Tag Archive | Rob Davies

Liquor licensing may have impractible conditions

DTI gets tough with age limits

...sent to clients 17 Oct…..   In what will be a tough ask, Minister of Trade and Industry, Robliqour-store Davies has proposed a number of changes to the National Liquor Act, the most contentious being to raise the legal minimum age for purchasing liquor from 18 to 21 years of age. The call for public comment on the draft National Liquor Amendment Bill as gazetted closed on 30 October.

The Department and Trade and Industry (DTI), who deal with liquor licensing at a national level, state that South Africa has globally the worst figures for alcohol related accidents and anti-social incidents involving liquor abuse.

Drastic steps had to be taken to gain control of alcohol related injuries, illnesses and abusive behaviour that were costing the state some R40bn a year, the Minister said.

Younger age groups

The Bill focuses specifically on youth since DTI maintains that alcohol abuse specifically damages the development of the brain making youth vulnerable. Liquor advertising aimed specifically at young persons will be prohibited under the Act and revised rules set down on broadcast times and content. Advertising billboards aimed at youth will be banned from high density urban areas.

Minister Davies called for “robust public engagement on the issues raised in the Bill” as it dealt with matters “that are of significance to South African society.” He noted that South Africans consume alcohol related products at double the world average rate.

On the question of the age threshold proposed in the draft Bill is a minimum purchasing age, not as has been widely reported a “minimum drinking age”. The onus of establishing age will fall upon the supplier who must take “reasonable steps to establish age” when dealing with a young purchaser.

Pressure point

A civil liability will now fall upon the manufacturers and suppliers as well who knowingly breach the new regulations, Minister Davies said, believing that this was the only way to get the problem understood and the new rules adhered to.

sab-youth-beer-adThe draft Bill states that responsibility will also fall upon the seller not only not to supply liquor to a person visibly under the influence of alcohol but that the seller could be in addition asked to show reason why they should not bear costs for damage incurred as a result of a subsequent accident involving that person who made the purchase.

On the problem of community issues, such as tackling foetal alcohol syndrome which is considerably worse in South Africa than elsewhere in the world and alcohol related crime, the onus of proof will shift not only to a supplier but also to manufacturers to show that reasonable steps were taken to ensure that liquor is not sold to illegal or unlicensed outlets. Which brings up the issue of liquor licences.

Distance from community

Licensing is a provincial matter and there are a number of changes that the amending Bill police-raidwill make to the anchor Act which will have to be abided by. Particularly notable is the proposal that licences cannot be granted to an outlet less than 500 metres from any school, recreation facilities and places of worship.

Provinces are stated as “having an obligation” to be far stricter in granting licences in highly urbanised areas, giving due regard for the need for stricter business hours and for the need to deal with noise pollution in stressful living conditions.

Previous articles on category subject
New health regulations in place soon: DoH – ParlyReportSA
Licensing of Businesses Bill re-emerges – ParlyReportSA
Medicines Bill : focus on foodstuffs – ParlyReportSA

Posted in Justice, constitutional, Security,police,defence, Special Recent Posts, Trade & Industry, Transport0 Comments

Parliament to open Aug 16

Parliament .. in a galaxy far, far away

 

……editorial….There’s nothing  more like an election to disrupt Parliament and the business of running a country thanparliament 6 an election.    Probably, and to a lesser extent, the same is going on in the USA but nevertheless few politicians in SA at present seem to have their eye on the ball when it comes to important decisions on matters of state.     Parliament is, of course, in recess.

A good many of the Cabinet seem to be on a different planet. Some appear to be focusing on putting out political fires in the lead up to what is, after all, only a local election. A disproportionate amount of time seems to be spent in a parallel world of infighting, all of it totally unrelated to business and industry. Our Cabinet seem more concerned with issues such as the SABC, for example.

Short on crew

Indeed, one could be forgiven for thinking that the only people at their desks at the moment are Mark Barnes at the Post Office, Minister Lynne Brown with her fight to reform public utilities and control Eskom’s statements; members of the Competition Commission; and Minister of Finance Gordhan Pravin and his Treasury crew.

On communications matters outstanding, Minister Faith Muthambi seems to have left the planet altogether.  Minister Cwele is fighting with his own colleagues on broadband allocation,putting the brakes on a desperately late decision. tina-joematt

Minister Joemat-Pettersson seems lost as to whether to go ahead with nuclear or not; now having to decide it seems whether to have more independent power providers or not and possibly reverse her promises to the private sector; trying fruitlessly to buy Chevron with SFF money and whether or not to renew the contracts of highly experienced personnel at NERSA. This Minister seems badly off radar.

Hands off

Eskom’s unexpected statement that the private sector REIPPP clean energy programme “makes no economic sense” must have wounded DTI’s investment programme and Minister of Trade and Industry, Rob Davies, also seems missing from the control deck in the light of  Zimbabwe trade inconsistencies. Again, living in another world far, far away, not having a plan “B”.

Meanwhile, the Presidency has a whole in-tray of unresolved legislative issues to make decisions upon and, sadly,Rob-Davies decision-making appears not to be the President’s forté.     Parliament re-opens for business on 16 August and it won’t be a moment too soon.

From now until the Christmas recess, matters before Parliament will vitally affect business and industry. It would seem doubly important therefore to get this election over and hope for some coherent policy statements from Cabinet.
Previous articles on category subject
Parliament and the investment climate – ParlyReportSA
Parliament closes on sour note – ParlyReportSA
Parliament, ConCourt and Business – ParlyReportSA

Posted in Cabinet,Presidential, earlier editorials, Finance, economic, LinkedIn0 Comments

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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Protection of Investment Bill finally passed

Protection of Investment Bill goes for signature….

