Industrial policy attracts investment

28 March 2011

Transnet’s decision to assemble 90 of the 100 locomotives on order from General Electric, and the securing of R14-billion in planned automotive investments, are some of the immediate achievements of South Africa’s new Industrial Policy Action Plan (IPAP).

Briefing Parliament’s portfolio committee on trade and industry in Cape Town last week, Trade and Industry Minister Rob Davies outlined several achievements of the plan, while adding that a lot of work still had to be done in the roll-out of the plan, which was launched last year.

He said lots of work had so far been done on setting up the systems, and that the coming year should yield results, particularly with the country’s revised procurement legislation, the Preferential Procurement Policy Framework Act, expected to come into force.

Davies said the planned R14-billion investment in South Africa’s automotive sector was in the form of investment commitments from both assemblers and component suppliers.

Last month, meanwhile, Transnet took delivery of the first of 100 new General Electric diesel locomotives at Transnet’s plant in Koedoespoort in North West province, where 90 locomotives are to be assembled by Transnet.

This is part of the pledge by state-owned enterprises to introduce more localisation and supplier development into their procurement policies.

Local manufacturing and procurement

The department’s deputy director-general of industrial development, Nimrod Zalk, said government departments were also looking to promote local manufacturing.

Zalk pointed to the Department of Health’s recent R4.2-billion tender for antiretroviral (ARV) drugs, where 72 percent of the contract’s value was awarded to South African manufacturers, while achieving significant price reductions relative to the 2008 ARV tender.

Zalk also outlined several key areas where the department had made progress with the IPAP, in areas such as procurement, industrial financing, improved competition and trade.

While the Industrial Development Corporation (IDC) has earmarked R25-billion for the green economy and a further R5 billion for an agro-processing fund, a R10-billion job creation fund, announced by President Jacob Zuma in his State of the Nation address last month, would be priced at prime minus 3 percent.

Added to this, the Department of Trade and Industry’s Enterprise Investment Programme, which is aimed at small and medium-sized firms in manufacturing and tourism, created 10 211 direct jobs between April and December last year.

To improve trade for exporters, the South African Bureau of Standards (SABS) has set up the Exporter Early Warning System on Technical Barriers to Trade. The system identifies technical barriers to trade notified to the WTO and is distributed for free to subscribers on a weekly basis.

To crack down on anti-competitive practices, South Africa’s competition authorities has also launched investigations into a number of areas, including tyre companies, scrap merchants, chemical firms, airlines, and construction companies.

Sector support programmes

Zalk also detailed various achievements in the government’s sector support programmes, including:

  • The creation of 1 100 new jobs in the clothing sector through the Clothing Textile Competitiveness Programme, which also helped firms retain 40 000 other jobs.
  • The seizure of R37-million worth of clothing merchandise suspected of being counterfeit or non tax-compliant, following raids on 56 premises by the SA Revenue Service.
  • The creation of 950 jobs and R40-million in investments in the call centre sector and the training of 3 400 young trainees under the Monyetla II Programme.

The IPAP would also included programmes for boat-building sector, and had elevated a Western Cape initiative in the oil and gas servicing industry to become a national programme.

Turning to implementation of the IPAP, Davies was adamant that his department would take a sterner approach to meeting targets than was taken for the first industrial policy action plan of 2007.

He said the department held internal monthly progress meetings around IPAP, calling in officials from other departments when necessary.

SAinfo reporter and BuaNews