The Department of Trade and Industry briefed the Committee on the policy development of Special Economic Zones (SEZ) in SA. A SEZ was a geographically designated area of a country set aside for specifically targeted economic activities. SEZs were tools for long-term industrial and economic development targeted at building industries whilst creating a sustainable environment for foreign and domestic direct investment to thrive. Examples of SEZs included Industrial Development Zones (IDZ), free ports and industrial parks/estates.
In as much as the DTI explained that the current policy on SEZs was to rectify or not to repeat the mistakes made with the current IDZs members still had a few concerns. Members were concerned that once again industrial investment and development would be focussed on the golden triangle regions ie
Members asked about the OR Tambo IDZ, the Richards Bay IDZ, the proposed SEZ Board and the red tape in establishing businesses. They further asked about regional development, financing for IDZs and what model
Department of Trade and Industry Briefing
The Department of Trade and Industry (DTI) briefed the Committee on the policy development of Special Economic Zones (SEZ) in
In November 2011 Cabinet approved the SEZ Policy and plans were made for the bill to be published for public participation. A SEZ was a geographically designated area of a country set aside for specifically targeted economic activities. SEZs were tools for long-term industrial and economic development targeted at building industries whilst creating a sustainable environment for foreign and domestic direct investment to thrive. Examples of SEZs included Industrial Development Zones (IDZ), free ports and industrial parks/estates.
The new SEZ Policy aimed to provide a clear framework with respect to development, operations and management of SEZs. It would provide a systematic planning framework for development of a variety of SEZs that would support implementation of the Industrial Policy Action Plan (IPAP) and the National Growth Path (NGP). A predictable financing framework would be developed that would enable long term planning. One of the key objectives of the Policy was to support the development of targeted industrial capabilities, and attraction of foreign direct investment within IPAP and the NGP framework.
Some of the key provisions of the Policy were the establishment of an SEZ Board to advise the Minister on policy, strategy and other matters. An SEZ Fund would be established to provide for predictable long term financing. The Minister would also develop an SEZ Strategy every five years to guide long term planning.
The DTI in conjunction with other departments and agencies in implementing the Policy would have a national marketing strategy to promote SEZs internationally and domestically, world class infrastructure would be provided together with effective and efficient logistics. Skills development strategies would also be put in place to support the medium to long term skills needs in the regions.
At present there was finalisation of the policy and the legislative framework as public consultations in the provinces were beginning.
Mr K Sinclair (DA,
He pleaded that DTI take into consideration broader economic development in
Mr Chipfupa stated that the delegation would do its best to answer most of the questions. Unanswered questions and comments would be taken back with them and put into the process.
The BRICS example was used to symbolically show the shift in economic power. Relating to SEZs specifically, in the foreseeable future the reality was that growth was taking place in the East. It was true that trade in
He agreed that on IDZs things needed to be done faster. There was a great deal of bureaucratic red tape in establishing businesses and companies in the country.
The proposed policy and legislation were by no means perfect but it was hoped that it could serve to be an enabler. He noted that it was not the intention of DTI to only focus on the golden triangle provinces ie
Mr Ngqaka addressed the issue of red tape and stated that the Department had looked at overseas models. In
Ms B Abrahams (DA,
Mr Chipfupa stated that OR Tambo IDZ would be operational in 2012. The focus at the IDZ would be jewellery and the
Mr A Nyambi (ANC,
He noted that there was clarity on the criterion for those provinces that qualified for SEZs, but what about those provinces that did not qualify. The issue of skewed development was a concern.
Mr Chipfupa stated that there were submissions from the provinces but they were not detailed. The DTI had set aside funding for provinces to develop their technical capacity so as to be able to put their plans together. The same was being done for municipalities.
It was correct that the Board was constituted of both government officials as well as outside experts. The fact was that SEZ Board was primarily a government function.
He noted that Transnet and Eskom were being brought on board. Labour and business was being brought on board as well. Forums were already in place to achieve this.
He asked members to consider the proposed legislation and to identify areas where it fell short.
Mr B Mnguni (ANC,
Mr Chipfupa agreed that regional development was important and that Africa was experiencing high growth even though
The SONA did tie in with IDZs. The focus was to reduce the cost of doing business. For example to reduce port charges, electricity costs and transport costs. DTI was engaged with National Treasury to discuss funding. DFIs would also provide funding.
Mr Ngqaka stated that the DTI was all for balanced regional development. There were huge economic potential in provinces other than the
On funding the DTI was considering a broader funding model. In the past DTI had relied on funding from National Treasury which was received once a year. Now bridging finance, equity funding and DFIs would be sources of funding.
The Chairperson referred to the Richards Bay IDZ situated in Kwazulu-Natal and stated that it had been in existence for 10 years but he saw no progress. For the past 3 years funding at the Richards Bay IDZ had decreased. How was the IDZ going to be turned around? For the DTI to say that three IDZs were operational needed to be looked at deeper. The DTI allocations to IDZs were Coega R3.6bn, East London R1.1bn and Richards Bay R88m. He asked what the aim of the Richards Bay IDZ was.
Did the SEZ plans of the DTI talk to the plans of Transnet? Transnet did not speak about the Richards Bay IDZ. It was something that needed to be considered.
How were municipalities to make applications for SEZs when they were already under so much strain? The core function of municipalities was service delivery. How could municipalities compete with applications from provinces?
He asked whether the DTI had the budget to implement the SEZs.
He considered incentives to be very important to attract investors. Incentives should be clearly set out even in the bill itself.
SEZs required good roads and rail infrastructure. Has DTI met with other departments to address the issue? How were things going to be transported from SEZs?
Mr Chipfupa conceded that the Richards Bay IDZ took much longer than what it should have. It should also have progressed much faster. The problem at
The challenge with including incentives in the proposed bill was that incentives needed to be dynamic as they changed all the time with changing economic trends. Permanent incentives could not be included in the bill. A mechanism was needed that would allow incentives to be changed when needed.
Mr Ngqaka stated that DTI saw
The Chairperson reminded Members that the present meeting was only an initial briefing and that a great deal of interaction was yet to come. He hoped that the DTI would speedup the hearings process in the provinces. Members must be kept abreast of where public hearings were taking place.
He expected the DTI to take action in
The meeting was adjourned.
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