IPAP succeeds in attracting investment

Wednesday, March 23, 2011

Cape Town - Transnet's decision to assemble 90 of the 100 locomotives on order from General Electric and the securing of R14 billion in planned investments in the automotive sector, are some of the immediate achievements of the Industrial Policy Action Plan (IPAP), the Minister of Trade and Industry Rob Davies said yesterday. 

Davies, who briefed the National Assembly's portfolio committee on trade and industry, outlined several achievements of the plan but hastened to add that a lot of work still had to be done in the role out of IPAP. The initiative was launched last year. 

He said lots of work had so far been spent setting up systems, but said the coming year would yield results, particularly with the country's revised procurement legislation - the Preferential Procurement Policy Framework Act (PPPFA) is expected to come into force.

The full document detailing the activities to be rolled out under the IPAP in the next financial year is expected next month, he said.

Davies said the R14 billion in the automotive sector is in the form of investment commitments from both assemblers and component suppliers.

Transnet took delivery of the first two locomotives at Koedoespoort last month, where 90 locomotives are to be assembled by Transnet at their plant in the North West town.

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

The department's Deputy Director General of industrial development Nimrod Zalk said departments were also looking to promote local manufacturing and pointed to the Department of Health's recent R4.2 billion ARV tender, 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's (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 last month in his State of the Nation Address, would be priced at prime minus 3 percent.

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

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, the competition authorities has also launched investigations into a number of areas, including tyre companies, scrap merchants, chemical firms, airlines, construction companies among others.

Zalk also detailed various achievements in the government's sector support programmes, these include:

-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 Services (Sars).
-The creation of 950 jobs and R40 million in investments in the call centre sector and the training of 3 400 young trainees are being trained under the Monyetla II Programme

Added to this Zalk said the revision of building standards would make the installation of solar water heaters or similar technologies in new buildings mandatory with a communication campaign to be rolled out in the 2011/12 financial year.

The forestry sector would create over 8 000 direct jobs with 161 licenses issued by the Department of Water and Environmental Affairs for 10 000 hectares.

Davies said the licensing process had long been stalled, but that the Minister of Environmental Affairs and Water Edna Moleywa was now taking water licensing issue seriously. 

So far 10 percent of licenses had been issued for forests used mainly for the manufacture of furniture, however, Davies said he wanted to see the process move a lot faster.

He said an intra-departmental task team report on developing a fairer steel price was adopted by Cabinet which mandated the departments of economic development, trade and industry and minerals and resources to come up with a fairer price.

Zalk said the manufacturing sector was hampered by among other things, the slowdown in fixed expenditure - both private and public, the slow recovery of the global economy and the strong rand.

While the PPPFA regulations still needed to be promulgated by the National Treasury, Zalk listed various outstanding issues, chief among these include:
-The promulgation by the Department of Energy of the biofuel blending process (Biofuels Mandatory Uplift Regulations) as well as the overhauling of Refit rules to focus on localisation of production of green technologies.
-Shareholder compacts at state-owned enterprises to secure fleet identification still must be completed by the Department of Public Enterprises.
-The scaling up of the Customs Fraud Campaign. 

He said the next IPAP would also look at boosting support for the commercialisation of intellectual property, where there was currently a gap. 

Turning to implementation of the IPAP, Davies was adamant that his department would take a sterner approach in meeting targets, than was taken by his department in the first industrial policy action plan of 2007, where he said many of the targets were not met and goals simply shifted when they weren't met.

He said the department held internal monthly progress meetings around IPAP, calling in officials from other departments when necessary, and following a system where programmes were colour-coded according to highlight those that were on target.

Though the IPAP's first progress report had come nine months after the launch of the plan, Davies stressed that the department would endeavour to submit progress reports every six months to the portfolio committee.

Davies said the new component of skills had been added to the IPAP's 2012/13 plan as skills formed a major medium-term constraints in economy.

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.

Davies also clarified the role of the IPAP under the New Growth Path, pointing out that while the growth path referred to totally of measures, the IPAP focused on manufacturing and high-value sector inside the NGP.

"There are no battles between ourselves and Economic Development over whether the IPAP has priority over the New Growth Path and visa versa," he said, adding that because of their scope both plans could not be run by the same department.