Sent to clients 20 Nov…… Trade and Industry Minister, Dr. Rob Davies, pushing through Parliament the proposed Protection of Investment Bill for signature by President Zuma, has discounted advice from rob davies 6the majority of submissions from business and industry and disagreed with all opposition members,

A majority of ANC Alliance members had out voted all opposition parties including the EFF in the National Assembly’s Portfolio Committee on Trade and Industry, with concurrence from the NCOP’s Select Committee on Trade and International relations.

The vote in the National Assembly following this was merely a formality with opposition parties voting against. Minister Davies held a media briefing beforehand claiming the removal of recourse for foreign investors to international arbitration was no big deal and in his opinion “the level of investment protection had very little, if any, impact on investment decisions.”

A sum up of the Bill

Shadow Minister  of  Trade and Industry, Geordin Hill-Lewis, said earlier in Parliament that the opposite was indeed the fact and “the new Bill, if it became law, would provide investors with no more protection than already provided in South African law.”

moneyIt had become apparent from earlier meetings that it was Minister Davies’ view that he disliked “litigious-minded investors taking advantage of obscure factors of international trade laws to reverse protection sought by his department” when Department and Trade and Industry (DTI) sought to protect local industry from unfair practices in disputes. He said DTI was not prepared to run and control over 180 bi-lateral trade agreements (BITs), which would now be terminated when they expire.

DTI, the Minister said, required “one harmonised law for investment” which, whilst taking South Africa into new investment territory at law at the same time, “joined South Africa with other leaders with a revised view towards foreign investment and trade.”

The “e” word

eThe primary area of concern during the debates conducted in Parliament recently surrounded an expressed fear of expropriation, a word not used lightly in the context of Africa as a whole. As pointed out by both Minister of Trade, Rob Davies, in terms of the Protection of Investment Bill now passed by Parliament, and Deputy Minister Cronin of Public Works, in terms of the Expropriation Bill being finalised by the Portfolio Committee on Public Works, South Africa’s Constitution guarantees against unfair and unjust expropriation. This, they maintain, is the protection that South African law gives at the highest possible level.

A debate recently occurred in the Portfolio Public Works Committee that the SA Constitution did not define exactly what was meant by the terms “property” or “the public interest” but it eventually transpired that at committee level that Constitutional issues could not be debated in a parliamentary forum. The issue has therefore been “ducked”, as it has, it appears, at Constitutional Court level.

None of our business

The fact that both Committees will not allow debate on the business of other committees in their debating time also precludes any debate on the Private Security Industry Bill, retained by President Zuma as unsigned and which demands 51% of foreign security company investments and was subject and voted on by the Portfolio Committee on Police.

Objectives

The original Cabinet statement issued when the Protection of Investment Bill, then with the deleted word “Promotion” still included when first tabled, stated that the Bill would:

• Provide adequate and equal protection for foreign and local investors alike.scan0004
• Place a stable business environment in place as part of efforts to attract investment.
• Provide adequate and equal protection for foreign and local investors alike.
• All investments will be protected irrespective of their origin.
Courtesy of Business Day
By default, therefore, all interests should be protected by SA law.

One concession

The original requirement that “government may consent to international arbitration with respect to investments after domestic remedies have been exhausted” was watered down, after debate, to allowing an independent tribunal to make further recommendations to the Minister before he or she exercised their rights in ultimate decision making which still remains the Minister’s prerogative.

With the passage of the Bill now for signature, all parliamentary procedure is now complete and a date for the Act to be promulgated announced – by which time DTI would have gazetted any regulations.
Other articles in this category or as background
Changes to Protection of Investment Bill – ParlyReportSA
Sept workshop: Protection of Investment Bill – ParlyReportSA
Promotion and Protection of Investment Bill opens up major row – 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

Posted in Earlier Stories, Facebook and Twitter, Finance, economic, LinkedIn, Trade & Industry0 Comments

Budget vote speeches: Out of touch with each other

Editorial….

DTI does flip flop on B-BBEE pointing…..

elephant and bayThere have clearly been were two big elephants in the room during budget vote speech time in the National Assembly over the last two weeks – Eskom and BEE.    Then, suddenly, with DTI reversing their decision to reduce B-BEE pointing award benefits for broad-based employment schemes – one of the elephants disappeared.  It was an amazing flip flop in government policy.

But in actual fact this represents no change, in reality – just simply the fact that the whole structure of what was proposed was seen by all as impractical, unenforceable and to industry, unacceptable.

Backstage dramas

Whether it was business and industry pressure that forced the change, the Chamber of Mines or even the trade union movement itself, after two surprising gazettes announcing reduced awards in terms of black empowerment for broad based shareholder schemes, including employee schemes so carefully Rob+Daviesworked out in the last two years, and the second gazette correcting the fact that such changes were not retrospective, what happened behind the scenes will never be known. We think it was minister Rob Davies himself who put his foot down.

In a private comment, when sympathising with the minister for having to reverse his department’s announcements so publicly, his answer was “When something goes wrong you have to put it right.”  We admire for that and told him so.

Energy issues remain at the core

As far as the first elephant in the room, the energy crisis, it remains.    Unusually, this year despite all the speeches, the amount of media briefings and portfolio committee debates, including the millions of rands spent on airfares with some forty odd departments and SOEs fielding full teams reporting, it was only the minister of energy, Tina Joemat-Pettersson, who really tackled electricity and the issue of Eskom – all the other ministers appearing avoiding the issue like the plague, even public enterprises.

Correcting the past

What indeed was noticeable, at portfolio committee level as well, that each reporting team and each minister seemed to be more anxious to report on transformation and state ownership issues, as if some very clear dictate had been received that the ANC was not delivering on its election mandate in these areas and this was really the main priority.

Whilst lip service seems to have been paid, and then only in some instances, to the need for foreign investment and issues of the country’s rating image, the lacklustre address by the minister of trade and industry gave only more credence to the belief that redress for past injustices was the only big elephant in their lives and in Union Buildings.

Transformation not economics at forefront

In the committees, where all departments have been reporting on progress towards annual targets, this now being the last quarter, the most important slide in any PowerPoint presentation (following clarity on the audit process) was always the racial makeup of the department concerned in terms of reaching transformation targets and what race ratios currently existed. The theme was obvious.

