Minister of Trade and Industry Budget speech & responses by ANC, DA and IFP

Minister of Trade and Industry, Dr Rob Davies gave his Budget Vote Speech on 20 April 2016.
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Madam Speaker,
Honourable Members
Director-General and officials of the Department of Trade and Industry and the Council of Trade and Industry Institutions
Leaders of organised Business and Labour
Distinguished guests
 
It is common cause that we meet at a time when our economy is facing enormous challenges. We are all aware of the impact of the global commodity price weakness, the domestic challenges related to electricity and the ongoing drought.
We are also aware that South Africa is not alone in facing these challenges. China, the world’s largest economy based on purchasing power parity, has not met its recent growth target and has experienced substantial stock market turmoil. Moreover, Brazil, Russia and Canada are in recession while Australia experienced growth of 0.6% in Q4 of 2015 – exactly the same as South Africa.
The Prime Minister of the United Kingdom has had to cut short his holiday to attempt to find a solution to the UK’s steel crisis. The UK’s steel sector is battling to remain afloat amid a global steel glut and, a few weeks ago, Prime-Minister David Cameron called on UK industry to support British Steel through buying local! I want to assure Honourable Members that the South African government has been taking no holiday on this issue and remains seized with working to ensure that we retain  increasingly competitive primary steelmaking capacity in this country. 
 
Madam Speaker, the circumstances we find ourselves in require that we re-double our efforts to radically transform our country’s economy. We can no longer afford to be a country that relies on the production and export of primary commodities. We need to continue working to bring about structural changes at two inter-related levels: first, we need to place our productive sectors firmly at the heart of a new growth path that will move us up the value chain - and second, we must significantly broaden the base of economic participation. These are commitments of the NDP and provide the only plausible basis on which  to secure higher rates of inclusive growth.
 
The 9 point plan spells out the interventions planned by government in this regard and several of these speak directly to the work of the dti. Today I will address just some of these, starting with “the implementation of a higher impact IPAP”.
Madam Speaker, in a few weeks’ time we will release the 8th iteration of our Industrial Policy Action Plan (IPAP) covering the period 2016/7-2018/9.
Just one of the important transversal policy levers identified in IPAP is local procurement. Thus far we have designated more than 16 sectors or products where public entities are required to procure from products produced in this country. These include rail rolling stock, work wear and uniforms, and furniture.
The three latest designations came into force on 21 October 2015. These are conveyance pipes, transformers and steel sub-structures.
I am happy to report that we are now beginning to see real impact of these commitments to local procurement in a number of industries:
 
For example, in Clothing, Textiles, Leather and Footwear – after having set a 100% local content requirement – we have seen the re-introduction of products where local production had been discontinued. These include technical fabrics, protective footwear, protective fabrics and chambray fabrics. The value of public procurement of locally produced clothing and textile products recorded by National Treasury increased from R264m in 2013/14 to R479m in 2015/16 – an increase of 82%. This intervention, supported also by our Clothing and Textile Competitiveness Improvement Programme has contributed to turning this sector around, and we are now applying the lessons learnt in Clothing and Textiles to the Leather and Footwear sector, where the initial results are very encouraging with 4 new factories have opening in the last six months: Ariana Footwear, Prizm Footwear, Safety Boys, and Mystic Eyes are fully operational.
 
A second example of successes from designation is bus bodies. This has led to the local manufacture and assembly of more than 700 bus bodies.  Busmark 2000 received an order to assemble 700 buses for the City of Cape Town. Mercedes-Benz SA was successful in a tender to provide 134 buses for phase 1B of Johannesburg’s Rea Vaya BRT system. Volvo SA won a tender to provide 40 new vehicles to the City of Cape Town for its extended MyCiti bus routes. And MAN is supplying 80 new commuter buses to Great North Transport, Limpopo’s largest public transport operator. Alongside the rejuvenation of our bus industry for the various Bus Rapid Transit (BRT) systems, we have been able to leverage a substantial increase in medium- and heavy commercial vehicle exports. In 2012, South Africa exported just R1.3bn of these vehicles. By 2014, this had almost tripled to R3.7bn and we expect the performance in 2015 to have improved further. Not too long ago we were advised, even in this House that productive activities such as the manufacture of bus bodies were ‘not worth saving’. We are glad we ignored that advice.
 
A third example is the steady progress being made in the production of locomotives locally. The R50bn Transnet contract for the building of 1,064 locomotives is a case in point. Locomotives are being built at Transnet Engineering’s plants in Koedoespoort, Pretoria and Durban. We have seen the IEC Holden assemble the first SA-made AC Traction motors, demonstrating rapidly improving local capabilities. Furthermore, China North Rail is working with MTU (a local company) to assemble advanced diesel engines locally. On the 4th of March 2016, the Gibela Rail Consortium took the first steps in building a factory at a cost of R1bn in Ekurhuleni. The factory when fully operational will employ 1,500 people directly and we are positive that these investments will create a viable platform for South African firms to export into Africa.
Needless to say, this factory would not exist without the implementation of local procurement policy. 
 
A fourth example is the designation of ship and boat building under the Oceans economy Operation Phakisa. As a result, SA Ship Yards (SAS) won a tender of R1.4bn to build seven Tugboats for Transnet National Ports Authority (TNPA). The contract has to date created approximately 200 new jobs and more than 60 apprentice artisans and mine engineers are being trained. More than R700 million has been earmarked for the Supplier Development agreement entered into by SAS and Transnet’s local suppliers, employees and graduates. In addition Vee Craft was awarded a tender worth R23m to build workboat ferries for the Navy and Smit Amandla Marine partnered with Damen Shipyards Cape Town to build two new vessels in an overall investment package worth R150 million.
 
Madam Speaker, I have visited many of these factories in the past year and can report that these Government contracts have created a mood of optimism on the shopfloors and factories. Industries that appeared to have no future and where assets were being run-down prior to being sold for scrap have been revitalised and long-term investments – including in machinery, people and skills – are being made which augur well for these industries’ future.
 
How much investment? Well, across the dti’s main incentive schemes (the AIS, 12i, CIP, Film, MCEP & ADEP) R57.1 billion rand in private-sector investment is being leveraged as a result of the dti having provided incentive support during the last financial year of approximately R10bn (on-budget R4bn + R6bn in 12i tax allowances). This support is provided to a wide range of local and domestic companies, one thousand seven hundred and seventy in the last financial year to be exact. Put differently, the dti approved support to about 7 new or established firms every single working day in 2015.
 
