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IRF DAILY

31 May 2011

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IN THE NEWS TODAY

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LOCAL NEWS

Investment confusion

WHAT SHOULD INVESTORS DO WHEN THE EXPERTS DISAGREE?

PHILADELPHIA - Franklin D. Roosevelt, a man who knew something about the topic, once remarked that

“there are as many opinions as there are experts.” He was depressingly spot on.

Looking over the various pieces of investment analysis that I’ve read in the last week, I’m struck by how

much conflicting advice is out there at any given moment. In just a few days, for example, one highly

regarded fund manager said that resources offer great value, while another said that they’re overpriced.

Similarly, within days, one institution issued an opinion that inflation is not a major issue, while another

called inflation the most serious threat facing investors. Given the existence of well-argued but

diametrically opposed opinion, how are we to decide who’s right?

Unfortunately, there are no hard and fast rules for judging which seer is seeing most clearly. Investment,

because it involves judgments about the course of future events, is a fundamentally uncertain business.

Experts can be a useful resource for those trying to navigate their way to prosperity, but in the end,

nobody really knows which path is right, and the judgment and responsibility rest on the shoulders of the

individual investor.

There are a few basic strategies you can employ to deal with this fact: you can pick one or more experts

and trust them with your money; you can eschew experts in favour of putting your money into index

tracking funds and trusting the market; or you can manage your own portfolio.

Picking a money manager

A very common approach to investing is to simply select a fund manager or two, and let them invest your

money as they see fit. There is a lot of sense in this strategy, particularly if you are careful about whom

you select.

As John Kinsley, managing director of Prudential Portfolio Manager’s Unit Trusts points out: “If you don’t

have the time, expertise and a disciplined framework for making investment decisions, you will be better

off leaving this to the experts. Any professional portfolio management team worth its salt is supported by

a team of experts including researchers, analysts and professional traders who have the ability and tools

to implement investment decisions cost-effectively and timeously.”

The trick is to pick the right team. A lot of investors use unit trust performance rankings to select fund

managers, but this isn’t a foolproof strategy since performance tends to be highly variable over time. A

more sensible approach is to try to understand different managers’ philosophies and to select one that

chimes with your own.

Tracker funds

This is another popular approach, and one that’s pretty well-supported by research. Basically, researchers

have shown that, on average, very, very few fund managers outperform the market over time. In other

words, over a period of many years, most fund managers do not deliver returns in excess of the returns of

the overall market. What’s more, since fund managers generally charge fees, even when they do

outperform the market, a chunk of that extra return ends up going to fees instead of to investors.

Based on these findings, financial institutions have developed so-called index trackers, funds which simply

replicate the overall market (or a piece of it) and charge minimal fees, trusting that in the long run,

investors in such funds will get the same returns as everyone else. These instruments offer a very good

way to invest, and generally have been shown to offer comparable or better returns than managed funds

over time.

Of course, with this strategy you lose the chance of outperformance, and you are entirely at the mercy of

the investment cycle – when markets rise you make money, when they fall you lose it. Active management,

on the other hand, can sometimes enable investors to profit even during a downturn. Full Report:

http://www.moneyweb.co.za/mw/view/mw/en/page292678?oid=538056&sn=2009+Detail&pid=287226

Moneyweb

31 May 2011

By Felicity Duncan

Business is cleaning up its act

The new Companies Act calls on directors to rethink their ethics strategy

The new Companies Act came into effect this May. It now places much more responsibility on top

management and holds directors liable for losses.

The Act was ushered in by Trade and Industry Minister Rob Davies, with the aim of reducing the red tape

and cost of doing business in South Africa. One of the legal ramifications of the Act is the requirement of

all listed business, companies with over 750 on their public interest score (in two of the last five years)

and state-owned companies to establish a social and ethics committee.

This committee is the equivalent of a Corporate Social Responsibility committee, as companies are now

legally responsible for the positive impact of company activities on the environment, consumers,

employees, communities, stakeholders and all members of the public.

No less than three directors or 'prescribed officers' (senior managers or executives) should be involved in

the committee. At least one of them should be a non-executive director and must have been non-executive

for the previous three financial years.

The new Act is in line with the recent move towards good corporate governance espoused by the King III

Report. While King III provides recommendations which are not legally enforceable, the Companies Act is

law.

Businesses now have within 12 months to comply with the Companies Act, so it is important for

companies to understand their current ethical standing before they proceed. King III states that, "The

establishment and maintenance of an ethical corporate culture requires the governance of ethics, that is,

the board should ensure the company has a well designed and properly implemented ethics management

process."