We have listened to many thousands of words spoken over the month and more is yet to come as we write, but it is all too evident that there is a massive discord between business and industry and President Zuma’s cabinet on priorities.

Final word

Trade and industry minister, Rob Davies, warned parliamentarians in his budget vote speech, when mentioning BEE matters , that members should  be aware that the President had indicated that the central task was to bring about radical economic transformation.      Which really said it all.

Posted in BEE, cabinet, Cabinet,Presidential, earlier editorials, Finance, economic, Fuel,oil,renewables, Trade & Industry0 Comments

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

Posted in Earlier Stories, Facebook and Twitter, Finance, economic, Labour, LinkedIn, Security,police,defence, Trade & Industry0 Comments

Small business gets R1bn incentive scheme

Tax relief and business incentives

The new small business development department (SBDD) has transferred from the department of trade and industry (DTI) the R1bn fund which covers both corporate incentives to develop small business and the Small  Enterprise Finance Agency (SEFA).

However, it will leave with DTI all matters relating to B-BBEE insofar as regulations are concerned.  Both the new minister, Lindiwe Zulu, and deputy minister, Elizabeth Thabethe, were present for a short departmental briefing by SBDD given to the new small business portfolio committee chaired by Ruth Bengu, who in the last parliamentary period served as chair of the transport committee.

Revised thinking

In an earlier portfolio committee meeting of trade and industry, a few days before under their chair, experienced ANC member Joan Fubbs, DTI had called for a rethink on small business policy.

They said they wanted to see a clearer policy on the SMME support role by national government with provincial and local government and to establish a programme for rolling out more small business “incubators”- something that opposition parties had been calling for over a long period of time.

Also DTI supported the call to review the small claims court system so that access to affordable justice was more affordable. They wanted this to be a further target of the new department.

Such recommendations came amidst a foray of criticism by commentators that the new department could become a diversion for unsolvable small business issues or alternatively the new department could become merely a point for start-up small business without any real muscle.

Less red tape

The new department in addressing MPs confirmed to them that its mandate was to focus on “enhanced business support” and they emphasised their support for women, people with disabilities and to provide mechanisms to access finance, business skills development.  They also said they were there to ease regulatory conditions; to help regulate better the SMME environment and to give leverage on public procurement.

It was important to recognise, SBDD said, that it was also there to encourage the development of cooperative entities, in which instance shareholders themselves were the members and entrepreneurs. Finally, the process of creating market access was an important task, they added. Nothing was new here.

But opposition ears pricked up when they said tax relief grants to corporates that invested in small business development were to be considered and incubation programmes and technology upliftment were priorities.  The immediate future, however, was all about configuring the new department; the “migration” of responsibilities from DTI; and transferring allocations for the establishment of support institutions.

Chair of the committee, Ruth Bhengu – previously chair of the parliamentary transport committee – then called for response from opposition members which mainly came from Toby Chance of the DA, whose questions were answered by both by the new minister and deputy minister.

Jobs or not

Chance said that whilst applauding the formation of this department, he wanted to know whether or not any success was to be measured in terms of jobs created,  which to him was the bottom line, he said. Also he wanted a clearer definition of what government actually meant by the term “small business”.

He said there were plenty of “gleaming new supermarkets in our townships but very little industrial developments, in fact some industrial parks were in a state of decay.” Chance said the DA was also worried that the impact of new labour legislation and labour regulations was immobilising small business and the amount of red tape currently being experienced was becoming “out of hand”.

Chance said he hoped the new department recognised the fact that that corporates and industry should focus on the development of small businesses to create the job growth called for by the NDP.   Partnerships with small business were the best way of achieving this, he noted.  He concluded that all “tax incentives should be re-visited” and that more emphasis should be laid on small manufacturing businesses.

In reply, minister Lindiwe Zulu agreed on the issue of red tape as a hindrance to small business and said her objective was to become like Rwanda where direct contact with national bodies that supported initiatives was far easier.

Compliance for all

However, she said that business had to understand that it had a role to play and a “culture of compliance” had to be encouraged in both small and large business and manufacturers or there would be anarchy.   Also large businesses and the state will have pay small business invoices on thirty days or risk penalties.

The minister said on the subject of labour regulations, dept of labour had its own targets and own agenda on decent work conditions and that was a separate issue. “The job of small business development was to work inside current conditions and for business to respect that.”

Chance replied that the governing party seemed to have “developed a track record of “attacking business persons when they criticised ANC economic policies or asked tough questions”, which statement prompted vehement denials from the minister and deputy minister.

Other articles in this category or as background
http://parlyreportsa.co.za//trade-industry/licensing-of-businesses-bill-re-emerges/
http://parlyreportsa.co.za//bee/minister-davies-gets-cooperatives-bill-approved/
http://parlyreportsa.co.za//parlyreport-contacts/cabinet-ministers/ministry-small-business-development/

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Licensing of Businesses Bill re-emerges

Illegal cigarettes targeted

cigarettesAfter being withdrawn by minister of trade and industry, Rob Davies, earlier this year, the Licensing of Businesses Bill has re-emerged as one of the tools deemed necessary for the collection of tax from illicit trading, in this case the thriving illegal cigarette market where billions of rands in duty are being lost annually, either as a result of local manufacture or illegal importation mainly from Zimbabwe.

Originally part of a plan by the department of trade and industry (DTI) to encompass within the tax net a whole range of small and micro businesses in the informal sector, the Licensing of Business Bill was tabled in Parliament designed to register all businesses operating in South Africa.

Its non-selective nature was seen by business, self-evident during parliamentary hearings, as an enormous bureaucratic burden adding yet further red tape to commercial activity and the cost of doing business in South Africa.

As a result of the debate that followed in the portfolio committee on trade and industry, the minister agreed to withdraw the Bill and for DTI to re-think the issue.    It was clearly far too wide ranging, unnecessarily complicated and contained a number of unintended consequences, as pointed out by business and industry.

