp 2016 52% 18% 3% 21% 2016 5% 10% 17% 42% 16%
decline in metal prices, rising production
2015 47% 24% 4% 18% 2015 7% 10% 17% 45% 15%
costs in South Africa’s mining sector and
the lacklustre performance of the global 2014 57% 17% 5% 15% 2014 8% 10% 16% 42% 16%

economy. 2013 60% 2013 9% 9% 15% 42% 16%

16% 5% 13%

2012 57% 21% 5% 11% 2012 7% 9% 16% 41% 17%

• During the commodity price downswing,
2011 57% 20% 5% 13% 2011 7% 9% 16% 41% 18%
the South African rand weakened, leading
to a decline in imports. The country’s 2010 52% 20% 6% 16% 2010 6% 9% 16% 41% 20%

imports from the rest of BRICS fell from 2009 49% 18% 8% 21% 2009 8% 9% 15% 39% 19%
its peak of US$23bn in 2013 to about
2008 44% 11% 15% 22% 2008 8% 9% 17% 41% 16%
US$18bn in 2016.
2007 30% 28% 13% 28% 8% 2007 8% 6% 17% 39% 18%

• Despite initiatives to reduce the dominance

2006 34% 14% 13% 28% 8% 2006 6% 19% 37% 22%

of commodities in its BRICS export 2005 27% 8% 15% 29% 14% 2005 7% 17% 37% 23%

basket, South Africa’s raw material exports

2004 27% 4% 21% 32% 10% 2004 8% 17% 33% 24%
increased from about 34% to 70% of total
2003 27% 6% 16% 36% 10% 2003 8% 18% 32% 22%
exports to the group between 2001 and
2016. At the same time, South Africa’s 2002 29% 14% 19% 26% 7% 2002 10% 17% 33% 20%
exports of manufactured products dropped
2001 24% 10% 20% 25% 16% 2001 10% 15% 41% 20%
from about 41% to 24%, while the country
0% 50% 100% 0% 50% 100%
continues to import mostly manufactured
products from the rest of BRICS. The Food and live animals Other chemicals and related products
current imbalance suggests that there is Beverages and tobacco Manufactured goods
room for a readjustment of South Africa’s Crude materials and inedibles except fuels Machinery and transport equipment
trade profile with its BRICS peers. Mineral fuels, lubricants and related materials Miscellaneous manufactured articles
Animal and vegetable oils, fats and waxes Other commodities

Source: UNCTAD, 2018 , *Products are classified using 11

Standard International Trade Classification (SITC) level 1
Trade Developments Figure 8. SA Exports and Imports with Brazil

Between South Africa

1.8
and BRIC
1.6
• In the 15 years leading to 2016, South
Africa maintained a trade deficit with 1.4

Brazil and China while enjoying short 1.2

periods of trade surplus with India and

US$ (billion)
Russia. 1.0

0.8
• China has been South Africa’s largest
partner among the BRICS countries, 0,6

accounting for between 40%-75% of

0.4
annual exports and 50%-75% of annual
imports. Since the early 2000s, India’s 0.2
total export revealed rapid growth.
0
Aligned to its overall export growth, India
2001 2004 2007 2010 2013 2016
overtook Brazil as South Africa’s second
largest trade partner in 2004. Given their Total Exports Total Imports

commodity-heavy export profiles, there

has been little trade between Russia and Figure 9. Exports and Imports with Russia
South Africa since the turn of the century.

0.6

• China has been responsible for the bulk of

South Africa’s trade deficit with the group.
0.5
In 2015, when South Africa’s deficit with
the group peaked, China accounted for
83% of South Africa’s US$10.6bn BRICS 0.4

trade deficit. In contrast to China, India’s

US$ (billion)

trade with South Africa has been largely

0.3
balanced since the turn of the century.

0.2
Source: UNCTAD, 2018, *Products are classified using
Standard International Trade Classification (SITC) level 1

0.1

0
2001 2004 2007 2010 2013 2016

Total Exports Total Imports

12
Figure 10. Exports and Imports with India

4
US$ (billion)

0
2001 2004 2007 2010 2013 2016

Total Exports Total Imports

Figure 11. SA Exports and Imports with China

18

16

14

12
US$ (billion)

10

0
2001 2004 2007 2010 2013 2016

Total Exports Total Imports

13
Trade Developments Figure 12. SA Trade Composition with Brazil
South Africa’s Exports to Brazil South Africa’s Imports from Brazil
Between South Africa
and BRIC 2016
2015 24%
35%
17%
25%
15%
15% 11%
34%
2016
2015
18%
15%
8% 7% 18%
10% 8% 25%
23%
16%
19%
17%

• South Africa’s export profile with the 2014 22% 34% 15% 19% 2014 15% 8% 17% 21% 23%
2013 27% 46% 12% 8% 2013 28% 6% 15% 21% 19%
rest of BRICS reveals its low export
diversification and strong reliance on 2012 29% 35% 19% 9% 2012 26% 7% 11% 22% 21%
2011 32% 31% 16% 14% 2011 23% 7% 7% 12% 21% 22%
primary goods.
2010 33% 25% 17% 18% 2010 21% 11% 26% 22%
2009 24% 33% 13% 24% 2009 22% 7% 10% 28% 20%
• In particular, the composition of South 2008 36% 21% 12% 19% 2008 15% 8% 8% 29% 24%
Africa’s exports to India changed notably 2007 41% 20% 10% 16% 2007 16% 13% 28% 26%
during the period under review. Prior to 2006 43% 22% 14% 13% 2006 15% 13% 26% 29%

2007, chemicals and manufactured goods 2005 43% 23% 10% 16% 2005 17% 13% 25% 27%

accounted for the lion’s share of South 2004 44% 24% 13% 2004 16% 7% 13% 24% 27%

Africa’s exports to India. Thereafter, crude 2003 38% 25% 16% 2003 9% 19% 21% 29%

materials and mineral fuels became the 2002 31% 28% 26% 9% 2002 10% 12% 16% 29% 19%

dominant exports. Similarly, South Africa’s 2001 29% 23% 14% 29% 2001 5% 9% 65% 10%
0% 50% 100% 0% 50% 100%
commodity exports as a share of total
exports to China have seen a significant Figure 13. SA Trade Composition with Russia
increase since the turn of the century.
South Africa’s Exports to Russia South Africa’s Imports from Russia

