Tag Archive | department of trade and industry

NRCS hammered over port delays

NRCS admits failure to meet LOA targets

…..sent to clients 16 Oct…...The National Regulator for Compulsory Specificationsasogan-moodley (NRCS), responsible for the issuance of letters of authority (LRAs) to complete import certification of imports in respect of critical safety regulations, came under intensive fire in Parliament from MPs across all party lines.

This included a warning from Trade and Industry Portfolio Committee Chairperson, Joan Fubbs, that the NRCS failure to meet its annual targets, particularly bearing in mind such targets were set by themselves, was not acceptable.

Chair Fubbs told CEO Asogan Moodley of NRCS his agency was “a blot on the otherwise excellent annual performance of the Department of Trade Industry (DTI)”, NRCS being the only one of the seventeen DTI entities to receive a qualified annual report from the Auditor General’s office for the past year.

Durban is problem area

sars-warehouse-durbNRCS has a mandate to provide LOAs for clearing goods for sale or service in various categories of goods imported into South Africa, with the port of entry of Durban providing most of the problems in supplying the necessary LOAs. Chair Fubbs said that the poor performance already shown in the first quarter of the current financial year did not auger well for any change in the immediate future. This cannot be the case, she warned.

NRCS divides imports into the main categories of automotive including all components; chemicals, materials and mechanicals; electro-technical including IT and electronic appliances and food in the form of fishery products, canned meat and processed meat. NRCS also ensures standards on building supplies and checks calibration and checks of weights and measuring equipment supplies, including gaming equipment.

Massive backlogs

CEO Moodley told parliamentarians that outstanding LOAs over the recognised maximum period of 120 days were, at worst, 191 days – where 179 consignments were involved. In all some 1,500 consignments exceeded 120 days across all imports at various ports of entry, he said. The worst failures to supply import LOAs were in respect of electrical goods, IT appliances, vehicles and automotive parts.

All imports were checked on a “risk-based approach” and dived into low-risk, medium-risk andcargo-vessels-durban high-risk as far as consumers were concerned. Target turnaround time, after inspection and issue of relative LOAs, was respectively 75 calendar days for low-risk, 90 calendar days for medium-risk and 120 calendar days for high-risk.

Asogan Moodley emphasised that a major problem had been that DTI had changed working days into calendar days which had overtime connotations for NRCS with already limited staffing levels.

The whole truth

Chair Fubbs queried the number of days that cargo was outstanding supplied by NRCS in their annual report, stating that she was aware that the situation was far worse that indicated by NRCS in their presentation. In fact, a number of consignments needed by commerce and industry has been sitting in bond for nearly a year, she said. This was not acceptable, she warned.

warehouseCEO Moodley named his problems in clearing goods as being as being a result of short staffing of expert examiners, who were difficult to find – although some personnel were being trained or re-trained to meet technological changes. Compounding the problem, he said, was the necessity to update the entire NRCS IT ability, which was budgeted for but which had not yet been completed.

He also complained that the volumes of incoming imports and the technical advances represented almost monthly in imported goods were not exponentially related to the growth of NRCS, its skills base and the level of monitoring expertise, particularly at major ports.

IT gear just standing

In respect of the electro-technical category, he said that whilst inspections were up 11% transnet-container-terminalagainst target, the processing of LOAs within the financial year stood at 68% lower than the target for 120 days turnaround. In other instances, inspections carried out at source or at retail level were also short on target level but CEO Moodley assured the Committee that the NRCS had embarked upon a process of implementing a new system of automation and modernisation to improve performance.

He said it would take 18 months to complete such a programme at a total cost of R50m.
Major problems encountered were that certificates of origin supplied by importers which differed when the same goods were subsequently imported resulting in the need for fresh LOAs and that all processes at present were manual which increased load.    He called for the regulations to be changed so that more categories were allowed for so that very low risk products could be handled specifically on a quicker turn-around basis.

Opposition members said that they could not see how this would improve the situation since the problem appeared to be an inability to handle any volumes with untrained staff, whether low risk or high risk.    MPs noted that import bottlenecks were a financial threat to businesses and industry who were reliant on such imports and failure by DTI in this regard led to job losses and low growth.

Technical advances not in tune                nrcs-logo                                    

CEO Moodley and his team of departmental heads went to great lengths to explain the technical variations in international goods and imports coming from various countries that were either substandard or which had wrong documentation. He said that the failure to provide standards for treated timber and safety footwear, for example, had caused a backlog and such issues as non or sub-standard tyres on vehicles had slowed things down in the automotive sector.

He complained that the lack of consistency in supplied products and the constant attempts to short-circuit the system by importers accounted for much of the delay in turnaround.

Where it matters

CEO Moodley said that the electro-technical industries represented an area where most product failures occurred.  He added that the introduction of LED technology had compounded the checks for accuracy and reliability and such issues as compatibility of electrical goods, in many cases portable generators and white goods, had a poor record of power specification labeling and consequent safety in South Africa.

This was a growing problem with many countries who worked to different standards, various plugging methods and a different disclosure ethic.

Warning

durban-port-bigIn conclusion, when the debate was wound up, the Committee noted that a complete change of direction in the methods and ability of NRCS to meet its targets had to be found and that future presentations by NRCS reflecting such dismal results would not be tolerated.

As a result of a number of critical comments from MPs across party lines, the backlog of 1,650 LOAs over 120 days would be tackled, regulator Moodley promised, “by October” but stated this as being with the use of “new inspectors”.

Also, in an effort to speed up the search for unsafe or non-compliant products, there would be no need to obtain a new LOA for additional imports of a product where one had been additionally granted, he said. However, NRCS reserved the right to carry out spot checks.

Consequences

From a subsequent follow-up report in Business Day, it was learnt that DTI had confirmed the resignation of CEO Asogan Moodley and that such a move “had been a decision of Mr Moodley himself”. Trade and Industry Minister, Rob Davies, said he had instructed DTI’s DG, Lionel October, “to engage with NRCS to ensure they meet their targets”.

DTI said that Minister Davies “simply expects management and labour of DTI entities to meet their targets”, referring specifically to LOA targets in the case of NRCS.
Previous articles on category subject
Customs Duty Bill cuts out inland ports – ParlyReportSA
Border Authority to get grip on immigration – ParlyReportSA
Tax law changes after mid-year budget – ParlyReportSA
New Customs Duty Bill opposed by BUSA – ParlyReportSA

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Government stirs on intellectual property plans

New approach to SA intellectual property 

……sent to clients Aug 1trademark logo6…. The Cabinet has agreed that a new intellectual property (IP) framework is needed and has asked that discussions commence with all stakeholders in order to set out a future IP policy for South Africa.

In 2013 the South African government released a draft IP policy which ran
into heavy weather because of ambiguities and anomalies at law. This previous attempt was rejected by Parliament.

dti-logo2Since that time, the private sector has complained of no movement from the Department of Trade and Industry (DTI) on the subject, or even the Department of Justice and Constitutional Affairs.

Hidden agendas?

Suspicions existed that a lot more was written “between the lines” by DTI in the light of a feeling that government medical authorities, including the Minister of Health and a large number of public sector entities, were favouring the case for making it easier for generics to come on to the market in view of the wish to introduce national health insurance and cheaper medicines.

copyright graphicThe law courts, always sticklers in their respect for the international word of law, favoured, it seemed, external legal international precedent as the basis for a new approach.

Discussions with DTI surrounded their attitudes and their not so transparent views on the Trade-related Aspects of Intellectual Property Rights agreement (TRIPS). However, that approach may have altered with DTI now more openly favouring Bi-lateral Trade Agreements (BITs).

Bad influence

In 2014, the whole question of IP policy became mired in controversy with a statement from a US-based lobby group based from Washington who surprised all by stating they were working with the local pharmaceutical
industry to influence the SA government and also the Department of Health (DOH) in particular in order to gain more ear to the international view. This was subsequently denied by the pharmaceutical world in SA (IPASA).

The whole matter appeared to inflame the incumbent Minister of Health, Dr Aaron Motsoaledi, who will no doubt be a key player in the new discussions.
After this the 2013 proposals seemed to fall away. Parliamentary hearings were at the time controversial, to say the least.

The major complaints boiled down to the fact that there were no time frames in the government proposals; no regulatory impact assessment had been done; and there was no appearance of a follow through of the effect of the Bill on international commercial ties.

Expert patent lawyers complained of ambiguity and lack of clarity at law.

Where it stood

After some heated debates at the time it appears that TRIPS, despite BITs copyright symboleven then being a new DTI “hobby horse”, has been respected by DTI and the generalised view accepted by most that there would be compulsory local patent registration based on a localised validity acceptance and acceptance by a localised body of all medicines dispensed. The query remained, however, on the skills available to undertake such a policy and time lags.

Whether the originally proposed patents tribunal will have final say in dispute or the High Court of SA will no doubt now be debated, as well as the critical issue of the length and duration of registered patents in a transparent manner with experts and a broad based body to represent the private sector.
As before, probably a “workshop” will be called for to air views.
Previous articles on category subject
Impasse on intellectual property rights – ParlyReportSA
Intellectual property law still in limbo – ParlyReportSA
Intellectual Property Laws Bill goes forward – ParlyReportSA
Medical and food intellectual property tackled – ParlyReportSA

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Border Authority to get grip on immigration

Border controls for trade as well…..

A Bill enabling the formation of an overall border authority to be known as the Border Management Authority has reachedborder lebombo Parliament following its publication for comment last October by the Minister of Home Affairs. The legislation will “allow for the transfer, assignment and designation of law enforcement functions on the country’s borders and at points of entry to this agency.”

