UNCLAS PRETORIA 004895

SIPDIS

USDOC FOR 4510/ITA/MAC/AME/OA/DIEMOND
TREASURY FOR OAISA/BCUSHMAN
USTR FOR PCOLEMAN

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: BEXP ECON EINV SF
SUBJECT: Amcham Business Climate Survey - 2005

REF: 04 Pretoria 5303

Sensitive but Unclassified; Protect Accordingly. Not
For Internet Distribution.


1. (SBU) In the American Chamber of Commerce's
(Amcham) 2005 Business Climate Survey, 75 percent of
companies viewed the business climate as "excellent"
or "good," up from 62 percent last year. Ninety-two
percent of companies plan to invest more or the same
and either to maintain or hire more staff. Fifty-
three percent of respondents plan to invest more in
the coming year, up slightly from last year.


2. (SBU) As last year, respondents most frequently
cited political stability, sound macroeconomics and
economic growth as favorable factors influencing
business and investment. According to the survey,
the biggest challenges are Black Economic Empowerment
(BEE) policies, finding and retaining skilled staff,
and crime (more than half had been adversely
affected).


3. (SBU) The majority of companies (80 percent) see
BEE as important and essential for economic growth;
however, 66 percent see it as a hindrance to further
investment. The vast majority of companies have in
place BEE polices, including employment equity and
BEE enterprise development and procurement programs.
U.S. companies have invested heavily in skills
development. Sixty-nine percent of companies spend
between 3-12 percent over and above the 2 percent
skills development levy on in-house training as a
percentage of payrolls. Fifteen percent have sold
equity.


4. (SBU) The most highly regarded government
organization is National Treasury, followed by the
Department of Labor, Department of Trade and
Industry, and the SA Revenue Service. The weakest
government organizations are the SA Police Service
and Departments of Health and Communications.


5. (SBU) Telkom, the parastatal telecommunications
company, was seen as expensive and inefficient with
poorly trained technical staff, poor response times,
and long waits for installation and upgrading. On
the other hand, Eskom, the parastatal electric
utility, was described as efficient and professional.
Power failures, however, are becoming a financial
drain and shutting down business communications
systems.


6. (SBU) Amcham plans to send the survey to the
South African government and issue a press release.
The survey results will be sent by e-mail to AF/S,
Commerce and USTR. Survey results are not fully
comparable with last year due to changed questions
and limited sample size. Fifty-nine companies
participated in the November survey.
TEITELBAUM