• South Africa’s imports from BRICS

2016 44% 18% 22% 6% 2016 52% 1% 16% 17% 8%
tend to be more diversified and skewed
2015 62% 9% 10% 5% 2015 13% 1% 24% 53%
towards manufactured goods. This holds
2014 41% 19% 10% 22% 2014 60% 3% 9% 20%
especially true for its imports from China
2013 42% 11% 9% 30% 2013 19% 29% 20% 18%
and India. In 2016, manufactured goods
2012 34% 15% 6% 36% 2012 13% 3% 36% 21% 13%
accounted for 87% and 45% of South
2011 53% 15% 18% 2011 14% 1% 47% 20% 8%
Africa’s imports from China and
2010 57% 19% 13% 2010 9% 30% 35% 10%
India respectively.
2009 61% 8% 19% 2009 78% 3% 7%
2008 44% 6% 14% 28% 2008 42% 22% 23%

• The composition of South Africa’s imports 2007 53% 6% 17% 15% 2007 77% 2% 20%

from Russia showed strong fluctuation 2006 60% 10% 7% 2006 28% 6% 63%

during the period under review. In par- 2005 51% 19% 16% 2005 5% 13% 71% 9%
2004 49% 13% 30% 2004 44% 43% 7%
ticular, four major spikes in mineral fuel
2003 67% 6% 14% 2003 15% 19% 60%
imports were notable in 2002, 2007, 2008
2002 49% 11% 18% 2002 73% 18% 5%
and 2009. During the recent oil price
2001 66% 6% 14% 2001 3% 73% 16%
downswing between 2014 and 2016, food
0% 50% 100% 0% 50% 100%
and live animals as well as manufactured
Food and live animals Beverages and tobacco Crude materials and Mineral fuels, lubricants
goods have shown notable spikes. inedibles except fuels and related materials
Animal and vegetable Other chemicals and Manufactured goods Machinery and
oils, fats and waxes related products transport equipment
Source: UNCTAD, 2018, *Products are classified using
Standard International Trade Classification (SITC) level 1 Miscellaneous Other commodities
manufactured articles
14
Figure 14. SA Trade Composition with India
South Africa’s Exports to India South Africa’s Imports from India

2016 26% 55% 4% 7% 2016 23% 22% 12% 27%

2015 15% 68% 4% 8% 2015 30% 19% 10% 29%
2014 33% 51% 5% 6% 2014 36% 15% 10% 26%
2013 25% 53% 9% 8% 2013 34% 15% 10% 29%
2012 31% 52% 6%7% 2012 32% 14% 12% 30%
2011 20% 55% 11% 9% 2011 34% 14% 14% 26%
2010 17% 60% 10% 9% 2010 30% 16% 15% 26%
2009 12% 58% 16% 10% 2009 27% 19% 15% 23%
2008 18% 29% 34% 16% 2008 32% 15% 16% 21%
2007 16% 33% 19% 25% 5% 2007 25% 12% 19% 21%
2006 14% 15% 29% 25% 15% 2006 17% 13% 23% 26%
2005 9% 15% 19% 18% 25% 11% 2005 13% 15% 21% 25%
2004 18% 6% 41% 19% 9% 2004 10% 16% 33% 14%
2003 20% 12% 34% 18% 14% 2003 17% 32% 14%
2002 16% 24% 31% 19% 8% 2002 19% 29% 13%
2001 13% 19% 35% 22% 7% 2001 3% 17% 33% 14%
0% 50% 100% 0% 50% 100%

Figure 15. SA Trade Composition with China

South Africa’s Exports to China South Africa’s Imports from China

2016 67% 26% 2016 18% 48% 21%

2015 69% 23% 2015 17% 52% 19%
2014 73% 19% 2014 17% 49% 22%
2013 73% 14% 2013 17% 49% 22%
2012 72% 12% 2012 17% 46% 24%
2011 72% 13% 2011 17% 48% 24%
2010 70% 18% 2010 17% 47% 26%
2009 66% 25% 2009 17% 46% 26%
2008 65% 24% 2008 17% 49% 22%
2007 38% 25% 2007 17% 48% 25%
2006 48% 27% 2006 16% 44% 31%
2005 47% 34% 2005 16% 43% 32%
2004 40% 39% 2004 15% 40% 33%
2003 36% 45% 2003 15% 38% 31%
2002 52% 31% 2002 16% 38% 30%
2001 47% 27% 2001 15% 34% 35%
0% 50% 100% 0% 50% 100%

Food and live animals
Animal and vegetable
oils, fats and waxes
Miscellaneous
manufactured articles
Beverages and tobacco Crude materials and Mineral fuels, lubricants
inedibles except fuels and related materials
Other chemicals and Manufactured goods Machinery and
related products transport equipment
Other commodities
15
Trade Developments
Between BRICS and
the Rest of the World
• Reflecting the dominance of commodity
exports to the rest of BRICS, South
Africa’s single most exported product to
Brazil was iron and steel. In 2016, iron
and steel accounted for 26% of South
Africa’s total exports to Brazil. In 2016,
transport equipment accounted for 10% of
South Africa’s imports from Brazil, making
it the single largest import from the Latin
American country.
• While vegetables and fruits were South
Africa’s most important exports to Russia,
accounting for almost half of all exports
in 2016, cereals accounted for more than
half of South African imports from Russia.
• In 2016, coal accounted for more than
50% of India’s import from South Africa.
South Africa’s imports from India are
more diverse with petroleum products
accounting for 23% of total imports from
India, followed by road vehicles, which
contributed 18% to South Africa’s imports
from the subcontinent in 2016.
of total exports to China. Imports were
dominated by manufactured products.
Telecommunication and sound recording
apparatus made up about one quarter of
South African imports from China.
• The key exports to each BRICS country
reveal the concentration of South Africa’s
exports on primary goods. The persistent
export concentration on primary products
suggests that current trade agreements
with BRICS countries to promote South
Africa’s export diversification have still not
taken effect.