The Authority’s objectives include the management of the movement of people crossing South African borders and putting in place “an enabling environment to boost legitimate trade.”  The Authority would be empowered to co-ordinate activities with other relevant state bodies and will also set up an inter-ministerial committee to handle departmental cross-cutting issues, a border technical committee and an advisory committee.

Mozambique border

sa moz logoThree years ago, Kosie Louw, then chief legal officer at SARS, told Parliament that a “one stop border post” to handle customs and immigration was being established at the Mozambique border.

An original document of intention was signed in September 2007 by both countries and consensus on all issues was reached between the two covering all the departments affected by cross-border matters.
Kosie Louw told the standing committee at the time that on finance the benefit of an OSBP was that goods would be inspected and cleared by the authorities of both countries with only one stop, which would encourage trade. In any country, he explained, there had to be two warehouses established, bonded and state warehouses.

Bonded and State warehouses

Bonded warehouses, he said, which were privately managed and licensed subject to certain conditions, were to allow imported goods to be stored temporarily in order to defer the payment of customs duties.

Duties and taxes were suspended for an approved period – generally two years, Louw said, but these had to be paid before the goods entered into the market or were exported. The licensee bore full responsibility for the duty and taxes payable on the goods, which could be removed only after all the customs requirements had been met.

State warehouses on the other hand, Louw said at the time, were managed by SARS for the safekeeping of uncleared,
detained,state warehouse seized or abandoned goods. They provided a secure environment for the storage of goods in which the State had an interest. Counterfeit and dangerous or hazardous goods were moved to specialised warehouses.

MPs noted that it had taken over six years for the Mozambique OSBP to be finalised which to them seemed an unduly long period. The SARS response was that that were many ramifications at international law but he added they had already had two discussions with Zimbabwe at that time.

Slow process

South Africa, he said, was looking at the establishment of more such posts and it was hoped it would take less time to reach an agreement as many lessons had been learnt through the Mozambique experience.

SARS, said losses obviously occurred through customs avoidance and evasion, so it was consequently very difficult tosa border beit bridge provide an overall figure on customs duty not being paid as evasion was evasion. Smuggling of goods such as narcotics, or copper, which could only be quantified on the basis of what had been seized. The same applied to the Beit Bridge border with Zimbabwe, where cigarette smuggling was of serious concern.

The overall principle of what was referred to then as an OSBP was for both countries to have one set of common warehouses for stop, declaration, search, VAT payments to South Africa. involving therefore vehicles going through only one process for both countries.

It seems that the new Bill is building on that experience but the whole process is taking an inordinate period of time put down to the fact that so many departments in two or three countries have to be consulted and consensus obtained.
Previous articles on category subject
Home Affairs gets tough on expired visas – ParlyReportSA
Customs Duty Bill cuts out inland ports – ParlyReportSA
Home Affairs fails on most targets – ParlyReportSA

 

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BEE: Davies drives on with Black Industrialist Policy

Report on Black Industrialist Policy awaited….. 

sent to clients 21 January….  The Black Industrialist Policy, now in place and engineered by the Department of Trade and Industry (DTI), is due to be debated in Parliament early February.

ack bdlive

ack bdlive

A progress report will be made by Trade and Industry Minister, Dr Rob Davies to the relevant portfolio committee shortly. The plan was submitted to Cabinet by and approved in early November 2015. The purpose of the policy, the Cabinet said at the time, was to focus on growth and competitiveness of Black-owned enterprises.

The plan is designed to “facilitate the meaningful participation of Black-owned and managed companies within industry” and is another extension to DTI’s Industrial Action Plan (IPAP).  It backs up, Minister Davies said when launching the programme, both the NDP and President Zuma’s nine-point plan laid out in the 2015 State of Nation Address.

More Black control releases more State money

The scheme offers a cost sharing grant with the DTI, ranging from 30% to 50%, to approved entities to a maximum of R50m.   The value of the grant in terms of any proposal will depend on the level of Black ownership and management control and must be for capital investment and other support measures, such as working capital.

Minister Davies said in his launch parliamentary media briefing  that a number of private banks black ownershiphad  approached DTI prepared to partner with government on the initiative. He said the idea was “to unlock the industrial potential that exists within Black-owned and managed businesses through deliberate, targeted and well-defined financial and non-financial interventions.”

Focus on Black ownership

Not mentioning job creation specifically, he said that his department particularly wanted to “speed up the entry of Black industrialists to enter strategic and targeted industrial sectors and value chains.” “South Africa will not be able to industrialise to maximise growth “unless it simultaneously includes the Black industrialist on a sustainable basis”, he said.

Manufacturing core needed

Minister Davies said that the only route for future of the economy was to build the manufacturing sector and the inclusion of the black industrialists and manufacturers had to be encouraged.

The DTI had earmarked R1bn of seed capital to assist the Black industrialists to raise the necessary equity required to access the private sector/banking market to access debt funding, he said.  This capital would be complemented by funding from developmental finance institutions.

He added that while incentivising the inclusion of the Black industrialists in the manufacturing sector, the parties involved “needed to be committed, willing to take risks and be willing to look for long-term returns and not short-term rents.”

” This policy proposes focused efforts to facilitate inclusion and participation of Black industrialists in manufacturing activities, with an understanding that more equal societies tend to grow faster than those that are unequal,” said the Minister.

Opposition members will specifically ask how this programme has contributed to job creation.

Previous articles on category subject
SA’s economic woes not BEE, says DTI – ParlyReportSA
25.1% is maximum BEE control, says DTI – ParlyReportSA
DTI does flip flop on BEE codes – ParlyReportSA

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BEE : Black Industrialist Policy ready to go

DTI with further Black industrialist plan…..

The Black Industrialist Policy is now in place engineered by the Department of Trade and Industry (DTI andBEE image approved by Parliament. It was submitted to Cabinet by Trade and Industry Minister, Dr Rob Davies and approved in early November. The purpose of the policy, the Cabinet says, is to focus on growth and competitiveness of Black-owned enterprises.

The plan is designed to “facilitate the meaningful participation of Black-owned and managed companies within industry” and is another extension to DTI’s Industrial Action Plan (IPAP). It extends, Minister Davies says, the NDP and President Zuma’s nine-point plan laid out in the 2015 State of Nation Address.

More Black control, more money

The scheme offers a cost sharing grant with the DTI, ranging from 30% to 50% to approved entities to a maximum of R50m. The value of the grant in terms of any proposal will depend on the level of Black ownership and management control and must be for capital investment and other support measures such as working capital.

Minister Davies said in his media briefing relayed on the parliamentary precinct that a number of private banks have already approached DTI prepared to partner with government on such an initiative. He said the idea was “to unlock the industrial potential that exists within Black-owned and managed businesses through deliberate, targeted and well-defined financial and non-financial interventions.”

DTI, he said, particularly wanted to “speed up the entry of Black industrialists to enter strategic and targeted industrial sectors and value chains.” According to Minister Davies, South Africa will not be able to industrialise to maximise growth “unless it simultaneously includes the Black industrialist on a sustainable basis.”

It all comes back to manufacturing

Rob-DaviesDavies said that the only route for future of the economy was to build the manufacturing sector and the inclusion of the black industrialists had to be encouraged. The DTI has earmarked R1bn of seed capital to assist the Black industrialists to raise the necessary equity required to access the private sector/banking market to access debt funding. This capital would be complemented by funding from developmental finance institutions.

He added that while incentivising the inclusion of the Black industrialists in the manufacturing sector, the parties involved “needed to be committed, willing to take risks and be willing to look for long-term returns and not short-term rents.”

” This policy proposes focused efforts to facilitate inclusion and participation of Black industrialists in manufacturing activities, with an understanding that more equal societies tend to grow faster than those that are unequal,” said the Minister.

Previous articles on category subject
SA’s economic woes not BEE, says DTI – ParlyReportSA
25.1% is maximum BEE control, says DTI – ParlyReportSA
DTI does flip flop on BEE codes – ParlyReportSA

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Plenty in the way of AGOA agreement

Sorting out AGOA agreement by Jan….

Sent to clients 17 Dec…. During a briefing to Parliament, it became evident once again that the SA Cabinet perceives the renewal of the AGOA agreement in the overall context of trade being attached in the future to a development price. The briefing was by DDG Kgabo Mahoai of the Department of International Relations and Cooperation (DIRCO).
Kgabo Mahoai

Whilst the advantages of a signed AGOA agreement to South Africa were great without doubt, Mahoai said, it had to be considered within the overall context of trade between Africa and the rest of the world. He was at pains to express that this was not just South Africa’s view.

AU plans for Africa

The overall African Union theme being developed by African states was clearly confirmed by DIRCO in that as a generalised policy, investment by international companies to gain access to poorer African zones had to be accompanied by reportable programmes of contributions to skills development, education, and small business and towards the upliftment of the African continent in general.   A price, he said, had to be attached for access to the African market.

Hence the Black Industrialists Investment Programme, devised by Department of Trade and Industry (DTI), they said, and whilst US President Barack Obama had given South Africa 60 days until January 4 to show it is meeting the requirements of AGOA before the US imposes normal tariffs on South African agricultural products, the two matters of development and trade were inter-dependent, whatever US senators might feel.

In the background

However, the whole issue is complicated by a third issue, say critics of DTI’s slowness in finalising AGOA, by the passage of the Private Security Industry Bill, held back by President Zuma and appearing to be compounded by national intelligence issues according to MPs. DIRCO said they could not discuss this but it was evident from questioning by MPs that this was “the elephant in the room” when it came to general US-SA trade relationships.

chickenWhilst the debate on AGOA has been complicated by US senators over anti dumping duties that South Africa had imposed on US chicken wings and drumsticks in 2000 – the argument then extending to meat and pork products – the stakes are high since the agricultural section of AGOA (which could be this isolated from AGOA and lose its duty-free status) involves some additional R140m of exports in wine, citrus and nuts, in addition to meat and poultry.