Significant though these achievements are, the industrial sector in South Africa remains characterised by far too few black entrepreneurs. It is impossible to build an inclusive and stable society when some sectors and industries remain largely untransformed, and where established sectors are perceived as monopolising access to government resources. This is why our Black Industrialist Programme is such an important initiative of Government. We are harnessing the resources – both on the supply and the demand-side – across Government and its Agencies to support black industrialists who have the potential to grow, invest and create jobs.  In the coming year, we will focus on supporting qualifying Black Industrialists through access to funding, incentives, soft loans, market access, procurement opportunities, training and capacity building, matchmaking and information sharing, research and innovation, assistance to meet quality standards, productivity enhancement support, and economic infrastructure. This support will be provided through collaboration with DFIs, SOCs, the CSIR and SABS, and other private and public institutions.
 
About 50 applications have already been received and are being considered by the department, covering sectors such as Agro-processing, Chemicals, Cosmetics, Pharmaceuticals, Mineral beneficiating sectors, Oil & gas, Automotive, Rail, Clothing & Textiles, Green Energy, Capital Equipment, and ICT. We are grateful for the many messages of support we are receiving from the private-sector and – increasingly – firm offers to collaborate and partner with Government to make the Black Industrialist Programme a success.
 
Honourable Members, another component of the 9 point plan that speaks directly to the work of the dti is encouraging private sector investment. There are numerous initiatives being undertaken in this regard. The relative difficulty or cost of doing business can be an important constraint on investment and business confidence. One of the costs of doing business which Business has raised quite sharply with the dti was the time and number of processes to be completed to register a company at the Companies and Intellectual Property Commission (CIPC). I am pleased to be able to report to this House that we have fundamentally re-engineered the way the CIPC operates over the last few years. Whereas it was a common complaint that registering a company could take more than a month, for a straight-forward company registration where the name of the company is not already in use, the process can be completed in just a few hours.
 
Furthermore, the CIPC has partnered with all the major banks and just last week I launched the partnership with Nedbank to provide business registration facilities within their branches. I want to emphasise that it is no longer necessary to travel to the CIPC offices to register a company. Company registration can now be done at branches and online through banks as well as at CIPC’s self-service Terminals so far installed in four Provinces or on-line through the CIPC website. Already in the past year, 300 000 businesses were formally registered at the CIPC. 88% of these applications were received through online channels.
 
Madam Speaker, working with the private-sector, we have identified a range of regulatory processes which – while in many cases necessary to protect our natural resources and citizens – could be simplified and decision-making speeded up. This has led us to establish a new division within the dti. The One Stop Shop or ‘InvestSA’ is a specialised unit that offers a suite of services that will fast-track, unblock and reduce red-tape in government for all investors. InvestSA is supported by an Inter-Ministerial Committee chaired by the President which will, amongst others, provide clarity and certainty on South Africa’s economic policy, identify and package investment projects, promote partnership between government and the private sector, and coordinate a One Stop Shop for investors to grow our attractiveness as an investment destination.
At an operational level, the One Stop Shop will be staffed by regulatory decision-makers from relevant Government Departments and Agencies. This will integrate and co-ordinate Government decision-making across its regulatory entities with transparent processes and firm turnaround times so as to speed up decision-making, communication with investors and ultimately unlock pent-up investment.
Madam Speaker, our SEZ programme has been bolstered with the addition of a major new initiative to revitalise our Local Industrial Parks. Ten State-owned Industrial Parks located in under-developed and former ‘Homelands’ have been identified for revitalisation. We cannot simply continue to lament that South Africans are not entrepreneurial enough without investing in the infrastructure which all business but especially township business needs to be able to operate.
For this reason, we have contracted the Development Bank of Southern Africa (DBSA) to oversee the infrastructure implementation phase with the first phase involving security infrastructure upgrading, fencing, street lighting, top structures and critical electricity requirements. We will be investing R189 million covering six industrial parks in this financial year. Two of the parks - Seshego Industrial Park in Limpopo and Botshabelo Industrial Park in the Free State are near completion of the first phase of the revitalisation program and will be launched in May 2016.
This initiative is a critical element of our inclusive growth imperative and we are pleased to report that other National Departments such as the Departments of Small Business Development, Rural Development and Land Reform, Economic Development and some Provinces such as Gauteng, are working closely with the dti to make our townships and Industrial Parks hives of economic development. The more equitable provision of economic infrastructure to under-developed areas is a key tenet of our inclusive growth strategy.
Honourable members, we have continued to make advances to deepen trade and economic relations with the world. The State Visit of President Xi Jinping – the 2nd in just a few years – has ushered in a new era of Sino – Africa relations with China committing US$ 60 billion towards Africa. One part of this sizable funding commitment was the announcement to create the US$10bn China - Africa industrial capacity cooperation fund to support investments into value-adding sectors including manufacturing, hi-tech, agriculture, energy and infrastructure by Chinese firms in Africa. The fund was launched in January 2016. China also increased its capitalization of the China Africa Development Fund (CADF) from US$ 5 billion to US$ 10 billion for Africa.
Government has also concluded the negotiations on poultry, beef and pork with the United States – “the three meats” – bringing to a close several months of discussions with the United States on the terms required to secure South Africa’s position in the African Growth and Opportunity Act (AGOA) for the next 10 years. The first shipment of poultry (frozen chicken legs) arrived at the Port of Durban and was cleared by the Port Health Authorities.
The negotiations with the US to secure AGOA have been complex and arduous. We would have failed in our duty to protect South African businesses and consumers had we simply agreed to the demands as originally put rather than undertaking negotiations. I am confident that South Africa has negotiated the best possible deal – in very difficult circumstances – to secure AGOA access at the lowest possible cost to our Agricultural sector.
 
Turning to the region, we have played a prominent role in championing developmental integration in our Africa regional economic integration initiatives. By this I mean that we are not only focused on the mercantilist benefits of regional trade. Rather we seek to create mutually beneficial partnerships which will secure Africa’s long-term development, by developing regional industrial capacity, stimulating infrastructure development, expanding skills development, and creating the conditions for Africa to embark on a growth trajectory based on regional beneficiation of its natural resources.
 
The current global downturn and depressed commodity prices have painfully reminded us that Africa must deepen its industrial base and beneficiate or remain forever vulnerable to volatile global commodity prices. As Angola approaches the International Monetary Fund for bailout funds due to the collapse in oil prices, we must stress that intra-Africa trade anchored by beneficiation and local manufacturing is essential to our long-term development. Consequently, South Africa strongly supports regional and continental efforts to build more industrialised and diversified economies and reduce Member States' over-dependence on the export of primary products.
 
Our regional trade integration efforts have already had an impact; the Continent is now the destination for 30% of South Africa’s total exports.  More importantly, our trade with the Continent is in value-added products and has been growing while our trade with our traditional partners has stagnated. It is no exaggeration to say that our Manufacturing sector would be in dire straits had Government not consciously decided to focus on developing the African market a decade ago.
 
