Medium Term and Strategic Plan 2011-2014: departmental briefing

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Trade and Industry

17 March 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Department of Trade and Industry provided the Committee with a summary of key achievements for the 2010/11 financial year.

On industrial financing, the Department reported the following key achievements:

•Launched the 12i Tax allowance for investment in new manufacturing assets and Training of staff - 2 applications received
Automotive Investment Scheme (AIS) launched and finalised leading to investment commitments of R13bn from assemblers and component suppliers, supporting 24,000 jobs in the sector. Large increases in levels of volumes and localisation
•Rollout of the Clothing Textile Competitive Programme (CTCP) and Production Incentive (PI) with 106 and 94 companies benefiting under the CTCP and PI respectively
•R40 million investments made and 950 jobs created. R42 million new investment commitments approved linked to 806 jobs. 3,400 are currently being trained under the Monyetla II Programme – 70% guaranteed employment by BPO consortium
•Improved the performance of incentive programmes by submitting amended guidelines for BPS & EIP

The presentation also highlighted the Department’s achievements in the areas of industrial policy, trade, investment and exports and administration.

Members asked questions about the textile industry, Walmart deal and whether the strategic plan related to the New Growth Path. Other questions pertaining to economic growth, intra-regional trade, the green economy and the filling of vacancies were also raised.

 

Meeting report

Opening Remarks
The Chairperson opened the meeting by acknowledging Members present and thanked the Department of Trade and Industry (the dti) for availing itself. She however, expressed concern at the late arrival of apologies from some Committee Members.

Furthermore, the Chairperson noted and accepted the Deputy Minister’s apology. She had been scheduled to brief the Committee on matters arising out of the 2011 state-of-the-nation address – however, due to other pre-scheduled commitments she and the Minister could not be available to do so.

The Chairperson further apologised to the Department for a poor turn-out by Committee Members. She then requested the Department to proceed with the presentation. She requested that the presentation begin and focus on the slides dealing with the Department’s achievements. 

Department of Trade and Industry Presentation
Mr Lionel October, Acting Director General, the dti, informed the Committee that the Department’s updated vision was based on three pillars. These were:
•diversification of the economy
•broadening of the economic participation base, and
• creating a strong and fair regulatory sphere.

The Government spent a considerable portion of it budget on procurement. The Department had realised that government’s procurement must be used as a leverage to boost industrial participation of local companies
. To that end, it had developed a sector designation methodology and was compiling the necessary research to designate a range of other sectors.

On industrial financing, the Department reported the following key achievements:

•Launched the 12i Tax allowance for investment in new manufacturing assets and Training of staff - 2 applications received
Automotive Investment Scheme (AIS) launched and finalised leading to investment commitments of R13bn from assemblers and component suppliers, supporting 24,000 jobs in the sector. Large increases in levels of volumes and localisation
•Rollout of the Clothing Textile Competitive Programme (CTCP) and Production Incentive (PI) with 106 and 94 companies benefiting under the CTCP and PI respectively
•R40 million investments made and 950 jobs created. R42 million new investment commitments approved linked to 806 jobs. 3,400 are currently being trained under the Monyetla II Programme – 70% guaranteed employment by BPO consortium
•Improved the performance of incentive programmes by submitting amended guidelines for BPS & EIP

In terms of key interventions regarding trade, investment and exports, the Department the highlighted the following:

SACU- SA facilitated consensus to focus work on regional industrialization; infrastructure development; trade facilitation; revenue sharing; unified engagement in trade negotiations. These five priorities were approved by the SACU Council.
•Continued to engage in the SACU-EU EPA negotiations with a view of minimizing the damage to SACU and laying basis for a common trade in goods arrangement between SACU and the EU.
Africa Strategy presented to and approved by African Renaissance Committee of ICTS cluster.
•SADC Ministerial Task Force approved an action plan with 9 priority focus areas to consolidate the SADC FTA.
•SA position defined with regard to trilateral FTA between SADC, EAC and COMESA
SA-Zimbabwe Bilateral Investment Treaty ratified by both Parliaments.

The presentation also categorized the achievements in the areas of broadening participation, regulation and law reform, and administration and coordination.

Discussion
Mr B Radebe (ANC) welcomed the presentation by the Department. His questions centred on the intra-regional trade. He wanted to know about the progress made regarding the idea of a single currency for the region and or the continent? He asked about the progress made in terms of the free movement of the people with the region and or the continent? Lastly, he needed information on the progress made in terms of the standardisation of goods and services within the region and or the continent?

Mr October replied that there were talks about introducing a single currency for the region. He added that the Department’s focus in this MTEF period was on goods and on business visas.

Mr N Gcwabaza (ANC) asked what the Department was doing to stabilise the textile industry? He also wanted to know whether there were plans in mind to increase SEDA’s profile. According to him the agency was not easily accessed by people in the country side.

Mr October acknowledged that the textile industry was sensitive and that the barriers of entry were low. He conceded that there was a need to stabilise the industry– and hence there were various incentive programmes that had been established.

Mr T Harris (DA) expressed concern that the Department’s strategic plan did not speak to the New Growth Path. He further raised a question around the envisaged Walmart entry into South Africa.

Mr October replied that there was no contradiction between the Department’s strategic plan and the New Growth Path. In addition, he pointed out that economic growth could be propelled by consumption production and the Department was focused on this aspect. On the Walmart deal, he noted that it was important for government and the unions to thoroughly scrutinise the proposed business by the said entity. He argued that local producers could be negatively affected by this (deal) because Walmart imported all its stock.

Mr G Selau (ANC) asked whether plans were in place for the automotive industry to transform from assembly plants into manufacturing of parts and/or components.

Mr M Oriani-Ambrosini (IFP) asked whether a study had been undertaken to determine whether employment generation, within the automotive, could be maintained and or increased if the South African public paid less for cars.

The Chairperson addressed several issues. Firstly, she asked the Department to prepare a report on progress made in terms of regional trade agreements. Secondly, she enquired about the vacant posts in the Department and if the Committee could receive a report on this. Thirdly, she asked about the Department’s strategy concerning the green economy. Lastly, she asked about the progress made in terms of addressing the infrastructural challenges faced intra-regional trade strategy.
 
Mr October replied that all outstanding questions would be attended to when the Department met with the Committee on Tuesday, 22 March 2011. The department would also brief the Committee on the progress made regarding the implementation of Industrial Policy Action Plan (IPAP2) and the National Industrial Participation Programme (NIPP) at that meeting.

In closing the Chairperson indicated that the committee would be sending the department written questions on its medium-term strategic plan 2011-2014.

The meeting was adjourned.

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