Department of Trade and Industry Department of Trade and Industry p yp yof of

South AfricaSouth AfricaSouth AfricaSouth Africa

PRESENTATIONPRESENTATIONPRESENTATIONPRESENTATION20152015

South Africa at a glanceSouth Africa at a glance

• Head of the State: President Jacob Zuma

• Area 1,22 million km2 ea , o• Population 51 million (2011 census)

• 11 Official languages with English the business language

• Total (nominal) GDP: R3.8 trillion (2014 estimate)

• GDP 2014 per capita: R72 667 (US$6,354) (2014 estimate)

• Real GDP Growth: 1.5% (2014)

• Inflation (CPI): 4.4% (2014 annual average)• Main Exports; minerals & mineral products, precious

metals & metal products, chemical & food products,

automotives & components. • Main trading partners: China, USA, Japan Germany,

India & the UK.

South African EconomySouth African EconomyYEAR 1994 THEN 2004 IN 2014YEAR 1994 THEN 2004 IN 2014

GDP  R482 bnS$ b

R1, 374 tnS$ 3 b

R3, 800 tnS$32 bUS$41 bn US$117.3 bn US$324.4 bn

Merchandise exports (billi )

R69, 8US$5 9

R281,8US$24 0

R988,2US$84 3

Source: SARB

(billions) US$5.9 US$24.0 US$84.3GDP Growth 3,2% 4,6% 1,5 %

•South Africa positioned as a manufacturing centre of excellence

•Diversified Industrial sectors

Source: SARB

•Open economy

•Sound business case for investment and profit

•South of Africa and present an opportunity to a market of more than 200 Million p pp yconsumers

SADC and South AfricaSADC and South Africa

• SADC FTA signed in August 2008 –market of 277 million consumers

• Future FTA with SADC, COMESA & EAC with a market of 700 million consumers

• Future C FTA with a market of 1 11• Future C-FTA with a market of 1.11 billion consumers

South African Trade AgreementsSouth African Trade AgreementsS th Af i C t U i (SACU) 5 t i RSA B t• Southern African Customs Union (SACU) : 5 countries – RSA, Botswana,Lesotho, Swaziland, & Namibia.

• South Africa – European Union (EU) Trade, Development and

Co-operation Agreement (TDCA) : SACU + 28 Countries

• Southern African Development Community (SADC) FTA: 14 countries -(Angola, Botswana, Lesotho, Democratic Republic of Congo, Madagascar,( g g gMalawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania,Zambia, Zimbabwe)

• Southern African Customs Union (SACU) - European Free TradeAssociation (EFTA) FTA : 9 countries – SACU + Switzerland, Norway, Icelandand Lichtenstein

• USA Africa Growth and Opportunity Act (AGOA)Agreements underway:

• SACU – India PTA• SACU – Mercosur PTA• SADC-EAC- COMESA T-FTA• C-FTA

South Africa’s South Africa’s leading Import Partners leading Import Partners ((2014)2014)

Rank Import Country US$

W ld 99 9 billi

Other46%United States

f A i

Nigeria5%

India5% Japan

4%

World 99.9 billion

1 China 15.5 billion

2 Germany 10.0 billionSaudi Arabia

7%

of America7%

3 Saudi Arabia 7.1 billion

4 United States of America 6.6 billion

5 Nigeria 5.1 billion

6 India 4.6 billion

7 Japan 3 8 billion

Germany10%

7 Japan 3.8 billion

8 United Kingdom 3.3 billion

62 Chile138,0

million

China16%

South Africa’s leading South Africa’s leading Export Partners Export Partners ((2014)2014)

Rank Export Country US$Germany5%

India4%

United Kingdom

4%

World 90.6 billion

1 China 8.6 billionBotswana

5%

Namibia5%

2United States of America

6.4 billion

3 Japan 4.8 billion

Japan5%

p

4 Botswana 4.7 billion

5 Namibia 4.5 billionUnited

States of 6 Germany 4.2 billion

7 India 3.7 billion

8 United Kingdom 3.4 billion

Other55%

China10%

States of America

7%

8 United Kingdom

73 Chile 70.1 million

BILATERAL TRADE WITH CHILETotal Trade (R’ million)

2500

1000

1500

2000

n R

ands

0

500

Val

ue in

2010 2011 2012 2013 2014Exports 469 601 888 761 761

-1000

-500

Imports 579 832 1190 1080 1500Total Trade 1048 1433 2078 1841 2261Trade Balance -110 -231 -302 -319 -739

8

BILATERAL TRADE WITH CHILETrade by Section in 2014

RSA Exports Machinery RSA Imports

Other14%

Machinery &

mechanical

appliances 23%

Prepared foodstuffs;

12%

p

Other6%

Mineral

Vegetable products

6%

Base metals 4%

Machinery &

mechanical appliances

4%

23%Vehicles14%

Mineral products

11%

B

Products of the

chemical Products of

th Base metals

22%

chemical 15%

the chemical

69%

9

BILATERAL INVESTMENT AGREEMENTS• In an effort to strengthen Foreign Direct Investment, RSA is developing a New

Investment Act to codify and clarify typical Bilateral Investment Treaties (BITs)provisions into domestic law, and strengthen investor protection.

