Special economic zones (SEZs) can help South Africa deal with its unemployment challenge by attracting jobs that China and other Asian nations will shed as they relocate some of their labour-intensive industries owing to rising costs, Centre for Development and Enterprise (CDE) executive director Ann Bernstein told the Portfolio Committee on Trade and Industry, in Cape Town, on Wednesday.

“As China develops, some of its labour-intensive industries are going to move. Some already have.

“This is an historic opportunity for South Africa. There are 85-million manufacturing jobs in China. One of South Africa’s national priorities should be to attract a few million of the jobs that China is destined to shed. To do so, we need to get our business conditions right. Done the right way, the SEZs could be a vehicle for doing this.”

Bernstein noted that key to getting the business conditions right was to get businesses and entrepreneurs involved in designing and running SEZs. “It’s vital that the structures that will govern SEZs have strong representation from small and medium-sized businesses and from potential new investors.

“Only 40% of South African adults work. Unless we fix that, the country will not make social and economic progress. We can’t afford to set up SEZs that are as ineffective as the industrial development zones. South Africa needs a laser-like focus on building SEZs that will attract labour-intensive businesses,” she asserted.

Bernstein added that, to attract these labour-intensive firms to local SEZs, the country had to provide a business environment in which labour costs were low, where there was considerable flexibility in working conditions and where firms could grow and shrink their workforces in response to fluctuating demand for their products or services.

“SEZs work best when they create conditions for business within their boundaries that are significantly better than business conditions in the rest of the economy. While this might have to do with fiscal incentives, more often it’s just about offering better infrastructure and logistics, easier access to skills and markets, and less red tape. If you do that, you allow industries in the SEZ to compete in the global market,” CDE director of research Antony Altbeker told the committee.

A research report compiled by the CDE last year, titled 'Special Economic Zones: Lessons for South Africa from International and Local Experience', showed that there were about 3 000 SEZs in 135 countries. These SEZs accounted for $500-billion of trade-related value-add and more than 68-million direct jobs in 2008.

Trade and Industry Minister Dr Rob Davies last month told the committee that ten potential SEZs had been identified in eight of South Africa’s provinces. The proposed SEZs would now undergo feasibility studies to determine their viability.

Three of the ten proposed SEZs would be located in Limpopo, with one in Tubatse to focus on platinum-group metals; one in Messina to focus on petrochemicals, agroprocessing and logistics; and one in Nkomati to focus on agroprocessing.

A proposed SEZ in Rustenburg, in the North West province, would serve as a platinum hub.

Further, an SEZ to focus on renewable energy was proposed for development in Atlantis, in the Western Cape, while an SEZ in Upington, in the Northern Cape, would focus on solar power.

The Wild Coast, in the Eastern Cape, and the Dube TradePort, in KwaZulu-Natal, could see the development of SEZs focused on agroprocessing, while SEZs focused on agroprocessing and logistics were proposed for development in Harrismith, in the Free State, and Nasrec, in Gauteng.

The SEZs were expected to promote the delivery of socioeconomic benefits and the creation of decent work through the development of new industrial regions and the strengthening of existing ones.