As we continue to improve our support to exporters trading with Africa, I am pleased to announce that the Africa Export Council commenced operations on the 1st of April 2016. This – our first – multi-sectoral Export Council will ensure that we provide targeted and customised support to manufacturing and service exporters trading on the Continent. Linked to this, we continue to develop our export credit offering so that South African exporters and especially those operating in the capital goods sector are able to compete on an equal footing with the many global players who are also operating in this space.
Honourable Members, I am happy to report that in June 2015 we launched the Tripartite Free Trade Area (T-FTA) signifying the conclusion of negotiations on the legal text that underpins the T-FTA. We are on track to create a market of over 600 million people with a combined GDP of over US$1trillion. The T-FTA is the building block for the establishment of the Continental FTA that will embrace the entire continent with a market of 1, 3 billion people and a combined GDP of over US$2trillion.
 
On infrastructure, a number of corridors and infrastructure projects have been identified to facilitate inter-connectivity and facilitate the movement of goods and services.
 
The benefit of the relatively weak Rand has been undermined by weak global demand, nevertheless, the dti directly facilitated R5.5 billion worth of exports in the 2015/16 financial year through undertaking 31 National Pavilion exhibitions, 26 Trade Missions and 5 high-level Investment and Trade Initiatives (ITIs). Associated with these events, 1,138 companies received financial assistance through the Export Marketing and Investment Assistance Scheme (EMIA).
 
With regard to implementing the National Exporter Development Programme (NEDP), important strides have been made during 2015/16 in aligning our export work with Provincial stakeholders and the larger export community through signing and implementing 6 Memoranda of Understanding (MoUs) with Provinces as well as 19 Agreements with Export Councils. The resultant greater coordination contributed to 1,558 potential exporters being trained to become exporters. In addition 1,437 clients were also assisted through the Department’s Export Help Desk with 816 trade leads being disseminated.
 
In this financial year, and cognisant of our fiscal constraints, the dti will undertake 25 National Pavilion exhibitions, 5 Investment and Trade Initiatives and 1 Special Project mission towards facilitating a targeted R3.5 billion of exports, with 1,000 companies financially assisted through EMIA.
 
The Integrated National Export Strategy was launched on the 23 March to guide our various export promotion undertakings with the aim of diversifying markets for value-added South African exports in identified IPAP sectors.   Against this backdrop, in the 2016/2017 period the dti will focus on implementing the Export Promotion and Development Action Plans that have been articulated in the INES.  These plans include the operationalisation of the National Export Advisory Council (NEAC) which will be tasked with enhancing coordination issues across government and the private sector in the implementation of the INES in order to improve the issue of competitiveness and removal of unnecessary barriers faced by exporters.
 
In addition to this a Services Export Strategy that is aimed at assisting South African firms to integrate into global supply chains of multi-national firms, by actively promoting subcontracting in power, infrastructure programmes and the built environment will be launched. 
 
Madam Speaker, Honourable Members, turning to the dti’s regulatory programme. The National Gambling Policy was approved by Cabinet in February 2016.  The National Gambling Amendment Bill will be tabled before Cabinet for approval on 18 May 2016 and later before Parliament in July 2016. Capacity will be built for enforcement of the policy, while support will be provided to people who are addicted. Illegal gambling activities will be dealt with harshly and coordination of policies and legislation at national and provincial levels will be strengthened.
 
With regard to the Liquor Policy, I have taken this Cabinet and its accompanying Bill will be tabled before Cabinet in May 2016; and before Parliament in July 2016. Once the process has been finalised national, provincial and municipal liquor authorities will apply policies, legislation and strategies in combatting alcohol abuse in a harmonised manner.
 
The Copyright Amendment Bill will be tabled in Cabinet for approval on 18 May 2016; and in Parliament on July 2016. When the legislative process is completed, the creative industries, in particular the music sector, will greatly benefit.
 
Madam Speaker, as I conclude, I must address the doomsayers amongst us especially those who enthusiastically contribute to the perception that investments are no longer reaching our shores. The facts are that leading global multinational companies continue to invest billions in the South African economy. In the words of the National Association of Automobile Manufacturers of SA (NAAMSA): “Capital expenditure by the seven major vehicle producers over the last five years amounted to over R24bn. Investments of this magnitude confirm the commitment of multi-national auto corporations to SA.” In October 2015 BMW announced a new investment of R6bn, just two weeks ago Ford announced a R2.5bn investment. And it is not only in the auto sector. 
On the 14th of March 2016 we launched the R 2 billion Japanese Sumitomo Rubber Industries, a two-phased project which will have a huge impact in stimulating economic growth and job opportunities in the KZN province but more importantly poverty alleviation in Ladysmith (Uthukela District Municipality) through skills development programmes that will be geared for the youth.  Also significant is that, phase 2 will replace the import of truck tyres which will be produced in the Ladysmith factory. This investment is expected to create a further 300 jobs bringing the employment to 1,200 which is significant for the local area.
Unilever has invested R 4 billion in state of the art plants across the country. These new investments also contribute to sustainable development, are energy-efficient, water-neutral and reduce the carbon footprint. Similarly, other companies such as Nestle, Proctor and Gamble, Samsung, Hisense, and Johnson & Johnson, all announced significant investments
Indeed, as a matter of fact, this year we will make a number of further announcements on new investments, expansions and launches from domestic and foreign investment. In May we will launch the MPACT PET Recycling plant in Wadeville and Dursots Food’s tomato processing plant in Modjadjieskloof in Limpopo. In April and May, Ford and Toyota will launch their new vehicles destined for the local and export markets.
The Han Noi company of China is undertaking a feasibility study to invest US$3,9bn in metallurgical technology, processing, steel plant, mining construction and energy in the prospective Musina Special Economic Zone.
Honourable Members, the dti is tasked with co-ordinating 3 of the priorities in Government’s 9-Point Plan to ignite growth and create jobs. In the coming year, we will intensively implement the Higher-Impact IPAP, the Beneficiation programme and the partnership with the private-sector to unlock investment. These activities all contribute to higher – and critically important – more inclusive economic growth.
 All the work I have been discussing is underpinned by the efforts of related development finance and regulatory bodies - namely, the Industrial Development Corporation, the National Empowerment Fund, the Council for Scientific and Industrial Research and the dti’s technical infrastructure institutions - as well as the cooperation of those SOCs that occupy a central place in our industrialisation effort. To the staff of all these institutions and to our own dedicated dti people – on whom all this work rests - I offer on behalf of government as a whole our sincerest appreciation.
 
