Industrial plan to create 2.5 million jobs

Friday, February 19, 2010

Cape Town - Government aims to create almost 2.5 million jobs by 2020 with the launch of the new Industrial Policy Action Plan, said the Minister of Trade and Industry Rob Davies.

"It is estimated that the IPAP will result in the creation of 2 477 000 direct and indirect decent jobs over the next ten years," said Davies.

Presenting the second Industrial Policy Action Plan at a media briefing on Wednesday, Davies said the plan, which comes into effect in April, would focus on four key areas to boost industrial capacity.

The areas include looking at ways of strengthening the Industrial Development Corporation (IDC), revising procurement legislation, the deployment of trade policies more strategically and targeting anti-competitive practices.

Davies said the example of Brazil's development bank BNDES had shown that capital at the IDC was relatively expensive - at an average of about eight percent compared to less than one percent for the Brazilian organisation.

The Brazilian development bank was also recapitalised regularly while the IDC had last received recapitalisation in the 1950s, he said.

The lesson, he said, was that the Brazilian example was able to leverage much more finance.

The Industrial Policy Action Plan would also help the country to leverage more local procurement to raise domestic production by overhauling the Preferential Policy Framework Act and assigning points in the tender process to those firms that procure locally.

Added to this, more planning and strategising would go into the procuring of goods and services.

Davies said procurement was done on a more ad hoc basis, meaning it was harder to build local production because often goods had to be imported at the last minute.

Through the release of long-term procurement plans, investors would be better informed on what goods were in demand by government and this would in turn help promote jobs at home.

Added to this, the Proudly SA campaign would be revived, he said.

Davies said eight to 10 products, such as railway equipment, would be identified to form part of the long-term procurement plan.

The government would also look at cracking down on anti-competitive practices, particularly those that affected labour-absorbing, downstream sectors as well as consumer goods to low-income households.

Davies said the action plan also aimed to boost sectors such as metals fabrication, capital and transport equipment, green and energy saving industries and agro-processing linked to food security and contribute to rural development.

The plan would also look at scaling up existing interventions that were identified in the first Industrial Policy Action Plan.

These sectors included the automotive components sector, downstream mineral beneficiation, pharmaceuticals, tourism and Business Process Services and the clothing and textiles sector.

Davies said support would be sharpened around the clothing and textiles sector, while the South African Revenue Service (Sars) would continue to crack down on illegal imports.

The government would move away from the duty credit certificate model, to a system based on credits that can then use the IDC for accessing finance.

Davies said he believed there was a real future for clothing in areas such as fast fashion and sports goods.

The plan would also look at promoting long-term sectors to develop capabilities such as aerospace, nuclear and advanced materials.

Davies noted that though the first Industrial Policy Action Plan, released in 2007, had recorded some successes, by for instance strengthening competition legislation and lowering some tariffs, it had unwittingly fallen short by tackling the easier-to-do things.

The new action plan would be a three-year rolling one and would be updated next year.

He said the document was a product of a large amount of work and engagements by his department with trade unions and business, Nedlac partners and industry associations and discussions within the economics cluster.