• South Africa’s top exports to China Source: UNCTAD, 2018, *Products are classified using
Standard International Trade Classification (SITC) level 1
included metalliferous ores, and iron
and steel, accounting for close to 60%

Figure 16. SA’s Top Traded Goods

with Brazil 2016
Exports US$ (million) Imports US$ (million)

Other transport
Iron and steel 98 145
equipment

Coal, coke and

51 Non-ferrous metals 124
briquettes

Other chemical materials Meat and meat

48 108
and products 48 preparations

Sugar, sugar
Organic chemicals 29 64
preparations and honey

Cereals and cereal

Non-ferrous metals 24 61
preparations

16
Figure 17. SA’s Top Traded Goods
with Russia 2016
Exports US$ (million) Imports US$ (million)

Vegitables and fruits Cereals and cereal

124 131
preparations

Fertilisers other than

Iron and Steel 50 29
group 272

Metalliferous ores and Non-ferrous metals

50 28
metal scrap

Crude rubber (including

Beverages 19 10
synthetic and reclaimed)

Electrical machinery,
Manufactures of metal 9 apparatus and 9
appliances

Figure 18. SA’s Top Traded Goods

with India 2016
Exports US$ (million) Imports US$ (million)
Petroleum, petroleum
Coal, coke and
734 products and related 704
briquettes
materials
Metalliferous ores and
570 Road vehicles 560
metal scrap

Medicinal and
Pulp and waste paper 187 385
pharmaceutical products

Power generating Cereals and cereal

117 121
machinery preparations

Iron and steel 85 Organic chemicals 116

Figure 19. SA’s Top Traded Goods

with China 2016
Exports US$ (million) Imports US$ (million)

Metalliferous ores and Telecommunication and

4004 2147
metal scrap sound recording apparatus

Office machines and

Iron and steel 1245 automatic data processing 1245
machines

Electrical machinery,
Non-ferrous metals 479 1059
apparatus and appliancess

Other industrial machinery

Pulp and waste paper 282 923
and parts

Textiles fibres and Articles of apparel &

213 879
their wastes clothing accessories

17
Investment Developments
A Snapshot of Total Investment into
South Africa from BRIC 2003-2017

Between 2003 and 2017 BRIC together officially invested a total of

US$17.8bn in 189 projects and created 36852 jobs in South Africa

India
Projects: 88
Capex:US$5.4bn
Jobs Created: 11875
South Africa
Russia
Projects: 17
Capex: US$466m
Jobs Created: 1478
China
Projects: 77
Brazil
Capex: US$11.9bn
Projects: 7
Jobs Created: 22863
Capex: US$72m
Jobs Created: 636

Brazil Russia India China

Average size of investment (US$m) 10.3 27.4 61.2 154.5

Average number of jobs created 91 87 135 301

per project
South Africa’s Net Figure 20. Total Foreign Investment

Foreign Investment 100

Position with BRIC 80

US$ (billion)
• South Africa’s net foreign investment*
60

position with BRICS moved from a net 40

negative position of US$261m to a net
20
positive position of US$71bn between
2001 and 2016. This reveals a stronger 0
2001 2004 2007 2010 2013 2016
growth in investment into BRICS from
South Africa than vice versa. BRIC Total Foreign Investment in South Africa

South Africa’s Total Foreign Invesment in BRIC

• Since 2005, South Africa has been a

net investor into BRICS with a record
Figure 21. Member State Share of Total BRIC Foreign Investment from South Africa
US$82bn in foreign investments held in
BRICS in 2016, while BRICS only held
about US$11bn in foreign investment in 100%
19% 22%
South Africa. 26%

70% 72%
• Between 2001 and 2003, India was 78%
84%
80%
88%
76%
88%
93% 93% 94% 94%
the largest recipient of South African 50% 66% 93%
66% 61%

investments among the BRICS countries.

Thereafter, China surpassed India holding
25%
over 70% of South Africa’s investments in 18% 15% 13%
15% 12% 13% 13% 13%
BRICS to date. 0%
2001 2004 2007 2010 2013 2016
China India Russia Brazil

• Between 2004 and 2007, Russia

accounted for the largest share of Figure 22. Member State Share of Total BRIC Foreign Investments to South Africa
overall BRICS investment in South
Africa. However, for the remaining years,
100%
China was the most important source of 17%
11%
18%
6%
investments for South Africa among the 7%
49% 14%
BRICS countries.
70% 75% 70%
79% 80% 79%
88% 89% 89% 90% 88% 92%
50%
Source: South African Reserve Bank, 2018, 81% 14%
74% 63%
* Total foreign investment includes: Direct investment,
Portfolio investment, Financial derivatives, Other investment
31%
and Reserve Assets 25% 22% 6% 7%
20% 7%
13% 11% 12% 5% 6% 7% 7% 10% 6%
0%
2001 2004 2007 2010 2013 2016
China India Russia Brazil

20
South Africa’s Net Figure 23. Total Foreign Investment - Brazil vs South Africa

Foreign Investment
25
Position with BRIC
• Since South Africa’s inclusion into 20
BRICS in 2010, its outbound investment
into the other BRICS members surged
significantly. This trend was in particular 15

US$ (billion)
pronounced for its investments into
China and India.
10

• The sudden surge in South Africa’s

outbound investments into BRICS can 5

be attributed to various factors including

an increased foreign expansion by
0
South African firms and a considerable
2001 2004 2007 2010 2013 2016
relaxation of exchange controls by
monetary authorities in 2011 that Total Foreign Investment in South Africa from BRIC Member State

allowed South African companies Total Foreign Investment in BRIC Member State from South Africa

to invest much larger sums abroad.