The problem, however, is that large corporations lack the tools to enable them to properly monitor

business ethics. If companies don't know where they stand, then how can they know which way is up?

Cynthia Schoeman (Pictured above), external lecturer at Wits Business School and former HR director at

TWP Projects, heads up her own company, Ethics Monitoring & Management Services, an answer to this

ethical dilemma.

It is focused on improving ethics in the workplace and building a critical mass of people who are

committed to ethics. "Ethics is the new fault line for businesses," says Schoeman. "It's unlike any other

workplace challenge as failure cannot be corrected by simply cutting costs next quarter."

Schoeman employs a web-based survey, the Ethics Monitor, which is basically a measurement tool

intended for organisations with employees of 100 or more who regard having a high ethical status as an

important factor in mitigating risk.

"The results of the Ethics Monitor survey provide insight into the ethics of an entire business beyond what

the CEO reflects to Board members," Schoeman continues. The new Companies Act and the King III

Report both point towards ethics as a central issue in business management. If ethics fail, the blame now

falls on the shoulders of directors.

Businesses that do exercise high levels of ethics will enjoy greater investor confidence, customer loyalty,

easier access to capital and will attract top talent… all contributing to competitive advantage.

Competitive advantage or not, the new Companies Act highlights a higher level of legal responsibility for

directors and top management to make sure their companies are in line with the law. And now, ethical

business is law.

Investment Times & Investment News

30 May 2011

By Stella Carter

A successful Treating Customers Fairly (TCF) implementation should render industry watchdogs obsolete

I’ve been immersed in the short-term insurance world of late. My first assignment was the unveiling of

Santam’s new logo along with their “Insurance, good and proper” strap line. There are those who say it’s

not ‘good and proper’ English, but what punch market phrase is? Next I attended a media presentation

announcing Discovery Insure’s arrival in the domestic personal lines space (let’s hope their distribution

force can explain the product in plain English!) And finally I attended a luncheon where I received the

latest copy of the Ombudsman for Short-term Insurance (OSTI) 2010 Annual Report. At these functions

I’ve listened to complaints about the number of new competitors in the market, concerns over ‘tow and

repair’ products masquerading as comprehensive motor cover, and the usual condemnation of the direct

insurer ‘no commission’ promise – but by and large the industry remains robust.

Despite the occasional hiccup the majority of local insurers are posting reasonable profit. Ian Kirk, chief

executive of Santam, said the strong rand and steep reduction in motor accident frequency had a welcome

impact on the group’s bottom line. Underwriting margins were nicely within the group’s 4% to 6% ‘target’

while the payout ratio – percentage of premium paid back to motorists at claims stage – hovered at the

70% mark. He used the Santam ‘brand’ launch to issue a challenge to his competitors to apply ‘good and

proper’ to their businesses too. He urged all insurance industry stakeholders to pay more attention to

consumer education at advice stage and to avoid ambiguous marketing campaigns. I can’t be certain, but

the insurance giant’s brand unveiling had a definite ‘Treating Customers Fairly (TCF)’ feel to it…

It’s as if Santam has laid down a challenge to the regulators: Bring your new legislation – we’re already

at work implementing it!

The new gatekeepers for the Equity and Fairness principles

The Financial Services Board (FSB) will succeed with its TCF implementation when the principles of

fairness and equity currently upheld by the OSTI are successfully taken up at product provider level – and

adopted throughout the distribution chain. It makes sense really… Because the idea with TCF is that the

consumers’ rights and interests be considered at every stage of the short-term insurers’ (or other financial

services providers’) business processes. At product design stage the insurer will have to focus on whether

their product is necessary, affordable, ‘fit for purpose’ and transparent. The insurer will then have to make

sure the product is distributed appropriately, whether the direct or broker channel is favoured. An

important requirement at this stage will be to ensure the consumer understands what the product will

and will not do. This is something Kirk refers to as “the promise”. And finally the product (meaning the

insurer) will have to perform, by living up to its promise at claims stage.

Judging by the number of complaints landing up at the OSTI, the short-term industry has some way to go

along the TCF path. “In 2009 the Office of the Ombudsman experienced, for the first time in its history, a

decline in the number of complaints received. This trend continued in 2010 with the total number of

complaints received falling marginally over 2009 levels,” observes Ombudsman Brian Martin in his

‘introduction’ to the annual report.