Licenses for all business

DTI said recently, when drawn into the current issue of illicit tobacco manufacture and importation, that mechanisms were indeed needed to control business in the informal sector and it might still require all businesses to obtain a licence from the local municipality but how such a system would work is still being refined.

A paper on the subject is to be submitted to the ministry by DTI, they say, pressurized now to some extent by the needs of department of police needing tools to control trading in certain commodities, particularly amongst the informal sector and to a certain extent in the micro and small business areas.

Also SARS joins the complainants in the light of the losses in excise duty.   DTI will no doubt be assisted by SARS in trying to widen the tax net accordingly.

Other articles in this category or as background
http://parlyreportsa.co.za//trade-industry/minister-davies-withdraws-licensing-of-businesses-bill/
http://parlyreportsa.co.za//finance-economic/licensing-of-business-bill-will-tighten-up-on-procedures/

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SA to allow avoidance of medical patents

SA copying Brazil by ignoring patents….

pillsGovernment’s Bill on changes to the Intellectual Property Act, not assented to yet by the President but passed by Parliament, is under major attack by overseas pharmaceutical companies who complain that the proposals to allow SA to bypass patent laws are badly drafted; just simply favour local generic manufacturers who have put no R&D into development and further confuse an already obtuse enforcement system of medical patents in South Africa.

Minister of trade and industry, Rob Davies, who was unusually involved in health matters when he recently made statements to the media, “We are the world capital of HIV/AIDS and we have serious burden of TB linked to that … and we have to have the freedom and ability to use the policy space that’s been made available to us under the world health agreement TRIPS ( Trade Related Aspects of Intellectual Property Rights) and public in the interests of the nations that we should take that option.”

South African generics being scouted

However, in this case, the minister was referring to the new government policy on intellectual property (IP), currently under discussion where the minister is saying his department of trade is dealing with “innovative pharmaceutical companies” involved in the production of cheaper drugs. IP is a DTI matter whether it involves health or not.

Briefing journalists on the response to the original draft policy and now the Bill, which elicited submissions representing more than 300 stakeholders, Davies said his department’s fight was “to strike a balance between the needs of public health and the interests of pharmaceutical companies”.

It came out in the questioning with DTI’s spokesperson, MacDonald Netshitenzhe, that the Doha agreement on TRIPS and public health allows countries to break patents by issuing compulsory licences to local manufacturers of generic medicines. These provisions are intended to be used in a public health emergency, and have been used by countries such as Brazil and Thailand to break patents on HIV medicines.

The doctor weighs in with comment

Dr Aaron Motsoaledi, minister of health, has taken the opportunity to declare that South Africa has indeed such an emergency (how much of it caused by the famed past health minister nicked named “minister beetroot” after she called for all to substitute beetroot and garlic for ARV’s aws not mentioned) but minister of trade and industry Rob Davies has added that there are many other areas in health where the poor are not able to begin to afford the menu of drugs on the market.

Commentators are saying  “emergency in HIV/AIDS” referred to by cabinet ministers was caused by government itself in the years of denial over AIDS and quote was activist Zachie Achmat of TAC when  government was refusing to import antiretrovirals (ARVs) some seven years ago, putting South Africa way back in the fight against HIV/AIDS and related diseases such as TB.

Now Zachie Achmat has joined the government call for cheaper drugs and to follow government moves. Other activist groups such as Medicines sans Frontiers have seen the new government policy as an opportunity to push for measures they believe will lower the price of medicines and have said so, particularly influencing Parliament when the matter was in earlier debate there.

An  outcry has grown since the new IP Bill was debated in Parliament, despite the lone voices declaring that the policy that ignoring worldwide patent rights would simply put to risk those investments already made in South Africa by overseas pharmaceuticals.

This charge was led by Wilmot James, shadow minister of trade and industry, and supported, strangely, by ANC Alliance partner, COSATU, for reasons that jobs would be lost.  Wilmot James called the document “remarkably unimpressive”, suggesting “the drafters appear not to fully understand intellectual property law”. Calling the DTI’s document “legally illiterate”, James said that the policy “lives up to the mediocre standard that we have come to accept from the intellectual property division of the department of trade and industry’.

The Doha declaration also allows parallel importation of medicines, which means a company or nongovernmental agency can import a patented drug from another country where the same product is sold at a lower price.

Davies has been quoted by the media as saying “Although we’ve been a major champion of all these processes internationally we haven’t necessarily incorporated them into domestic law. That’s one of the issues that we need to follow through.”

Copyright legislation needed to be brought in line with recent World Intellectual Property Organisation treaties, including the Beijing treaty and the Marrakesh treaty, he said. He was quoted as saying that government was looking at the issue of collective management of royalties in view of complaints from industry stakeholders.

All of this comes in the light of a government health policy to introduce a free national health scheme.  Netshitenzhe of DTI explained that after the public comment period was concluded, the amended document, including comments, will be brought to Cabinet, who may suggest further changes before giving its approval.

Once the policy is finalised, the department of trade and industry will draft legislative amendments to be vetted by Cabinet and Parliament, ideally in March of next year 2014.     Most of the public debate took place in the media whilst Parliament was closed.

Internationals are “satanic” says Motsoaledi

Dr Aaron Motsoaledi weighed in further with the comments to Mail and Guardian, stating “I am not using strong words; I am using appropriate words. This is a conspiracy of “satanic magnitude”, calling on all South Africans to fight “to the last drop of their blood”. Most feel that Motsoaledi will stay as minister of health when the new government is formed in April/May next year.

