INTRODUCTION
Definition of investment.
The word investment essentially means an outlay on
an asset that is capable of generating returns over a period of time. The level
of investment depends on the capacities as well as the intents of the
individuals or the organizations that are carrying out the investments. In many
cases, it actually is influenced by the risk appetite of the investor.
Generally, an investment that is more risky offers a
higher return. Investments can be made in stocks of listed companies as well
through initial public offering, in mutual funds, in pension funds, in
insurance sector and with banks in various forms. In respect of companies,
monies paid to buy out other companies as well as holding a controlling stake
in other companies is classified as investments. Investments can be short term
as well as long term, depending on the maturity period.
Investment law is a discipline with an emphasis
focused on legal responsibilities of investors as well legal protection of
investors rights and interests.
SOCIAL
RESPONSIBILITY OF INVESTMENT LAWS
Investment law should address to the investors
immediate priorities in establishment of an effective engagement process that
will address people’s well-being. Among the social responsibility of investment
laws includes the following;
- To encourage promotion of social awareness and education.
One of the social responsibilities of investment
laws is to promote social awareness and education. Investment laws must ensure
that investors participate fully in promoting social awareness of the society
by facilitating various education programs such as building schools in their
investment areas.
- To ensure supply and improvement of social services.
Investment laws should address the investors to
participate in improving social services around their investment areas. Such
social services includes clean water supply, good medical services,
construction of infrastructures such as roads as well as construction of
schools.
3.
To
combat of corruption.
One of the social responsibilities of investment laws is to combat
corruption. Investment laws must make
efforts to establish regulations, laws and oversight institutions aimed at
preventing, investigating and sanctioning corrupt practices, both petty and
grand corruption which are still common in political and administrative
systems. In 2006, the World Economic Forum’s Global Competitiveness Report for
2008-09, mention corruption as one of the main constraints for doing business
in developing countries. So in order for an investment sector to develop,
investment laws should be strictly constructed to prevent corruption.
4.
Improvement
of labour standards and equal employment opportunity.
Another social responsibility of investment laws is to cover the improvement of the fundamental
principles and rights at workers. The laws must ensure that the labour rights
are not violated and trade union rights are correctly exercised. Investment
laws should also ensure the promotion of equal employment opportunity at areas
of investment. Equal employment opportunity includes fair and equitable
recruitment and hiring, equal wages and benefits for equal and comparable
worth, fair and equitable promotional and training opportunities, and the right
to organize and join representative trade unions and associations.
5. Protection
of environment.
To ensure
protection of the environment is another social responsibility of investment
laws. The laws must be formulated to monitor the environmental management
policy. The investment laws must be strictly formulated to protect the
environment by preventing practices which are known to endanger the
environment. The practices which endanger the environment includes unsafe
nuclear waste disposal, improper use of chemicals and contaminants and
ineffective or inadequate pollution control.
6. Protection
of human health.
Another
social responsibility of investment laws is to promote human health by being
strict on practices which endanger human health. Practices which endanger human
health includes sale and distribution of known contaminated products, sale and
distribution of therapecetically ineffective or dangerous drugs and purchasing
goods from or selling goods to companies known to disregard workers safety.
ECONOMIC
RESPONSIBILITY OF INVESTMENT LAWS
Investment
laws plays a great role in the development of the economy of the country.
Investment laws are to be constructed in such a way that they can promote
investment and encourage investors to invest their capital in difference
economical and commercial sectors. The investment laws should also maintain and
enhance a positive investment image of a country. The following are economic
responsibility of investment laws;
1. To
encourage investments in a country.
One of the
economical responsibility of investment laws is to encourage investment in a
country. Investment laws are to be constructed in such a way that they
encourage and attract investors to invest their capital in various economical
sector so as to bust and push forward the economy of the country.
2. To
promote the growth of the economy of a country.
Another
economic responsibility of investment laws is to promote the growth of the
economy of the country. Investment laws are to be constructed in such a way
that the country get huge profits as a result of good investment policies. The
investment laws should make sure that both local and foreign investors
contribute much in the growth of the economy of the country.
3. To
ensure that investors do not avoid or evade tax obligations.
Tax as a
compulsory contribution levied on income to the support of the government in
the growth of its economy should not be evaded or avoided by investors. Investment
laws are to be constructed in such a way that they put restrictions to
investors for taking advantage of the most beneficial provisions of the laws to
eliminate or minimize their tax obligations as one of the economic
responsibility of investment laws.
4. To
give equal opportunity for investment to both local and foreign investors.
Another
economic responsibility of investment laws is to give equal opportunity to both
local and foreign investors to participate in the country economy. The
investment laws are to be formulated in such a way that they give equal chance
to both the local and foreign investors to participate fully in the economy of
the country by investing their capital in most strategic investment areas.
5. To
provide for investment incentives
In order
to ensure the promotion and development in growth of the economy of a country,
investment laws should provide for tax reliefs which may be accessed by
investors in less strategic investment areas so as to promote investment in
those areas and to increase funds to the country economy for economic growth.
Conclusion
and Recommendations.
From the contributions, there is
substantial evidence that investment laws can have impact to economic growth
and poverty reduction. In order to channel the benefits of investment laws to
the country, the government has a key role to play particularly on the
designing of incentive packages and related regulatory mechanisms.
To accelerate economic growth and
poverty reduction through investments there are the following recommendations
to take into account:
• There is need for the general
public to be made aware of the incentives given to foreign investors and those given
to local investors. In order to make use of the incentives for the locals,
deliberate measures should be taken to develop the local entrepreneur’s capacity
to absorb the incentives.
• Incentives should be a short
term strategy expertly designed for specific industries to attract investments.
The long term strategy should be to improve the environment for doing business
to cut down the cost of doing business. Improvement of energy sector, port and
road and railway network connecting to neighboring countries should be given
the deserved weight in economic planning and development.
• Corporate Social
Responsibilities programmes by investors should be well coordinated with government
development plan to ensure they contribute to long term development agenda of
the respective communities.
