E London IDZ lands first investors

22 July 2005

The East London Industrial Development Zone (IDZ) recently announced its first three investors, which are to pump a total of R188-million into the IDZ plant on the west bank of the Eastern Cape city.

“It’s exciting times for us at the IDZ and Buffalo City,” says IDZ chief executive Simphiwe Kondlo. “Our strategy is to provide the infrastructure and support to enable companies in the East London IDZ to be globally competitive.”

He said the three new investors had responded to the strategy and would now benefit from immediate access, hi-tech telecommunications and close proximity to the port.

The East London IDZ, one of four liberalised duty-free areas in South Africa, is just two kilometres from the airport and five kilometres from the port.

The zone is finalising the first phase of infrastructure development, but Kondlo says it is ready for investors.

Glass manufacturing company Universal Safety Glass is to invest R156-million in the IDZ, a move expected to create 255 jobs over the next two years.

General manager Pieter Hugo says his company has confidence in the Eastern Cape’s growing economy. “The East London IDZ is close to the harbour and the airport. This will improve our logistics chain tremendously. We also believe this investment will open up new markets for our business.”

Abalone farming facility Wavelengths 150 is to invest R21-million in the zone’s agricultural cluster, and is expected to create 30 jobs for unskilled labour.

According to Kondlo, there is a huge export market for many of the Eastern Cape’s agricultural products. “The East London IDZ’s custom control area is an ideal location for export-oriented industry as there are a number of benefits offered to these industries,” he said.

Local transport and logistics company Miltrans will also invest R11-million in the zone.

More incentives
Business Day reported in June that the East London IDZ wants government to consider allowing it to use state incentives, together with those it already offers, to attract investment to the area.

Kondlo is quoted in the newspaper as saying the IDZ would offer more of an opportunity if it offered incentives such as those provided by the Motor Industry Development Programme.

This programme provides preferential tariff rates for vehicle components being imported into SA based on the value of components exported from SA.

The zone has commissioned auditing firm KPMG to carry out a study on whether motor industry incentives could be used in combination with its own incentives, Kondlo said.

According to Business Day, the zone already offers businesses established there duty-free imports, no restrictions on foreign equity ownership or on profit repatriation, no currency restrictions and no value-added tax on components coming into the zone.

Besides offering further incentives to investors, the zone wants Eastern Cape infrastructure to be upgraded. Kondlo said there was no direct rail link between East London and Port Elizabeth, which is about 300km away and has an IDZ of its own.

He told Business Day that East London could not develop as an “island”, economically separate from Port Elizabeth and South Africa’s economic heartland in Gauteng.

Source: Buffalo City