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South Africa’s National Assembly has approved the Promotion and Protection of Investments Bill following debate by members of parliament (MPs) on Tuesday, with the new regulations bidding to clarify the level of legal protection investors have and encourage foreign venture capitalists to put their money into South Africa.

The Portfolio Committee on Trade and Industry had previously passed the bill, with trade and industry minister Rob Davies saying it is aimed at reassuring investors that South Africa is open to foreign investment and will continue to provide strong protection to investors.

It has now been sent to the National Council of Provinces (NCOP), where it will be processed before being sent to President Jacob Zuma for his final approval.

“Fundamentally, the underlying philosophy of the bill is to clarify the standard of protection that an investor may expect in the Republic, and to promote all types of investments by creating a predictable business environment that is readily understandable to an investor,” Davies said.

“The bill guarantees the rights of investors in accordance with the Constitution.”

The government has for the past three years been reviewing its investment regime, in particular the nature of round 3,000 international investment agreements and bilateral investment treaties that were signed in the 1990s, before the Constitution came into effect.

Davies said these agreements provided firm guarantees to investors against direct and indirect expropriation, as well as guarantees against fair and equitable treatment, but were formulated and phrased in an extremely expansive way. This had opened doors to litigation, and over the past few years there have been multiple cases where individual investors have taken governments to international courts.

“Our central message is that we have seen over a period of time that the established international investment protection system has been recognised around the world as being in need of serious review and reform,” Davies said.

“In developing the bill, we have taken into account all the concerns raised. Our aim is to modernise South Africa’s policy approach to foreign investment in view of national, regional and global developments.”

Davies said it was not the intention nor the mandate of the bill to develop the law in areas that are not directly in the scope of investment regulation, as Section 25 of the Constitution provides adequate protection to investors from arbitrary expropriation and deprivation.

“There is emerging jurisprudence on deprivation, it is not the role of this bill to clarify and interpret law,” he said.

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