Kick back…

Senior SA MPs across party lines have observed that the position for DTI has also recently radically altered in that drought has seen the necessity to import cheap chicken as a substitute in the absence of red meat to poorer and lower income groups. This has adversely affected the SA position in negotiations.

No doubt, this is the dilemma facing DTI, Minister Rob Davies, having recently stated that “everything had been done which was possible to meet US requirements on certifications issues but did not wish to intervene in matters relating to ongoing veterinarian discussions between the two countries.”

In other words, previous arguments that the “US was bullying smaller countries into trade agreements advantageous to the US” might now have been negated by an additional need for chicken on the local market. Whilst meat is preferred in the average African household, chicken is a relatively cheaper substitute and acceptable, especially chicken wings and drum sticks, the drought in SA having changed the “quid pro quo”.

DTI at the front

DIRCO in their briefing said that they did not wish to make statements to MPs on “DTI territorial areas” but they were assisting where possible to ensure that the AGOA agreement was satisfactorily concluded in all aspects. Also the US, DIRCO was sure, were meeting all “developmental requirements” on general US-SA relationships, both here in the commercial world and on an inter-governmental basis.

DDG Kgabo Mahoai felt confident, he concluded, that AGOA was to be renewed in all aspects despite further late “anti-SA lobbying by some US senators attempting to resuscitate pressure on President Obama.”

Inside job

At this point, the meeting was disrupted by unruly NEHAWU protesters who blew vuvuzelas and sangnehawu freedom songs, disallowing any further debate. Chairperson, Eddie Makue (ANC), wisely concluded the meeting, objecting to protester’s that the disruption was illegal in terms of national law to interrupt parliamentary business. A good number of the NEHAWU demonstrators were in fact parliamentary staff and had full knowledge where meetings were taking place in the parliamentary precinct.

This was a sad conclusion to an intelligent meeting.

Other articles in this category or as background
EU and AGOA still important to SA, says govt – ParlyReportSA
AGOA : Parliament this week 3 Nov 2015 – ParlyReportSA

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Draft Copyright Amendment Bill raises queries

Copyright Bill proposes revenues to state…

copyright graphicsent to clients 28 Oct….  Anomalies abound in the draft Copyright Amendment Bill, recently published for comment and now awaiting tabling in Parliament hopefully with a number of changes, say experts in the intellectual property industry.

The Bill primarily affects music, artistic and literary copyrights but the whole issue of patents, copyright and intellectual property rights are so intertwined that any changes will undoubtedly send up red flags up in various areas.

Government says in this instance it is trying to modernise the existing Copyright Act but as with any changes to established procedures that have existed for years, there are pros and cons that come with change it seems.

50 years after death

The draft Bill deals primarily with copyright of artistic, musical and literary work and most assume earphonesthat works of great composers such Brahms, Beethoven and Schubert are free of copyright, those geniuses having long since passed away. In fact under the existing Act, the author, composer or artist has copyright for life and then fifty years

The draft states both clearly and unambiguously that the ownership of all copyright held by individuals will automatically transfer to the state upon their death.

Until death do us part….

There is not the slightest indication of what body or entity is involved, other than the fact that the Bill is to be tabled by the Minister of Trade and Industry, meaning that DTI, or an entity controlled by it, would receive such, presumably the individual’s Estate being responsible for notifying DTI that they are heirs. The draft also states that government may never re-sell or pass on such copyrights.

The question to any casual observer is what happens to this money, at present collect by such bodies in doubtful manner by such bodies as SAMRO and passed to DTI? It is revenue and does it go to National Treasury, perhaps a fund for aged musicians, authors and artists even child education in the arts? On this the Bill is silent, no policy having been ever stated by any cabinet minister on such matters.

Another tribunal

In the absence of any new guides as promised on intellectual property in general, such having been promised by DTI in the form of a National IP Policy many months ago, more concerning is the establishment of an Intellectual Property Tribunal which is a case of “overkill” in dealing with this limited area of copyright and royalties.

Such a body may adjudicate on “on any application and on any legislation brought before it”, the draft supermarketstates.

On the whole, we have to assume that the majority of the draft Bill applies to individuals only, with the exception of the recording industry and literary reproduction industry, there also being certain clauses regarding End User Licence Agreements affecting software sales.

Criminalisation

Of concern though to many is the growing tendency to introduce criminalisation into legislation such as areas of BEE with fines normally reserved for more serious and harmful criminal police offences. In this case DTI have once again mentioned maximum jail and penalties of totally disproportionate periods and amounts.

To many, this Bill appears to have a lot more written in between the lines and prompts again many questions as to the direction DTI is taking with regard to international agreements, in this case the Agreement on Trade-related Aspects of Intellectual Property Rights.

It will be interesting to see what is finally tabled in Parliament for debate and what emerges from parliamentary public hearings

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AGOA : Parliament this week 3 Nov 2015

cropped-sa-parliament-2.jpg

 

Editorial…….

AGOA : What and who to believe….

Reported to clients 5 November……On June 10 2015, a meeting took place in Parliament between the Department of Trade and Industry (DTI) and the Portfolio Committee on Trade and Industry, chaired by Ms. Joanna Fubbs, during which DTI was reporting back on its progress with B-BBEE.

The meeting was interrupted by the appearance of Faizel Ismail, the special SA Trade Ambassador to thefaisel ismail AGOA talks, who dramatically made an announcement with the Chair’s agreement despite nothing on the agenda, to all members of the Committee. To sum up the statement he said that the negotiations on the AGOA trade agreement could be considered a success. There was considerable joy amongst MPs generally.

Then on September 8, Lionel October, Director General of the Department of Trade and Industry (DTI), surely “Mr. Big” when it comes to knowledge of trade relationships and policy with other countries, made the following rather obtuse statement to the PC on Trade and Industry when asked for the current position with regard to the AGOA.

He answered, “As for SA’s US relationship, no one relationship would save SA. The US has decided to re-industrialise with an emphasis on energy development in Africa after a previous emphasis on the service industry. The AGOA had been reviewed, and meat trade issues needed to be resolved but in general the AGOA had grown in its relationships.”

What this was supposed to mean was difficult to interpret. But then discussions were on-going at the time between SA representatives and the US congress over poultry, meat and pork issues and relationships were admittedly difficult. Dumping by the US was the accusation. Lack of certification of SA exports was the reply. Most were downcast.

The context

The occasion for DG October’s remark was DTI’s presentation of its annual report to Parliament, with Minister Rob Davies present, and it was in answer to an Opposition member on the subject. It was apparent to all at the time that the AGOA had not been mentioned as one of the “achievements” of DTI for the year 2014/5 and the first quarter of the present year. That’s as close as Parliament can get to being up-to-date.

Then newspapers announced that South Africa’s inclusion had been agreed to by Congress and the AGOA Bill had been sent to President Obama for signature. The poultry and meat issue had been resolved apparently.

lionel october 3Everybody relaxed and Lionel October told Parliament in a further PC Trade and Industry meeting, this time on the Protection of Investment Bill, that indeed the Bill had indeed gone for signature and all was done and dusted.

Reverse gear

The we heard from the media, not DTI, that everything is held up again after DTI had admitted under pressure that they had failed to meet a poultry declaration deadline under the AGOA. A war of words started on whose fault that was, DTI claiming that the fault was mutual between the US and South Africa.

In the meanwhile we had put the AGOA behind us, the focus having shifted in the meanwhile to watching the Portfolio Committees of Police and awaiting the return of Private Security Industry Bill, President Zuma staying “mum” on the subject and the Cabinet saying nothing in their regular statements from GCIS.

Clearly the preamble to the AGOA agreement had fallen foul with the US Constitution finding this particular Bill objectionable in terms of international obligations on expropriation, presumably connecting AGOA to US investments in the security sector industry where US owned interests stood to lose control of their investments in South Africa. This time it was the US media reporting, not the negotiating parties.

Just recently, Ms. Joanna Fubbs, chairperson of the Trade and Industry Committee, refused Oppositionjoan fubbs members the right to discuss the issue of the Private Security Industry Bill in her Committee, stating that the subject matter was the domain of another Committee. The subject at the time was the Protection of Investment Bill, now passed at committee level, and whether this Bill would contribute further to poor US relationships, as was apparent with the Security Industry Bill already.

 Passing the cushion

But that was not the full truth. The PC Committee on Police, as far as we can establish, has never discussed in depth the implications of the Private Security Industry Bill as far as the AGOA is concerned. Meanwhile President Zuma, who had the Bill and still has, must be perfectly aware of the implications as must the whole Cabinet, since it is not just the poultry industry that is affected but the security industry, the automotive industry and a whole lot more.

This is especially in the light of the fact that, according to reports, this Bill has been mentioned in Congress in front of the SA Ambassador called to Congress to answer on the subject. Nobody knows therefore, if Parliament will again verbalise on the Bill because nobody will come clean on why the Private Security Industry Bill is stuck where it is in the Presidential office.

 AGOA vs Security Bill

Is AGOA on the altar of ideology, one must ask therefore.

courtesy iol

courtesy iol

During a very recent briefing to the PC on Trade and Industry on AGOA progress, Minister Davies told parliamentarians that everything “was in the hands of veterinarians, both on the US side and in South Africa, both parties taking the issues of animal disease and sickness very seriously“. He continued, “It has been more than we dare do in DTI to interfere or intervene in this process. It is supposed to be an independent process. Avian ‘flu in the US is a repeating disease but, however, all is now resolved from an SA perspective.”

