The two Johannesburg IDZs – one at South Africa's busiest passenger and freight hub, Johannesburg International Airport (JIA) and the other the premier container depot at City Deep – will be modelled on the free-trade zones of Dallas Fort Worth in Texas and the Jebel Ali in the United Arab Emirates.
Blue IQ will be lodging an application for the two sites to be declared as IDZs before the end of the year and as soon as the Minister for Trade and Industry makes the declaration, infrastructure development will start on the sites. GM finance and viability and project manager Sipho Mhlongo tells Engineering News that early indications are that these proposed IDZs could generate at least 30% of Blue IQ's ten megaprojects' targeted R100-billion 10-year spin-off.
It is envisaged that the City Deep IDZ will logistically be the central port for high-bulk, low-value containers around the Southern Africa tip.
The City Deep container depot is already the main inland port in South Africa, servicing the whole country through existing rail and road infrastructure.
The establishment of an IDZ will offer expedited Customs procedures and a one-stop investors' shop to assist industries within the surrounding industrial park.
It is also believed that an IDZ will attract logistics-centred industries, warehousing and related-service industries to the area.
The State-owned enterprises RoshProp and Propnet are the two main landowners around City Deep, with pockets of land under their control.
Historical circumstances, however, have led the land-use patterns to be highly fragmented due to the legacy of mining in the area, with some of the land being subject to mineral rights, rendering the land unavailable in the short term.
However, because the business service area does not necessarily have to be adjacent to the inland port, a virtual IDZ will be established on the smaller sites until the other strategically situated pieces of land can be phased in as they become available.
Currently, five shipping companies have the mandate to operate cartage services from the City Deep terminal and, together with Spoornet, they handled an average of 150 000 t equivalent units of cargo a year between 1999 and 2001.
Though formal incentive packages must still be finalised by the South African Revenue Services, long-term investors that make use of the City Deep IDZ will benefit in a number of ways.
One of the key attractions will be expedited customs services and, apart from the obvious advantage – a duty-free area – value-added services like repackaging and palletisation will also be on offer.
This will have a cost-effective impact on specifically low-volume exporters as shipping companies would be able to conglomerate batches.
Another advantage would be the number of spin-off industries in the service sector, such as recruitment agencies and auditing and accounting firms.
Blue IQ has committed R60-million to establish the road infrastructure around the City Deep IDZ and to ensure that City Deep becomes the central logistics hub in the SADC region. Blue IQ is also working closely with DTI and Transnet.
In addition to this, the Gauteng Provincial Department of Housing will also make a contribution towards reducing overpopulation in the City Deep hostels and informal settlements around the area.
JIA forms the perfect platform for international trade and investment companies that depend on the rapid flow of imports and exports for global competitiveness.
A 119 ha site, owned by State-owned enterprises Denel and Airports Company South Africa (ACSA), on the eastern precinct of JIA, has already been identified for the proposed IDZ.
It is envisaged that the JIA IDZ will be geared towards low-bulk high-value technology-related exports, but high-bulk time-sensitive goods could be diverted there as well.
This one-stop business shop will be a major advantage, as targeted industries, which include high-technology, biotechnical and light assembly, would be centrally located in the IDZ for networking and knowledge- sharing purposes.
Interviews conducted during the research on the feasibility of an IDZ at JIA revealed the possibility of JIA being the perfect address for companies wishing to market themselves overseas because of the international familiarity of the name.
This could well then present a marketing trump card for future companies located within the JIA IDZ.
Blue IQ and its team of expert partners are currently working on alternative models of engagement for the IDZ which look at optimal relationship structures between Blue IQ and the landowners for the IDZ development.
Also to be explored are the possibilities for inclusion of other critical participants, such as strategic equity and management partners.
Mhlongo discloses that a company which specialises in managing free-trade zones has already expressed interest in becoming involved with the JIA project.
Blue IQ has committed R110-million for infrastructure provision around JIA and is working in partnership with ACSA, Denel and Ekurhuleni Metropolitan Council in taking the development of the JIA IDZ forward.
Apart from this investment, Blue IQ is also considering providing additional funds as seed capital to kick-start development of the JIA IDZ.
The IDZs have a substantial property development component associated with their establishment and, with IDZ cluster industries to be located in a central area, this gives great scope for participation by property developers in the IDZ initiative.
While the level of participation for these developers is not yet clear, Mhlongo foresees an arrangement whereby property developers develop sites at their own cost for tenants, with the IDZ operator retaining management of the property either through lease or sale agreements.