In addition, the depreciation of the
rand versus the US dollar since 2011,
combined with rising stock prices of Figure 24. Total Foreign Investment - Russia vs South Africa
foreign-listed subsidiaries of some
South African firms, has also played a
significant role in the rise in the value of 4

South African foreign investment in the

BRICS countries.
3

Source: South African Reserve Bank, 2018

US$ (billion)

0
2001 2004 2007 2010 2013 2016

Total Foreign Investment in South Africa from BRIC Member State

Total Foreign Investment in BRIC Member State from South Africa

21
Figure 25. Total Foreign Investment - India vs South Africa

2
US$ (billion)

0
2001 2004 2007 2010 2013 2016

Total Foreign Investment in South Africa from BRIC Member State

Total Foreign Investment in BRIC Member State from South Africa

Figure 26. Total Foreign Investment - China vs South Africa

90

80

70

60
US$ (billion)

50

40

30

20

10

0
2001 2004 2007 2010 2013 2016

Total Foreign Investment in South Africa from BRIC Member State

Total Foreign Investment in BRIC Member State from South Africa

22
Total FDI into South Figure 27. Total Inward FDI Capital Investment from BRIC

Africa from BRIC 7,9

US$ (billion)
• Between 2003 and 2017, South Africa
received on average US$1.2bn in FDI*
flows per year from its fellow BRICS
partners. While annual inflows remained
below US$1bn for most years, inflows 2,3 2,2

exceeded US$2bn in 2008, 2014 and

1,0 0,9
2016. Record inflows of U$7.9bn were 0,5 0,4
0,6 0,5 0,4 0,3 0,3
0,1 0,1 0,1
recorded in 2014 because of a single
2003 2005 2007 2009 2011 2013 2015 2017
US$6.4bn investment from China
(for more detail see FDI by business
Figure 28. Total Jobs Created by Inward FDI from BRIC
activity section).

• Despite the value of investments 4885

remaining relatively stable, there has 4624

been notable growth in the number of

Number of jobs

jobs created by FDI projects from BRICS 3566

3144 3204
as a group. Between 2003 and 2016, the 2766 2811 2792
number of jobs created by investments
2235 2135
from BRIC grew at a compounded annual
1689
growth rate of 10% from 882 to 3 566 jobs
per annum. The number of FDI projects 882 897 920

from BRICS also increased between 2003 302

and 2015. However, in the last two years,
2003 2005 2007 2009 2011 2013 2015 2017
the number of projects dropped sharply
back to the level of the early 2000s.
Figure 29. Total Number of Inward FDI Projects from BRIC

Source: fDi Markets, 2018, *FDI = Foreign Direct Investment

21 21
20
19
18
Number of projects

14 14 14
12
10
8
6
5
4
3

2003 2005 2007 2009 2011 2013 2015 2017

23
Total FDI into South Figure 30. BRIC Member State FDI Share in South Africa by
Total Capital Invested
Africa from BRIC
8% 10%
18%
7% 22%
29% 31%
36%

• Over the period under review, China and 74%

India have been the dominant sources of 81%
94% 99% 95%
86%
100% 97%
87%
FDI for South Africa. They accounted for 85% 79%
77%
70% 65%
the bulk of capital investment, number of 63%

projects and job creation, while Brazil and

24%
Russia’s contribution has been marginal 15% 11%
6% 4%
in comparison.
2003 2005 2007 2009 2011 2013 2015 2017
China India Russia Brazil

• In the early-2000s, India dominated

capital investment into South Africa Figure 31. BRIC Member State FDI Share in South Africa by
among the BRICS countries. However, Number of Jobs Created
after 2006 China began to emerge as
the key source of FDI, contributing 99% 22%
of the record US$7.9bn investment in 44%
52% 49%
2014. The trend is similar in terms of job
73% 72%
creation and number of projects. Since 79% 78%
90% 94% 94% 88%
100% 98% 97%
2003, the number of jobs created and
76%
number of projects realised by Indian
56%
FDI has declined while China’s share 45%
16%
50%

27% 13%
has risen. China’s emergence as a key 18%
7% 11% 7% 6% 10%
5%
source of FDI for South Africa coincides
2003 2005 2007 2009 2011 2013 2015 2017
with its extensive global uptick in outward
China India Russia Brazil
investment since 2005.

Figure 32. BRIC Member State FDI Share in South Africa by

Source: fDi Markets, 2018
Number of Projects

13%
20%
29% 29% 28%
36% 40%
50% 50% 52%
60%
67% 67%
74%

100% 75% 60%

43% 56%
64% 64%
33% 33% 33% 55% 20%

25%
33% 7% 16%
10%
10% 11% 20%
17% 14% 17% 5%
13% 10% 8%
7% 7% 5%

2003 2003 2005 2007 2009 2011 2013 2015

China India Russia Brazil

24
FDI into South Africa Figure 33. Capital Investment from BRIC

from BRIC Pre- and 11

Post South Africa

Joining BRICs

US$ (billion)
• FDI inflows from BRICS increased rapidly
3
since South Africa joined the group in
2
2010. In the seven years since South 1
0.03
Africa joined the group, its fellow BRICS 0.02 0.05 0.10
2003-2010 2011-2017
partners invested three-times more
capital in the country compared to the Brazil Russia India China
seven years prior to 2011. A once-off
US$6.4bn investment in 2014 skews the
inward FDI reading in favour of China. Figure 34. Total Jobs Created by BRIC Inward FDI

• China’s FDI was the main driver of job 14925

creation since South Africa joined BRICS,

while the number of jobs created by all the
other member states decreased between
Number of jobs

7938
2011 and 2017. 6648
5227

• While all member states increased their

1112
number of FDI projects to South Africa 508 128 366

since accession to BRICS, China showed 2003-2010 2011-2017

the strongest growth in the number of FDI

Brazil Russia India China
projects. This reaffirms China’s position
as the key source of investment to South
Africa among the BRICS countries. Figure 35. Total Number of Inward FDI Projects