The work of the dti is also supported by the oversight of the Parliamentary Portfolio Committee and the Select Committee of the National Assembly and the National Council of Provinces. To the Chairpersons, the Hon Joan Fubbs and the Hon Eddie Makue, as well as honourable members of the Committee, I express my sincere appreciation for your support.
 
All the work of the dti is also supported by the Ministers and Departments of the Economic Sectors and Employment and Industrial Development Cluster. Allow me to also express my sincere appreciation to these Ministers and their respective departments.
 
We re-affirm our common goal of taking the inclusive industrialisation of South Africa to a new and higher level.
 
I commend this budget to the House.
I thank you.

Appendix
 
1. FDI
The business press has reported widely on a supposed sharp decline in Foreign Direct Investment (FDI) in 2015 according to a preliminary UNCTAD report. This report was based on estimates for the last quarter of 2015 as the Reserve Bank (SARB) only released the final 2015 figures on the 8th of March this year.
According to the SARB, South Africa recorded a negative direct investment in Q1 and Q2 of 2015. This outflow of capital was due to foreign parent companies reducing their equity holdings in their South African subsidiaries. The transactions included:
·         The sale of Glaxo’s share in Aspen (R 10,5 billion)
·         Brait sold 37,1 per cent of its stake in Pepkor to Steinhoff (R 26,4 billion)
·         ENRC sold 13 per cent of its stake in Northam Platinum (R 2,5 billion)
Madam Speaker, we must make clear here that these transactions are not the same as the disinvestments we saw before the dawn of democracy in SA. Not one of these companies has indicated that they are disinvesting because of something SA has done. These transactions result from global private companies making strategic decisions – in many cases due to regulatory changes or changing circumstances in their home markets. Barclays Plc’s decision to sell Barclays Africa is another such transaction and as has been reported is not due to any particular policy change in SA. Indeed as the Barclays SA CEO has stated publicly, Barclays SA’s profit metrics are significantly better than Barclays Plc is able to achieve in the UK.
It is important to contextualise some of the successes we have had in building an investor-friendly environment. 
Amongst others, we have finalised the Protection of Investment Act, which aims to balance the rights and obligations of investors and government while also preserving the right of government to regulate in the public interest. Investors domestic and foreign will be treated equally on the basis of the principle of non-discrimination and substantial protection of investor rights, based on the Constitution. I am pleased to announce that South Africa is ranked no.10 globally for the protection of investors.
 
2. Incentives
(i)     MCEP
In May 2012, we introduced the Manufacturing Competitiveness Enhancement Programme to assist South African manufacturers to enhance their productivity, international competitiveness and job retention. Today I can report that more than 900 projects have been supported through this scheme. In the period April 2015 to December 2015, 232 entities were approved for funding and a total of 52 466 jobs were sustained.
 
(ii)       APDP
Manufacturing sector remains critical to our economy given its multiplier effect, job creation and inclusive growth capability.  The review of the APDP and the policy certainty we have created has grown the auto sector significantly. The number of units of vehicles produced grew from 388 442 in 1995 to 615 658 in 2015. The APDP has leveraged private-sector investment of over R25, 7bn over the last 5 years. As a result South Africa has become an international player in the autos sector with all the major OEMs producing locally.
 
The year 2015 was notable for a steady stream of new investments in the autos sector as OEMs increased their investments in the South African plants. The OEMS often explicitly acknowledged the support they received under the Automotive Production and Development Programme (APDP) as a critical lever that encouraged them to invest more in SA.
 
Highlights of the year included the following:
 
In February 2016, German motor company Daimler announced its decision to make South Africa the regional base for its new global truck and bus strategy. This is expected to bring significant business to Mercedes Benz SA and ultimately result in new investments in its East London plant. Making SA the new Southern African regional base will set South Africa up as the service base for all Daimler brands in SA, Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zimbabwe, Zambia and Malawi.
 
BMW Group South Africa has announced an investment of R6 billion into its Rosslyn Plant in Pretoria, earmarked for the production of the next generation of the BMW X3, which will be sold locally and exported internationally.
 
An Iveco-Larimar joint venture has started producing trucks and buses on its R600 million production plant in Rosslyn. This plant will assemble CKD kits of Iveco trucks and buses and is expected to employ 1,000 workers.
 
In March 2015, Toyota Motor SA started CKD production of the Quantum minibus in its Durban facility. The project cost was R500 million, with 270 direct jobs created and a further 50 new components to be sourced locally.
 
Volvo has invested R60 million in a regional parts and distribution centre in Benoni, Ekurhuleni. This facility will consolidate all their logistical operations in Sub-Saharan Africa.
 
In December 2015, Beijing Automobile International Corporation announced an investment of R11 billion in a completely knocked down (CKD) vehicle manufacturing plant in South Africa. The investment will create about 2,500 direct jobs and 7,500 indirect jobs.
 
(iii)      12i
 
Section 12i Tax Allowance Incentive was launched in July 2010 to promote and support investment in new manufacturing projects that utilise new and unused manufacturing assets; as well as for the expansion and upgrading of existing industrial projects.
 
Between April 2015 and January 2016, 26 projects with an investment value of R9.5 billion were approved. The support was extended to companies in a wide range of sectors such as steel, agro-processing, oil and gas, boatbuilding, chemicals, cement, paper, plastics and food and beverages.
 
(iv)     BPS incentive
With regard to BPS incentive, 10 new projects were approved in the 2015/16 financial year with a 5 year projected Export Revenue of R5, 7 bn. Through government support, the industry has sustained 10,997 jobs.
 
SEZs & IDZ
 
During the financial 2015/16, we designed the Maluti-a-Phofung IDZ as an SEZ. Maluti-a-Phofung is aimed at bolstering logistics efficiency along the key trade routes such as the Gauteng-Durban port corridor and Bloemfontein–Cape Town corridor. The main industries it will serve include agriculture, agro-processing, automotive and logistics.