The office received 8,778 complaints through 2010 and was able to ‘recover’ R130 million for consumers.

Martin says the result was pleasing given the prevailing economic conditions and the pressures

experienced by both consumer and insurer through 2009/10. Recessionary conditions led to an alarming

number of complaints stemming from non-payment of premium or the confusion created by ‘churn’ from

one insurer to another in an attempt to ‘save’ on monthly premium.

FA News

30 May 2011

By Gareth Stokes

Compliance best practice guidelines available online

The Compliance Institute of South Africa announced today that its Generally Accepted Compliance

Practice framework (GACP), the first of its kind in the world, is now available for purchase online.

The GACP is a set of principles, standards and guidelines that act as a compliance best practice benchmark

for organisations and their Compliance Officers. It can now be ordered online through the Institute and is

available in an A5 loose-leaf binder as well as in electronic format.

The cost of the GACP is R600 (excluding VAT) for a hard copy and R300 (excluding VAT) for an electronic

copy. Members of the Institute are entitled to one copy of the GACP free of charge as part of their

membership.

FA News

30 May 2011

J Arthur Brown, Noseweek are lying - Old Mutual

OLD MUTUAL DENIES POCKETING R300M OF WIDOWS’ AND ORPHANS’ CASH.

JOHANNESBURG - Old Mutual has taken strong exception to a recent Noseweek article in which it was

claimed the insurance and investment giant “pocketed” R300m of widows’ and orphans’ cash.

Noseweek’s lead article for April was dedicated to telling J Arthur Brown’s side of the story. Brown,

apparent founder of Fidentia, claims he has been so unfairly maligned by journalists, lawyers, curators,

the Financial Services Board, and even judges, that he cannot possibly receive a fair trial. He has been

charged with fraud and theft.

Perhaps the most interesting part of the piece was a sidebar titled “Who pocketed the widows’ and

orphans’ cash?” The answer, if you believe Brown and Noseweek, is Old Mutual. The widows’ and orphans’

money, worth roughly R1bn, was housed in an entity called the Living Hands Trust. This money was

managed by Old Mutual, before it was transferred to Fidentia, in late 2004.

Noseweek reported that in the five years the money was in Old Mutual’s control, the Living Hands Trust

had lost an effective 23% of its capital value. This, while paying out just 4% per year.

“When the trustees of the Living Hands Trust decided to move their funds, their portfolio was said to be -

in the most recent statement from Old Mutual - worth R1.2bn,” Noseweek reported. “But Old Mutual

eventually only transferred R898m to Fidentia Asset Management. The balance of R300m of widows’ and

orphans’ money, Old Mutual had pocketed for itself as a ‘termination fee’.”

Noseweek quoted Brown as saying: “I am accused almost daily of having stolen from widows and orphans,

yet Old Mutual could benefit by this obscene amount in cancellation fees - in addition to their usual

generous management fees - without so much as a mention in the press, let alone public outcry or

sanction.”

On April 15, Moneyweb contacted Old Mutual, requesting its comment on the alleged R300m termination

fee.

Old Mutual denied the allegation. We asked Old Mutual if it could elaborate on how the trust’s money

performed under Old Mutual’s watch. We asked how much it initially received, how much was paid to

beneficiaries, and how much was eventually transferred to Fidentia. Full Report:

http://www.moneyweb.co.za/mw/view/mw/en/page295046?oid=537233&sn=2009+Detail&pid=287226

Moneyweb

17 May 2011

By Julius Cobbett

INTERNATIONAL NEWS

Nine out of 10 women face poverty in retirement

NINE out of 10 women face poverty in retirement because they are far less prepared for older age than

men, it was predicted yesterday. The 'Sheconomy' conference heard women account for 85pc of

consumer purchases, but they neglect to protect themselves financially.

This means that when it comes to retirement, redundancy and serious illness, women do not tend to have

anything in place to allow them to draw down money and are left with state supports.

The conference, which was organised by Zara Mulholland Byrne of Mulholland Life and Pensions, Dublin,

in association with Aviva Life and Pensions, found that four out of 10 women have no pension.

Ms Mulholland said: "Retirement can be a big shock, even for the most highly paid professionals and that

is because most women don't allocate some of their earnings to fund their retirement.

"In fact, according to a survey conducted by Axa, 42pc of Irish women have no pension."

The adviser said that women find themselves with considerably less money to live on when they give up

work.

"Only one in 10 women will maintain the same quality of life after retirement. Statistically, women live

longer than men, so they have a wider gap of retirement time to fund."