• However, in developing the Act, RSA ensures alignment with national legislation, theConstitution, and developments in international investment treaty-making including theprinciple of non-discrimination, and equal treatment of national and foreign investors.

• RSA has terminated most first generation BITs and refrains from entering into new BITs• RSA has terminated most first generation BITs and refrains from entering into new BITsunless there are compelling economic and political reasons.

• In the immediate post-apartheid era (1994-1998), South Africa concluded 15 BITsmainly with European countries.y p

• Other BITs were negotiated subsequently, but most not ratified.

• South Africa receives no FDI from many countries with whom we have a BIT, andreceives FDI from countries with which we have no BITs (USA, India).( )

• Good faith attempt to assure investors that investment would be secure under newdemocratic government.

• BITs also signal South Africa’s re-entry to international community after years ofg y y yisolation.

South AfricaSouth Africa-- global perspectiveglobal perspective• South Africa is one of the most sophisticated and promising

emerging markets, offering a unique combination of highlydeveloped first world economic infrastructure with a vibrantemerging market economyemerging market economy.

• South Africa is one of the world’s 26 industrialized nations & 27th

largest economylargest economy

• South Africa has the 2nd largest economy on the African continent,accounting for approximately 25% of the continent’s GDP.accounting for approximately 25% of the continent s GDP.

• The JSE Securities Exchange is Africa’s largest and mostdeveloped Securities Exchange and one of the world’s top 20p g pexchanges.

• South African economy is the most diversified African Economyy y

South Africa South Africa -- global perspectiveglobal perspective

• South Africa remains the world’s top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium.

• South Africa holds 80% of global manganese reserves, 72% of chrome 88% of platinum-group metals (PGMs) 40% of gold andchrome, 88% of platinum-group metals (PGMs), 40% of gold and 27% of vanadium.

A di h W ld B k S h Af i k d 41 t f 189 i• According to the World Bank, South Africa ranked 41st out of 189 in the world for the Ease of Doing Business in 2014.

• South Africa scored well in various categories according to the 2014/15 WEF’s World Competitiveness Report (144 countries ranked) with overall competitiveness we ranked 56th in place.

South Africa South Africa –– a conducive environmenta conducive environment

World Economic Forum’s Global Competitiveness Index (2014/15) shows that South Africa is:

• # 1 in the strength of auditing and reporting standards• # 1 in the regulation of securities exchanges# 1 in the regulation of securities exchanges• # 2 in the protection of minority shareholders’ interests• # 3 in the efficacy of corporate boards • # 6 the availability of financial services# 6 the availability of financial services • # 6 in the soundness of banks• # 10 in the strength of investor protection• # 11 in the quality of air transport infrastructure# 11 in the quality of air transport infrastructure• 56th overall ranking out of 144 countries

South Africa’s investment environmentSouth Africa’s investment environment

South Africa today is one of the most sophisticated and promising emerging South Africa today is one of the most sophisticated and promising emerging markets globally, mainly because of …markets globally, mainly because of …

Political & economic stability with sound

macro economic

Abundantnatural

resources macro-economic management

CompetitiveExcellent

transport &

resources

Competitive sectors/industries

plogistical

infrastructure

f

Skillsavailability

World class financial system

Favourable cost of doing business

Industrial Policy Action PlanIndustrial Policy Action PlanIndustrial Policy Action PlanIndustrial Policy Action Plan

Diversify the economy: provide strong support Promote a labour Industrialisation Contribute towards Long term

intensification ofprovide strong support for value added manufacturing,

especially in globally competitive

non traditional

Promote a labour-absorbing

industrialisation path with systematic

employment-

Industrialisation model focussed on

inclusion of historically

disadvantaged people and

industrial development in

Africa, focussed on infrastructure,

productive capacity d i l

intensification of South Africa’s

industrialisation process and movement towards a non-traditional

tradable goods & services

p ycreating linkages

p pregions and regional

integration

to a ds aknowledge economy

Infrastructure DevelopmentInfrastructure Development

• Most advanced and extensive transport infrastructure in Africa offeringdirect access to 14 SADC countries - a market of 250m people.The transport sector has been highlighted by the government as a key• The transport sector has been highlighted by the government as a keycontributor to South Africa's competitiveness in global markets.

• South Africa will spend billions of rands on new infrastructure in the comingyears, focusing on rail and road projects, economic links in five regions inyears, focusing on rail and road projects, economic links in five regions inthe country, new universities and refurbished hospitals

• In 2013 announced government three year spending programme of R827billion (around US$70 billion at current exchange rate)

• To boost energy capacity, the government would continue searching forrenewable energy sources, especially solar electricity and biofuels as itimplements the Green Economy Accord with economic stakeholders.