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THE BUDGET VOTE ADDRESS DELIVERED TO THE NATIONAL ASSEMBLY BY MR. MZWANDILE MASINA, DEPUTY MINISTER TRADE AND INDUSTRY, 20 APRIL 2016

Chairperson of the Session;
Members of the National Assembly;
Minister Davies, DG October and officials of the Department of Trade and Industry, and the Council of Trade and Industry Institutions (COTII);
Leaders of government, business and Labour
Black Industrialists
Distinguished Guests
Ladies and Gentlemen

1. Honourable Chairperson and the entire Presidium of the National Assembly, I stand here today to discharge my obligation of accountability as a member of the National Executive. I also stand here as a child of the people of Ekurhuleni struck by grief at the tragic loss of the lives of our brothers, sisters and comrades over the weekend.
2. I wish to use this moment to convey my heartfelt condolences to families and friends of my comrades who passed away in the bus accident that happened as they were making their way home from the ANC Manifesto Launch held in Port Elizabeth.
3. Honourable Chairperson, as the Department of Trade and Industry, we account for the progress made on the commitments we made in our budget vote and state new objectives that we will pursue in the context of the budget allocations of this Financial Year.
4. Since the break of the global downturn almost a decade ago, we have worked hard to limit the effects of global contagion on us. We have kept our economy alive by employing numerous industrial policy interventions to maintain stability.
5. The experience of the global crisis informed our view that we need to pursue a radical economic transformation that makes us less vulnerable to external investment and volatile markets while developing programmes that give rise to inclusive growth.
6. Job-rich industrial growth builds sustainable industries, communities and societies. If we are to give the current generation of young people the hope of a better life then our commitment to radical economic transformation and industrialisation must be unwavering.
7. Inclusive growth must mean that black people are no longer relegated to being labourers forever! Inclusive growth - if it is to have real meaning in South Africa – must embrace the need to increase the participation of black people in all aspects of business including as shareholders, managers and entrepreneurs.
8. One tool to achieve inclusive growth is to provide economic infrastructure such as local industrial parks to township entrepreneurs. This is after all precisely the kind of economic infastructure that the dti provides within the Industrial Development and Special Economic Zones. Revitalisation of Industrial Parks will unlock entrepreneurial capabilities and provide institutional support to township businesses.
9. This reactivation of Industrial Parks is systematically linked to the bigger programme of Special Economic Zones. Its main focus is to break the spatial profile of investment flow that is concentrated in metropolitan and mostly coastal regions to the exclusion of township and rural spaces.
10. Therefore our continued efforts to attract overall increased Investment within the outlines of our industrial objectives as articulated in IPAP also have in mind the growth of industrial activity in townships and rural regions in which mostly black people reside and seek economic opportunities.
11. It is in this context that we pursue strengthening of the Black Industrialists programme. We have already developed a Black Industrialists Incentive Scheme whose allocation will come from the 6.9 billion rands earmarked for the Incentive Development and Administration budgets. The bulk of its capital will be generated and administered from the other Development Finance Institutions.
12. One of the criticisms that have been levelled against our work on the Black Industrialists Programme has been about our supposed neglect of Small Businesses. This is factually incorrect.
13. The Black Industrialist Policy identifies its intended beneficiaries to include, in particular, entities owned by small business, co-operatives, youth, people with disabilities, amongst others.
14. We are working with the Department of Small Business Development, to establish strong collaborative relationships and linkages between the Black Industrialist programme and their Gazelles programme that deals with business development support for SMMEs.
15. The objective is to develop pathways for SMMEs to grow – supported by comprehensive and seamless support measures from the Department of Small Business Development initially, and as these SMMEs graduate to large-scale enterprises, with support from the dti under the Black Industrialists Programme.
16. After all, these are policy efforts of one government and they must not be read in separation from each other. It is a collective project of the ANC government to achieve a transformed industrial economy with increased black participation in the space of small and big business.
17. Honourable Chairperson, we canvass the position that the democratic state must use all its muscle to facilitate and lead transformation. This includes the use of Public Procurement policy as a strategic tool to boost the development and market competitiveness of emerging black businesses.
18. In this regard, the dti signed an MOU with the State Owned Enterprise Procurement Forum (SOEPF) in January 2016. This is an umbrella forum for all main State Owned Enterprises including Transnet, Eskom, SAA, Denel, Armscor, and PetroSA.
19. This MOU with the SOEs is designed to leverage State procurement through the permits of the Preferential Public Procurement Framework Act. It underscores targeted procurement for local production and developing a database with long term procurement opportunities as per the demand management strategies of various SOEs.
20. This approach will assist Black Industrialists and emerging black business in general with access to opportunities and market incubation. The Black Industrialist Policy encourages SOEs to set targeted procurement for the promotion of transformation in the manufacturing sector.
21. Therefore targeted procurement and ‘set-asides’ are key instruments that will be used to pursue market transformation. It is for this reason that we engaged the National Treasury and registered 8 challenges with the PPPFA in July 2015, including, amongst others, “inclusion of targeted procurement in the PPPFA Regulations”.
22. We continue to participate in the National Treasury’s committee to ensure that these Regulations enable support of Black Industrialists through targeted procurement and set-asides in the SOEs as pronounced in the Black Industrialists Policy.
23. Honourable Chairperson, industrial development is not limited to heavy industries. It also includes the growth industries that cultivate and promote cultural and spiritual development as part of nation building.
24. The South African government has held the notion that the film industry is a critical site of cultural articulation of our historically evolved identities. It serves as a platform that mirrors conversations about social identities that emerge as we forge a new nation based on values of democracy, non-racialism non-sexism.
25. Moreover the film industry has great potential to be among South Africa’s key drivers of economic development through the creation of jobs, both direct and indirect, and through skills development. In fulfilling its commitment, the Film and Television Production incentive was launched by the dti in June of 2004.
26. Since implementation of the Film and TV production incentive programme in June of 2004 up to March 2015; a total of 583 productions spanning block busters, documentaries, television series and animations were approved with a total Qualifying South African Production Expenditure (QSAPE) valued at R 15.2 billion with a total incentive commitment of R 3.3 billion.
27. Of the productions assisted above, 336 South African productions, 86 Co-productions, 97 foreign productions and 15 Emerging Black filmmakers.
28. Secondly, we used the Infrastructure support programme (CIP) to assist build a world class film and sound studio in the city of Cape Town to help local producers attract larger budget productions.
29. This has resulted in a noticeable strengthening of the film supply value chain such as the transfer of technology, skill and knowledge to South Africans practitioners which they would otherwise not have acquired through working on lower budget films.
30. A collaborative funding effort by the dti and the National Film and Video Foundation led to the realisation of the Box Office topping film, Happiness Is A Four Letter Word”; which has been named the first genre film in South Africa to gross more than R 12 million at local cinemas.
31. This production was a result of a co-production by experienced producers Helena Spring and Junaid Ahmend partnering with emerging Black Female filmmaker Bongiwe Selane, with an investment close to R10 Million and assistance from the dti worth about R4 Million creating a total of 516 job opportunities during production.
32. Honourable Chairperson, many opinions have been reported about South Africa’s apparent declining attractiveness for foreign direct investment. Some Honourable Members regularly lament that South Africa seems to be doing poorly in attracting FDI.
33. Yet, as I undertake the Taking the dti to the Factories, I meet industrialists and investors who are actively demonstrating their faith in the domestic economy. These investors – supported by the dti’s incentive programmes – invested some R57bn in the South African economy in the last financial year.
34. These developments are in part due to our efforts of leading investment trade missions, some of which I led in the last financial year to Africa, Europe, Canada, North America and Asia.
35. Honourable Members, just last week I returned from the UAE with two awards. The first was the runners-up award for best investment project facilitated in the Southern African Region.
36. The second award was 3rd prize for investment agency in the Indian Ocean Rim Association countries. These are only the most recent of a number of awards South Africa, the dti and Invest SA have achieved over the last few years.
37. These awards and our investment performance on shop-floors and in factories – not in newspapers – provide evidence that the private-sector contains to invest in our economy.