When the final document re-appears in the public arena in the form of the amended Act in what has become a very heated debate, some watering down may have taken place but what was at first taken to be a simple document protecting indigenous medical practices, has obviously international implications for both local and international partners in the pharmaceutical manufacturing industry and those with head offices outside the country.
Previous articles on this subject

http://parlyreportsa.co.za//finance-economic/intellectual-property-laws-amendment-act-law/
http://parlyreportsa.co.za//finance-economic/promotion-and-protection-of-investment-bill-opens-major-row/
http://parlyreportsa.co.za//health/medical-food-intellectual-property-tackled/
http://parlyreportsa.co.za//uncategorized/next-for-pppfa-preferential-procurement-are-pharmaceuticals/

 

Posted in Facebook and Twitter, Health, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

Promotion and Protection of Investment Bill opens up major row

New DTI Investment Bill disliked as damaging to FDI……

A draft Promotion and Protection of Investment Bill has come under serious fire from not only South African business groups but from foreign firms operating in South employing large numbers of local employees. Most have described the proposals as adding woes to an already damaged South African investment picture, adding yet further risk to the current economic downturn

Promoted by minister of trade and industry, Dr Rob Davies, the Bill will enable South Africa to trade ignoring existing bilateral investment treaties (BITs) between South Africa and other countries in the EU whilst extending protection to new investors from all other countries.

Davis says bi ltateral treaties irrelevant

Davis says that the new Bill if passed as it stands “will enable a comprehensive and uniform legal framework to govern investments in the country”.  He said a review of South Africa’s bilateral investment treaties had found that there was no correlation between the existence or absence of a bilateral treaty with a particular country and the flow of foreign direct investment (FDI) from the country.

Minister Davies has been warning for some time that such a review would take place and the draft, just closed for public comment, indeed makes a number of radical changes to South Africa’s  trading relations, which many trade law experts say brings further uncertainty to the investment climate when least wanted by the country.

Listing the uncertainties to FDI

The first of the many changes is that investors no longer have recourse to international arbitration. Under 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 local.

The second major change relates to the compensation paid in the event of expropriation. The new Bill simplistically says that  “compensation must be just and equitable”, clearly creating uncertainty in the light of known statements by cabinet ministers and senior ANC politicians in South Africa on the subject of expropriation.

Events in other parts of Africa will no doubt leave investors uneasy despite the promises of minister Rob Davies that “protection for overseas investors will be in terms of South Africa’s Constitution”, which he said “provides significant and robust protection for investors and for property both domestic and foreign.

All local foreign investors, even those with a half acquired knowledge of South Africa’s political development, will have watched the appointment of a state market valuator to handle land reform expropriation.

Finally, an uneasy point for many is that the new draft Bill fails to provide the normal provision of a BIT with what is considered by most internationals as the necessary affirmation that investors will enjoy fair and equitable treatment. Therefore they might feel that without the full protection that is enjoyed by any South African investor in the country, they might feel in jeopardy without the normal assurances of equal competition or against local protection.

amchamlogo2One such critic of the new Bill is the South African structured American Chamber of Commerce (AmCham) instituted by South Africans in Johannesburg some thirty years ago. AmCham represents some 250 American multinationals registered to do business in South Africa, eighty of the biggest contributing R233bn to the SA economy in 2011, and employing some 150 000 employees, either directly and indirectly.

They say they know where the minister is coming from but agree with all the points made by trade law experts, confirming their deep concern that the draft Bill states compensation will be an “equitable balance between the public interest” and the party that is involved.

This is totally unsatisfactory, they say. Reducing compensation or describing compensation in a manner as proposed in the Bill will increase the risk for investors, the paper says. The AmCham submission, available on their website, says that the state’s ability to undertake acts harmful to an investment’s profitability or property rights in the manner described appears to provide less protection than the Constitution itself affords.

They add that there is a perception given by the proposals that fair and reasonable treatment between local and international business issues will not be provided. AmCham goes on to state “any investment that violates domestic legislation or foreign agreements should be dealt with through legal channels available, without limiting the rights or protections of the investment.”

Jeff Nemeth

Jeff Nemeth – President AmCham

AmCham says, “Clear assurances that capital relating to investment and returns can be repatriated is not given and the investor should not lose their basic rights as is proposed under this law”. They add, “Investors are jittery of the slightest possibility of expropriation of assets by government which is perceived, rightly or wrongly, to be a very real possibility in relation to the South African government’s priority objectives of industrial development; public welfare objectives and black economic empowerment.”

“This perception should be decisively addressed by government and should be firmly dealt with in the Protection of Investment Bill.  In its current form, the draft Bill does not offer investors assurance that predictable and stable policies are a government priority”, AmCham concludes.

Davies said both his ministry and department of international relations “have been engaging with those European countries with whom South Africa has bilateral investment treaties to inform them about the country’s plan to introduce the Bill and the termination of the BTI only takes place six to 12 months after, depending on the agreement in place.”

The minister recently told a meeting 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”.

AmCham and others say this is not the point and now is not the time to tinker with the investment climate, thus providing less clarity and less security for FDI given the current downturn in economic factors.

Posted in Facebook and Twitter, Finance, economic, Health, LinkedIn, Trade & Industry0 Comments

B-BBEE Codes of Good Practice far more onerous

One year for implementation…

ladderThe final Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice have been published. Companies will be granted a one-year transitional period to align with and prepare for the implementation of the revised Codes.

Trade and Industry Minister Dr Rob Davies has stated that the amended codes are a “new beginning” aligned to government’s transformation ambitions and follow a period of much debate and which were earlier released in October last year.

The revised codes deliver a reduction of elements, from seven to five, within the generic scorecard, comprising ownership, skills development, enterprise and supplier development, management control and socioeconomic development, and changes to the points required for compliance.

Black ownership goes to 40%

The codes set the minimum requirement for ownership at 40% of net value, with skills development accounting for 40% of the total weighting points, and enterprise and supplier development required a sub-minimum requirement of 40% within each enterprise and supplier development element, namely preferential procurement, supplier development and enterprise development.

All companies, barring micro enterprises, will be required to comply with the five elements of the B-BBEE scorecard including  all organs of state and public entities; and  “natural or juristic persons who conduct a business, trade or profession in South Africa, which undertakes any economic activity with organs of state or public entities.”

