SEZs to drive regional industrialisation, boost jobs

Monday, January 16, 2012

Pretoria - A new Bill gazetted today aims to boost job creation and industrialisation in outlying areas through the licensing of special economic zones (SEZs).

Briefing the media in Pretoria on the gazetting of the Special Economic Zones (SEZ) Bill for public comment, the Minister of Trade and Industry Rob Davies said special economic zones would expand the work done by the Industrial Development Zones (IDZs) and attract more foreign investment.

In particular SEZs would also help stimulate industrialisation outside of the country's main urban areas of Cape Town, Gauteng, Durban-Pietermaritzburg, East London and Port Elizabeth, he said.

Davies said Industrial Development Zones would not be scrapped, but would continue to exist as SEZs under the new Bill.

He said the focus of the IDZs - based at ports and airports - had been mainly on exporting industries, but that the SEZs would effectively be an expanded version of these and would include a focus on such areas as innovation and regional development in areas such as industrial parks, sector development zones and science parks.

The department's IDZ programme was initiated in 2000 and four zones had been designated, with three currently operational - namely Coega near Port Elizabeth, East London and Richards Bay.

A fourth IDZ at OR Tambo International Airport in Johannesburg has yet to come into operation, but the department is this year hunting for an international operator to run the IDZ.

Davies said the IDZs involved 40 investors, that had invested a total of R11.8 billion and created 33 000 jobs through the construction of these zones and direct employment in firms based there.

The Bill also proposed to bolster governance and funding of SEZs following the department's review of the IDZs, which began in 2007.

Davies said the department had found that IDZs tended to favour only a few regions, with a narrow focus on supporting infrastructure, that planning was done on an adhoc basis with inadequate co-ordination among key government agencies and stakeholders.

Added to this, financing arrangements made it impossible to do long-term planning, while targeting of investments had been poor.

To remedy this the Bill provided for the setting up of a SEZ fund, as well as a special economic zone board to regulate policy, issue operator permits for SEZs and to advise the minister on the zones.

The fund is not only intended for feasibility studies, but incentives as well to those that created the IDZs. The SEZ board would do the advisory work on where incentives would be directed, said Davies.

He said investors in these zones would be able to access the department's 12i incentive, adding that the National Treasury had gazetted increased tax benefits a week ago which companies could access through the incentive.

Meanwhile, Davies said a feasibility study had been conducted on whether to set up an IDZ in Saldanha, in the Western Cape, and pointed out that the results had been "quite positive".

The department's Director General, Lionel October, said the IDZ plan for Saldanha, was at a "quite advanced" stage and that it was hoped that the feasibility study would be completed by June this year.

When this was concluded an application would be submitted to the minister for approval of the IDZ.

October said long-term viability - at least 20 years - was a key factor that the department would consider before designating SEZs, including the proposed IDZ at Saldanha.

He said renewable energy manufacturing was one of the areas the department's team is looking at in Saldanha.

The department is also considering aquaculture, mineral sands, gas and oil as other sectors that could benefit from the proposed IDZ.

The department is also working with various provinces, including Limpopo, Free State and the North West and potential SEZs had been identified in areas such as light-manufacturing, agro-processing and platinum beneficiation, said October.

Davies said a period of public consultation of the Bill and engagement with provinces to identify SEZs and to carry out feasibility studies would start as of today.

He said the department intended to table the Bill and have it passed in Parliament this year.

The Bill will be available shortly through the Department of Trade and Industry's website.