Source: fDi Markets, 2018

55
48

40
Number of projects

22

8 9
3 4

2003-2010 2011-2017

Brazil Russia India China

25
Total FDI into South Figure 36. Share of FDI Capital Investment by Province 2003-17

Africa from BRIC by

Province 2003-2017
100%
• Among the various provinces in South 12% 14%
90% 22%
Africa, Gauteng, the engine room of 7%
80%
its economy, was the key destination
13%
70%
for BRICS FDI between 2003 and 72%
2017. During this period, the province 60%
20%
accounted for 56% of total capital 50%
88% 74%
investment, 40% of FDI projects and 31% 40%

of total job creation. 30%

41%
20%
20%

• In contrast to the other BRICS members, 10%

2%
0% 6% 3% 2%
India invested the bulk of its investments Brazil Russia India China
outside of Gauteng. The key destination
of Indian investment was KwaZulu-
Natal. The province also benefitted the
Number of Jobs Capex
most from job creation stemming from Country Province
Projects Created (US$m)
Indian investments. Brazil 4 609 63 Not Specified
3 27 9 Gauteng
• While China was the most important Russia 3 1042 337 Not Specified
investor in Gauteng in terms of capital 9 321 92 Gauteng
investment and job creation, India was 1 21 11 Mpumalanga
responsible for the largest number 4 94 27 Western Cape
of investment projects. In addition, India 26 3778 1209 Not Specified
Chinese investments also had the largest 3 159 706 Eastern Cape
provincial footprint with projects in all 36 4478 1054 Gauteng
provinces except the Free State.
15 3061 2213 KwaZulu-Natal
1 21 50 Mpumalanga
Source: fDi Markets, 2018 7 378 154 Western Cape
China 21 9659 1705 Not Specified
4 3286 879 Eastern Cape

56%
27 6679 8781 Gauteng
1 100 10 KwaZulu-Natal
1 227 119 Limpopo
of capital investment 1 27 5 Mpumalanga

from BRICs between 1 106 34 North West

2003 and 2017 was 5 1134 193 Northern Cape

16 1645 174 Western Cape
invested in Gauteng
Total FDI into South Figure 37. Share of Total Capital Investment from
Brazil by Sector 2003-17
Africa by Sector
2003-2017
2%
8%
• Compared to China and India, Brazil 10%
and Russia were less active investors in
South Africa. Russia invested US$466m US$72m 49%
14%
in 17 capital investment projects. This is
more than twice the number of projects
and more than 6-times the value of 17%
Brazil. Close to 70% of Russian capital
investments were directed towards South
Africa’s metals sector and had the largest Country Number of Jobs Capex Sector
impact in terms of job creation in this Projects Created (US$m)
sector. Brazil 1 94 35 Aerospace
2 24 12 Financial Services
1 400 10 Automotive OEM
• India channelled US$5.4bn into 88 capital 1 94 7 Automotive Components
1 14 6 Chemicals
projects. Almost half of these investments 1 10 1 Software & IT services
were directed to the fossil fuels. 7 636 72 Total

Figure 38. Share of Total Capital Investment from

• Compared to India, China invested in Russia by Sector 2003-17
a smaller number of projects, but on
average invested twice the amount of 2%1%
2%2%
capital per project. More than half of
China’s capital investment was directed
5%
towards the real estate sector. 5%

14%
• Brazilian, Chinese and Indian investment US$466m
in the automotive sector had the largest
69%
impact on job creation.

Source: fDi Markets, 2018

Country Number of Jobs Capex Sector
Projects Created (US$m)
Russia 2 1021 323 Metals
6 132 67 Financial Services
2 156 26 Aerospace
1 54 22 Coal, Oil and Natural Gas
2 30 8 Transportation
2 19 8 Software & IT services
1 16 8 Communications
1 50 5 Business Services
17 1478 466 Total

28
Figure 39. Share of Total Capital Investment from
India by Sector 2003-17

Country Number of Jobs Capex Sector

Projects Created (US$m)
India 6 554 2324 Coal, Oil and Natural Gas

3 160 851 Alternative/Renewable energy 1%1%

8 2774 406 Automotive OEM 3% 4%

3%
2 1673 373 Metals 3%
5%
3 718 369 Hotels & Tourism
19 1722 272 Software & IT services 7%
US$5.8bn 43%
3 392 166 Biotechnology 7%
4 735 165 Rubber
7%
14 294 154 Financial Services 16%
1 473 55 Plastics
4 747 53 Consumer Products
21 1633 198 Other
88 11875 5386 Total

Figure 40. Share of Total Capital Investment from

China by Sector 2003-17

Country Number of Jobs Created Capex Sector

Projects (US$m)
China 1 N 6400 Real Estate 1%1%
1%
2 3010 2015 Transportation 1%
9 7043 1322 Automotive OEM 2% 2%
10 4707 609 Metals 5%
5%
2 1127 591 Building & Construction Materials
1 41 186 Alternative/Renewable energy 11%
US$11.9bn 54%
9 1171 167 Communications
13 908 111 Electronic Components
17%
5 2160 107 Consumer Electronics
3 318 101 Food & Tobacco
22 2378 289 Other
77 22863 11900 Total

29
FDI into South Africa Figure 41. Share of Total Capital Investment from Brazil by
Business Activity
by Business Activity
2003-2017
9%
• Brazilian and Russian investments were
concentrated on a small number of busi- 14%

ness activities. More than half of Brazil’s

capital was invested in education and
US$72m
58%
training in the aerospace and automotive 19%

components sector. Among Brazilian

projects, manufacturing projects within the
automotive sector created the most jobs
(400). More than two-thirds of Russia’s
investments went into extraction activities. Country Number of Jobs Capex Sector
Projects Created (US$m)
Brazil 2 188 42 Education & Training
• Close to half of investments from India
were concentrated in manufacturing of 3 34 14 Business Services

vehicles and components, consumer 1 400 10 Manufacturing

products, rubber and industrial machinery 1 14 6 Sales, Marketing & Support
and one-quarter in electricity generation 7 636 72 Total
including a coal-fired power station and
renewable energy projects. Among Indian Figure 42. Share of Total Capital Investment from Russia by
projects, manufacturing projects created Business Activity
the most jobs (6341).