The Minister added, “Furthermore on our side we, the Department of Agriculture and Fisheries and their veterinarians have written to the US side to say we are ready to implement all conditions so President Obama can sign. All the deals are done in both the US and SA industries and we just await the US response”, he concluded with Faizel Ismail present.

Dave MacPherson (DA) pointed to the fact that the whole of AGOA would be torpedoed anyway if the Private Security Industry Bill were to go through. Minister Davies responded that the Private Security had not come up once in the AGOA talks with the US. “Too much of this has been a media debate”, he said.

Under pressure

Consequently Minister Davies is fully aware the situation but dealing with the issues as if they were not connected, which could be considered slightly disingenuous. It is known that Minister Davies very much wants the AGOA deal signed but Oppositions members conclude, when asked, that they also cannot think of a single reason for pushing through the Private Security Industry Bill if it is at the expense of the AGOA and growth.

Unless it can be put down to disharmony within the Cabinet or intransigence on the part of the Minister of Police, they say.

As for the future of the AGOA then, for the moment don’t hold your breath but rather cross your fingers that Cabinet as a whole will come out of its ideological bubble, if this is the case.

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Sept workshop: Protection of Investment Bill

Report to clients 15 Sept. Two more posts to follow…

Initial discussions on Investment Bill…

In a parliamentary Trade and Industry Committee workshop, two professors of law at South AfricanCOMMITTEES_large universities stated that the Promotion and Protection of Investment Bill (as it was then called) seemed to be little about promotion of investment but more about local protection.

Nevertheless, both felt that localised jurisdiction was the more appropriate way to settle issues under arbitration conditions in the South African context; was in line with SADC modelling and introduced the elements of national interest and “fairness”, which they said international arbitration often precluded.

Both added that some of the vague wording and definitions had to be tightened up upon if the Bill was to be a useful tool in encouraging developmental investment and that, in purely legal terms, their view was that the Bill would pass constitutional muster.

Legal minds

joan fubbsMs. Joanna Fubbs, chairperson of the committee, had invited a number of legal and trade entities to share opinion on the new Bill under relaxed workshop discussion rules and on the invite list was Prof. Riekie Wandrag of University of Western Cape and Prof. Jonathan Klaaren of Wits University.

Department of Trade and Industry (DTI) also made a presentation by Ms. Xolelwa Mlumbi-Peter, who was to be leading DTI’s briefing of Parliament on the PPI Bill in the coming days.

 International views

An international guest to report on the PPI Bill was a United Nations Conference on Trade and Development (Unctad) representative, James Zhan, who noted that the proposals contained in the Bill seemed to be following the new trend, particularly in developing countries.

It was now becoming standard practice, he said, not to have traditional bilateral trade treaties (BITs) butzahn rather an agreement that favoured economic development in the host country and subject to the laws of that country.

Unctad led most of the discussions during the debate and stated that any such legislation as proposed by the PPI Bill could “fill an important gap in the developmental role of a country and help with economic development.”

The trend in many countries such as South Africa, Mr Zhan said, was to move away from BITs which tended to be a legacy from the past. However, he added that this was not the whole story. What was put in its place, such a Bill as proposed, had to be part of a whole regulatory framework that encouraged development strategies as well as investment. One could not be without the other.

 Part of a state policy perhaps

D Macpherson DAWhen asked by DA member, Dean Macpherson, if he was aware that the PPI Bill was part of a whole number of Bills that were part of the South African government’s present land and state expropriation policy, such as the Expropriation Bill and a draft Land Holdings Bill, Mr Zahn said he was not asked to talk on these further Bills or discuss any state policy nor was he asked to study the wording of the Bill before them in detail.

His brief, he said, was merely to comment on the Bill as this was a workshop and on the basis of what was happening elsewhere in the world and the role of Unctad. Each government had its own policies and laws and it was not Unctad’s role to get involved in specific national issues.

On issues of arbitration on BITs resulting from disagreements with host countries, he said globally there were over 3,500 treaties of some sort in operation in 160 countries on trade at any one time and, on average, a new treaty is signed every week including mega regional BITs.   He said “few countries were satisfied with the current international trade regime” and it was fast changing.

 Where the argument comes

He said most arbitration matters or points of disagreement arose over waste collection, treatment and disposal (3%); transportation and storage (3%); the manufacture of food products (4%); real estate (4%); telecommunications (6%); construction (8%); financial services and insurance issues (9%); mining and gas (16%); supply of electricity (19%); and other varied issues (28%).

65% of arbitration cases were decided in favour of the businesses involved and 35% in favour of the state involved.    Zahn said that “the world was going through a period of reflection on trade agreements” and whilst companies in the major trading nations in some cases might prefer BITs, most of them were coming to terms with the fact that many smaller nations, especially those with poor communities, were asking for national priorities to be included in packages.

History of up and down

In terms of foreign direct investment (FDI), South Africa was amongst the world’s top recipients but South Africa’s graph of incoming funds since 1994 was “lumpy” he said, “sometimes up and sometimes down due to the fact that most projects in South Africa were very large infrastructure projects and only occurred now and then”.

FDI graphAs far as FDI was concerned, the UK was by far the largest supplier of FDI in South Africa (48%), with the Netherlands coming in at 16%; the US at 6%; Germany at 5%; and China at 4%.  Financial destinations provide 40% of FDI applications in SA; mining, quarrying and petroleum at 28%; and manufacturing at 17%.   Transport, storage and communications was at 10% and gas, water and electricity, at this stage, almost 0%.  The reason for the odd groupings was not given.

Zahn said Unctad saw this Bill as a natural bridge to the country’s own developmental strategies and it was in general was in line with Unctad’s core principles. When asked by Opposition MPs if the wording regarding “the public interest” and vagaries of allowing the Minister to decide if an investor may use international arbitration methods on disagreements worried him at all, Chairperson Joanna Fubbs stepped in and said that the meeting was a workshop, not a clause by clause debate on the Bill.

 Findings often obscure

However, Zahn did say that he could only opinionate in broad terms and state what the rest of the world was doing in general terms. The point was that arbitration under BITs was a different issue to the state to state relationships envisaged by the Bill before the workshop but he noted that many international arbitration findings in favour of the investing company were on obscure technical points and had little to do with the investment itself and the country in which the investment was made.

He understood, however, that whilst the Bill might not be coming at a good time from the point of global economic factors, “it was a good Bill generally in broad principle and it was a good time to set up new structures”.

Gives policy space

 Jonathan klaarenProf. Jonathan Klaaren of Wits University said in broad terms BITs probably do not affect a leaning towards good developmental investment but do not hurt inward flows of capital. Thus he felt that DTI, by giving protection for inward and outward SA investments and retaining “policy space for a legal and policy framework attuned to sustainable development”, allowed South Africa to do some of “the agenda setting”.

He agreed with the recent Policy Review on trade treaties which stated that BITs tended to open the door to narrow commercial interests and that matters of national interest became subject to unpredictable international arbitration outcomes if they went wrong. “This may lead to a result that may constitute a direct challenge to legitimate, constitutional and democratic policy making”, he said.

In his view, procedural “fairness” contained in a domestic jurisdiction approach was superior to the arguments often given in favour of “fairness” at international level. He said the “fairness” was guaranteed with a robust judicial system such as existed in South Africa whereas in the international environment of arbitration, quite often “fairness” was not reached because of obscure legal issues. The national interest of a country was therefore made irrelevant because of a technical point at law.

He noted that issues of economic development could not be addressed outside of borders but human rights issues such as land grabs in Zimbabwe were coming into the matter and involved the SA Law Society at the moment who were deciding upon such issues. At the moment the SADC Arbitration Tribunal was only state to state, so matters raised in this workshop fell away.

The future with SADC

reikie wandragProf. Rieikie Wandrag of the Faculty of Law, UCW, gave a detailed comparison with existing SADC investment protocols and hoped-for changes being negotiated. She also drew comparisons with the East Africa COMESA trading bloc.

She said the Bill was generally in line with the regional perspective in SADC and Africa generally and that the PPI Bill attempted to address most of the concerns currently being expressed in many developmental regions. Prof. Wandrag undertook a comparison of expropriation wording; the use of the expression “in like circumstances” in each region, which was usually the contentious area in any such Bill; and how each region dealt with the area of “fair and just compensation”.

DTI’s view

DTI’s Xolelwa Mlumbi-Peter complained that arbitration panels produced inconsistent interpretations even on similar matters and undermined in their view the predictability of investment law.   She said that with international arbitration, DTI had noted that matters were shrouded in secrecy; rulings were not published because of confidential rules and which affected governments; whilst matters were not generally conducted on a “proper state-to-state basis”.

 Social imperatives to be included

She said the trend was now to have state-to-state international investment agreements, where implications for countries was involved and arbitration issues could not avoid local courts or the laws of the country where the investment took place. Broader social and public imperatives would have to be considered when considering investment because, DTII said, it had to be understood that South Africa was engaged in a process of socio-economic transformation.

The agenda in South Africa was set by the NDP, New Growth Plan and IPAPs in addition to the local laws of the land, Mlumbi-Peter said, and the implementation of this “ambitious development agenda required the development of new policies and regulations whilst ensuring that South Africa remained open to foreign investment and trade”.