In conclusion, Honourable Chairperson, our strategy of a High Impact Industrial Policy Action Plan is multipronged. We view a wide range of sectors, both heavy and soft industries, as critical pillars of its objectives.

We have committed the DTI to working tirelessly and systematically to protect our economy from extreme effects of the struggling global economy.

We have also set in place a good policy infrastructure to set off the trigger for improving our productive advantage when global markets stabilize. However, the need for inclusive growth cannot wait for better global conditions.

We have no choice but to act decisively now to create the conditions for inclusive growth and to implement direct interventions such as the Black Industrialists Programme to achieve increased participation by black people in the South African economy. Failure to do so would represent a key missed opportunity to place the South African economy on a more equitable and stable growth path.

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Responses:

An Old Battle Cry Finding Policy Articulation In a new South Africa! Trade and Industry Budget Vote 34 by Hon Bongani Mkongi, ANC MP

20 April 2016, Parliament Of The Republic Of South Africa

Honourable Chairperson and;
Honourable Members of Parliament who are in attendance today;
Our guests in the gallery;
Ladies and gentlemen.

45 years back, in its strategy and tactics document as adopted at Morrogoro Conference in 1969, our glorious movement, the African National Congress (ANC) declared to the world to know that:
"it is inconceivable for (any) liberation to have meaning without a return of the wealth and the land to the people as a whole (especially its rightful owners)."

The ANC acknowledged that in the period between 1994 and 2012 the fundamental distribution of wealth and the aggressive growth of job creating industries have not met the people`s expectations.

As a result at its national conference in Mangaung, in 2012 the ANC resolved to declare this, a second phase of a transition. This second phase of a transition is underpinned by a radical economic transformation with drastic measures to accelerate growth and intensify the programme of economic transformation.

The Industrial Policy Action Plan (IPAP) is a structured government response to radically transform the South African economy with important strategic elements such as inclusive growth, deracialisation and moving away from the old Mineral Energy Complex.

This radical shift means changing the structural architecture of the South African economy to build a strong integrated and growing economy in the context of a shared and inclusive economic growth.

IPAP has expressed the need for a strategic shift from a consumption-driven sectors of the economy towards labour absorptive productive sectors to ensure sustainable economic growth and job creation. The core to industrialization is massive investment in productive assets i.e machinery and equipment in productive sectors of the economy.

However, the industrialisation drive of South Africa needs an integrated approach. To this end, in December 2015 Cabinet has established an Inter-Ministerial Committee on Investment which will deal among others:

Overall coordination, alignment and policy coherence on economic policy and regulatory framework, thereby providing clarity and certainty to both domestic and foreign investors.
Scaling up private sector investment, higher impact Industrial Policy Action Plan, support of the Black Industrialist programme, SME development and the Township Economy.
Regional integration and industrialization of the African Continent.
There is also an urgent need to review all those international trade agreements that continue to hinder the industrial expansion of South Africa and be replaced by trade laws that will foster industrialisation, manufacturing and value addition. Our aim is to decolonize South Africa and Africa at large.

Therefore, radical economic transformation means in essence breaking ranks with the past political, economic and social landscape. It means breaking ranks with the 1910 political and economic architecture that is characterized by a compromise between global capital and the white minority in South Africa constituting of English and Afrikaner populations. Therefore, radical economic transformation means the aggressive altering of the balance of power in the commanding heights of the economy, breaking down the backbone of white ownership on the means and modes of production in South Africa.

Honourable Members, South Africa cannot justify, after 22 years of majority rule, the continuing ownership of our wealth by white minority in South Africa whilst the black majority live under poverty, unemployment and squalor. We can`t continue celebrating mediocre; we can`t celebrate white arrogance and domination over the economic and social lives of Africans in particular and blacks in general. We are confident that it is only the ANC that can change that. It is only the ANC that can succeed to take our people to a better life for all.

Honourable Members, it is our belief that Broad Based Black Economic Empowerment (BBBEE), the creation of black industrialists as well as strengthening our incentive programmes will remain our anchor towards our transformation ends.

The recent establishment of the Black Economic Empowerment Commission and the Advisory Panel on Black Industrialists is testimony to the seriousness of the ANC government to fastrack economic transformation and integration of black people into the mainstream of the economy. Therefore we believe this will sustain our agility to meaningfully broaden participation of the marginalized communities into the mainstream of the economy.

In the final analysis, we must move with speed to break ranks with the `structural weaknesses and stubborn challenges facing our economy especially, `the continued incorporation of South Africa into the global division of labour as a producer and exporter of primary commodities in the form of raw materials. We must break ranks with a notion that South Africa continues to be an importer of value-added, manufactured products and finished goods. We must break ranks with remnants of both classical colonialism and colonialism of a special type (CST).

If we don`t break ranks with the past; the present South Africa will continue to be trapped under widespread unemployment, deepening income inequality and abject poverty. In our journey, to break ranks with the past, the ANC through the Department of Trade and Industry (DTI) is committed in accelerating socio-economic change and we are succeeding in that journey.

In conclusion, through the creation of black industrialists, our goal is fundamentally alter the balance of power in the commanding heights of our economy.

We are not apologetic about these policy choices, because they are formidable and they are the source of inspiration to our people. These we agree, are about the advancement of our historic mission to radically transform the economy and return it back to our people especially the economic wealth, land, property and other stolen goods and service from the indigenous people of South Africa.

I thank you.

Speech by Cde Lerumo Kakalo (ANC) on the Budget Vote Debate 34, Trade & Industry

20 April 2016

Madam Speaker/ Deputy Speaker
Chairperson/ Deputy Chairperson
Minister and Deputy Ministers
Honourable Members

The Committee conveys its condolences to the families of those who lost their lives in the bus accident travelling back from the ANC Manifesto. And also the families of those who lost life in an earlier accident travelling for Chris Hani Region to the ANC Manifesto launch in Port Elizabeth (PE). May their souls rest in peace.