4%
• A US$6.4bn construction project in the 12%
real estate sector in Johannesburg in
2014 was China’s single largest business
15%
activity. The capital investment accounted US$466m
69%
for more than half of China’s investment
in South Africa. Besides this construction
project, manufacturing activities in
the metals, electronic components
and automotive sectors attracted one
Country Number of Jobs Capex Sector
quarter of capital investments. These
Projects Created (US$m)
manufacturing investments created
Russia 1 1012 320 Extraction
over 17 000 jobs. In addition, China also
invested a substantial amount in logistics, 7 182 72 Business Services

distribution and transportation. 8 142 57 Sales, Marketing & Support

1 142 18 Maintenance & Servicing

Source: fDi Markets, 2018 17 1478 466 Total

30
FDI into South Africa Figure 43. Share of Total Capital Investment from India by
Business Activity
by Business Activity
2003-2017 6%
3%

7%
• In general, all BRICS members, apart
7%
from Russia, channelled a considerable
7% US$5.8bn 47%
share of their FDI into the secondary
sector. In contrast, Russian investments
were largely directed to the extractive 23%

sector.

Country Number of Jobs Capex Sector

• Unlike trade, BRICS investments in Projects Created (US$m)
South Africa have been more aligned India 20 6341 2542 Manufacturing
with sectors and activities earmarked 3 254 1253 Electricity
under South Africa’s industrialisation 22 1573 379 Business Services
programme. However, despite the focus 2 1033 370 Extraction
of these investments in the industrial 3 718 369 Construction
sector, they have not yet translated into 26 440 329 Sales, Marketing & Support
greater manufacturing exports from South 12 1516 144 Other
Africa to its fellow BRICS countries. This 88 11875 5386 Total
suggests that these investments are
largely market seeking in South Africa and Figure 44. Share of Total Capital Investment from China by
the region and are not necessarily aimed Business Activity
at improving South Africa’s manufacturing
export competitiveness. 3%
2%

17%
Source: fDi Markets, 2018

US$11.9bn 54%

24%

Country Number of Jobs Capex Business Activity

Projects Created (US$m)
China 1 6400 Construction

32 17678 2867 Manufacturing

5 3240 2051 Logistics, Distribution & Transportation

1 41 186 Electricity
38 1904 395.2 Other
77 22863 11900 Total

31
Key Takeouts on
South Africa’s Trade Russia India China

and Investment
Relations with BRIC Trade Balance -US$1.02bn US$25m US$46m -US$6.7bn
2016
Since 2001
Over the past 15 years, Brazil and Russia’s
trade with South Africa has remained
marginal compared to that of India Key Exports to • Food and live • Food and live • Manufactured • Manufactured
and China. This is largely because the South Africa animals animals products and products and
2016 machinery machinery
economies of Brazil, Russia and South • Manufactured • Manufactured
Africa are commodity-based. The three products and products • Mineral fuels
countries have very similar trade profiles machinery
and have limited room for trade among
each other. Key Imports from • Food and live • Food and live • Mineral fuels • Raw materials
South Africa animals animals except fuels
In contrast to these three commodity 2016 • Raw materials
• Beverages and except fuels
exporters, China and India are much tobacco
more industrialised with high demand for
imported raw materials. Their demand
for commodities and a more diversified Total FDI in South US$72mn US$466m US$5.4bn US$11.9bn
export basket present more opportunities Africa 2003-2017
for trade with South Africa. South Africa
largely serves as a source of raw materials
for their industrial sector and a market for
their manufacturing output. Trade between
BRICS and South Africa has been driven by Total Foreign US$163mn US$40m US$621m US$9.7bn
demand for commodity exports from South Investment in
Africa to BRICS and high local demand for South Africa
manufactured imports. 2016

As seen with trade, China and India’s

investment into South Africa also
Total Foreign US$1.3bn US$1.1bn US$2.1bn US$77.6bn
outstripped that of Brazil and Russia. As investment from
commodity-based economies, Brazil and South Africa
Russia faced economic headwinds due to 2016
low diversification and strong downswings
in global commodity markets in recent
years. These headwinds affected the
Key Sectors • Aerospace • Metals • Coal, oil and • Real estate
ability of the two countries to invest abroad. Attracting FDI in natural gas
China and India’s economies were less South Africa • Financial services • Financial services • Transportation
exposed to commodity price fluctuations 2003-2017 • Alternative energy
• Automotive OEM • Aerospace • Automotive OEM
and hence have a more favourable fiscal • Automotive OEM
position allowing them to invest globally. In
addition, both country’s governments have
adopted an arguably supportive approach
to international expansions.

32
Doing Business in BRICS
Key Factors to Consider
 Main Taxes Terms

10% to 35% - Import duty is waived on machinery and equipment that are
Import Duty
unavailable locally

• 0% to 15% - Federal tax levied on domestic and imported manufactured products.

Industrialised
Levied by determining how essential a product may be for the Brazilian end-user.
Product (IPI) Tax
Brazilian exports are exempt from the IPI tax

Doing Business Merchandise and

• 7% to 18% - Value-added tax applicable to both imports and domestic products.
Varies among states, and businesses in some sectors of the economy, such as
Service Circulation
in Brazil Tax (ICMS)
mining, electricity, liquid fuels and natural gas can be awarded exemption from
ICMS tax on a case-by-case basis

1.1% to 6% - Federal tax levied on credit, exchange, insurance and securities

Tax on Financial
transactions executed through financial institutions. Includes intercompany loans
Key Country Indicators Transactions (IOF)
and gold transactions
15% to 22.5% - Capital tax gains on non-residents
Income Tax
15% - Payments of interest on shareholders’ equity to a non-Brazilian resident
GDP 2017
US$2.06 trillion
Foreign
Investment Incentives
Population Benefits
207 million
Special tax regimes are offered to the Information Technology (IT) sector, exporters,
Federal Incentives
Inflation 2017 and research and development.
2.95%
• Free import and export trade area

Doing Business Ranking 2018 • Federal taxes incentives (such as import duty and corporate income tax
Manaus Free Trade reductions)
125/190 Zone
• State taxes incentives (state value added tax reduction)