There is an increased threshold in points required to achieve a better B-BBEE status and exempted micro enterprises have now a threshold of R10m and general companies, known as QSEs, have a range of R10m to R50m.

On the new enterprise and supplier development enterprises totalling 40 points, 23 points are required as black ownership majority. Procurement is down to 12 points, of which only five points relate to all suppliers with black economic empowerment credentials, three points to qualifying small enterprise suppliers and four points for exempt microenterprises with a 15% target each.

Commentators have pointed out that many companies acquire total, or at least most of their imported goods on international markets and this will place them a complete disadvantage. The amended codes outline in much more clarity that large companies are required to comply with all three priority scorecard elements – namely ownership, skills development and enterprise and supplier development.

Refer to articles in this category
http://parlyreportsa.co.za//bee/bee-comes-under-scrutiny/
http://parlyreportsa.co.za//bee/turnover-fines-employment-equity-breaches/
http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/

Posted in BEE, Facebook and Twitter, Finance, economic, LinkedIn, Mining, beneficiation, Trade & Industry0 Comments

BEE comes under media scrutiny

New BEE Codes & Bill to fill gaps…

rob daviesMinister of Trade and Industry, Dr Rob Davies, says the new BEE Amendment Bill and the revision of the Codes would go a long way in plugging the gaps that, in his view, businesses had taken advantage of with such moves such as fronting. The amendments would also avoid the “tick-box” manner of BEE compliance that seemed to be developing in the country, he said.

When asked about a time limit on BEE, he was clear in his reply.  “The eventual idea is to create a non-racial society in which these kinds of racial categories will no longer be considered. We are nowhere near putting a time limit on this happening”.

Now five code elements

He said that the new legislation and Codes would reduce the exorbitant amounts of money that small enterprises had to pay to consultants to prove BEE compliance. “The current generic scorecard contains seven elements and these have been reduced to five in order to align the elements more closely with the trajectory of the economic growth and development in the country.”

Minister Davies pointed out that in terms of the new Bill, about to be assented to by the President, had a total of 105 points assigned to the five elements.

Social imperatives

“Black economic empowerment is not just a social and political imperative”, he said. “We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of the society in the same way the political space does. That’s why we are saying Black Economic Empowerment (BEE) remains an economic imperative.”

Minister Davies said the tandem launch of the Codes signalled the opening of a sixty-day period in which business and all other members of the public can submit their comments on the Codes for consideration before all the changes are finalised.

He concluded, when addressing a media conference on the subject, “We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of the society.”

BMF comes in

At the same meeting, Black Management Form’s Xolani Qhubeka, endorsed the amended Codes on BEE but warned “that whilst they area a step in the right direction, still more has to be done.”

The media asked whether, in stating that the new Bill had lightened the regulatory requirement for small business, whether this was because of the Bill or the new Codes.

Minister Davies indicated that the Codes were still under debate and this is “where reform would take place”. One of the areas being looked at was where bigger companies had to go through a lengthy verification process when dealing with smaller companies, he said.

“ Much of the comments are about the numbers, targets and the time to reach the targets but some of the fundamental principles will continue whilst the parameters and the timeframes are being discussed.”

All about fronting

When asked about the idea of incentivising plans for ownership as he perceived it, Minister Davies said this came back to the fronting question and what the problem with BEE, as it stood, was all about.

There was ownership as a proper and wholesome economic concept and there were also simple formal contract of some sort of shareholding, he said. “What has happened is that most of BEE is some kind of share transaction”.

He said his department was “weary” of empowerment of plans and new companies where  a kind of ownership had been established that was a share transaction deal. He said that BEE in its proper form had to deal with such subjects as procurement and skills training and added, “What we want to see is the entering into real ownership relationships with people who are empowered and can exercise the economic powers of ownership.”

BEE not a failure

On being asked whether, in introducing criminalisation to BEE legislation, he thought BEE had failed, Davies said “ We cannot conclude that BEE is a complete failure. I think that some aspects of it so far have showed some progress. We have seen the emergence of business people from historically disadvantaged communities playing leadership roles in business, state-owned enterprises, and government.”

“ What is lacking is the impact that was desired by the legislation originally. With any kind of legislation there will always be a need to tweak it. The fundamental difference between SA and other emerging economies is that people were subjected to racial categorisation. This had to do with social definitions. People were classified by the apartheid regime as white, black, coloured and Indian.”

“Depending on how one was classified through the Population Registration Act,” he went on, “ this defined your life chances; your education; your skills development and even for small business development. Apartheid neglected black small businesses until about ‘five minutes’ before the democratic transition.”

How long will it last

Questions then arose from the floor on the “sunset clause” issue, with one person saying that all this was 20 years ago, and people entering the economy had come through a new education system. Why could there not be term limits on this and why were there no deadlines, they asked on such legislation.

Minister Davies again referred to the past and brought up the 1913 Land Act and “the history of disempowerment of peasant farmers in the Transkei, who competed with white commercial farmers. One could clearly see how these farmers were disempowered and prevented from being commercial farmers so that they could be available to go work in the mines. Small black shop owners were not allowed to operate in the city centre and compete with the white shop owners.”

He acknowledged that it was twenty years since this had all had completely changed but the life span of disfranchisement effects has continued. “White people still have the best chances that other people do not have and this is the fact of the matter and is what have had to deal with.

Fronting penalties

When asked about the penalties on fronting, Minister Davies said at the moment as the law stood the only remedy was the common law offence of fraud; and, he added, fraud is criminally punished. “The only remedy at this point in time is the criminal one. And a maximum ten year sentence, subject to court process, is the legal process for cheating.”

Get rich quick

When it was pointed out by a questioner “that some people got richer through BEE regulations whilst a number of others stayed far behind”, Minister Davies responded by saying that BEE had to be got onto a “broader base” and this is why a Commission for BEE had been established.