The workshop concluded with the chairperson pointing out that the idea had been to “set the scene” for parliamentarians on the forthcoming hearings and the reasons for introducing such a Bill.
Other articles in this category or as background
Promotion and Protection of Investment Bill re-tabled
Promotion and Protection of Investment Bill opens up major row – ParlyReportSA
Protection of Personal Information Bill almost concluded

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SA’s economic woes not BEE, says DTI

BEE and economic climate not connected…..

lionel october 3In his introduction to the Department of Trade and Industry (DTI) presentation to Parliament on the current position with regard to the implementation of Black Economic Empowerment (BEE) as of August, 2015,  DTI’s DG, Lionel October, said that contrary to some claims, BEE was nothing to do with the many economic problems that beset South Africa.
In his overview, before discussing the detail of the B-BBEE Act, the Codes and Sector Charters, October said he wanted place the need for urgent transformation in its proper context. He said that indeed South Africa, as an emerging economy, had been hurt by global factors recently by Chinese currency interventions and originally by its own energy supply problems.

Key to future, says DTI

However, he said, economic transformation in the form of black advancement, procurement from black entrepreneurs, the transfer of basic mineral wealth into beneficiated products and a rebuilt and transformed manufacturing sector held the key to development.   BEE was nothing to do with the pervading “doom and gloom” scenarios that were persisting in business and industry circles.

Lionel October said “things now needed to be speeded up”. He claimed that the country now had all the legislation, tools and direction needed to contribute the shortage of jobs and quoted JP Landman by saying that South Africa faced a further problem that population growth of 200,000 births a year more than the previous year every year was as much a problem currently, he said.

The big sell

In tracing the development of BEE since the commencement of the B-BBEE Amendment Act in 2014, the adoption of the B-BBEE Codes of Good Practice in May this year, DTI had held 46 workshops to explain and help in the development and understanding of the need for black empowerment. It was not a racial issue, he insisted, but a programme of necessity if South Africa was to survive economically.

He said that the process of establishing at BEE Commission was at “an advanced stage” – the new acting commissioner having been announced recently.

B-BBEE ACT trumps all

Acting chief director of BEE at DTI, Liso Steto, then reported that the new “trumping” provision in the Broad-Based Black Economic Empowerment Act will take effect in two months time when the 12-month transitional period expires. An example of “trumping”, he explained to MPs, was if, for example, a government department put out for tenders and ignored the provisions of the B-BBEE Act. In that case, the Act would “trump” any regarding the tenders.
This trumping therefore, he said, will take precedence over any other law and relates to all other instruments of black economic empowerment, such as Codes of Good Practice and Sectoral Charters. The provision would come into effect in October 2015, by regulation.

Codes get to nitty gritty

On Codes, Steto said, the major development had been the issue of relating “employment equity” to “management control”, with the latter now being the uniform name. Also “preferential procurement” and “enterprise development” were merged for evaluation into one element re-named “enterprise and supplier development”.

Minimum requirements had been introduced for “ownership”, “skills development” and “enterprise and supplier development”, as above.

Fighting “fronting”

Acting DG Steto re-confirmed that 25.1% remained as the target for black ownership. Emphasis was laid on the expression “true ownership” when explaining the 40% sub-minimum applicable on the net value of ownership in the hands of black people. Only investments regulated and based in South Africa will qualify as a “mandated investment”.

On Sector Codes, it was confirmed that ten sectors had been given extensions since 2013 but the final, final date was now October 2015 for all sectors. To date tourism, property, agriBEE, forestry, the media, advertising and communication were in line for approval. The process of aligning the mining charter with the liquid fuel charter had begun.

Split must come

Rumour has it “in the corridor” that these will eventually be split but the whole issue of the implementation of the Minerals and Petroleum Resources Development amendments have to be resolved before such an event can even be considered, resulting in this be an issue way into the future.
Questioning from MPs was limited, a concern being expressed by parliamentarians that the whole issue of verification agencies had to be speeded up by DTI and re-clarified. Lionel October said this was a priority.
MPs also complained that the threshold increase for BEE exempt micro enterprises, now being introduced, from R5m to R10m seemed a strange move if the idea was to develop more small manufacturing businesses but DTI responded that their view was different and the necessity to reduce red tape in the SMME world was essential.

Other articles in this category or as background
25.1% is maximum BEE control, says DTI – ParlyReportSA
DTI does flip flop on B-BBEE codes – ParlyReportSA
Equity quotas court ruling affects BEE legislation – ParlyReportSA
B-BBEE Codes of Good Practice far more onerous – ParlyReportSA
One year to implement B-BBEE Codes – ParlyReportSA
Liquid fuels industry short on BEE charter – ParlyReportSA

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Promotion and Protection of Investment Bill re-tabled

Revised Investment Bill gives some ground…..

Rob+DaviesA crucially re-amended version of the Promotion and Protection of Investment Bill has been re-tabled in Parliament by DTI that gives ground to some degree on the question of rights of investors regarding international arbitration regarding disputes in terms of the new ground breaking  legislation.

During his budget vote speech, Trade and Industry Minister, Rob Davies, stated that the Promotion and Protection of Investment Bill would finally be retabled in Parliament, meaning that it will definitely not be signed into law as it was and that it would be subject to changes.

That Bill has now been re- tabled and no doubt being studied by all.

Past bilaterals respectedPromotion and Protection of Investment Bill 

Promoted by Minister Davies specifically, the Bill as it was voted through but not signed by the President ignored existing bilateral investment treaties (BITs) between South Africa and other countries in the EU whilst extending protection to new investors from all other countries. The new Bill as amended clarifies that this does not apply retrospectively.

Minister Davies said at the time, which was worrying to many foreign companies, that there was a trend he felt amongst developing countries to ignore such treaties although they might have been agreed to by previous governments.

Impediment to investment

Africa-map-with-coinsUnder BITs at present, trading investors are allowed to have arbitration proceedings as laid down by World Bank rules.   International arbitration, for obvious reasons, is preferred by investors as it is impartial and not in the hands of the country invested in, as is promoted the Promotion and Protection of Investment Bill making it localised.

Minister Davies is on record as saying that that “South Africa had significant foreign direct investment from the US, Japan, Malaysia, India and other countries, and we have no bilateral investment treaties with them”. He commented in Parliament, some time before this budget vote speech, that such bi-lateral agreements on the whole were “irrelevant”.

The Bill as it stood allowed for acquisition by the state in the ownership of foreign companies “in a just and equitable manner”.  Such nebulous wording was rejected by the international business community in South Africa. Minister Davies said at the time when the Bill was passing through the portfolio committee on trade and industry, that “protection for overseas investors will be in terms of South Africa’s Constitution”, which he said, “provided significant and robust protection for investors and for property, both domestic and foreign.”

A “Bit” better

legalWhat the re-written Bill contains is a clause granting an investor the right to be treated no less favourably than South African investors as long as their investments are ‘‘in like circumstances’’. This is qualified by the clause which states, “The Bill provides for the security of investors and their investments. It seeks to clarify that the Republic bears no greater obligation to foreign investors than to its own investors in respect of their investments.”

However, on the rights under BITs agreements for arbitration or mediation internationally on new investment, it would appear that DTI have relented to some degree. After describing the whole process of local mediation which has to be undertaken first, the re-drafted Bill still insisting on this, a clause has been inserted that “the government may consent to international arbitration in respect of investments covered by this Act, subject to the exhaustion of domestic remedies. Such arbitration will be conducted between the Republic and the home state of the applicable investor.”

The Bill is now being digested and presumably Parliament will announce new hearings and call for further submissions.

Other Bills coming

ack bdlive

ack bdlive

In his budget vote speech a few weeks ago, Minister Davies confirmed that a Copyright Amendment Bill would also come before Parliament in the current financial year, together with a National Gambling Amendment Bill (as distinct from the Remote Gambling Amendment Bill before Parliament at present).

He also referred to a Liquor Amendment Bill which is suspected of being somewhat draconian. The whereabouts of the Intellectual Property Rights policy paper is also long outstanding from the Department of Trade and Industry.

Other articles in this category or as background
Promotion and Protection of Investment Bill opens up major row – ParlyReportSA
Private Security Industry Bill comes closer – ParlyReportSA

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25.1% is maximum BEE control, says DTI

DTI upbeat on implementation of BEE codes…..

lionel october 3

In a report to Parliament on the amended BEE Codes of Practice and their implementation as from 1 May 2015, Lionel October, Director General of Department of Trade and Industry (DTI) and his B-BBEE staff team, emphasised that the generic scorecard was aligned to government’s key priorities. He also said the State had no ambitions to take their target on black control beyond 25.1% of ownership.

Supplier Development is new title

DG October said the main emphasis of the codes had now switched to greater emphasis on what was previously termed procurement – now referred to as “supplier development”. This approach was more in alignment with the National Development Plan (NDP) objectives, DG October said, simply because that was the main direction needed to empower the development of black enterprises and build the economy on a stable growth path.

“In fact the German auto industry working with the German Chamber of Commerce had established a fund

BMW-Werk Südafrika

in South Africa”, he said, “for financing, training and building expertise in black businesses to supply the auto industry”.

There was considerable discussion on this by members and DG October said that there had been a general recognition in business and industry of the word “must” had replaced “may” in terms of B-BBEE requirements; that level four had to be reached for incentives and in general now “certainty” had been restored to the business environment on BEE issues, he felt.

Five “Elements”

The generic scorecard now had five elements, he said, which all companies, except those micro-exempted, had to comply with for recognition. All employment equity and management control had now been merged into one of those elements, now termed “management control”.    Sector codes were now to be aligned by 1 Nov. 2015, as set out in Code 003.

He said that “in response to public submissions” the import exclusion principle would be maintained and that the definition of an “empowering supplier” in the context of code alignment was a compliant entity which could demonstrate that its production and/or value adding activities were taking place in this country.”

