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Exchange Control Rules To Be Relaxed
The medium term budget speech, by Minister Pravin Gordon, on the 27th October 2010 saw several announcements in respect of proposed relaxation of the exchange control rules.
In keeping with a gradual approach to the abolition of exchange control, these new rules once implemented, will be a another step towards such a goal.
Blocked rands
For those who have emigrated from South Africa they will have welcomed the proposal to release all blocked rands. Whilst no exact figures are available it is reported this could be in the region of 10 – 20 billion rands that would now be released and available for transfer abroad.
Of course some outflows may well be welcome as the rand maintains its heady highs against major currencies.
For those with blocked rands, there is little doubt mist would prefer to transfer their money out of South Africa and what better time with the rand so strong.
Emigrants
Emigrants from South Africa currently have restrictions in terms of what they may transfer abroad (see above blocked rands) – the proposal is to scrap these allowances allowing emigrants to transfer all assets. The question of whether to emigrate formally will now become more pertinent as will ensuring the correct processes are followed.
South African Residents
There is a chain of thought that you cannot expect others to invest in your country if you will not allow your own residents to invest abroad. We have seen a gentle relaxing of the limitations imposed on South Africans sending money outside of South Africa but the latest proposal sees a giant leap forward with the life time allowance (4 million per adult) being replaced by annual allowance of 4 million per adult. In addition the discretionary annual allowance will be increased from R 750,000 to R1 million rand.
All told some positive news – it may have an impact on the rand if money starts to flow outwards, investors are sure to welcome any relaxing of restrictions and South Africans can really start to look abroad to widen their investment options.
Author – Incompass Financial Solutions
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