Chairperson as the ANC pledged in its local government manifesto that we shall develop and strengthen local economies, create jobs and promote placements, especially for the youth: through reorienting local economies to becoming effective centres of production, information processing, economic and spatial development. Strengthening structures of local economic development.

The DTI through its industrial parks revitalisation programme, and working in partnership with the provincial and local spheres of government is leading the process of local economic development.

As outlined in its programmes, DTI is committed implementing the Presidents 2015, 9 point plan to ignite growth and create jobs. It plays a critical role in facilitating three of the 9 priority interventions.

These are:

1. Beneficiation through adding value to mineral resources
2. A more effective implementation of a higher impact industrial policy action plan
3. Encouraging private sector investment. These national priorities inform the departments spending over the Medium Term which are: Increased investment facilitation, manufacturing incentives, supporting exports and industrial spatial development.

Added to the area of investment facilitation, the department will manage new investment promotion and inter-departmental clearing house, a One-stop-shop to facilitate investment, which is part of the 9 point plan. This means government agencies involved in any aspect of investment, such as regulations, permits, licensing, infrastructure and incentives are to be brought into a single cohesive structure that coordinates and streamlines processes to provide prompt, efficient and transparent services to investors.

The Committee commends the DTI for its consistency in spending patterns of its budget allocation over the past five years, where underspending has been within 2% of the allocated budget for each specific year. The Committee is happy that during 2015/16 financial year, the DTI has for the first time achieved record levels of financial performance and has spent almost 100% of its allocated budget of R9.5 billion.

In order to encourage investment by private sector to our economy, 76% or R7 billion of the total allocated budget is disbursements to private companies.

This has been allocated to programmes such as:

Manufacturing development incentives
Services sector development incentives
Industrial Development Zones
Special Economic Zones
Support programme for Industrial innovation
Critical infrastructure programme
Export market and investment assistance
Clothing and Textile production incentives and customised sector programme.
The Committee congratulates the DTI and Invest SA in winning the runner up for the best investment project facilitated in Southern Africa region and the 3rd prize for investment agency in the Indian Ocean Rim Association Countries.

This shows confidence by investors to South Africa as an investments destination of choice and government ability to facilitate investments. These developments are a testimony to the ability of our government to create a conducive environment for investments. The President recently announced an Inter-Ministerial Committee on investment and the Invest SA approach to improve our overall investment climate and to fast track, unblock and reduce red tape in government.

I cannot agree more with Deputy Minister Masina, when he said "These investment awards are evident that our investment division, Invest SA can compete, is right there with the best and is capable of facilitating large scale projects.

Winning two investment awards demonstrated the government remains hard at work and will continue to make South Africa an attractive destination."

Investment attraction remains a key priority for government, despite current global conditions, South Africa still receives investment and is regarded as a promising investment destination. This affirms that foreign investors believe in the potential of our economy. The good news is that our economy is turning the corner in investment, just in a period of 3 months, the country secured more than R10billion in investment. This is because investors know South Africa has a clear incentive programme and government is clear about the direction of our economy.

It’s time for Davies to step aside

 

Dean Macpherson (DA) Shadow Deputy Minister of Trade and Industry

 

Honorable Chairperson

South Africa is stuck in a place of low growth, rising unemployment, slumping business and consumer confidence, spiraling debt and very few solutions from the government on how to overcome these. In fact, the Minister continues to tell us that this is mostly the result of ‘international headwinds’ but as Abraham Lincoln famously said, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all of the time”. You’re no longer able to pull the wool over our eyes Minster.

The truth of the matter is that most, if not all of these problems are of your governments own doing but I still believe that with the right person in charge, we can turn them around in a relatively short space of time.

This can only be done by a Minister that approaches economic policy with a dogmatic approach to job creation and sees business as the driver of new jobs, not the enemy of the unemployed.

The DTI in this budget will see a decrease in funds allocated to incentives and job creation. In fact, in recent years, job creation projects have become almost nonexistent. The only program that keeps on increasing is that of staffing costs. When the ANC says that this is the ‘people’s budget’, they are right. It is a budget focused on those within the employment of the state, not those trying to find employment.

Don’t take my word for it Honorable Members, the Department has itself detailed in length how it plans to do less with less. In 2012/13, 22,085 jobs were supported though incentives, that will nose dive to just 3,600 in the current financial year. In 2013/14, 106 000 jobs were retained with incentives, this will crash to 3000 in 2017/18 and export revenue from approved projects will collapse from R16.3 billion in 2014/15 to a pathetic R600 million in 2017/18.

The biggest causality of the budget cuts is the Manufacturing Competitive Enhancement Program (MCEP) which had a fantastic uptake by businesses wishing to expand and grow, thus creating more jobs. However, the Minister has done very little, if anything to keep the program afloat by securing more funding from treasury. Instead, he has heaped praise on himself by claiming that this government is a ‘victim of its own success ‘despite me warning him in 2015 that we needed to secure a further R2.2 billion to take us through to 2017/18. Businesses are being forced to stall expansion plans, unable to employ more people because the Minister chose to bury his head in the sand.

However, the worst form of artful dodging by the Minister has to be his conduct over the crisis facing the steel industry in South Africa. Since August 2015, he and the Deputy Minister have ducked and dived from taking responsibility for ensuring that local steel producers do not increase prices in exchange for tariff protection on imported steel.

Bizarrely, the Deputy Minister had no idea what was even in the deal and worse, the Minister denies it even is a deal. Well, if you do something in return for something and if you have a clause which terminates an agreement for violating it – that is called a deal.

Instead of sticking to the agreement, AMSA has increased their local prices 3 times this year and the Minster has done nothing about it. He has sat on his hands and run scared while AMSA have rode roughshod over him. Not only is he the nowhere man, but he’s now a full on empty suit.

Honorable Members, when the budget is measured against outcome 4 of the NDP which is Decent employment through inclusive growth, it is only able to achieve a 45% correlation and this is where it falls short as identified by the Parliamentary Budget Office:

1 – Reducing the cost of living for poor households

2 – Reducing the costs of doing business

3 – Developing proposals for an acceptable minimum standard of living

4 – Removing the most pressing constraints on growth, investment and job creation

Worse than this is that against Chapter 3 of the NDP, there is not a single action set by the DTI in the MTSF to reduce unemployment to 6% by 2030, increasing the proportion of working adults to 61% or the proportion of working adults in rural areas to 40% or for GDP to increase to 5.4%. It’s all blank!

You Minster, are failing in the most important and pressing areas facing our country. The PBO has confirmed that your government only pays lip service to the NDP, no doubt because you’re too occupied with violating the constitution and failing to hold the President accountable for any and all scandals.