DTI said that that “deviations of sector codes in terms of targets must be over and above those of generic codes and companies that derive more than 50% of revenue from sectors where there is already a sector code must be measured in terms of that sector code.”

DTI has no doubtful intentions

George Washington, having cut down the cherry tree, with his fatherIn general, DG October said in response to questions from MPs about the amendments, it had been his impression that business seemed to accept there were no political mala fides on the part of DTI; just a wish to get on with the planned NDP growth path which required the co-operation of business and industry on black empowerment.

The funding of Sector Charter Councils was a “joint responsibility between government and the private sector and entities must report annually on their B-BBEE status to sector council who will in return reports to the BEE Commission”, DTI said.

New sectors in the sights

Sector codes were being considered for the tourism, which had reached the stage of gazetting for public comment; “alignment” was being reached in the construction, integrated transport, ICT, financial services and chartered accountancy sectors; the property and forestry sectors had reached gazetting stages and marketing, advertising and communication were with their appropriate ministries for approval.

DG October mentioned the fact that the manufacturing industry stood alone as there were so many different sectors but over a period, aspects would be dealt with such as the film industry and textile and clothing industry.

DTI concluded their input to the meeting by advising that a technical assistance guide to B-BBEE was in process and DTI were in the process of finalising the B-BBEE verification manual.

Recent faux pas

rob davies2Opposition members asked how it was that DTI went so wrong with the question of  downgrading the pointing system for employment schemes and why it was that the Minister of Trade and Industry, Dr Rob Davies, had to retract that portion of the amendments which were not gazetted for public comment.

Chairperson Joan Fubbs intervened at this point, noting the Minister had taken the blame, had apologised for the mistake and could do no more than admit that DTI had been wrong.

DG October added that at a DTI workshop on the subject with “some stakeholders” this direction had been considered as a good option for broader rather than narrow empowerment but it had now been recognised by DTI that “they had gone down the wrong route as far as investor confidence was concerned”.

DTI had now reversed everything with the promise that this would not occur on the agenda again.

Better ideas could come

It had also been realised that such a move could also destroy imaginative plans for black management control such as that pitched by Standard Bank where 40% shareholding went to staff who could have representation on the board; 40% went to recognised BEE shareholders and 20% went into community organisations and trusts.

In answer to direct questioning by MPs, DG October confirmed that by the term “black”, DTI translatedlionel october this as African, Coloured, Indian and Chinese. He also confirmed that all these groups, if foreign and not South African citizens, were excluded.

More than 25.1% “unrealistic”

DG October, when asked by ANC MPs whether the 25.1% target for black ownership was realistic and fair considering that the demographics in South Africa demonstrated a far larger proportion of black people, he said that 25.1% could be considered as a “basic critical mass to engender a solid forward movement”.  To go any further would be unrealistic, he added.

In Malaysia, he said, local ownership was considered fair at 30% and other African countries as high as 50%, but he felt that in South Africa, where the need for the transfer of skills and training from large to small companies, especially through supplier development by state utilities and large businesses, was essential, this was a fair percentage assumption and which called for co-operation and fairness between all parties, all bearing in mind “a pretty hideous past”.

Redress of the past in all preambles

joan fubbsAt this point, Chairperson Joan Fubbs referred to the South African Constitution, reading out the clauses which not only stated that all were equal despite race colour or creed but that discrimination was possible if it was fair and she reminded MPs that redress of the past was “fair”.

She asked for all “not to isolate clauses in the Codes to determine personalised interests but get on with job of re-aligning communities that had been excluded from ownership for over 300 years”.

One ANC MP asked that the focus on big businesses be less emphasised and that DTI rather spent considerably more time with the job of developing ownership of black small business, which he stated could be “the power house of South Africa”.

He called for legislation that enforced government and public utilities, “as custodians of state power” to set an example on supplier development since, he said, one could hardly expect the private sector to follow suit, if the SOEs did not lead the way on this issue.

Incentives needed, not law says DTI

DG October said such sort of things were “impractical in the real world” and said the main challenge was a phased process of change which now had the support of many in positions of power in business. He also emphasised that B-BBEE had to tie in business and industry with incentives rather than with the law.

When asked about his recent public statement that he had set DTI’s target to produce “100 black industrialists”, he was referring rather to 100 black industrial leaders “financed and supported by DTI initiatives”.

Other articles in this category or as background
BEE comes under media scrutiny – ParlyReportSA
Rumblings in labour circles on BEE – ParlyReport
B-BBEE Codes of Good Practice far more onerous – ParlyReportSA
One year to implement B-BBEE Codes – ParlyReportSA

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Impasse on intellectual property rights

intellectual property paper awaited….

pills 2Whilst the promised paper on intellectual property (IP) policy remains outstanding, the  argument that South Africa could be a ‘rogue’ state with scant regard for property rights versus the call by local and international activists for drugs which are affordable to poorer families is still wracking the pharmaceutical industry.

The subject was recently re-heated by protests by activists in Pretoria against high drug and medicine costs but still nothing has yet reached Parliament in the form of a serious proposal on government’s stance on pharmaceutical intellectual property rights.

Rights  not tests

What now seems to be the situation is that both manufacturers and activists are calling for a fair and legally correct policy document on intellectual property rights which gives certainty.  At the same time, a claim was made in Parliament some time ago that South Africa just “rubber stamps” patent applications at a vast rate, only 1% going to local innovators.

According to CIPC, the department of trade and industry (DTI) central office that handles registration under DG Astrid Ludin, says the question of registration of patents is proceeding with new vigour but complainants make the point that no actual testing takes place. Ludin, current CEO and IT guru was not in Parliament to make any presentations and who remains “on suspension”, it appears, for some transgression on awarding contracts.

Opinion only

Ludin has an excellent reputation with DTI  and is trying to get things right. Our guess is that she was trying get things done even faster and transgressed some tender procedure but was beaten by the red tape machine.

It appeared some time ago that stakeholders were past the endless argument that South Africa would make the market place unsustainable for pharmaceutical companies with important and much needed drugs if there is disregard for patents lodged after years of painstaking research. But this once again re-emerging as a stated position.

Massive response

Over 100 submissions, it is rumoured, were made on the original Policy IP document when it was first submitted for comment, so one assumes that Dr Rob Davies has a fair assessment on how stakeholders are feeling… but his department still awaiting to tackle the issue, it appears.

Meanwhile, activists have re-opened their claims that “tweaking” of an expired but well established drug takes place and new patent periods sought for twenty years on the same item, which cuts out the possibility of cheaper generics and innovation. Facts presented at recent conferences on the subject have also re-awakened the premise that South Africa is paying more than most developing countries for its drugs.

The background of the delay is provided by a divisive scenario between two government departments – health and trade and industry – the latter department being responsible for the production of the new intellectual property policy stating South Africa’s position.

Cooling waters

Despite the minister of trade and industry, Dr Rob Davies, trying to calm waters with the vague statement of “We are moving in a direction in striking a balance between innovation, affordable medicines and to modernise our intellectual property rights regime”, South Africa’s new intellectual policy seems to be sticking at cabinet level.

It is difficult to disregard the much earlier scandal involving the rumoured attempt by a Washington-based PR company to delay and modify the draft IP Policy, a move which infuriated both the minister and the department of health. The anger of minister of health, Dr Aaron Motsoaledi, was patently obvious at the time and there is no doubt that a sour taste in the mouth is left with many in that department.

TAC returns to the fray

With Treatment Action Campaign and Médecins Sans Frontières ratcheting up their campaigns – the latter specifically naming Pfizer on TB drugs that cost R10 in India and R600 in SA – and DTI’s minister Davies recovering from the impasse on B-BBEE, the much needed IP policy will probably remain on the backburner for a short while longer.

Two things will happen eventually. Either the government publishes a gazette calling for comment on yet a further draft IP policy or an ATC notice is issued by Parliament announcing its tabling as a paper for debate.

Either way, minister Davies is likely to call a media briefing first and not just issue regulations.

Other articles in this category or as background
Intellectual property law still in limbo – ParlyReportSA
Intellectual Property Laws Bill goes forward – ParlyReportSA
Medical and food intellectual property tackled – ParlyReportSA
Medicines Bill: focus on foodstuffs – ParlyReportSA

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South Africa’s IP policy still hidden away

Drug impasse on IP (intellectual property) rights……

patents graphicThe simplistic public platform which is pervading the pharmaceutical debate on the long awaited IP policy – that persistent argument that  South Africa could be a ‘rogue’ state with scant regard for property rights – is constantly coupled with the call by local and international activists for drugs which are affordable to poorer families.

All has been re-heated considerably by protests in Pretoria but nothing has yet reached Parliament in the form of a serious proposal on IP that can be considered by pharmaceutical companies in order to bring certainty.

What now seems to be the situation is that both manufacturers and activists are calling for a fair and legally correct policy document on intellectual property rights which gives certainty but nothing is forthcoming.   At the same time, the claim was made in Parliament some time ago that South Africa just “rubber stamps” patent applications at a vast rate, only 1% going to local innovators.

And yet all know the incredible cost to find a successful HIV/AIDS vaccine. These costs must be recoverable, say pharmaceuticals, or innovation and research will stop. South Africa, like so many countries, is about to step into the unknown.

Problem not with CIPC

According to CIPC the questions of registration of patents is proceeding with new vigour but complainants make the point that no actual testing takes place. Ms Astrid Ludin, current CEO and IT guru was not in Parliament to make any presentations on the specific subject of IP and who remains “on suspension” it appears for some transgression on awarding contracts.

Ludin has an excellent reputation with DTI and in all probability she just wanted to get a job done, at high speed and quickly chose what she thought was the best thing to do. Unfortunately, that is not how red tape works.

