ipap 2013/14 implementation progress … and industry chamber nedlac 03 october 2013 ipap 2013/14...

Trade and Industry Chamber

Nedlac

03 October 2013

IPAP 2013/14 IMPLEMENTATION

PROGRESS REPORT

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CORE OBJECTIVES OF THE IPAP

South Africa’s long-term vision of an equitable society is provided by the

National Development Plan.

The IPAP is informed by this vision; and its interlocking transversal and sector-

specific interventions constitute key pillars of the programmatic perspectives

set out in a series of ‘drivers’ and ‘packages’ contained in the New Growth Path

(NGP).

Government policy set out in these and other documents seeks to ensure a

restructuring of the economy to set it on a more value-adding, labour-intensive

and environmentally sustainable growth path.

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3 October 2013 IPAP 2013/14 - 2015/16 3

IPAP TRANSVERSAL INTERVENTIONS

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Public Procurement

Section 9.3 of the PPPFA Regulations was used to specify minimum

thresholds for the local production of DTT Antennas and Satellite DTH

Dish Antennas which have been set at 100%

The City of Cape Town has awarded the tender to provide vehicles for its

extended MyCiTi bus routes to Volvo SA. Volvo SA would provide 40

buses for the N2 express routes at a cost of R180m

Mercedes-Benz SA‟s Sandown Motor Holdings has won the tender to

provide 134 busses for the phase 1B of JHB‟s Rea Vaya BRT system

MAN is supplying 80 new commuter buses to Great North Transport

Limpopo‟s largest public transit operator.

ESKOM re-advertised the SWH tender with amendments on local content

requirements (70% for the major components: tank and collector)

The instruction notes for Solar Water Heaters and valves & actuator

products were circulated by the NT

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Public Procurement Minister Davies officially launched SABS Local Content Verification Office on 5 July

2013

Renewable Energy Independent Power Producer Procurement

Programme

Department of Energy approved 19 bids in the second round.

The Solar photovoltaic sector accounts for 9 bids; wind for 7 bids; 2 Small

Hydro and 1 Concentrated Solar Power (CSP).

The total preferred bidders‟ investment is estimated at R28.1 billion with a local

content value of R11.8 billion and 7 385 jobs expected to be created

Monitoring and evaluation of the performance of designated sectors

SABS has finalised the verification framework for rail rolling stock and busses

Standard bidding documents and annexures for awarded transversal textile and

clothing tenders managed by the NT have been reviewed and forwarded to

SABS for local content verification.

The dti working with the South African Clothing and Textiles Workers Union

(SACTWU) in following up on tenders that are not compliant to the PPPFA

regulations. Letters to this effect have been written to affected departments and

Provincial Treasuries.

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Industrial Financing Manufacturing Competitiveness Enhancement Programme (MCEP)

Since inception a total of 387 enterprises have been approved for

funding to the value of R2.6bn.

By end of August 2013, R192.8m had been disbursed. It is expected

that there will be a significant increase in disbursements, due to the

enhancements made on the application and claim forms as well as

the interim IT System that has been successfully tested and

implemented with effect from 07 August 2013.

Entities that were approved for funding have projected an investment

value of R9.5bn and 118 193 jobs to be sustained in the agro-

processing, metals, chemicals, plastic, electro- technical, printing,

pharmaceuticals and film sectors

The IDC has approved Projects to the value of R350 million via the

MCEP loan facility; approximately R70 million has already been

disbursed

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Industrial Financing Continuing reorientation of the IDC to finance IPAP/NGP sectors

124 903 jobs were saved/created through IDC funding approvals

2009-2012

R12.9bn worth of approvals, expected to create/save ±14,500 jobs

R5.5bn committed for investment in the Green Economy

R1.1bn committed for investment in the agriculture & forestry value-

chains

R501m approved for clothing & textiles sector – forecast to save

2,400 jobs

R5bn private „green bond‟ concluded with the Public Investment

Corporation to facilitate funding for businesses looking to invest in

clean-energy infrastructure developments

The IDC sourced R4 billion from the Unemployment Insurance Fund

to lower the cost of capital.

Government's Green Fund, administered by the DBSA, has

processed 590 applications for sustainable development projects

worth R10.9bn

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Developmental Trade Policy ITAC has processed a variety of applications for a variety of products and some

have been implemented by SARS

Inclusion of boxer shorts under rebate item 311.40/5208.4/01.05

Reduction of duty on engine CV joints

Increase the general rate of customs duty on wire nails from 5% to 15%

Rebate provision for aluminium slugs for impact extrusion used in the

manufacture of aerosol cans

Insertion of rebate item 306.01/2815.11/02.06 for Sodium Hydroxide for use in

the manufacture of Sodium Metasilicates

Reduction of customs duty on polyether-polyols from 10% to free

Fraud, Illegal Imports, Sub-standard Goods

The new Automated Customs Management System was implemented by SARS

on 18 August 2013 with mote 39 000 import declarations and 55 000 export

declarations processed since inception.

