Pretoria - The Manufacturing Circle has welcomed the Department of Trade and Industry’s sustained efforts to support manufacturing in the country.
“While work remains to be done, progress achieved so far has led us to believe that IPAP [Industrial Policy Action Plan] is worthy of applause,” Manufacturing Circle chairman Mike Arnold said on Monday.
He was speaking at the launch of the sixth iteration of the IPAP [2016-17], which represents a continuous consolidation and strengthening of concrete industrial policy intervention.
In the past years, IPAP has been able to stabilise the manufacturing sector, grow important parts of it and prevent de-industrialisation. It has done so by putting in place mechanisms to leverage public procurement for the competitive manufacture of inputs into major areas of public infrastructure, including rail rolling stock, clothing and textiles.
“The inclusion of more transversal intervention and the introduction of the Manufacturing Competitiveness Enhancement Programme [MCEP], as mentioned by the Minister (Rob Davies), were timeous interventions, without which manufacturing in South Africa would have been worse off,” Arnold said at the launch of the last IPAP under the current administration.
Formed in 2008, the Manufacturing Circle interacts with government and other stakeholders in order to review, debate and help formulate policies that will have a positive impact on South Africa’s manufacturing base.
It is made up of a number of South Africa’s leading medium to large manufacturing companies from a wide range of industries.
Changes to MCEP
With regards to changes to the MCEP, announced by the dti last week, Arnold said manufacturers accept that not every incentive can continue in the same form indefinitely.
The programme offers incentives designed to drive growth and promote competitiveness in the manufacturing sector. It includes a package of incentives specifically designed for established manufacturers, with the aim of promoting competitiveness and retaining jobs.
“Manufacturers also accept that there are limits to what industrial policy can and cannot achieve,” Arnold said, adding that there were other challenges that face manufacturing.
He noted that there were previous examples of manufacturers who found themselves in a difficult position at the end of the financial crisis, where demand for goods “imploded” due to reasons beyond their control. At the same time, manufacturers were competing against unfairly incentivised imports.
“Under these conditions, a comprehensive and coordinated development approach to support domestic manufacturing is vital,” Arnold said.
“We believe to pull this all together, the different role players support and grow our manufacturing base. IPAP and many other efforts of the dti are an excellent example of good policy and action. We welcome the IPAP,” said Arnold.
Progress under IPAP
In his comments in the document, Minister Davies says while IPAP has “significantly strengthened” the country’s industrial policy in the most “difficult of times”, he was “far from content” with what has been achieved to date.
However, IPAP has seen significant progress.
Over the past four years, the Industrial Development Corporation (IDC) -- which provides finance for industrial development projects -- has invested R45 billion in equity or loans, helping to create new job opportunities in manufacturing, the green economy, infrastructure development and the services sector. This is but one of the achievements under IPAP 2013-14.
Since 2010, the 12i Tax Incentive has offered R20 billion in tax breaks for compliant manufacturing projects, enabling the dti to leverage R32 billion in actual and projected new investments over the 2010/15 period.
The 12i Tax Incentive is designed to support Greenfield investments (i.e. new industrial projects that use only new and unused manufacturing assets), as well as Brownfield investments (i.e. expansions or upgrades of existing industrial projects). The new incentive offers support for both capital investment and training.
Since its inception in May 2012, MCEP has approved funding for 413 entities and R2.8 billion has been committed to support manufacturers, with a total investment value of R12.4 billion. This has helped to sustain 110 977 jobs, 63 094 of which will be in agro-processing, metals, chemicals, plastic and the film sector, among others.
Since its commencement in 2008, the Manufacturing Investment Programme (MIP) has approved 1 856 projects with a total incentive value of R4.9 billion.
These are projected to secure investments amounting to R35.4 billion and create 43 570 jobs. The top three sectors for project approval were agro processing, metals and chemicals.
When coming to the creative industries, particularly film, between April and December 2013, 66 film and TV productions were supported by the dti, with an estimated total investment of R1.8 billion.
A joint initiative between the Cape Craft and Design Institute and National Treasury’s Jobs Fund programme -- implemented by the Development Bank of Southern Africa (DBSA) -- saw the creation of 104 new sustainable long-term jobs between September 2012 and October 2013 in the Western Cape’s craft and design sector. – SAnews.gov.za
