investment law Tanzania cont.

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;

1. 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.

2. 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.