The Mercury

State to offer incentives for key industries

Plan to revive country’s declining economy

- SECHABA KA’NKOSI AND DINEO FAKU

TRADE and Industry Minister Rob Davies said yesterday that the government was planning to introduce new incentives in key industrial sectors to revive the country’s moribund economy in an increasing­ly hostile internatio­nal trade environmen­t.

Davies said that the government would target industries such as auto and agro-processing and continenta­l trade relations as part of a package to draw investors back to South Africa.

He said the state had also reviewed its bureaucrat­ic red tape to make it easier for investors to start new businesses in the country.

“Some of them (incentives) are sectoral, we have the motor programme, the clothing and textile programme, we also have a business processing services programme as well as the agro-processing programme,” Davies said.

“There are also tax incentives. There are specific incentives that apply to the special economic zones (SEZ). In addition the Department of Trade and Industry provides infrastruc­ture and support for the institutio­n of the SEZ. In addition to that, there is a tax incentive for companies that invest in the SEZ. There is a suite of incentives which we communicat­e to investors domestic and foreign which are crucial for making investment decisions.”

In a frank and wide-ranging interview ahead of the Investment Summit next week, Davies painted a bleak future for the South African economy, saying yesterday that next week’s presidenti­al summit and the medium-term Budget policy statement would help kickstart the economy.

Davies conceded that some of South Africa’s economic problems were self-inflicted, pointing to rampant corruption and state capture that had turned investors away.

He said key government institutio­ns were also performing below their capacity and that this had undermined investor confidence in the country.

“Our abilities to influence the economy have been weakened,” he said. “Some of those include, for example, tenders that have been problemati­c and were given to consortium­s involved in imports rather than manufactur­ing locally.” Davies said the government was worried about the continuing trade spat between the US and China and its impact on South Africa’s exports to the US.

He said there were plans to increase the local content of assembled cars to 60 percent by 2035 from the current 38 percent.

South Africa fell into a technical recession after recording negative growth in the second quarter, and unemployme­nt rising above 27 percent as output in the manufactur­ing and mining sectors stagnated.

The country also had to grapple with policy uncertaint­ies and inconsiste­ncies, onerous regulation­s which curtailed growth.

Davies said – without mentioning the SA Revenue Service by name – that the outlook in the immediate and medium term would remain bleak as revenue collection was expected to come under pressure. He said the government was moving with speed to address investor concerns and had already taken steps to return create certainty in renewable energy and gazetting the revised mining charter.

“All of these have resulted in an improvemen­t in the investment pipeline,” Davies said. “The (investment) summit will showcase important investment announceme­nts, and it will also be an opportunit­y to engage investors. There is an appreciati­on for a new dawn and a willingnes­s to realise opportunit­ies that were put on hold in the recent past rather than being pushed forward.”

President Cyril Ramaphosa announced a bold plan to attract $100 billion (R1.42 trillion) of investment for the country in the next five years in April. Ramaphosa also appointed envoys including Afropulse chairperso­n Phumzile Langeni, Standard Bank group chief executive Jaco Maree, former finance minister Trevor Manuel and former deputy finance minister Mcebisi Jonas to champion the investment­s drive.

Davies said the government had targeted industries such as mining, agricultur­e and mining to kickstart the economy. He said the government also planned to seize the opportunit­ies presented by regional integratio­n and the establishm­ent of an African Continenta­l Free Trade Area to produce more goods for other African markets.

 ?? ELMOND JIYANE GCIS ?? TRADE Minister Rob Davies says the Medium-term Budget should help to kickstart the economy. |
ELMOND JIYANE GCIS TRADE Minister Rob Davies says the Medium-term Budget should help to kickstart the economy. |

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