Since the implementation of the new system, goods with a total trade value of

R40 billion moved through South Africa‟s borders with more than R2.5 billion

having been collected in duties

In KZN the Electrotech Division of NRCS has stationed two permanent

inspectors at the port and Durban accounted for 71.5% of the border

inspections in Q1.

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Developmental Trade Policy For Q1 Electrotech conducted 277 border inspections and other border

inspections were conducted at City Deep (19.9%), Port Elizabeth(6.5%) and

Cape Town(2.1%)

Non-compliant products valued at R23 Million, were impounded in Durban, in

addition to approximately 5,000 television sets embargoed at the Cape Town

port, valued at about R2.1 Million

A number of standards and compulsory specifications were finalised and published

New Compulsory Specification for processed meats

Review of Compulsory Specification (VC 8043) for coal stoves and heaters and

VC 9088) for shooting ranges completed.

The Legal Metrology Bill was certified and presented to Trade and Industry

Portfolio Committee

Fuel cells standards have been published to date and more will be published in

the next quarters

SANAS started with the development of an accreditation programme for

Certification Bodies of Energy Management

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Competition Policy Various settlements on price-fixing were reached, with the following companies and

values:

R148 million with Lafarge in the cement industry

R88.5 million with FoodCorp in the wheat flour and maize-meal sub-sector;

R16.7 million with Astral Operations.

Oceana was fined R35 million for price-fixing and

Telkom was fined R649 million for market abuse

Fuel: The Commission referred the SASOL; SANS; HOSAF abuse of

dominance case to the Tribunal and will be heard on the 20 May 2013

A major investigation into collusion and price-fixing in the construction industry

was carried out, with a settlement reached in June 2013

Steel: Excessive pricing – Progress report finalised.

Telecommunication: Telkom fined R649m for market abuse.

A market inquiry into pricing practices in the private healthcare sector has been

initiated

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Special Economic Zones

The SEZ Bill undergoing parliamentary processes and expected to be

concluded by Q4

Feasibility studies for the PGM beneficiation hub in Tubatse (Limpopo)

and Solar Corridor in Upington (NC) are underway.

Gauteng has finalised feasibility reports for the ICT hub and undergoing

consultation process

Technical feasibility study finalised for Dube Trade Port (KZN)

Platinum Valley Hub: Arrangements to commence with pre-feasibility

studies on the Platinum Valley and other identified SEZ are in progress

SEZ Capacity Building Programme has commenced with 30 officials from

dti,SARS,NT, hosting municipalities embarking on SEZ training

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25 June 2013 IPAP 2013/14 - 2015/16 12

IPAP SECTORAL INTERVENTIONS 1

Sectors supported since 2007: scale up and broaden interventions

27 February 2013 IPAP 2013/14 - 2015/16 12

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Automotives

The Electric Vehicle Industry Road Map was launched by Minister in May

2013

157 projects approved under the Automotives Incentive Scheme (AIS):

investments of R13bn; incentives of R3bn; currently sustaining 58,168

jobs

R600m truck and bus assembly plant under development in Rosslyn, a

joint venture between Iveco SA and the Larimar group. 1,000 new jobs

expected to be created

Draft National Automotive Value Chain proposal completed for a new

manufacturing competitiveness improvement support framework.

the dti created a "People Carrier" automotive incentive scheme for mini-

and midi-bus taxis, to grow local assembly and production

Confirmation by Toyota SA that the new Toyota Corolla will be

manufactured at the company‟s Durban plant.

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Clothing, textiles, leather and footwear

Clothing & Textiles Competitiveness Programme (CTCP) has

stabilised sectoral production and employment:

A combined approval to date of more than R 2.1 bn has been

achieved and already over R1.27 bn disbursed to the participating

enterprises

To date more than 12,205 new decent permanent jobs have been

created, with a further 62,085 jobs saved

The Competitiveness Improvement cluster programme has secured

the participation of some notable local retailers such as Foschini &

Edcon

The National Leather and Footwear Cluster (housed under the Vaal

University of Technology) was established as a cooperative venture

between Vaal, shoe manufacturers and leather tanning enterprises

Proposal on Communal Hides beneficiation finalised undergoing

stakeholder consultations

Proposal on the establishment of the exotic leather cluster finalised by the

consortium which includes IDC, DTI and leather goods manufacturers

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Metal fabrication, capital & rail transport equipment

New regulations on Scrap (i.e. price preferential system) was

implemented on 16 September 2013

Minerals and Petroleum Resource Development Act (MPRDA): inclusive

of Section 26, beneficiation provisions to support downstream

beneficiation currently subject of Parliamentary process.

