Investment experts say the draft law creating a new company to manage state-owned enterprises is full of flaws.

In terms of a proposed new law, the President will be the sole representative of a holding company that will house state-owned enterprises (SOEs) and will have the power to appoint its board. This has alarmed the investment community, which is worried about political interference in SOEs.

There is growing scepticism among South Africa's investors about the proposed legislation, which is purportedly aimed at strengthening the governance of SOEs and stopping their decline by reforming their ownership model.

The legislation in question is the draft National State Enterprises Bill, which was recently published for comment and has largely been trashed by prominent players in the investment sector for being an empty shell and an exercise in rearranging the deckchairs on a sinking ship.

The key proposal of the Bill is to shift some SOEs under a single state asset management holding company (holdco) instead of retaining them under the Department of Public Enterprises (DPE), which is likely to be closed after next year's elections.

The Bill does not mention which SOEs are earmarked to be moved.

It is expected that the Industrial Development Corporation, Sentech, Safcol and the Development Bank of Southern Africa will be first in line to be...