A foreign direct investment model for tourism property acquisition
Snyman, Janetta Adriana
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Foreign direct investment is a much debated topic worldwide. Without foreign direct investment, the Tourism Industry of South Africa cannot achieve its full potential. Therefore, the role of foreign direct investment cannot be disregarded, for it can significantly contribute to a country's tourism and economic growth. This leads to the primary research goal of this study, viz. to develop a foreign direct investment model for the South African Tourism Industry to so as to successfully attract and sustain foreign direct investment. In order to achieve this aim, a literature study and an empirical study was conducted. For the empirical research, a quantitative research method was used. The target population was identified by means of a convenience sampling method. One hundred and fifteen questionnaires were handed out to various estate agencies in South Africa that had sold property to foreign investors. These estate agents were situated in the Western Cape, Eastern Cape, KwaZulu Natal, Limpopo province, Gauteng as well as Mpumalanga. Four objectives were derived from the primary research goal. The first objective was to establish what it is that South Africa is able to offer to foreign investors. It was found that these opportunities exist in infrastructure, suprastructures, spatial development initiatives as well as conservation areas. The second objective was to establish the determinants and a country's tourism's characteristics that will influence foreign direct investments. It was found that both macro- (openness and exports, exchange rates, inflation rates, budget deficits, investment and infrastructure, and political instability) and micro-determinants (market size and growth, labour costs, host government policies, tariff and trade barriers and the product life cycle), as well as the tourism characteristics, the components of a tourism product, services, and the tourism growth potential of a country positively influence foreign direct investment to a host country. The third objective was to determine the role of the South African government and institutions with respect to foreign direct investment. This was done through a literature study and a quantitative analysis. It was found that a country's success in attracting foreign direct investment is largely dependent on the government of a country, i.e. its policies as well as legislation, strategies to attract foreign direct investment as well as incentives that the government of a country offers to prospective investors. Role players such as institutions (SA Tourism, International Marketing Council) as well as the government should liaise with estate agents in order to enhance foreign direct investment. Lastly, the South African government should ensure political and economical stability. The fourth objective was to make recommendations regarding foreign direct investment in the South African Tourism Industry. It was recommended that the South African government should address the crime factor in South Africa. The high crime rate in South Africa influences foreign investors negatively. More police officials should be trained and harsher punishments should be bestowed on offenders. It is also recommended that foreign direct investment should be encouraged to ensure tourism development in South Africa. In order for South Africa to remain a global player in this field, as well as to sustain tourist numbers, the country's tourism policy is to be government-led, private sector driven and community-based. Therefore, tourism cannot fully develop without foreign direct investment. The study also indicated that there is a strong correlation between the foreign tourists who visit South Africa and the investments that took place; therefore it was recommended that the model developed should be implemented to ensure sustainable foreign direct investment in the South African Tourism Industry.