He said, “You put somebody in a certain position so that you could pretend that the enterprise is something other than it is in terms of empowerment.” The Commission would look at this, he said, and in the worst case scenarios it would recommend that such cases go through the criminal justice system.

When asked when the Commission likely to be established the Minister explained the parliamentary process of legislation, the advertising of posts for a Commission and the setting up of procedures, all of which took considerable time.

More background articles on subject
http://parlyreportsa.co.za//bee/rumblings-in-labour-circles-on-bee/
http://parlyreportsa.co.za//bee/new-b-bbee-bill-avoids-circumvention-of-the-law/
http://parlyreportsa.co.za//bee/bee-bill-to-stop-fronting-tabled-in-parliament/

Posted in BEE, Cabinet,Presidential, Facebook and Twitter, Finance, economic, Labour, LinkedIn, Trade & Industry0 Comments

Minister Davies withdraws Licensing of Businesses Bill

Not scrapping Licensing of Businesses Bill…..

Trade and Industry Minister Rob Davies says his department (DTI) is to re-represent a Licensing of Businesses Bill to Parliament which will be “significantly different” and will take into account business concerns expressed over the recent hearings in April.

He told a parliamentary press briefing that the purpose of the Bill had been to “combat illicit trading” but there had been no provision in the Bill that targeted foreigners.

Threat to small business

He said, “This is the economy of illegal imports, this is the trade in sub-standard products and this is the economy of people who don’t pay their VAT. The original Bill presented was designed to combat the significant illicit economy that was operating in South Africa’s urban and peri-urban areas, and which in DTI’s view posed a serious a threat to small businesses in the country.

The idea was a database

“It never was our intention to have an onerous registration process, which requires business people themselves to do a lot of things,” he said. The idea is to have municipalities, in the course of registering people for all kinds of services, to then forward these names to a national database.

He argued there was a tendency to see any kind of regulation as “red tape”, whereas there was a distinction between red tape, which was bureaucratic and unnecessary, and regulation which was needed for good reason.

He gave no timings on the preparation of a new draft Bill on the same subject

Refer previous articles

 http://parlyreportsa.co.za//finance-economic/licensing-of-business-bill-will-tighten-up-on-procedures/

Posted in Trade & Industry0 Comments

Nedlac gets a stronger voice in SEZ management

Long time in making

Coega harbour equipMinister of Trade and Industry, Rob Davies, told parliamentarians that much of the delay in bringing the Special Economic Zones (SEZ) Bill to parliament was the result of lengthy negotiations on SEZ board make-up.

Whilst the draft Bill was at Nedlac negotiation stage, it had resulted in the proposed six independent members of the fifteen member SEZ board were now proposed as three independent members from Nedlac “constituencies”, the other three independents being proposed by the minister.

However, DTI had insisted that the three Nedlac independents balancing the independents, presumably from business, meet a criteria set rob daviesby DTI and the minister.

Linking SEZs to IDZs

Another reason for the lengthy gap between the Bill first appearing for public comment and its tabling was that a considerable amount of work and input had been made at provincial and localised areas in places such as Coega and East London, where SEZs were in embryonic stage, or in areas where IDZs were about to happen such as Saldanha.

DTI was at pains to state that the two complimented each other, although SEZs were a subsequent development found necessary to develop all areas of South Africa, especially in depressed rural areas, whereas IDZs were linked to ports or international airports.

The new SEZ board will administer proposals for SEZs, run funding mechanisms and handle incentives, said minister Davies. In each area set up, DTI will be responsible for setting up a “one stop government shop” to deal with all government departmental issues involved with the investors dealing with the particular SEZ.

State will work with partners

The Bill will provide for municipalities, in fact any tier of government, to apply for an SEZ but a rigorous process of evaluation is called for in terms of the Bill where a business applies for an SEZ in evaluating whether a municipality is capable or has the capability to provide the services called for. No private ownership of a SEZ will be allowed but private and public partnerships are to be encouraged.

DTI provided Parliament with the figures to date on progress with existing IDZs amounting to some R3bn providing nearly 50,000 jobs. Saldanha particularly had provided a strong foundation for the oil and gas industry in that area, said Lionel October, director general, DTI.

Four types

Most importantly, October said that the SEZ Bill provided the missing framework for this kind of area industrial development and there were four types of or categories of SEZ, which were a free port; a free trade zone; an industrial development zone; or a sector development zone.    Any government or municipal involvement is to be in terms of both the Public Finance and Municipal Finance Management Acts, the Bill proposes.

In answer to comments that Kenya and Nigeria were ahead of South Africa in such investment offerings and speed and good incentives were essential, Minister Davies responded that it was not a question of anybody being “ahead” of anybody.   South Africa, he said, wanted to see all of Africa grow and South Africans wanted to be able to trade with the whole of Africa. All of Africa must grow for all to benefit. It was not relevant to him, he said, whether Nigeria was economically larger or smaller than South Africa.

Will SEZs override traditional land?

Various MPs gave voice to the worry of land issues in rural areas where SEZs were to be established or created but DTI expressed little concern on this matter as far as drafting the Bill was concerned.     DTI responded that that such issues were specific to an individual SEZ and such matters would be dealt with in terms of an individual application and by the individual SEZ working party involved.

The primary concern, said DTI, had to be the re-industrialization of the rural areas.
Associated articles archived
http://parlyreportsa.co.za//finance-economic/special-economic-zones-sez-bill-to-be-be-up-shortly/
http://parlyreportsa.co.za//cabinetpresidential/sez-programme-to-get-going-with-new-bill/

Posted in Cabinet,Presidential, Finance, economic, Labour, Land,Agriculture, Mining, beneficiation, Trade & Industry, Transport0 Comments

Davies presses the button on nuclear development

Dr Rob Davies, minister of trade and industry, in a statement issued to the media following up on address given by him at the Nuclear Empowerment Conference in Johannesburg recently, stated that South Africa’s entry into the nuclear energy field was “expected to be one of the largest state-owned procurements in the country”.

