Business is the basis of wealth in a country and therefore needs "appropriate" regulation, but policies must not deter investment, says former Education Minister and Professor of Law Kader Asmal.

Speaking at a conference at the South African Institute of International Affairs in Johannesburg this week, he stressed that business had to comply with the internal order of the State, but cautioned that government policies should not be so "vulgar" as to deter potential investment into the country.

Asmal, a Professor of Law at the University of the Western Cape and also a former Water Affairs and Forestry Minister, argued that the best way to encourage investment and create wealth was through a free-market system.

However, he added that multinational companies that invest in South Africa need to adhere to the country's laws and policies, and emphasised the need for business to promote and uplift the local community. This corporate social responsibility, Asmal stated, was the key to creating business sustainability in the country.

He referred to an example of how multinational agricultural companies in the past have extracted the country's resources and failed to uplift the local farmers. Further, he pointed out that certain mining companies have not done enough to uplift local communities.

Asmal argued that companies and multinationals needed to facilitate wealth and social wellbeing in the country in order for the partnership between government and business to be mutually beneficial, stressing the importance of indigenous social upliftment.

Citing the problems of government-business regulation in the country, Asmal stated that South Africa had one of the strongest internal legal orders in the world, but that it lacked the means to enforce this order.

He pointed to the dissolution of the Scorpions, which was replaced by a new priority crime investigations unit, the Hawks, and the lack of an independent unit of enforcement, as part of the problem.

He added that this had led to a breakdown of the internal order, which translated into corruption and infringements on human rights, which had done little for human development on the ground level.

Asmal called for greater government regulation in order to enforce codes of conduct that would dictate the behaviour of business. This regulation would ensure that business complied with standards that ensure human rights through policies of: nondiscrimination, the upliftment of the indigenous population, respect for workers rights, respect of the country's sovereignty, environmental sensitivity and upholding the rights of the consumer, among others.

In addition, Asmal argued that, business and multinationals needed to be sensitive to the plight of the local population and conscious of their social context, as well as to employ wealth creation policies in order to "uplift them from previous wrongs of the past". Through these measures, Asmal said, business could achieve sustainability.