78 No. 37261 GOVERNMENT GAZETTE, 24 JANUARY 2014 Chapter 10: Promoting investment in the ICT Sector i 10.1 Introduction For government, investment in the ICT sector is a fundamental policy goal, alongside transformation, diversity, universal access, and empowerment of historically disadvantaged individuals. In order to ensure a sustainable Investment environment, it is critical for government to create an enabling policy environment. This includes establishing proper investment policy and regulations, building research and development capacity, and promoting innovation. According to the Global Competitiveness Report 2012-2013, the five greatest obstacles to doing business in South Africa are: i) an inadequately educated labour force; ii) restrictive labour regulations; iii) inefficient government bureaucracy; iv) inadequate supply of infrastructure; and v) corruption. The same report ranks South Africa 113th out of 144 countries in labour market efficiency. 10.2 Policy and Regulatory Framework One of the key objectives of the Telecommunications Act of 1996 (repealed in 2006) was to encourage investment and innovation in the telecommunications sector. There have been many advances made in terms of the development of this sector particularly on the investment in infrastructure. But it has also been fraught with challenges. The state of investment in the broadcasting industry is highly regulated in terms of limits set (both for local and foreign) and the licensing process for such services, together with the managed liberalisation. These limits were set in 1993 and they have not been revised, in spite of attempts to do so by the regulator. The infrastructure licence for broadcasting services is issued only after the Minister of Communications has issued specific policy directives. While attempts have been made to integrate postal services into mainstream regulation as part of convergence, demonstrated by the transfer of the Postal Regulator into ICASA in 2005, the postal sector is still governed by the Postal Services Act of 1998. The postal market is divided into two, namely the reserved and unreserved markets. As mentioned earlier, only the national operator, SAPO exclusively operates in the reserved market. The unreserved market is easy to enter as no application is required. A licence is issued upon completing a prescribed registration and payment of a R500 registration fee. There are no specific clauses in legislation, licence conditions or regulations addressing sector-specific targets or mechanisms. 10.2.1 Infrastructure Investment The past 20 years have seen the ownership of telecommunications service entities transforming into a major industry sector that offers considerable investment opportunities to private investors both domestically and internationally. BMI-T has calculated that the cumulative CAPEX since 1993 has been R132,4bn in mobile and R101.8bn in fixed networks. There are several notable examples of foreign direct investment in the telecommunications networks in South Africa. These include the UK's Vodafone's investment in Vodacom, India's Tata's investment in Neotel, Japan's NTT's investment in Dimension Data, and the continued investment by Saudi Oger in Cell C. The regional and international investment in the SEACOM, EASSY and WACS submarine cables has benefitted the local economy. 74 This gazette is also available free online at www.gpwonline.co.za