Tag Archive | special economic zones

Special Economic Zones (SEZ) Bill now in debate

Special Economic Zones (SEZs)  aimed at growth…

rob daviesAs an integral part of the New Growth Plan, the Special Economic Zones (SEZ) Bill has tabled  before Parliament by the trade and industry minister, Rob Davies.

In April last year, the cabinet has approved the draft which provides for the designation, development, promotion, operation and management of SEZs, an important component of department of trade and industry”s (DTI) development policy within the New Growth Plan.

Takes over from IDZ policy

This has been developed in conjunction the various economically linked government departments dealing with the concept of SEZs differing greatly but not entirely replacing past industrial development zone (IDZ) principles.

The new Bill will allow for an appropriate board; a fund to develop SEZs and the ability to manage and implement programmes establishing and approving incentives for operators. The Bill itself states that the new legislation will allow for:

•    the management of SEZs
•    establishing an SEZ board
•    establishing a dedicated SEZ fund
•    incentives for SEZ operators
•    the issuing of SEZ permits to persons wishing to develop a SEZ
•    the suspension or withdrawal of a SEZ operator permit.

Complementing what has gone before

In addressing Parliament, minister Rob Davies said the policy and Bill had been drawn up to deal with the problems that had resulted from the earlier industrial IDZ incentive programme but which would now be consolidated into and under the proposed structure, both by filling in gaps and widening the scope of both geographically and economically.

What will interest developers, he said, is that the Bill allows for the application of different types and improved incentives for developing industry and businesses.  Once the board is established this will in fact activate the new SEZ programme and allow for co-ordination.

A draft bill and a draft policy were gazetted separately for comment in January last year.  Minister Davies has said that the IDZ programme would continue but would fall under the proposed SEZs and the aegis of new SEZ board.

Posted in Finance, economic, Labour, Land,Agriculture, Public utilities, Trade & Industry0 Comments

SEZ programme gets going with new Bill

Cabinet has approved the Special Economic Zones (SEZ) Bill for subsequent tabling in Parliament which will provide for the designation, development, promotion, operation and management of SEZs, the subject of the new development policy within the New Growth Plan developed in conjunction the various economically linked government departments dealing with department of trade and industry (DTI), the minister Rob Davies introducing the Bill.

The new Bill will allow for an appropriate board; a fund to develop SEZs and the ability to manage and implement programmes establishing and approving incentives for operators.

It will also regulate the application and issuing of permits to developers wishing to operate a SEZ.

In addressing Parliament in the last session, minister Rob Davies said the policy and Bill had been drawn up to deal with the problems that had resulted from the earlier industrial IDZ incentive programme but which would now be consolidated into and under the proposed structure, both by filling in gaps and widening the scope of both geographically and economically.

More importantly, it allows for the application of different types and improved incentives for developing industry and businesses.  By establishing an SEZ Board, the Bill will in fact activate the new SEZ programme and allow for co-ordination.

Posted in Cabinet,Presidential, Finance, economic, Labour, Land,Agriculture, Trade & Industry0 Comments

DTI claims new SEZ investment incentives are better

In launching it’s new Special Economic Zone (SEZ) plan, the department of trade and industry (DTI) has admitted to Parliament that a lack of specific attractive incentives did not lure investors to the various IDZs in South Africa in the manner intended accompanied by somewhat “ad hoc” funding arrangements with national treasury.

There was also insufficient marketing and a lack of stakeholder co-ordination, DTI has said.

Lionel October, director general of DTI and his team were asked to present to Parliament on the readiness of the new Special Economic Zones (SEZs) which are planned to substitute as a new investment drive and how the existing IDZs would be incorporated into the new plan.

In retrospect, October explained to parliamentarians, DTI had found that it’s officials  had often been provided with insufficient or untimely oversight of individual strategic plans and operations of the IDZs themselves had found the regulatory framework provided by DTI for the operation of IDZs insufficient to guide long-term planning and coordinate plans in order to integrate into other national, provincial and regional strategies.

Between the years 2002 to 2012, the government of South Africa has expended a total of R7,6bn to the three functioning IDZs on the East coast, R5,4 billion(76%) of this coming from the DTI’s budget and R 1,7bn from the host provincial governments.

Meanwhile, over the eight years of its operation, the current plan has attracted a total of 44 investors who DTI claimed have invested some R12.3bn, creating they say some 38,000 direct and indirect jobs.

Lionel October told parliamentarians that DTI now planned a “one stop shop model for investors where bureaucratic red tape will be reduced”; that the IDZs would be incorporated and integrated with SEZs with the assistance of experts identifying weaknesses in the previous systems and that DTI was developing a marketing strategy for the integrated result.

Tumelo Chipfupa, DTI’s deputy director-general, told the parliamentary committee that DTI admits that the three IDZs (Coega, East London and Richards Bay) should have achieved better results and a lot more had been hoped for but the result of under-achievement had resulted mainly because “the funding model did not cater for the dynamics needed by investors and the fact that allocation of funds had been inconsistent and inflexible”.

Posted in Finance, economic, Land,Agriculture, Public utilities, Trade & Industry, Uncategorized0 Comments

No labour dispensation for SEZs, says DTI

In a media release, the director-general of the department of trade and industry (DTI), Lionel October said labour laws will not be relaxed in the new arrangements for accelerating industrial development through special economic zones.

He was addressing organised labour at the Special Economic Zones Bill public hearings held by the department in Pretoria, yesterday.

Whilst government needs the full support from organised labour and business for the proposed special economic zones to work effectively, he said, “It is not in our best interests to deregulate labour laws in order to attract foreign investors and therefore exploit our workers.”