• Subsidised land to investors

Key Government Departments for
Sudam & Sudene • Corporate income tax reductions
Foreign Investors Zones (located
• Corporate income tax reinvestment
in North and
Ministry of Industry, Foreign
Trade and Services
Northeast Brazil) • Incentivised accelerated depreciation of fixed assets
Address: Esplanada dos Ministérios - Bloco
Special Tax
J - Térreo - Sala T 05 – CEP 70.053-900 - Special tax regimes are offered to various sectors
Regimes
BRASÍLIA/DF
E-mail: ouvidoria@mdic.gov.br
Tel: +55 61 2027 7666
Key Sectors for Investment
Brazilian Trade and Investment 01. Infrastructure development 07. Pharmaceuticals
Promotion Agency
Address: 02 11 Edificio Apex-Brazil, 02. Agriculture 08. Mining
Sector Bancario Norte, 03. Agri-food industry 09. Pollution control equipment
Brasilia – DF 70040-020, Brazil
04. IT (hardware and software) 10. Aeronautical industry
E-mail: apexbrasil@apexbrasil.com.br
Telephone: +55 61 3426-0202 05. Energy 11. Telecommunications
06. Franchises 12. Tourism

34
 Main Taxes Terms

Profits Tax 12.5% to 20% - Levied on net profits

Import Duties VAT 5% to 30% - Depends on value of an item

Social Welfare
30% - Levied on employees annual salary and paid entirely by the business
Taxes
• Foreign legal entities without a business presence in Russia: 10% on freight
services provided in Russia.
Withholding on
Dividends, Interest, • Income tax on most Russian-sourced income including interest, royalty, income
Doing Business and Royalties from leasing, and rental operations: 20%

in Russia • Dividends: 15%.

• 13% - Personal income tax rate for Russian residents
Income Taxes
• 30% - Personal income tax rate for non-residents
Key Country Indicators Import Excise Tariff
20% to 570% - Applied to product categories including, luxury goods, alcohol,
tobacco, and petroleum products

GDP 2017
Foreign
US$1.58 trillion
Investment Incentives
Benefits
Population • Software and high-tech companies: 14%
Reduced • Property tax: 0% for
142 million social security • Companies engaged in special innovation projects: 14% 10 years
contributions
• Companies that are members of the Skolkovo project: 20%
Inflation 2017 Reduced profit tax rate: • Land tax: 0% for
Technology
3.69% innovative special 0% for 5 years, Federal budget 5 years
economic zones Regional budget 0.13%-5% Regional budget
Doing Business Ranking 2018
Tourism and Reduced profit tax rate: • Transport tax: 0%
35/190 for 10 years
recreational special 0% for 5 years, Federal budget
economic zones 0.13%-5% Regional budget

Key Government Departments for Industrial Reduced profit tax rate:

Foreign Investors production special 2% Federal budget
economic zones 0.13%-5% Regional budget
Ministry for Economic Development (SEZ)
Galkina Vasilisa – head of the division of SEZ Reduced profit tax rate:
E-mail: galkinave@economy.gov.ru Port zones 2%, Federal budget
Tel: +7 495 690 5838
0.13%-5% Regional budget
Ministry of Industry and Trade
Address: 7 Kitaigorodsky Proyezd, Moscow
E-mail: uspenskaya@minprom.gov.ru Key Sectors for Investment
Tel: +7 495 710 5500/+7 495 632 8927
01. Infrastructure development 05. Metals and Mining 09. Automotive industry
Russian Investment Agency 02. Agriculture and food industry 06. Hotels and Entertainment 10. Real estate
Address: Bolshaya Yakimanka, 1, Moscow, 119180
03. Medical equipment 07. Transport and logistics 11. Oil and gas
E-mail: info@investment-in-russia.com
Telephone: +7 495 970 85 65 04. Pharmaceuticals 08. Innovations and technology

35
 Main Taxes Terms
Income Tax • 0% to 30%

• Payable whenever a sizable amount of money is received

Capital Gains Tax • Tax on short-term gains is calculated based on the income bracket

• 20% Tax on long-term gains

• 0% to 34% - Domestic companies
Corporate Tax
• 41% to 43% - Foreign companies
Doing Business Dividend Tax 15% - Applicable on the gross or net income received from investments

in India Entry Tax 5.5% to 10%. - All items entering the state ordered via e-commerce

Customs Duty 0% to 150% - The average rate is approximately 12%

Key Country Indicators Stamp Duty 6% to 12% - Varies by province

GDP 2017
Foreign
US$2.6 trillion Investment Incentives
Benefits
Population • Exemption from import duty, VAT and other taxes
1.2 billion Special Economic
Zones (SEEPZ, • 10-year tax holiday for the first 20 years
Kandla, Cochin,
• 10% FDI allowed through the Automatic route for all manufacturing activities
Madras,
Inflation 2017 Visakhapatnam, • Simplification of procedures and self-certification in the labour acts
2.49% Falta)
• Speedy approvals, clearances and customs procedures and dispute resolution
• 100% foreign direct investment (FDI) are allowed for all the manufacturing
Doing Business Ranking 2018 activities
100/190
• Income tax holidays
Noida Export
• Exemption from import duty, VAT and other taxes
Processing Zone
Key Government Departments for • Procedural efficiency for fast dispute resolution, clearances, Approvals, and
customs procedures
Foreign Investors
• Abundant supply of trained manpower
Ministry of Commerce and Industry
Address: Udyog Bhawan, New Delhi 110 107, India FDI is allowed without needing prior approval from Government or the Reserve
Email: wio-commerce@nic.in Bank of India. Certain activities such as enjoying the automatic route benefit,
Automatic route
Tel: +91 11 2306 2261 namely; telecom services, banking, satellites (establishment and operation),
defence, mining, among others
The Associated Chambers of Commerce &
Industry of India
Address: ASSOCHAM Corporate Office, 5, Sardar, Key Sectors for Investment
Chanakyapuri, New Delhi – 110021
01. Airport and ground handling 06. Machine tools 11. Safety and security
E-mail: assocham@nic.in
Tel: +91 4655 0555 (Hunting Line) 02. Computer and peripherals 07. Medical equipment 12. Telecommunications
03. Education services 08. Mining and mineral processing equipment
Invest India:
Address: Federation House, Tansen Marg, 04. Electric power and equipment 13. Textile machinery
New Delhi, 110001 transmission equipment 09. Oil and gas field machinery 14. Water and sustainable
E-mail: bhaskar.chaturvedi@investindia.gov.in
Telephone: +91-11-23048155 05. Food processing 10. Pollution control equipment energies

