Apr 02, 2012
Davies sets May launch date for new R5.8bn manufacturing incentiveBack
Agriculture|Africa|Design|Industrial|MCEP|Mining|Resources|Water|Africa|South Africa|Automotive|Embattled Domestic Manufacturing Sector|Manufacturing|Manufacturing Enterprises|Products|Water Infrastructure|Coenraad Bezuidenhout|Infrastructure|Nimrod Zalk|Power|Rob Davies|Water
© Reuse this
The rules governing access to the so-called Manufacturing Competitiveness Enhancement Programme (MCEP) would be released soon and the scheme would be open to all manufacturing enterprises not covered by sector-specific industrial financing support mechanisms. In other words, companies in the automotive, clothing and textiles and business process outsourcing industries would not be eligible.
Department of Trade and Industry deputy director-general Nimrod Zalk said the MCEP was also unlikely to support capital-intensive industries, firms in sectors with high levels of market concentration, or those that had been found guilty of anticompetitive behaviour. “We will seek to support initiatives that maximise employment and value-added potential,” Zalk said.
The department’s The Enterprise Organisation would administer the incentive, which was also one of the few new elements included in latest version of the Industrial Policy Action Plan, or Ipap3, also unveiled on April 2.
The larger action plan would also be deployed over the three-year fiscal period from April 1, 2012, through to March 31, 2015, with yearly revisions. It had been closely calibrated to the R845-billion public infrastructure programme and would seek to leverage industrial development opportunities on the back of general public sector procurements and the investments into power, transport and water infrastructure.
The focus of the MCEP was on supporting domestic manufacturing enterprises, many of which were still battling domestic and international headwinds, to upgrade their facilities, processes and products, as well as to initiate targeted skills initiatives.
During the 2009 recession, manufacturing shed 200 000 of the nearly one-million jobs lost over the period and Davies indicated that during the current phase, where many of South Africa’s key trading partners were either facing new recessionary conditions, or protracted periods of low growth, the MCEP was part of South Africa’s “proactive” response plan.
It was also intended to facilitate such upgrading notwithstanding the natural reticence arising from rising power and transport prices and the volatile currency, which a number of manufacturers argued was overvalued.
“There is a risk that we could repeat the situation of 2009, where there is a depressing effect on the South Africa economy arising from global conditions and that manufacturing could be disproportionately affected,” Davies warned.
Manufacturing Circle executive director Coenraad Bezuidenhout said the proposed May launch of the incentive was a welcome development.
The organisation was also thankful that the sector was receiving greater attention from government and that some resources were also being directed towards boosting manufacturing. But to replicate some of the sector-level successes would require closer collaboration between government and business, as well as full buy-in across government departments not only for MCEP, but also for a number of the procurement programmes.
Many of the MCEP’s design elements had been drawn from the Clothing and Textiles Competitiveness Programme (CTCP), which was currently helping to support 208 companies in the sector, employing 48 384 people.
As with the clothing and textile sector ahead of the introduction of the CTCP, many manufacturers were reluctant to invest to elevate their competitiveness over the medium term, preferring to “sweat their assets” until it reach a point where they were forced to close.
“Manufacturers must invest to raise competitiveness,” Davies averred, adding that the MCEP would offer grant funding to support such initiatives.
The grant funding was additional to the R102-billion in loan finance that would be disbursed by the Industrial Development Corporation in the coming five years to support the productive sectors outlined in the New Growth Path, including manufacturing, mining and beneficiation and agriculture and agroprocessing.
The MECP was also over-and-above the R21.7-billion 12(i) tax incentive for large manufacturing investments, and a range of sector and generic incentives on offer, such as the Automotive Production Development Programme and the support available for research and development programmes.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Macro and Micro News
A coalition of nongovernmental organisations, trade unions, corporates and faith-based organisations are rallying support for a march through the streets of central Johannesburg in opposition to the xenophobic violence that has rocked two of the country’s largest...
It was fundamental that the transformational agenda of the agriculture sector was prioritised and accelerated, Portfolio Committee on Agriculture, Forestry and Fisheries chairperson Machwene Semenya said. She emphasised that agriculture was the key to transforming...
The Companies and Intellectual Property Commission (CIPC) is in "deep trouble" and possibly on the "verge of collapse", according to the Democratic Alliance (DA). This follows the shock resignation on Monday of CIPC commissioner Astrid Ludin, who told staff that she...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...