The timing of the remark would appear that pressure has come from organised labour to say something to the working force as a result of the introduction by President Zuma of special economic zones (SEZs) and their introduction into Parliament by October and the DTI.

October also said in his media release that government needs a regulated labour market to remain competitive and raise living standards for workers.

He went on to say, “The model of special economic zones that the government is pursuing shifts away from competing on the basis of cheap labour to competing on the basis of the quality of services and support measures provided in the zones and their host regions.”

DTI concluded that the challenge as they see it is to develop a comprehensive package of support measures that will be adequate to “attract desired investments but also assist the country to master the desired industrial capabilities”.

Public hearings are shortly to take place members involving the public, organised labour and business the SEZ Bill and government’s policy in this regard. The stated purpose of the Bill being to “accelerate of industrial development and create jobs through the creation of new industrial hubs in under-developed areas and industrial decentralisation from traditional zones by building targeted areas.”

The Bill, gazetted by the minister of trade and industry Dr Rob Davies last month, will be tabled once public hearings conducted by the DTI have taken place

Posted in Finance, economic, Justice, constitutional, Labour, Land,Agriculture, Mining, beneficiation, Public utilities, Trade & Industry, Uncategorized0 Comments

DTI to form multi-billion rand incentives fund

The Minister of Trade and Industry has released the Special Economic Zones (SEZ) Bill for public comment. The SEZ Bill is expected to be tabled in Parliament later this year and Minister of trade and Industry Rob Davies says that in his view it is one of the most important developments of 2012 in order to achieve the objectives of the country’s economic planning programme.

DTI has now briefed the parliamentary trade and industry committee on the concepts behind the proposed legislation. According to the minister, the main objectives of the SEZ bill are:

• for the designation, development, promotion, operation and management of SEZs

• for the establishment of the SEZ board

• to regulate the application and issuing of SEZ operator permits • for the establishment of the SEZ fund

• decentralisation in the economy-broaden location of industrial development

Whilst claiming, as did the minister, that “the country now has a really effective plan to offer the investment community”, Lionel October, DTI’s director general, admitted the exact amount of finance at his department’s disposal to fund new special economic zones (SEZs) in South Africa still remains to be negotiated, although the matter has been agreed to in principle at cabinet level.

Nevertheless, he countered questioning at a parliamentary trade and industry committee presentation on this subject ,by saying that “Whilst we still have to fight a significant battle with Treasury on the size of a multi-billion rand incentives fund, it was significant that the DTI now has a proposal along the lines offered in China, Brazil and India”. (BRICS)

This plan, he said, will be supported by a Bill shortly to be introduced to Parliament and which would provide “the necessary predictability to such financing.”

October said the main problem in the past was that the present IDZs were not driven by incentives.   Only one development had taken place at Richards Bay, for example, he noted.  “Although any business plan must make economic sense as a first priority, we have learnt that any growth plan, as in BRICs countries, must be attached to incentives. “In the past, we were de-incentivising many potential areas just because they did not have a port, for example”.

In the new proposals, said October, the country would move away from very long plans and do what the Chinese have done successfully and focus on five-year plans.  He added that the competitive factor, where IDZs competed with each other, had to be stopped and that a “joint marketing proposal approach” had to be adopted for the whole country.

“This was the purpose of dividing the country into SEZs”, he said, and to build a national team to market the country’s proposals.

In terms of the new Bill, there were to be different categories of SEZs, such as industrial development zones, industrial parks or estates, science and technology parks, spatial development corridors and sector development zones.   October quoted successful examples of SEZs in Shanghai, Oman and Malaysia.

Problems had been encountered, October said, with the previous concept of the smaller IDZs over the past few years and the idea had not worked particularly well. Main problems had been that previously designated areas favoured those with international airport or seaports and penalized other areas for not having such.

The DTI’s contribution into the four areas of Richards Bay, East London, Coega and OR Tambo and Saldanha for forty projects had been 5.3bn or an approximate 5.7% return.

Lionel October emphasised that the IDZ programme had not been incentive driven. There had also been too much emphasis on infrastructure, whilst other issues such as logistics, marketing and skills supply had been on the back-burner.

The IDZ programme had “lacked a unique value proposition”, he said, and too many messages were going out to the investment community. There needed to be a single strategy and message from one place, said October.

He noted that now, with the promise from Treasury in October’s medium term budget that R10bn would be put aside for investment purposes, the new plan, supported by legislation, had become an exciting prospect and the new national regulatory environment would not only give the host zone but the whole region total involvement and the added ability to put in place longer term planning for an entire area.

The new Bill also provided for five parties to be involved in the process; namely, the DTI, Treasury, all three tiers of government, Eskom and Transnet, all parties being involved on a SEZ board set up by the new Bill. Other important parastatals could be added if relevant, October said.

MPs commented that no such plan would work unless government parastatals were on board to help plan infrastructure needed.

When asked by an ANC MP why labour was not represented in the planning structures, Lionel October responded frankly by saying that such a planning process could not be subjected to the issue of collective labour bargaining at that stage of the investment process, although the supply of skilled labour was a major issue.

He detailed the financing instruments as a fund to be established by the minister of trade and industry in consultation with the ministry of finance and development finance institutions (DFIs), which would play a major role in the development of a particular SEZ, liaising on marketing, capacity development, skills strategies, infrastructure, business incubation, environmental protection, technology and R&D and, finally, quality and productivity.

He would not talk on the subject of specific incentive numbers, saying that incentives had always been granted in the past but that in the future any incentives and incentive programmes would be the subject of far more focus with proper funding to make more things possible.

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


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