The second version of government’s Industrial Policy Action Plan (Ipap2) was a “realistic” growth strategy, but South Africa would have to draw on its existing strengths and eliminate some identified weaknesses to ensure its success, growth consultancy firm Frost & Sullivan research analyst Laura Peinke said on Tuesday.

She emphasised that the country could not waste time in implementing these new industrial policies, as it would otherwise run the risk of losing its manufacturing base forever.

Peinke pointed out that South Africa’s manufacturing industry continues to be driven by unsustainable consumer sectors and not production-driven sectors.

This meant that while the country’s manufacturing production volumes were increasing, employment and capacity utilisation was declining.

Ipap2 came into effect on April 1 and would run until March 2013.

It was aimed at expanding production in value-added sectors with high employment and growth multipliers and which could compete with export markets, as well as with imports in the domestic market.

Peinke noted that the government’s consultation with stakeholders regarding the plan, the detailed key action plans, positive government incentives, coordinated policy development and the R3,6-billion allocated in the latest national budget, were all aspects that could contribute to the success of its implementation.

However, government would also have to deal with some negative aspects, such as inefficient State-owned enterprises, funding deficits, some negative reaction to the plan and what some regarded as unrealistic targets.

Peinke said that it remained to be seen if all of the targets were achievable, but said that even if only half of the targets were met, especially in terms of job creation, this would be a big improvement on what had previously been achieved under the first plan.

She noted that it cost about R1-million to create one new permanent middle-income job in South Africa, which meant that it would cost the country about R880-billion over the next ten years to create the targeted more than 800 000 direct jobs.

However, the creation of jobs would contribute to the country’s economic growth and poverty alleviation, she stated.