Nearly 90pc of women experience a significant drop in income, and this can result in a loss of

independence, spending power and self-esteem, Ms Mulholland said in reference to research by HSBC

bank.

Contributing factors to these difficulties included the fact that women were more likely than men to work

part-time or take career breaks due to childcare and family commitments. They were also more likely to

care for an elderly relative and bear the associated costs.

Retirement

Women will ordinarily take an earlier retirement than their male counterparts and, even today, women

can often remain subject to lower wages than men, the conference was told.

All of these elements have the potential to significantly reduce women's pension contributions, the

Sheconomy event was told.

The fact that women have longer life expectancy means women can find their modest pension pots have

even further to stretch leaving them with a disappointing income through later years.

People generally tend to put funding a pension on the long finger, Ms Mulholland said.

"The key is to start early. It is important to get sound advice from a well-established pension provider.

Women can start a pension later in life and still improve their retirement prospects considerably, she

added.

Personal Finance

31 May 2011

By Charlie Weston

New pension rules 'risk a mis-selling scandal'

Millions of workers will be put at risk of being sold the wrong pension and losing half their retirement

income under government plans, a leading investment manager warns.

David Pitt Watson, of Hermes Fund Managers, says Coalition plans to automatically enrol workers in

pension schemes will expose many to the danger that their money ends up in unsuitable funds that eat up

much of their savings in fees.

In a letter to The Daily Telegraph, he warns of a "second crisis of mis-selling" even bigger than the scandal

of the late 1980s, when more than one million people are thought to have been wrongly advised to take

out personal pensions instead of staying in company schemes.

Under new "auto-enrolment" rules, which will take effect next year, all workers and their employers will

be obliged to pay into a pension fund.

The rules are aimed at the seven million workers who are not saving enough for their retirement.

Employers will pay three per cent of salary towards an employee's scheme and workers will pay four per

cent. The scheme will cover all workers, except those who actively opt-out.

Crucially, employers will choose where to invest the money. Mr Pitt Watson fears that many could end up

putting the savings into badly-run or even fraudulent funds.

Related Articles

Pension mis-selling scandal looms amid reforms

16 Feb 2011

Financial advice needs reforming, says FSA

16 Dec 2010

"There will be no restrictions on the terms which can be offered by private providers of auto-enrolled

pensions," he warns.

"History suggests we can expect that many will be sold pensions where 50 per cent or more of their

potential pension disappears in charges.

"Perhaps even worse, it seems there are no restrictions on how the money will be invested, or adequate

standards for the records that providers will need to keep. A recipe, some might say, for fraud."

When auto-enrolment begins, workers will have the option of putting their money into a new,

government-controlled pension fund, the National Employment Savings Trust (Nest). Individual

contributions will be capped at £4,200 a year, meaning anyone saving more than that will need to look

elsewhere.

Mr Pitt Watson says the cap means there is a danger that, instead of putting some money into Nest and

some into a private fund, some employers will put all their workers' money into a private fund. "In a well-

functioning market, that might not matter too much. But we know from past mis-selling scandals that too

few people understand how charges work," he says.

A Department for Work and Pensions spokesman said: "We aren't complacent – we and the pensions

regulator will be closely monitoring automatic enrolment and have powers to prevent excessive

charging."

Telegraph News

31 May 2011

By James Kirkup , and Holly Watt

OUT OF INTEREST NEWS

State lost R238m to social grant fraud

15,004 PEOPLE HAVE BEEN CONVICTED SO FAR.

The SA Social Security Agency (SASSA) has lost R238 million to social grant fraud since 2005, Social

Development Minister Bathabile Dlamini said on Monday. The agency was defrauded of R12 million in

2005, when it was established. In 2006, the figure more than doubled, the minister said in written reply to

a parliamentary question by the Democratic Alliance.

She said 17,908 fraud cases were brought to court by December 2010 and 15,004 people have so far been

convicted of social grant fraud.

Dlamini said by the end of last year, the government had recovered more than R85 million, and was

hoping to get back all money lost due to fraud.

She said every person convicted for defrauding SASSA was made to sign an acknowledgement of debt to

repay the money, with interest of 15 percent. The state is still owed R214 million and is collecting the

money on a monthly basis. The interest collected is paid over to the national treasury.

Moneyweb

31 May 2011

What goes around comes around

WHO EVER COINED THIS ADAGE MUST HAVE HAD LIQUIDATOR ENVER MOTALA IN MIND.

