The Department of Trade and Industry (DTI) on Tuesday announced that valves, manual and pneumatic actuators, electrical and telecommunications cables, as well as solar water heater components had been designated for local production and as requiring specified local content levels in the public sector procurement system.

Trade and Industry Minister Dr Rob Davies signed the necessary authorisation in terms of his powers under the amended Preferential Procurement Policy Framework Act (PPPFA) regulations.

The National Treasury would, in due course, circulate the instruction notes which would regulate the environment within which government departments and public entities procured designated products. The instruction notes would have specified minimum local content thresholds.

Sectors already designated for local production with minimum local content thresholds were rail rolling stock, power pylons, bus bodies, canned or processed vegetables, certain pharmaceutical products, furniture products, and the textile, clothing, leather and footwear sector.

Public procurement was one of the key industrial levers in the Industrial Policy Action Plan (IPAP).

The amended PPPFA regulations, which came into effect on December 7, 2011, empower the Trade and Industry Minister to designate industries, sectors and subsectors for local procurement at specified levels of local content.

The designation policy instrument was one of a suite of policy levers designed to maximise support for domestic manufacturing. The others are the Competitive Supplier Development Programme, which is led by the Department of Public Enterprises and governs the procurement programmes of State-owned companies, and the National Industrial Participation Programme (NIPP).

This instrument obliged overseas companies, which won tenders valued at more than $10-million to provide ‘offset’ obligations through investments in the domestic economy.

At the end of 2012, Cabinet signed off on a set of policies which tightened the NIPP framework, closed existing loopholes and aligned the policy with other public procurement instruments.

Details of these provisions would be made public when the new regulations were signed off by Davies.

The DTI was confident that local production of designated products would help stimulate aggregate demand and strengthen support for the domestic manufacturing sector. 

In so doing, the deployment of procurement policy levers was an added incentive for foreign direct investment in the production sectors of the economy.

“In the year ahead, the DTI will significantly scale up designations and other procurement policy levers in support of domestic manufacturing.

“This will be done at the same time as the department deploys a range of other supportive and interlocking instruments to raise the competitiveness of South Africa’s manufacturers. This will be done in close collaboration with business and labour,” said Davies.

Further detail of these measures would be set out in the 2013 IPAP, which would be launched in April.