State boost for local industry

29 May 2008

The Department of Trade and Industry is working with state-owned enterprises to build the competitiveness of South African suppliers, to ensure they reap the benefits of the massive infrastructure spending programme under way in the country.

This comes at a time when many sectors in the economy – following strong growth in manufacturing last year – are operating at near full capacity, thus pushing up the level of imports and impacting negatively on the country’s current account deficit.

Addressing members of Parliament this week, Trade and Industry Minister Mandisi Mpahlwa outlined several interventions undertaken by the government to provide support to certain sectors of the economy, ranging from technology support to industrial upgrades.


He said his department was working closely with the Department of Public Enterprises as well as Transnet and Eskom to examine the costs of intermediate inputs into manufacturing, with a number of import tariffs having being removed or currently under review.

At the same time, Mpahlwa said, the competition authorities were playing a much more active role in responding to anti-competitive behaviour in relation to inputs for these key sectors, such as metal fabrication, capital and transport equipment, automotives and related components.

As part of a national tooling initiative, the department was also focussing attention on the chemicals, plastics, pharmaceuticals, forestry, pulp and paper, and furniture industries as they embarked on crucial upgrading.

The Enterprise Investment Programme and the National Foundry Technology Network will also be launched in July, to help domestic firms become more competitive and take greater advantage of the massive public investment programme.

Motor industry development

Mpahlwa added that moves were afoot to help double the size of South Africa’s automotive sector in particular, which has been a key job-creating industry.

As a result of the Motor Industry Development Programme (MIDP), the sector had almost doubled in size since 2005, with a ten-fold growth in automobile exports, he said.

The department believes it is possible to again double this figure by 2020, and is currently reviewing the MIDP, which is set to expire in 2012. It is also in the process of developing a Vision 2020 strategy to provide ongoing support to the industry.

However, Mpahlwa said the industry would be expected to provide a “quid pro quo” for government’s base support by accelerating its levels of productivity growth and fundamentally deepening the automotive component industry in South Africa.

To support this deepening of component capabilities, the department had begun rolling out a three-year supplier development programme through the Automotive Industry Development Centre.

The revised architecture of this programme would be announced in August, he said, adding that the country was encouraged by the strong recent foreign investment in the country’s car-making sector.

Other key sectors

With forestry being another key element of the country’s industrial plan – and of the Accelerated and Shared Growth Initiative (Asgi-SA) – an agreement was reached with the Department of Water Affairs and Forestry to fast track the issuing of water licences.

Mpahlwa said this would allow for increased forestation in area much in need of jobs, such as the Eastern Cape province, with the planting of an additional 3 000 hectares this year, followed by 8 000 hectares next year and a further 10 000 hectares 2010.

Business Process Outsourcing, another key element of the Asgi-SA initiative, was already showing substantial success, he said, with nine projects already approved, generating over 9 000 jobs.

The department was also working with the National Treasury to provide a package of R5-billion in tax incentives to support “non-traditional” tourism areas by the end of this year.

Source: BuaNews