36
 Main Taxes Terms
• 25% - Levied on foreign entities with business operations in China
Enterprise
Income Tax • 20% - Levied on foreign enterprises with no operations in China but receive
dividends, interest, or other income in China

Value-Added Tax 2% to 17%

Doing Business Business Tax 3% to 20%

in China Stamp Duty 0.05% to 1%

Import and Export 9.8% - Except for several important resource commodities, China imposes no
Tariff export tariff on other commodities

Consumption Tax 3% to 45%

Key Country Indicators
Deed Tax 3% to 5%

GDP 2017
US$12.2 trillion Foreign
Investment Incentives
Benefits
Population
Encouraged A reduced 15% enterprise income tax (EIT) rate for firms
1.4 billion Foreign within the scope prescribed by the Catalogue of Encouraged
Investments Industries
China (Shanghai) It provides convenient investment and trading procedures,
Inflation 2017 Pilot Free Trade full convertibility of currencies, effective and efficient goods
1.59% Zone supervision, and investor-friendly regulatory environment
Special Economic
Zones (SEZ): Provides preferential policies in funding and taxes. Newly
Doing Business Ranking 2018 Shenzhen, Zhuhai, established high-tech enterprises retain their first income
78/190 Xiamen, Shantou, from operations and enjoy a 3-year tax reduction or
Hainan Island, exemption
Kashgar
State-level New
Government provides support concerning policy and funding
Area:
Reduced tax of 15% to 20% and a 50% deduction on
Key Government Departments for Preferential Tax research and development for enterprises engaged in
Foreign Investors Policies: industries of high and new technology, environmental
protection, safety among others
China Council for the Promotion of
International Trade (CCPIT)
Address: 1 Fuxingmenwai Street, Beijing 100860, Key Sectors for Investment
China Chairman: Jiang Zengwei
01. Chemical industry 04. Renewable energy
Tel: +86 10 8807 5650
02. Insurance and banking 05. Environmental safety
State Administration for Industry and Commerce 03. High technology 06. Green economy
Address: 8 Sanlihe Donglu, Xichengqu, Beijing,
100820, P. R. China
Email: dfa@saic.gov.cn
Tel: +86 10 6801 0463/3447

China International Investment

Promotion Agency
Address: 3rd Floor, Building F, Fu Hua Mansion,
No.8, Chaoyangmen North Avenue, Dongcheng
District, Beijing, China 100027
E-mail: service@fdi.gov.cn
Telephone: +86-10-64239227
37
 Taxes Rates
• 18% to 45% - Individual tax

• 28% - Companies

• 45% - Trusts
Income tax
• 0% to 28% - Small business corporations

• 20% - Dividend tax

• 18% to 22.4% - Capital gains tax

Doing Business Transfer duty 0% to 13%

in South Africa Turnover tax for

micro businesses
0% to 3%

Royalties 15%
Key Country Indicators Imports and export
0% to 30%
tariffs

GDP 2017
US$349 billion Foreign
Investment Incentives
Benefits
Population
• Preferential 15% Corporate Tax for qualifying entities
54 million
Special Economic • Building Allowance: 10% per annum for qualifying buildings and fixed structures
Zones (Musina/
Makhado, OR • Employment Incentives for low salary workers
Inflation 2017 Tambo, Maliti–A-
5.19% Phofung, Dube • Import duty rebates for production-related and exported products, and VAT
Trade Port) exemptions under specific conditions for supplies procured in South Africa

• Enhanced 12i Tax Incentive for greenfield and brownfield investments

Doing Business Ranking 2018
The Tshiame Food
82/190 Processing Park
Provides logistical services, warehousing, cold storage and manufacturing facilities

• VAT exemptions under special conditions for supplies procured in SA

Industrial • Duty suspensions on imported inputs
Key Government Departments for Development
Foreign Investors Zones • Dedicated SARS officials to provide customs and VAT support

• Industrial infrastructure linked to an international port of entry

Department of Trade and Industry
Postal Address: the dti, Private Bag X84,
Pretoria, Gauteng, 0001
Physical Address: the dti,
77 Meintjies Street, Sunnyside,
Pretoria, Gauteng, 0002
E-mail: contactus@thedti.gov.za
Tel: +27 (0) 12 394 9500
Companies and International
Property Commission (CIPC)
Postal Address: PO Box 429, Pretoria, 0001
Physical Address: the dti Campus, Block F,
77 Meintjies Street, Sunnyside, Pretoria
E-mail: info@cipc.co.za
Tel: +27 (0)12-394-9500
Business process
The BPS grant pays up to R124 000 per job created by a Business Process
services (BPS)
Outsourcing operation located in South Africa
grant
Key Sectors for Investment
01. Agro-processing 07. Boatbuilding 13. Tourism
02. Business process outsourcing 08. Pulp, paper and furniture 14. Chemicals, plastic fabrication
and it-enabled services 09. Automotive and components and pharmaceuticals
03. Machinery and equipment 10. Green economy industries 15. Creative and design industry
04. Electro-technical 11. Advanced manufacturing 16. Infrastructure development
05. Textile, clothing and leather 12. Bio-manufacturing 17. Oil and gas
06. Consumer goods

38
Contact

Dr Martyn Davies
Managing Director, Emerging
Markets & Africa
Deloitte Africa
mdavies@deloitte.co.za

Nazeer Essop
Public Sector Industry Leader
Deloitte Africa
nessop@deloitte.co.za

Research Team
Simon Schaefer
Manager
Deloitte & Touche
sischaefer@deloitte.co.za

Jean-Baptist Nkume
Consultant
Deloitte Africa
jnkume@deloitte.co.za

39
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