MUCH has come to light on SA’s industrial development recently, including details of a spate of investments and stakeholder opinions on everything from preferential procurement to new special economic zones.
But there is little clarity on how the state and business will find each other in the struggle to grow the economy and create jobs — many in the private sector complain there is little support for industry by the government.
Despite such sentiments, Trade and Industry Minister Rob Davies approved greenfield and manufacturing expansion projects worth R21,7bn in the past 15 months.
Six will start commercial production by August, with the rest up and running by 2014.
They are all in priority sectors identified in the Department of Trade and Industry’s Industrial Policy Action Plan, with eight projects in the chemicals sector, one in agroprocessing, two in the paper and pulp sector, and two in biofuels.
These include a R1,8bn fuel-grade ethanol plant in Cradock in the Karoo; a R2,1bn soybean crushing and biodiesel plant at Coega near Port Elizabeth; an R8bn Sasol wax project, and a new Omnia Group nitric acid complex in Sasolburg.
In addition to R4,5bn in additional tax allowances granted to these projects, the Treasury recently revised incentives for investors in SA’s existing industrial development zones.
Recent events in the retail sector, however, highlight sticking points between state planning and the functioning of free markets.
In setting aside the review application by the government over the merger of Walmart and Massmart , Competition Appeal Court Judge President Dennis Davis ordered the merged parties to find the best way to empower domestic suppliers to deal with Walmart’s entry into SA.
Paul Coetser, head of competition practice at Werksmans Attorneys, says that “ultimately … the parties will have to return to court” over the remedies.
But Judge Davis says competition law cannot be a substitute for industrial or trade policy.
This constant battle between business and state interests mirrors in many ways the hearings now under way to give diverse parties an opportunity to express their views on the Special Economic Zones Bill and policy.
Gazetted by Mr Davies in January, this intends to provide for the development, operation and management of special economic zones to promote accelerated industrial development and industrial decentralisation.
“We hope the new policy direction … will result in … foreign and domestic investment … (and) access to economic opportunities to (the) previously marginalised… ,” Mr Davies says.
But last week, the director-general of the Department of Trade and Industry, Lionel October, told organised labour that labour laws in such zones would not be relaxed.
“Our challenge is, therefore, to develop a comprehensive package of support measures that will attract desired investments, but also assist the country to master the desired industrial capabilities,” he says.
This rigidity of purpose ignores the functioning of markets in favour of state planning and control, and is unlikely to attract significant private sector investment.
The Coega Development Corporation says it has been given the go-ahead to build a 13MW photovoltaic solar facility worth R278m in Coega.
It also says wind energy projects with a combined capacity of more than 6 000MW are at various stages of development.
But such projects have been extremely slow to materialise. The gulf between the private sector and the state is part of the problem.
“Our primary focus is on state-led foreign direct investment — companies that are ready to internationalise,” Christopher Mashigo, business development manager at Coega Development Corporation, says.
allixm@bdfm.co.za
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Article source: http://www.businessday.co.za/articles/Content.aspx?id=167379