Most critical : Invention or intervention?

It appeared some time ago that stakeholders were past the endless argument that South Africa wouldmedicines, pills make the market place unsustainable for pharmaceutical companies with important and much needed drugs if there is disregard for patents lodged after years of painstaking research. But this once again re-emerging.

Over 100 submissions, it is rumoured, were made on the original Policy IP document when it was first submitted for comment, so one assumes that Dr Rob Davies has a fair assessment on how stakeholders are feeling… but his department still refusing to tackle the issue, it appears.

Keeping the same show running

Meanwhile, activists have re-opened their claims that “tweaking” of an expired but well established drug takes place and new patent periods sought for twenty years on the same item, which cuts out the possibility of cheaper generics and innovation. Facts presented at recent conferences on the subject have also re-awakened the premise that South Africa is paying more than most developing countries for drugs.

The background of the delay is provided by a divisive scenario between two government departments – health and trade and industry – the latter department being responsible for the production of the new intellectual property policy stating South Africa’s position.

Too many pokers in fire perhaps

medicine bottleDespite the minister of trade and industry (DTI), Dr Rob Davies, trying to calm waters with the “going nowhere” statement of “We are moving in a direction in striking a balance between innovation, affordable medicines and to modernise our IP regime”, South Africa’s new intellectual policy (IP) policy seems to be sticking at cabinet level.

It is difficult to disregard the much earlier scandal involving the rumoured attempt by a Washington-based PR company to delay and modify the draft IP Policy, a move which infuriated both the minister and the department of health. The anger of minister of health, Dr Aaron Motsoaledi, was patently obvious at the time and there is no doubt that a sour taste in the mouth is left with many in that department.

Has to come to a head

medicines sans frontWith Treatment Action Campaign and Médecins Sans Frontières ratcheting up their campaigns – the latter specifically naming Pfizer on TB drugs that cost R10 in India and R600 in SA – and DTI’s minister Davies at present in the USA arguing on GAT agreements, the much needed IP policy will probably remain on the backburner for a short while longer.

Two things will happen eventually. Either the government publishes a gazette calling for comment on yet a further draft IP policy or an ATC notice is issued by Parliament announcing its tabling as a paper for debate.

Either way, minister Davies is likely to call a media briefing first.

Other articles in this category or as background
Intellectual property law still in limbo – ParlyReportSA
Intellectual Property Laws Bill goes forward – ParlyReportSA
Medical and food intellectual property tackled – ParlyReportSA
Medicines Bill: focus on foodstuffs – ParlyReportSA

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DTI Manufacturing Competitiveness Programme scrutinised

 pics ack bdlive

Plan not easy to work, says October…..

lionel octoberLionel October, acting DG, department of trade and industry (DTI) admitted to Parliament the Manufacturing Competitiveness Enhancement Programme (MCEP) had been a difficult programme to run.   Over eight hundred applications with a grant value of R5.1bn had been agreed upon but only R1.5bn disbursed.

However by  2018, he said, DTI would have allocated all R7.4 billion and the amount granted One of the major problems faced, October said, was brought about by the confusion in the minds of many on the nature of the MCEP.  A good number of applicants had tried to apply as if their applications were for a social grant, which was certainly not the case.

MCEP was a short term stimulating package designed for already successful manufacturing companies to assist them during current global and difficult times. Addressing Joan Fubbs of the trade and industry portfolio committee, DG October told parliamentarians that national treasury had been approached for funds in 2012 to revive the manufacturing sector for a period of six years.    R7.4bn in the end was provided.

One year later, trade and industry minister Dr Rob Davies reported that R3bn MCEP approvals had beenRob_Davies made, which would support industrial investments by 436 applicants  and this would a sustain more than 116 000 manufacturing jobs.

The MCEP was conceptualised as a result of the one-million jobs shed during the 2009 recession, he said, and which had badly hurt the nation’s finances. Minister Davies described at the time how the MCEP incentive programme was a critical element of DTI’s Industrial Policy Action Plan (IPAP) designed to stem the sudden loss of the manufacturing sector’s contribution to GDP.

The MCEP was not designed to assist new companies but support existing ones with the potential either of recovering from an earlier troubling status or developing new markets, Davies insisted.

susan mangole Ms Susan Mangole, COO at DTI,  explained to parliamentarians at the recent meeting that the department maintained a “pay-out system” where, after initial approval, the incentive money was only paid once the agreed plan was up and running and jobs had been retained. There was accordingly a time lag between approving a grant and receiving the funds in reward. The time lag could be up two years before fruition of the project was apparent.

The programme, she told parliamentarians was now two and a half years old and, after a slow start, the applications “became a flood”.  Currently, DTI had already committed well over half of the total package. DTI focused on two components with MCEP, Ms Mangole said.   Firstly, through production incentives as described and then with industrial financing loan facilities through Industrial Development Corporation, who had been given R1bn from the fund by DTI.

Any company could only qualify if it had level 4 B-BBEE status or could achieve the status within twomanufacturing years. Lionel October concluded that DTI had been instructed (presumably by treasury) that by the end 2016 it should entertain no more applications and only deal with those already filed.   By 2018, he said, DTI would have allocated all R7.4 billion and the amount granted had now been rationalised to a maximum of R30m, although it had started at R50m.

Some DA opposition members complained that it was absurd to exclude companies because of their current B-BBEE status when the idea was to create more jobs.   DG October stated that this was a “must” in applying, since it was a fact that all companies had to comply with BEE and labour laws. But, he said, most larger companies did in fact comply and the focus of DTI remained revitalising such sectors as agro-processing sector, where most imports of machinery occurred.

“So the problem is not on the supply side but on the demand side”, he said and added that the agro-processing industry in South Africa was experiencing a massive turnaround with exports probably reach double digits of a percentage towards GDP.

He commented, “Then this industry could then pay its workers decent wages.”

The DA complained about poor communication between DTI and applicants saying that a year couldparliamentary committee elapse without even hearing an acknowledgment of an application. There was, the member said, without any doubt an enormous backlog of applications and delays in correspondence on those that were in process.

He complained that DTI was very inefficient in its customer/client care relationships. G Hill-Lewis (DA) agreed and said that it was nearly impossible to “get anybody on the ‘phone at DTI, let alone the person dealing with MCEP issues”.

Ms Mangole confirmed that DTI was working towards improving its response system but that DTI had informed its clients and stakeholders that there would be delays because the system was under strain and that it would be difficult to honour the claims within reasonable times. In subsequent presentations DTI showed a shortage of 271 posts of qualified persons.

lionel october 3On the subject of which industries were getting the most grants, Lionel October said those businesses, such as in the automotive and textile industries that had access to other schemes, were excluded by default. He thought now that the DTI might move to strategic sectors but in any case, in the final play out, it was the manufacturers who succeeded with good proposals who would determine where the market for incentives was.

He stressed that the programme was aimed at retaining and sustaining jobs but not creating jobs. He admitted that as DTI did not make labour law, compliance in this respect was of low priority in considering factors for approval of an application.

Acting DG Lionel October agreed to some extent with opposition members that the issue of complying with labour laws was indeed a matter for labour inspectors. Meanwhile, he said the main focus was on revitalising the companies involved.

Other articles in this category or as background

DTI earns ire of Parliament on BEE – ParlyReportSA

DTI gives warning on investment climate – ParlyReport

SA Manufacturing Competitiveness Enhancement cash grants from DTI

DTI claims new SEZ investment incentives are better

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Private Security Industry Bill comes closer

Motive for Private Security Bill unclear…..

adt securityAs of this date, the Private Security Industry Bill still remains for signature by President Zuma passing it into law, having had the contentious clause that South Africans must own at least 49% of shareholding of any security companies, as proscribed in the original Bill passed by Parliament, increased to 51%.

However, from statements made by senior officials in the department of police and the minister himself it seems quite possible that government will push the law through despite the stated objections of security  industry associations and the possibility of the industry taking government to court on the matter.

The Bill introduced two years by minister Nathi Mathethwa, then a protégé of president Zuma but now reduced to the post of minister of arts and culture, posed the reasons for a controlling number of 51% being the result of the possibility of national security breaches by foreigners in South Africans affairs. This has never been defined.

Ek is die Suid-Afrikaanse

Such a matter was stated by the local security industry as being absurd since most South African management, local shareholders and certainly the majority of employees were South Africans anyway. In can only be assumed that the government thinks their are “plants” by foreign countries working in the industry, or alternatively, the reasons given by the state are a cover for some other motive, as of yet not clear.

Immediately the Bill was tabled, opposition members in Parliament pointed out that such a law would place SA not only in violation of international trade agreements but place the country in jeopardy of renewal of AGOA by the United States, of valuable export trading advantage to South Africa.

Particularly, South Africa is in danger of violating GATT agreements, but the minister of police has responded with the names of other countries discounting international agreements on the issue of local ownership control.

In a rush to close Parliament for the May elections last year, the Private Security Industry Bill, with other Bills, was hammered through Parliament using every possible ANC vote but, however with the 51% clause reduced to 49%.  This has now been reversed.

Trade and Industry unconcerned

Unless the Bill is returned to Parliament unsigned, a course, which would seemingly make the new police minister Nkosinathi Nhleko unhappy, and with minister of trade and industry (DTI), Rob Davies, appearing ambivalent on the whole issue, all would seem set for a suicidal dive into unknown international trading waters as far as obligations are concerned.

This is despite a trade delegation visit to the US on the subject. Recent statements by US congressmen and a joint letter addressed by them to SA on other possible violations of GATT by the DTI, particularly on poultry import issues threatening AGOA, are all being played down by cabinet ministers.

