Economic and political brics and choirs

I argued a few months ago, amid speculation that South Africa would be joining Brazil, Russia, India and China to turn the BRIC group into BRICS, that South Africa did not fit the mould of large economies with large populations, growing rapidly.

Well it turned out that I was wrong. Well, wrong that we wouldn’t join. However, the implicit reasons for us joining were just made explicit. Zuma stated after South Africa’s first meeting with the BRICS group that:

“Although our Brics partners are leading economies in the world, South Africa nevertheless brings unique attributes which complement the Brics mechanism/”

“At a political level, our partners appreciate our unique value system which derives from our history and a particular experience.”

(Quotes above from the News24 article covering Zuma’s view that “Our Bric friends like our politics“.)

It’s a little like the prettiest girl getting picked for the choir, except in this case our BRIC friends want us to open our mouths and sing loudly.  I wonder what would happen if our song-sheet changed?

4 thoughts on “Economic and political brics and choirs”

  1. Don’t know if you’re aware, but we’ve recently been structuring a system that allows for our country to be used as a staging point for investment into Africa.

    Our tax regime now includes an intermediary holding company structure that is engineered to allow us to be used as a treaty shopping destination – the entity is treated as tax resident, with carve-outs only for certain passive income (interest, dividends, royalties) related to substantial investments.

    There’s still edginess around the ExCon issues – there was a requirement for annual approval that one was permitted to actively reinvest “on demand” into foreign investments. (Think of a private equity fund and draw-downs.) I haven’t been following as closely as I ought, so I’m not sure how this latter issue has played out.

  2. (The carve-outs to which I’m referring above are carve-outs/exclusions from South African domestic taxation: income tax and, at least initially, STC. Interest and dividends are financial services and VAT exempt. Royalty income (supply) is, IIRC, located where the rights are exercised, which would be outside ZA if the rights are exercised outside of ZA.)

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