11 October 2005 A Walk Through the Global Village Dawie Roodt Efficient Group Presented by

Index Us Our Neighbours Us and Them Global Hotspots If I was the Minister Threats Pick Your Currency What now?

Us

Economic Aggregates Fiscal Deficit (Fiscal)-1.6%-0.9% CPIX (average)4.3%4.2% Prime Interest rate (year-end)11.0%10.5% PSCE (year-end) adj16.1%18.6% Current Account : GDP-2.9%-2.7% R/$ (year-end) GDP (full year)3.7%4.4%

Outcome: Revenue R bnBudget ‘04EfficientDifferenceBudget ‘05EfficientDifference Personal Tax Company Tax VAT Excise Duties Fuel levy Other Total

State Finance

Government Finance

Inflation

Interest Rates De Kock Stals Mboweni

BoP

Rand Valuation Gold $800 Rubicon Stock market crash ANC, Reds fall Elections Exchange controls Asian Wakefordgate Rus, Zim, Arg Fin Rand NOFP +NOFP -

GDP

Our Neighbours

4% of African Area 23% of African GDP 21.2% of African Exports

Mistakes made in Africa Idolise Leaders Marketing Boards Nepotism Incompetence Corruption Poor Fiscal Discipline Too Relaxed Monetary Policy Unrealistic Projects ????????

GDP Source: UN

AIDS Source: UNAIDS

Us and them

$ € Yuan ¥ £ R

Euro Composition CountryCurrencyConversion rate:€1 AustriaSchillings13.76 BelgiumFrancs40.34 FinlandMarkkaa5.95 FranceFrancs6.56 GermanyDeutsche Marks1.96 GreeceDrachmae IrelandPound0.79 ItalyLire LuxembourgFrancs40.34 NetherlandsGuilder2.20 PortugalEscudos SpainPesetas166.39

$ € Yuan ¥ 15 years?

$ € Yuan ¥ € 50 years?

$ € ? € Sensible?

Percentage of World, ‘04 CountryCountry AreaGDPGDP per CapitaInternational Trade (03) Africa 20.3%2.2%$8952.5% South Africa 0.8%0.5%$ % Japan 0.3%11.4%$ % France 0.4%5.0%$ % Germany 0.2%6.8%$ % UK 0.2%4.3%$ % USA 6.4%27.6%$ % China 6.4%4.5%$ % Russia 11.4%1.5%$ % India 2.2% $6260.9% Brazil 5.7%1.9%$ %

GDP, y:y Q2 05 Source: Economist

GDP, 99 – ’03 avg Source: World Bank

Inflation, Aug 05 Source: Economist

Interest Rates, Aug 05 Source: Economist

Africa - Loser FDI In: $15bn FDI Out: $1.3bn Western Europe FDI In: $310.2bn FDI Out: $350.3bn North America FDI In: $36.4bn FDI Out: $173.4bn South America FDI In: $49.7bn FDI Out: $10.7bn Central & Eastern Europe FDI In: $20.9bn FDI Out: $7.0bn Asia - Winner FDI In: $107.1bn FDI Out: $23.6bn FDI Flows 2003 Source: World Bank

Global Hotspots

Hotspot If China grows at its five year average (8.52%) it will surpass the US in 2040 if the US continues at 2.78%

Tax systems PersonalCorporateDividendsSales, value added France49.58% (€47 131)34.33% territorialIncome tax19.6% Germany47% from (€52 293) %Income tax, 50% exempt 16.0% Japan50% nat.; local (¥18m) 30.0%Comp tax 50% exempt; income tax 16.0% UK40% (£30 500)30.0%10%; 32.5% (£30 500)17.5% USA35% Fed; 0-11% state ($ ) 35.0% Federal % state Comp tax; 5-15%; double taxed 0% Federal % state SA40% from R %12.5% exempt in indv14%

Flat Taxes Systems Flat tax first introduced in the 19 th century Estonia – 24% Latvia – 25% Russia – 13% Slovakia – 19% Romania – 16% US States ranging from 3.5% - 5.3% Illinois Indiana Massachusetts Michigan Pennsylvania Canada provinces –Alberta – 10.5%

Considering Flat Tax Systems Poland – 15% Greece – 25% Czech Republic Croatia The Netherlands – 40% USA

If I was the Minister

Tax Requirements Consumption tax + 6% Redistribution tax + tax on dividends Sin taxes

Tax Requirements Consumption tax + 6% Redistribution tax + tax on dividends Sin taxes No corporate taxes No other taxes

Threats

Oil: Impact

Commodities

Pick Your Currency

International Currencies

What now?

Asset Allocation, 2005 Reason DomesticRatings upgrades, GDP, Commodities International ( )Uncertainty over oil price; economic recovery – Heavy Overweight – Overweight – Neutral – Underweight – Heavy Underweight

Asset Allocation, 2005 DomesticInternational Equities Property( ) Bonds Cash – Heavy Overweight – Overweight – Neutral – Underweight – Heavy Underweight