But the removal of Motala last week as one of the liquidators of the old Pamodzi Gold Mines may have, in

my opinion, come a bit too late. None the less, it is probably the biggest positive move since the Pamodzi

mines were placed under provisional liquidation a couple of years ago.

Motala was removed as liquidator by the master of the high court, following an investigation into his

(Motala’s) work. The Master retained the four other liquidators to continue with the work.

His removal will unravel Motala’s strangle-hold and prize open the veil of secrecy that has so dominated

the whole liquidation process all along.

As the National Union of Mine Workers (NUM) and Solidarity have said, Motala’s removal “had improved

transparency” on how the rescue plan for the Orkney and Grootvlei mines were going to unfold.

It has taken a bit too long - more than two years - to be precise. But justice has been done.

Well, Motala has vowed he would fight his removal as liquidator. I doubt. But we will see.

I do not know what it is exactly that the Master of the High Court’s investigation unearthed.

But a lot of shenanigans have happened since the mines in question were placed under liquidation and

when Motala took charge. Full Report: http://www.moneyweb.co.za/mw/view/mw/en/page292679?

oid=538014&sn=2009+Detail&pid=287226

Moneyweb

30 May 2011

By Sipho Ngcobo

Walmart ruling to send signal on investment in SA

The way in which the competition tribunal decides on the proposed buyout of Massmart by Walmart will

offer a sign of things to come in the investment climate of South Africa

SA will send a strong signal to would-be foreign investors today when the Competition Tribunal rules on

Walmart’s R16,5bn bid for a 51% stake in local retailer Massmart .

The decision, due to be published at 2pm – 7am in Bentonville, Arkansas, where the US giant is

headquartered – will give the strongest indication to date of how SA’s antitrust regulator interprets the

public interest concerns that local competition law obliges them to consider in any takeover.

While the deal has not raised typical anti-competition concerns such as potential monopolies arising out

of a combination of Walmart’s operations with those of Massmart – as Walmart has no current business in

SA -- competition lawyers say this is the first takeover decision contested purely on public interest

grounds. And in this deal, those are jobs and local manufacturing.

"There will be jobs created there, but we are worried about the impact on suppliers," says Trade and

Industry Director General Lionel October. The tribunal has to walk given the potentially conflicting goals

of promoting competition in Africa’s biggest economy and limiting any possible negative side effects of the

deal. Unions and government, warning of surging imports at Massmart due to access to Walmart’s global

procurement network, are pushing for the imposition of conditions such as Massmart committing to its

current level of local procurement for a period of five years.

Faced with the growing realisation that conditions were likely, the companies changed their tune at the

end of the six-day public hearing that concluded on May 16. They dropped their earlier refusal to make

guarantees and offered "voluntary" conditions they would accept to ease passage of the deal. The

companies voluntarily offered no retrenchments for two years; recognition of the main staff union for as

long as the tribunal wanted; and setting up a R100m fund to help small suppliers meet their procurement

needs.

They resisted, however, any commitment to buy locally, saying that while Massmart’s expanding food

retail operation was likely to increase local food purchases automatically, any attempt to mandate local

purchases was akin to economic engineering.

"The process of integration of SA into the world economy has been ... one in which there are winners and

losers. Overall, SA has been a significant winner in that process," David Unterhalter SC, for Walmart, told

the tribunal in his closing remarks. "Selective intervention … is frankly a situation where one is

intervening in a wholly ineffectual way in a way to deal with forces vastly bigger than any one firm and

any one intervention."

The battle the companies had was to convince the tribunal that the benefit of lower prices that all parties

would agree were likely to result from Walmart’s efficient procurement processes would outweigh the

risks to manufacturing and labour relations.

"It matters greatly what are the likely consumer benefits," Mr Unterhalter argued. "When you do your

ultimate reckoning, consumer welfare is a signifcant public good. We say is a central public interest. We

think… the likelihood of substantial consumer benefit… is a heavy weight that must be placed in the scales

that you must look to."

Unions, however, argued that a Walmart-backed Massmart would be a far more powerful entity than any

local retailer, and that intervention was necessary to level the playing field.

"The proper perspective is that you recognise that the sheer size of Walmart, being above and beyond

anything you have faced, is such that it needs to have its unlimited competitive power curbed. It’s not

about making it uncompetitive, but curbing its competitive powers," Paul McNally SC for clothing workers’

union Sactwu argued before the tribunal.