Apprenticeship programme gazetted in April 2013 and 410

apprenticeship students enrolled under the National Tooling Initiative

Programme (NTIP).

85 students completed on the job training and 304 students completed

phase 2

127 workers were trained under the National Foundry Technology

Network

17 new foundries have enrolled on various Competitiveness Improvement

Initiatives.

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Agro-processing 1

The Eat Safe, Eat Well, Eat Local Campaign was launched in

collaboration with Proudly South African (PSA) and other stakeholders

under the umbrella of the South African Fruits and Vegetables Canning

Association (SAFVCA)

Boland Pulp has launched 8 products since the campaign

the dti together with National Cleaner Production Centre has developed

an audit programme for the Resource Efficient Cleaning Production

Programme (RECPP) for the fruit and vegetable canning industry

R260m has been dedicated to the Small Scale milling project by Old

Mutual Masizane Fund an MoU has been signed between the DTI and

Old Mutual. 24 small scale maize mills have been ordered for this project

Since the launch of The Aquaculture Development and Enhancement

Programme:

4 projects have been approved to the value of R189m with investment of

R35.2m in Abalone and Tilapia.

292 jobs expected to be created in Western Cape and Gauteng

80 organic food farmers in Limpopo and KZN were trained for

participation in the retail supplier programme

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Pharmaceuticals

50% of the total tender value of family planning tender has been awarded

to domestic manufacturers with Aspen receiving R33.14million &

Fresenius –Kabi receiving R82.9 million of the tender

R150 million loan secured from IDC for the facilitation of the Biovac

Project (manufacturing of vaccines)

100% of the blood fractions tender and 99.4% of the Large Volume

Parenterals tender (worth R294 million and more than R750 million

respectively) were awarded to South African manufacturers

65% of the ARV tender (code HP-13, value R 5.8bn ) awarded to SA

manufacturers

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Film industry

“Long walk to freedom” which received support from dti was screened at

the Toronto Festival in September. The movie is to be released in South

Africa in November 2013

Other four dti-supported projects to a combined value of R31.1m (Blitz

Patrollie, Black South Easter, Kumba and Zulu) were screened at the

2013 Cannes Film Festival

The movie Mad Max 4 - Fury Road - one of the biggest ($125m) feature

films ever brought by Warner Bros to SA - was approved and filmed in SA

and Namibia, for projected release in 2014

On the basis of sustained dti support, South Africa has already attracted a

string of locally shot blockbuster films, including Chronicle and Safe

House, starring Denzel Washington and Ryan Reynolds, the 3D comic-

book adventure "Dredd," and the TV drama "Mary & Martha," starring

Hilary Swank

The Adventures of Zambezia, a locally-produced animated feature film,

was selected as the closing film and received outstanding nominations.

The film performed excellently at the box office, out-performing Judge

Dredd; and is said to be doing extraordinarily well in Russia

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Business process services Monyetla Skills Programme

The National Skills Fund has approved further R71 million for the

phase 4 for financial year 2013/14.

Matched funding secured from the DBSA through Jobs Fund for

training of another 6000 learners T

Currently there are 26 signed consortia contracts and 1127 learners

in training.

10% of the total allocation was outside Gauteng, KZN and Western

Cape. R3.4 million has been disbursed to participating consortia thus

far

BPS incentive

The total amount of claims paid on the BPS incentive programme

since Jan 2011 is R384 million. The sustained jobs are a total of

7,196

SA was presented with the European Outsourcing Association (EOA)

Offshoring Destination of the Year Award

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3 October 2013

IPAP 2013/14 - 2015/16

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IPAP SECTORAL INTERVENTIONS 2 & 3

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Green industries

The dti has commenced the process of small scale renewable energy

localisation strategy and wind energy localisation roadmap.

600 students enrolled for training at the recently launched Energy-

Efficiency Training Centre at the National Cleaner Production Centre.

In renewable energy, the IDC approved funding for 43 projects worth R3.8

billion in green industries such as solar water heater manufacturing, with

further investments set to follow in wind tower production; solar PV

structures and PV panel assembly

1st quarter 2013: DCD, an SA-owned OEM, will begin construction of a

wind tower manufacturing facility in the Coega IDC; expected to create

628 construction jobs and 200 full-time operational jobs

Global wind and solar power developer Mainstream Renewable Power

turned the sod on a 138MW wind energy plant in Jeffrey‟s Bay, Eastern

Cape in Feb 2013

Sun Edison South Africa broke ground on its first SA project, a 28MW

solar plant in Limpopo. This R1.2bn project will be followed by a 30MW,

R1.4bn project at Witkop, near Polokwane

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Advanced manufacturing Localisation of Manufacturing of Electrical Prepayment Meter

Manufacturing (EPPMMs) through designation within the PPPFA

EXCO approved the designation proposal for the Residential

Electricity Meters in September

A formal application to ITAC to review tariffs on prepayment meter

components under way

Software Development Process Improvement Programme

Three entities: Barone, Budge & Dominick (Pty) LTD (in JHB), Wits

Centre for Network Services (in JHB) and Maitland Group (Cape

Town) undergoing training as part of the programme.