Davies pointed to the fact that such a massive investment in new technologies could place the country ahead in manufacturing.    The step was “a major opportunity for the South African local supply and manufacturing industry to develop”.

The conference was dealing with South Africa’s energy mix particularly related to nuclear development.

Posted in Cabinet,Presidential, Energy, Fuel,oil,renewables, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments

Manufacturing Competitiveness Enhancement cash grants from DTI

Minister Rob Davies, department of trade and industry (DTI), has announced yet a further set of incentives to bolster manufacturing and general engineering industries against the current downturn in economic conditions, intended also to counter dismal local market conditions and the effects of recession in some of South Africa’s top export destinations.

Known as the Manufacturing Competitiveness Enhancement Programme (MCEP), DTI’s programme is aimed at tempting manufacturers to upgrade their production facilities, the incentives being greater as more labour sustainability appears in the returns and value is added by expansion to the processes involved and markets are built.

Said Davies, “The MCEP will also aim to address the general ability of the South African manufacturing industry to compete against imports and to also to compete globally against its counterparts in other export markets.” His statement followed his budget vote speech in the National Assembly on this point.

“It is proposed”, he said, “that the MCEP incentive will be available not only to entities engaged in manufacturing, but also to engineering services and other agencies servicing and supporting the manufacturing industry.”

The grants in general will be managed by the DTI and in the case of capital grants “cost sharing” will be between 30 and 50% of the investment, with smaller firms receiving a larger percentage of their investment. This incentive has been opened to all manufacturing enterprises not covered by sector-specific incentives, such as those available to companies in the automotive, clothing and textiles and business process outsourcing industries, Minister Davies said.

Launching the R5.8-billion programme, Minister Davies added that a number of types of grant were involved – namely a straight forward capital investment, as already mentioned, involving upgrading capital equipment and expansion of productive capacity.

Then there was a “green technology” grant for an existing production process that becomes “greener” as a result of capital injection, resulting in cleaner production and improved energy efficiency. This would have the same cost sharing arrangement at between 30 and 50% of the investment, with smaller firms again receiving a larger percentage of their investment.

There are also to be enterprise-level grants, where investment in the adoption of world-class manufacturing practices were involved, ranging from lean production technology to gaining an ISO mark and where cost sharing would be as high as 50 -70%.  Similar cost sharing arrangements would be offered for feasibility studies grant, resulting from a programme where “a bankable feasibility study for new manufacturing projects” was found to be acceptable.

Finally, there would be cluster initiatives grants towards support for cluster initiatives to improve competitiveness, innovation and access to new markets and where technology development centres, market research, international advertising and publicity costs were deployed to gain new markets. Dr Rob Davies said that it was important for DTI to ensure that the MCEP grant programme was “flexible” in its application and he said that the working capital portion of the grant which will be managed by the Industrial Development Corporation. Manufacturers and organisations can begin applying from June 4, which is when DTI will open its Internet online application system, the Minister said, implying this would be on the DTI website.

Posted in Cabinet,Presidential, Finance, economic, Land,Agriculture, Mining, beneficiation, Trade & Industry, Uncategorized0 Comments

Davies to re-introduce his ailing BEE

Following the gazetting of a draft Broad-Based Black Economic Empowerment Amendment Bill in December 2011 for comment (60 days), trade and industry minister, Rob Davies, has recently indicated his view that the planned  amendments to BBBEE legislation would “seek to strengthen access to procurement opportunities and to assist with black enterprise development.”

He also indicated in his statement that fronting was a practice that had to be eliminated and penalties for non-compliance as far as regulations were concerned would be introduced in the legislation, which included jail sentences. How this would relate to the Liquid Fuels Charter is not clear. . In terms of the draft BBBEE Act Amendment Bill, the cabinet statement set out the proposed amendments, some of which included amendments including the penalties mentioned for non-compliance in terms of enterprise development, or lack of it, fronting and procurement elements not complied with in terms of the BBBEE scorecard.

Definitions of what is termed as fronting are given in order that legislation may apply and the appropriate regulations enforced. On this issue, much was passed on by minister of energy, Dipuo Peters from the energy conference in November 2011.   Minister Davies said that more emphasis was to be placed on enterprise development and procurement within key sectors, in terms of both the IPAP and new growth path plans. Incentives were to be created for broad based black ownership and the use of such tools as employee share ownership, co-operatives and community ownership.

Relevance to the Employment Equity Act was an important factor, Minister Davies said, as was aligning skills requirements to current and new skills development strategies involved in the new growth path and elsewhere. Targets for this, for procurement matters and enterprise development had to be “adjusted” accordingly, he said.

Meanwhile, Minister Dipuo Peters also welcomed the BBBEE legislation as contributing towards the objectives of the liquid fuels charter. Challenges facing her department were irregular monitoring of compliance, pockets of poor performance within the value chain and lack of financially sound BEE deals, she said late last year.

She also added that her department was looking at ways to strengthen liquid fuels strategic stocks to cover any emergencies that might arise.

She advised the media in November the compliance report on the liquid fuels charter had been submitted to the cabinet for approval. At the time, she expressed her view that current shareholding was not spread uniformly across the value chain and total assets spread in line with demographics, noting that whilst technical issues such as access to storage facilities was a significant problem. In general, she complained that the participation of women, procurement and enterprise development lagged behind targets.

She also added that her department was looking at ways to strengthen liquid fuels strategic stocks to cover any emergencies that might arise. Her recent comments on the new BBBEE legislation were made in the light of Minister Davies announcement.

Reference to both BBBEE legislation and the Liquid Fuels Charter is expected to come up in President Zuma’s address to the nation.

Posted in Cabinet,Presidential, Education, Electricity, Energy, Finance, economic, Fuel,oil,renewables, Health, Justice, constitutional, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Security,police,defence, Trade & Industry, Transport0 Comments


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