The tribunal’s ruling will also establish precedents that will influence future considerations. One that is of

concern to the companies is an argument that the unions and government made about 503 Game workers

that Massmart retrenched in May last year.

These workers were retrenched as part of a get-fit exercise by Massmart ahead of what it new was a likely

bid by Walmart, the two sides argued. The companies vehemently rejected the allegation, arguing that the

workers had been sacked after all other efforts – including trying to reach agreement with retail workers

union Saccawu on a flexible 40-hour working week – had failed. Full Report:

http://www.businessday.co.za/articles/Content.aspx?id=144352

Business Day

31 May 2011

By MICHAEL BLEBY

Patel insists jobs target can be met

Patel says so far growth has been credit- fuelled and consumption-led but SA now needs to create a

sustained base for consumption underpinned by production

CREATING 5-million jobs by 2020 is realistic but steps to achieve the goal must be speeded up, Economic

Development Minister Ebrahim Patel says.

"We have been in conversation for a long time, it is clearly time for action — we are two years into a new

administration," he said yesterday. "The goal of 5-million jobs is realistic and realisable, but it does

require purposeful implementation."

Mr Patel was speaking at a conference discussing the issues raised by the government’s New Growth Path,

which was unveiled last year. The strategy aims to make SA’s growth more sustainable and inclusive, and

to reduce poverty and inequality.

"So far growth has been credit- fuelled and consumption-led — we need to create a sustained base for

consumption underpinned by production," Mr Patel said.

He said mining was central to the economy, and only a small group had benefited from it so far. But he

declined to say whether he supported nationalising the mines — which is being investigated by the

African National Congress.

"The challenge in mining is, how do we increase the base of extraction and beneficiation into more jobs?"

Mr Patel said.

The New Growth Path identifies several sectors for employment creation, including mining beneficiation,

tourism, construction, processing of agricultural products and the "green" economy. It also calls for a

more "stable and competitive" exchange rate — a controversial topic as views differ on whether the level

of the rand can be managed.

Trade and Industry Minister Rob Davies said yesterday the rand was still overvalued.

"There is no question about it. The question is what do we do about it. It’s not an easy question, but the

fact is that we are sitting with an exchange rate which is less then optimal for the trading sector and

manufacturing," he said.

Business Day

31 May 2011

By Mariam Isa

SA wants to work on an alternative trade deal

Trade and Industry Minister Rob Davies revealed plans to alter trade deals with BRICS members

SA IS proposing to work on an alternative trade package with Brazil, Russia, India and China of the Brics

group, to advance global trade after hopes of concluding the decade-long Doha round of talks were

declared dead yesterday.

"There is now recognition that the window of opportunity to conclude the Doha round has closed and that

there would be no conclusion to the Doha round in 2011," Trade and Industry Minister Rob Davies said

yesterday.

Mr Davies said the work going on now was no longer an attempt to conclude the Doha talks but a bid to

deliver "a much smaller package".

A ministerial conference has been planned for December to discuss proposals on global trade.

The World Trade Organisation (WTO), which regulates world trade, has on numerous occasions failed to

conclude the Doha talks.

Trade negotiators from developed and developing countries have yet to resolve their differences on key

issues central to the successful conclusion of the Doha round of talks. The issues include industrial tariffs

and agricultural subsidies.

Mr Davies said SA had made onerous commitments on industrial tariffs as a result of being classified as a

developed country by the WTO.

The country is lobbying for this classification to be removed.

SA, Brazil, China and India criticised what they see as the protectionist measures of the agricultural

industry in developed countries. Russia is not a member of the WTO.

Trade policy analysts agreed yesterday that the Doha round of trade talks was dead.

"He (Mr Davies) is right. The bottom line is that the world is not yet ready to conclude the talks," said

Peter Draper, an adjunct professor of international business at the University of the Witwatersrand.

"What was on the table was not perfect but it was better than nothing," Mr Draper said.

He warned that an implication of this deadlock could be to encourage countries to be more protectionist

and to disregard the jurisdiction of the WTO.

Mills Soko, associate professor of international political economy at the business school of the University

of Cape Town, blamed a "crisis of leadership and multilateralism in the world trading system" for the

failure of the Doha talks.

"Globalisation is very unpopular in developed countries as trade is seen as a cost and not as a benefit,"

Prof Soko said.

Business Day

31 May 2011

By Loyiso Langeni

Compiled By

Ruwaida Kassim

Institute of Retirement Funds, SA

Tel: 011 781 4320

WEB: www.irf.org.za

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