Foreigners will be required to obtain mandatory investment permits before being allowed to set up shop in Kenya if Parliament endorses a proposal by MPs.
The Trade Committee of the National Assembly said although the Investment Promotion Act requires foreigners to invest at least $100,000 (Sh13.39 million) at current exchange rates), it leaves it optional for them to acquire permits, an avenue that the MPs said had been abused by some foreigners.
“The committee observed that there is a gap in law for registration of foreign investors under the Act (Investment Promotion Act), which is not mandatory. Since Section 3(1) provides that a foreign investor who intends to invest in Kenya may apply to the authority for an investment certificate,” the committee chaired by Embakasi North MP James Gakuya said.
“That Parliament in exercise of its legislative authority to review the provisions of Section 3(1) of the Investment Promotion Act, to provide a mandatory requirement for a foreign investor to apply for an investment certificate to ensure compliance with the requirements, set out under Section 4(2) of the aforementioned Act,” the committee recommended.
The committee’s recommendations come in the wake of allegations by local traders last year that Chinese-owned China Square was engaging in unfair trade practices of undercutting local businesses by selling goods at low prices to bar competitors.
China Square started operations at Unicity Mall, Juja, end of January last year, attracting public attention for selling goods at lower prices compared to other establishments.
Its operational model would later draw the fury of local traders who accused China Square of threatening their existence and causing protests.
The committee, in the report tabled before Parliament on March 7, faulted the government for lacking a coordinated approach in handling of foreign investors, which has led to confusion and instances where some investors take advantage of legal loopholes.
“The Cabinet Secretary in charge of the Ministry of Investment Trade and Industry in consultation with the Council of Governors within 60 days of the adoption of this report to develop a policy framework for the development and implementation of investment policies that mirror the two levels of Government,” it recommended.