 American Chamber of Commerce in SA have pointed to the difficulty, not only with B-BBEE but with this proposal, the difficulty US/SA companies operating in South Africa have with their head offices in parting with ownership of their companies.

The police minister says that he “finds that South Africa will meet its trade obligations under GATT and the action will not threaten AGOA” – an unusual statement for a minister of police, whilst DTI itself, or the minister of trade and industry, still seem have their heads well below the water line.

Under the skin

Eventually, it will emerge what it that is so worrying to the department of police about companies like ADT, Tyco, Securitas, Chubb and the many Japanese, Korean and British companies involved in the manufacture and supply of security equipment….. all at the risk of disinvestment or, worse, maybe an imagined xenophobic wish for these countries not to employ ex-pats or immigrants from other parts of Africa. 

Other articles in this category or as background

No moves on new Private Security Industry law – ParlyReportSA

Private Security Industry Bill gets through Parliament – ParlyReportSA

DA’s Crucial Infrastructure Bill tabled on security – ParlyReportSA

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Auto sector leads investment, saysDTI

Benz and GM lead in auto sector…

lionel octoberIn presenting its annual budget report to the trade and industry portfolio committee, director general Lionel October of the department of trade and industry (DTI) listed one of the past year’s highlights as the investment of R16bn that had been attracted into the auto sector in South Africa.

Mercedes-Benz SA, he said, had raised its total investment in SA to more than R5bn by increasing in its local output to 100 000 units a year, creating 800 new jobs in the process. Furthermore, it busy starting production of its new C-Class which would go from 250 units to 420 units a day.  In the same sector, he said, General Motors SA, together with component manufacturer Tenneco SA, was now about to export catalytic converters to the value of R6bn.

Volvo and MAN join in

On the subject of transport generally and important to include because of localised content factors, he said, was the contract in concluded in the year under review with Volvo SA to provide 40 new buses for MyCiti bus routes in the City of Cape Town for is commuter network; with Mercedes-Benz SA for 134 buses for the next phase of Johannesburg’s Rea Vaya system and with MAN for 80 new buses for the Limpopo area.

Of note, October said, was the fact that the energy sector had seen progress with the start of the independent power producer (IPP) programme.  Significant progress had been made with a number of smaller IPP projects already.

Movies and milling

In a vastly different sector, parliamentarians were surprised to hear that the movie Long Walk to Freedom, costing R239m to make in SA, had been premiered and had grossed more than R23m already locally.

In agro-processing, DTI in collaboration with German milling plant manufacturers Bühler,  launched an innovative semi-portable maize milling plant known as Isigayo, as a pilot for entrepreneurial maize milling development.

Settling down

October claimed that in the clothing industry, which had experienced such bad times, the DTI clothing and textile competitiveness programme had “stabilised” the clothing sector.

Over forty applications involving R645m had been received with R77.7m already disbursed.   Under DTI’s production incentive programme in the clothing industry, nearly 800 approvals had been granted to the value of R2.2bn.  DTI estimated that in that sector so far 63,311 jobs had been saved and 8,459 created.

Of note during the year, DTI said it had designated Saldanha Bay as an IDZ with pre-feasibility studies completed for Tubatse in Limpopo and Upington in the Northern Cape.  Another four IDZs in outlying areas were being planned whilst an application for designation had been submitted to the Manufacturing Development Board in respect of Dube Trade Port on the East Coast.

Industrial focus areas

Of importance, October said, was the passing by Parliament in the last year of the Special Economic Zones Bill which will “take the IDZ principle into new territory enabling the creation of new industrial hubs to bring previously marginalised regions into the mainstream economy.”

On the domestic economy, Lionel October spent some considerable time reviewing the year in detail, most of which has been well covered in the media.  He noted that real GDP grew by an annualised quarter-on-quarter rate of 0.6% in the second quarter and the little growth had been led by government services, finance, real estate, business services, transport, storage and communication services.

The Marikana effect

Overall, the manufacturing sector had contracted by slightly more than 2 % in the second quarter of 2014 due to low production in autos, chemical products, rubber and plastics, glass and non-metallic mineral products, he said, but in an overall sense the contraction was mainly due to the prolonged strike in the platinum sector.

On the subject of legislation, October noted that the Lotteries Amendment Act and the Intellectual Laws Property Amendment Act, involving the protection of traditional knowledge, had been assented to and were awaiting implementation.

The National Credit Amendment Bill had been adopted by Parliament, he said, and a draft policy frameworks on IP and gambling had been developed. A new Licensing of Businesses Bill had been drawn up and public consultations conducted on the Liquor Act, with a new draft policy adopted.

Getting all in line

On trade matters generally, DTI reported that during the year under review SADC services negotiations had been undertaken, South Africa making initial offers on financial and communication services.  Steps were now to be taken, October said, “to encourage compliance by certain SADC members in terms of their commitments under the SADC trade protocol.”

Consensus had been reached in the year on the need for high level bilateral engagement within the Southern Africa Customs Union (SACU) towards more and better integration and SACU had now developed, with other countries, a number of partnerships and free trade agreements. Progress had been made to some extent with tariff negotiations, notably tariff offers to East Africa and Egypt.

Summing up he said the hosting of an Africa-India ministerial trade conference was underway and MOUs on economic cooperation had been tabled with Ghana, Benin and Nigeria. As far as Nigeria was concerned, a draft MOU specifically on automotive cooperation had been completed. Also commenced was the South Africa-Cuba agreement on economic assistance.

Lionel October noted with pleasure that DTI had been given the top ranking by business as the best performing national government department in SA.

Other articles in this category or as background
http://parlyreportsa.co.za/finance-economic/%EF%BB%BFdti-gives-warning-investment-climate/
http://parlyreportsa.co.za/uncategorized/dti-tables-two-bills-for-its-co-operative-strategy-for-sa/
http://parlyreportsa.co.za/finance-economic/minister-davies-continues-ipap-6/
http://parlyreportsa.co.za/cabinetpresidential/davies-presses-the-button-on-nuclear-development/

 

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DTI gives warning on investment climate

High administered prices a threat…

42X90693In an apparent warning to the economic cluster, a deputy DG at department of trade and industry (DTI), Garth Strachan, warned that South Africa was reaching “a tipping point” where administered prices, either levied or taxed by the various state departments, were so high that it was making the cost of doing business in South Africa totally impractical.

 

There was neither an attractive climate for investors because of high state administered prices, he said, nor did it make any easier DTI’s developmental programme in support of the NDP and attracting investors.

In a frank presentation to the portfolio committee on trade and industry, he qualified DTI’s position during his candid commentary with the caveat that as far as the regulation of administered prices were concerned, such as electricity, port and rail freight charges, road transport costs and water tariffs, that these were not the core competencies of DTI although they were adversely affecting DTI’s current IPAP 6.

Undermining investment climate

He noted later in his talk that in the successive implementation of various IPAPs, including the current industrial plan, DTI had found that administered prices constituted a total impediment to economic development.   In fact, now in 2014, they were providing a “serious economic shock”, as he put it, to the viability and competitiveness of the manufacturing sector.

Garth Strachan commented that the addition of carbon tax could push South Africa to the ‘tipping point’, unless the proposals were with “carefully calibrated policy interventions.”

As far as electricity was concerned, it was DTI’s view that the actual problem lay in the funding structures of local government, especially where no allowance was made for infrastructure upgrading and maintenance. Water shutdowns were also an increasing problem, he said.

He told parliamentarians that in one instance a global investor had experienced 140 electricity and water shutdowns. He did not indicate over what period.

International comparisons

He said that on electricity tariffs, whereas in 2009 when compared to China, the USA, Canada/Quebec, Abu Dhabi, Kazakhstan, India and Russia to give a fair geographic spread, South Africa had been with a group that had the lowest in prices, it now had the “gold medal” for being the highest of all and by 2020 the situation would be exacerbated unless something dramatic took place.

Strachan said that in the World Bank Report of 2013, SA port charges were amongst the highest in the world; container charges being 710% more than the global norm and automotive cargoes costing a premium of 874% more than the global norm. This detrimental fact was compounded by port and rail freight inefficiencies to local destinations.

He told parliamentarians that in DTI’s view it was extraordinary that exports were virtually subsiding raw material exports such as iron and coal.  In the case of coal, this was 50% below the global norm and iron ore approximately 10%, according to 2012 figures, these being the latest DTI could get.

This led, Strachan said, to the unfortunate situation where the country exported iron ore at a net loss to the country but imported girders, cranes and containers, for example, at possibly the highest in the world.  It was impractical to have subsidies passed on to exporters of primary products penalising importers of necessary needs, he said.

On carbon tax, he dismissed any “one size fits all” programme as contributing to the overall problem by making things worse and on climate change generally, he said that DTI was already working towards the protocols agreed by South Africa “through a range of measures to support energy efficient systems and investment in energy.”    These were part of DTI’s manufacturing enhancement programme, he noted.

He said there should be a shift in pricing “in favour of less carbon intensive sectors which are more labour intensive and value adding”. He quoted particularly steel, polymers and aluminium, which he said should be considerably below import parity levels.

Nullifying NDP objectives

Garth Strachan concluded that with manufacturers already going out of business, the issue of administered prices was probably the most important issue facing South Africa at the moment in the search to create more jobs.

Parliamentarians noted with concern what DDG Strachan had illustrated in his review. Many called for a joint portfolio meeting on the subject with public enterprises, transport and energy, despite the subject of administered prices also not being a core function of the trade and industry committee. For example, it was noted, they had no parliamentary right to influence such bodies as Transnet and Eskom, nor deal with treasury on tax and tariffs.

 

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