This is the ANC of today. An organisation so ravaged by infighting, so shattered by corruption and so at odds with the constitution, it has forgotten to do the very basics and for this, the voters will punish them severely on the 3rd of August.

I thank you

 

The ANC’s empowerment con trick

 

Geordin Hill-Lewis (DA) Shadow Minister of Trade and Industry

 

Honourable Chairperson,

The Department of Trade and Industry is vested with enormous regulatory and policy making power. This power places it along with the Treasury at the apex of economic management in South Africa.

Its mandate is simple: increase value added exports, increase foreign investment, create a policy environment for economic growth and real job creation, and break down the barriers that keep poor black South Africans locked out of the economy.

So how has it fared in the last year?

–    An enormous 74% decline in foreign direct investment in just one year

–    Manufacturing production is flat-lining

–    Business confidence is at 36, the lowest point since 2010

–    In the World Bank Ease of Doing Business rankings, we’ve declined from 69 to 73 in the last year, the lowest position SA has ever held, and a full 41 places lower than the position we held in 2008, before Minister Davies came into office

–    193 companies went bankrupt just in February of this year

–    The GDP growth rate on a per capita basis is negative, which means people are getting poorer

–    There are 8.2 million unemployed people, a number that grows by nearly 800 people a day

On every single criteria that this Department and this Minister should be measured by, he is failing.

In fact, the only indicator that is in the green is the balance of trade, and that’s mainly because the rand has languished at record lows after President Zuma dropped the equivalent of a nuclear bomb on our economy in December.

The South African economy is less competitive, less attractive to foreign investment, and more and more people are unemployed.

It is easy to focus only on the seemingly endless supply of corruption scandals that this government and President Zuma offer up. But often the link between the two is lost. For the truth is this: the most scandalous thing this government has done has been its mismanagement of the economy.

That is why we always say that corruption is not just an issue of the President’s personal conduct – corruption saps resources and makes poor South Africans even poorer.

And the place where poor, black South Africans are getting the worst treatment is in this Department’s handling of Black Economic Empowerment.

The DA will always support truly broad-based empowerment that actually empowers poor, black South Africans, and helps to break down the barriers that keep them locked out of the formal economy.

But we will always reject crony enrichment and patronage schemes aimed at making a small group of well connected people extraordinarily wealthy, while the majority of black South Africans continue to live in poverty.

In a series of new regulations and Codes from this Minister, it is quite clear that the ANC government has no intention of empowering ordinary black people. It never had any intention of doing that.

BEE under the ANC is becoming increasingly punitive, increasingly narrow, and increasingly manipulates outcomes instead of dealing with the real obstacles that black people face to entrepreneurship. It is starting to resemble Malaysia’s narrow 51% indigenisation policy, where every entrepreneur must hand over 51% or close its doors. That is not value-adding empowerment. Down that road lies only ruin.

But like the classic confidence trick, the Minister thought that by simply calling it “broad-based” empowerment, everyone would think it was actually “broad based”.

The truth is that the only lives that matter to this government are the luxury lives of a tiny coterie of billionaires that is ever-more closely tied to the President and his family.

The newly-minted Black Industrialist Programme, is THE case study of the ANC’s con trick of broad based empowerment. 100 connected cronies each get hundreds of millions in public money and soft loans, with no job creation targets and no export targets of any sort.

We don’t need to look far to see what this programme means in reality. Duduzane Zuma’s stake in Optimum Coal and Tegeta Resources is no doubt an example of a successful industrialist to the DTI. Goldfield’s has said publicly it was a given a list of people that it should “empower” – including the Chairperson of the ANC, Hon Mbete.

This is not empowerment. It is the ANC in government funneling millions to the ANC in business, so that a tiny group of ANC cronies can get rich.

It is nothing more than bribery and corruption.

Real empowerment gives black South Africans a stake in the economy. It removes impediments to entrepreneurship.

It is not supposed to be a stranglehold on economic growth. And it is not supposed to benefit a few at the expense of the poor.

One very sad consequence of the ANC’s con is that it is increasingly difficult to maintain a national consensus around the principle of empowerment. It’s tough to make an argument for a model that is just legalised corruption. More and more businesses are simply checking out.

The one positive consequence is this: everyone is seeing right through the ANC. The con is over. The actions of this ANC caucus two weeks ago, in defending President Zuma, confirmed it for all to see. President Zuma is the ANC, and the ANC is President Zuma. They are one and the same.

And the public are rejecting it outright. You may have tin ears, but when you can’t even fill up a stadium in PE, you must know people are going to throw you and your corruption out on August 3rd.

Honourable Speaker,

At the outset the IFP supports this budget vote but would like to raise the following concerns:

Trade and Industry in South Africa, Honourable Speaker, requires more carrot and less stick. Regulations for regulations are not only counter-productive but also complicate the trade environment and deter foreign investment.

The tax benefits for new business operations in respect of companies investing in SEZ’s can flow only over a ten year period which means that if it takes companies 10 years to become fully operational, they derive no benefit.

One significant challenge being the recent global oversupply of subsidized steel which is still crippling our engineering and steel manufacturers in South Africa, must be carefully and comprehensively addressed. Even though the Minister of Trade and Industry has imposed duties on imported steel the benefits are still not being passed on to the value added downstream manufacturing industry.

Then Honourable Speaker in respect of the recent renewal of the US’ African growth and Opportunity Act (AGOA) most of our industries are set to benefit.

Minister Davies did exceptionally well to save AGOA but in the poultry market imported chicken landed at dumped prices and is actually being sold for more than local products, this means Honourable Minister Davies that the poor cash strapped consumer is being further exploited for the sake of protecting meat importers huge profit margins.

If we look towards gold of which South Africa produces 10% of the world’s supply and has 40% of the world’s known reserves. It is estimated that 36,000 tonnes of undeveloped resources and about one third of the world’s un-mined gold still remains.
For these reasons alone it’s my personal opinion that ratings agency Moody’s and Standard and Poor could never downgrade South Africa to junk status as this would affect their own credibility.

Consumer spending, one of the driving forces of the economy is also weak, and with interest rates expected to rise twice this year, 25 basis points probably next month and the same by the end of the year, it looks to grow weaker!

During this year’s debate, as in many of the debates of Trade and Industry in the past and most probably in many of the debates in future, the issue or the importance of growth and foreign investment appears to be central.
The real issue however, is whether this department has the political will over and above debating this issue?

I for one believe that there is nothing wrong with the legislation we have adopted in this department to promote and protect investment, the issue seems to be in implementing it!

Corruption has become a way of doing business in this country and can quite simply no longer be tolerated or defended because it seems that the burden of enforcing the law has become greater than the administrative capacity and will dedicated to its eradication.

I thank you.