IDZ & PORT INFRASTRUCTUREIDZ & PORT INFRASTRUCTURE

SPECIAL ECONOMIC ZONES (SEZS)SPECIAL ECONOMIC ZONES (SEZS)

• Government has identified Special Economic Zones as a mechanismthat will contribute towards the realisation of its economic growth andthat will contribute towards the realisation of its economic growth anddevelopment goals;

• And is committed to support and facilitate the designation, regulationpp g , gand development of Special Economic Zones in South Africa;

• Special Economic Zones will be designated in areas to promotetargeted economic activities, supported through special arrangements;

• and support systems including incentives, business support services,fstreamlined approval processes and infrastructure.

SEZ VALUE SEZ VALUE PROPOSITIONPROPOSITIONSEZ VALUE SEZ VALUE PROPOSITIONPROPOSITION

SEZ Support Measurespp

Infrastructure St t

Skills & Supplier Development OSS Strategy

Incentives Strategyi) 15% Corporate Taxii) Building Allowance

Funding Strategyi) SEZ Fundii) Mi f f di g

Strategyi) Bulk infrastructure by government through SEZ Fund

i) Skills dev. Strategies for SEZsii) Supplier development programmes to

OSS Strategyi) To reduce info search & transaction costii) Facilitate

iii) Employment Incentiveiv) CCAv) 12i Tax Allowance

ii) Mix of funding instrumentsiii) PPPs

gii) SEZ Locationsiii)Various stakeholders roles in providing i f i

programmes to develop our local businessesiii) Continuous training of civil

permits & licences for investorsiii) Eliminate steps in approvals

infrastructure in and out of zone

servantssteps in approvalsiv) After care

SEZ TARGETSSEZ TARGETS

10 SEZs from 2015 @ 300ha

60% FDIs + 40% Domestic

10 SEZs

1200 investment projects = 120 each

100 000 di t 100,000 direct jobs = 10,000 each

MAJOR INVESTMENT PROJECTS AND CASE STUDIES MAJOR INVESTMENT PROJECTS AND CASE STUDIES FACILITATED BY The DTIFACILITATED BY The DTI

• Major Projects Facilitated• Over the past five years multinationals have affirmed South Africa as a

regional manufacturing hub The Sedibeng Heineken is South Africa’sregional manufacturing hub. The Sedibeng Heineken is South Africa s largest green field project built in a record time before the 2010 World Cup and has a capacity of 3 million hectolitres.

• Unilever projects such as “Indonsa” is a global first for the group in termsUnilever projects such as Indonsa is a global first for the group in terms of advancing its focus on advanced sustainable “green” technology. It is Unilever’s second largest plant in the world and its 5th plant in South Africa.

• Other FMCG companies such as Proctor & Gamble, Nestle, KimberleyClark, Ranbaxy, Hisense and LG have established new plants or expanded their operations.

• In the Auto sector, TISA has facilitated projects for Toyota, Nissan, Ford, General Motors Tata FAW BMW Iveco KLT Motherson Somi andGeneral Motors, Tata, FAW, BMW, Iveco, KLT, Motherson Somi and Johnsons Control.

22

MAJOR INVESTMENT PROJECTS OPPORTUNITIES

RSA presents the following Major Investment Projects• Energy – Nuclear Power Station construction by 2023gy y

• Freight logistics network – modernisation and upgrade of Rail, Ports and pipelines by 2022 worth R310 billion capital investment

• Water Olifants River Water Resource Development Project (phases 2B• Water - Olifants River Water Resource Development Project (phases 2B and 2G) worth R13.1 billion. Currently feasibility assessments being done.

• Liquids Fuels – “Mthombo” construction of 3 000kbbl/d oil refinery at Coega with supporting infrastructure of R100 billion Currently feasibilitywith supporting infrastructure of R100 billion. Currently feasibility assessments being done.

• Other major investment projects can be assessed at http://www treasury gov za/documents/national%20budget/2015/review/Fullhttp://www.treasury.gov.za/documents/national%20budget/2015/review/FullReview.pdf

Investment OpportunitiesInvestment Opportunities

Investment OpportunitiesInvestment Opportunities

Investment OpportunitiesInvestment Opportunities

Investment OpportunitiesInvestment Opportunitiespppp

Investment OpportunitiesInvestment Opportunities

Investment OpportunitiesInvestment Opportunities

Investment OpportunitiesInvestment Opportunities

Investment IncentivesInvestment Incentives

Investment IncentivesInvestment Incentives

Investment IncentivesInvestment Incentives

Investment IncentivesInvestment Incentives

PRESENTED BY:

Ambassador Extraordinary and Plenipotentiary:

H E Dr H Fisher

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THANK YOU FOR YOUR ATTENTIONTHANK YOU FOR YOUR ATTENTION