An agreement to conduct research (focusing on this project at PHD

and MBA level) has been signed between Wits University and

University of Cape Town

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KEY CHALLENGES

Bunched up and sharply escalating electricity prices especially where large

premiums are added by municipalities where large disparities in and between

municipalities exist.

The slow recovery of the global economy, weak demand from South Africa‟s

traditional trading partners and slowing demand for commodities in China.

Continued currency volatility.

Large current account deficit together with a huge manufacturing trade deficit.

Limited allocation of capital to productive sectors such as the relatively more

labour-intensive and value-adding sectors of the economy.

The expeditious roll-out of the public infrastructure investment programme

being driven by the Presidential Infrastructure Co-ordinating Commission

(PICC) needs to be supported by robust localisation measures to ensure that

the infrastructure build does not 'suck in' unnecessary imports that could

impact negatively on the current account balance.

Slow progress has been registered with respect to addressing the difficult

problem of the skills deficit and mismatch in the economy

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KEY CHALLENGES

Monopolistic pricing of privately owned key intermediate inputs such as steel,

plastics and polymers into the manufacturing sector continues to constitute a

major constraint to downstream sector development.

Apparent limited progress with respect to the implementation of new port

charges regime to favour the export of value-added goods, compounded by

serious inefficiencies in rail and port freight logistics. A more speedy

implementation of a commitment made by the Transnet National Ports

Authority (March 2013) to change its pricing model in favour of the export of

manufactured goods by lowering tariffs on tradable exports by about 40% will

be of significant benefit to South African manufacturing exporters.

Non-compliance with the Designations under the amended regulations of the

PPPFA by state entities and insufficient use of the mechanism provided by

Clause 9(3) of the Act, which enables localisation in all tenders. Non-

compliance by municipalities wrt to Designation in Clothing and Textile Sector

a major concern.

Securing greater support for localisation by the private sector in key sectors

especially mining to mirror developments in the CTLF sector where a quick

response framework by retailers has been adopted.

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Appendix

Balance on Current and Financial Account and

REER

25

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

-80000

-60000

-40000

-20000

0

20000

40000

60000

80000

q12008

q22008

q32008

q42008

q12009

q22009

q32009

q42009

q12010

q22010

q32010

q42010

q12011

q22011

q32011

q42011

q12012

q22012

q32012

q42012

q12013

q22013

Balance on current account (Rm) Balance on fin account (Rm) REER (Index 2000=100)

Source: SARB

26

Appendix

Trade Balance

(US $ million)

-8000

-6000

-4000

-2000

0

2000

4000

1Q

1990

3Q

1990

1Q

1991

3Q

1991

1Q

1992

3Q

1992

1Q

1993

3Q

1993

1Q

1994

3Q

1994

1Q

1995

3Q

1995

1Q

1996

3Q

1996

1Q

1997

3Q

1997

1Q

1998

3Q

1998

1Q

1999

3Q

1999

1Q

2000

3Q

2000

1Q

2001

3Q

2001

1Q

2002

3Q

2002

1Q

2003

3Q

2003

1Q

2004

3Q

2004

1Q

2005

3Q

2005

1Q

2006

3Q

2006

1Q

2007

3Q

2007

1Q

2008

3Q

2008

1Q

2009

3Q

2009

1Q

2010

3Q

2010

1Q

2011

3Q

2011

1Q

2012

3Q

2012

1Q

2013

Agriculture Mining Manufacturing

Appendix

Manufacturing trade deficit: June 2012 to June 2013

(Rand million)

27

-12000

-10000

-8000

-6000

-4000

-2000

0

Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013

Machinery & equipment Motor vehicles, parts & accessories Coke & refined petroleum products

Appendix

Manufacturing trade surplus: June 2012 to June 2013

(Rand million)

28

0

2000

4000

6000

8000

10000

12000

14000

16000

Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013

Basic iron & steel Basic non-ferrous metals Beverages

Appendix

PMI January 2009 to August 2013

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0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Source: Economist

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Appendix

Manufacturing Employment

(„000)

1110

1120

1130

1140

1150

1160

1170

1180

1190

1200

1210

q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 q4 2012 q1 2013 q2 2013

Source: Stats SA

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Thank you

ipap 2013/14 implementation progress … and industry chamber nedlac 03 october 2013 ipap 2013/14...

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