organised by: world trade expo · •south africa at a glance • area 1,22 million km2 population...

TRADE & INVESTMENT OPPORTUNITIES IN SOUTH

AFRICA

Organised By:

WORLD TRADE EXPO

MUMBAI

29 October 2018

•South Africa at a glance

• Area 1,22 million km2

• Population 51,6m (estimate)

• Head of the State: President Cyril Ramaphosa

• 11 Official languages with English the business language

• Inflation (CPI): 5,3% (2017 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 Economy

•Source:SARB

YEAR 1994 THEN

2004 2014 2017

GDP (billions) US$ 60 US$ 171 US$ 341 US$ 349.3

Merchandise exports

(billions)

US$ 8.7 US$ 35.2 US$ 97.5 US$78.25

GDP Growth

3,2% 4,6% 1,4 % 1,3%

South African Economy: cont

•Unemployment remain high at 27.6% (2017)

•Inflation (CPI): 5.3% (2017 annual average)

•Structural challenges such as export of raw materials and reliance

on imported consumer goods not resolved yet.

•Triple challenges poverty, unemployment and inequality

South Africa’s leading trade partners (2017)

Export Country %

1. China 9.5

2. United States 7.7

3. Japan 4.7

4. India 4.6

5.Botswana 4.3

Import Country %

1. China 18.3

2. Germany 11.9

3. US 6.6

4. Saudi Arabia 4.7

5. India 4.7

•Source: DTI

BILATERAL TRADE (SOUTH AFRICA-INDIA)

MAJOR SOURCE OF FOREIGN DIRECT

INVESTMENT INTO SOUTH AFRICA (Source:FDI intelligence)

Source Country Projects Capex

($USm) Jobs Created Companies

United States 91 5 970.5 15 159 74

UK 86 7 045.8 18 165 66

Germany 33 2 269.8 6 872 28

India 30 3 634.1 6 236 23

China 23 1 690.2 9 516 17

Australia 19 6 600.2 7 063 14

Netherlands 17 666.2 1 775 13

Switzerland 17 1 740.6 10 336 12

France 17 1 271.9 1 781 14

Ireland 15 1 988.7 1 082 8

India FDI into South Africa Industry Sector Projects Capex Avg Capex Jobs Created Avg Jobs Companies

Financial Services 14 1 052.3 75.2 238 17 8

Software & IT services

14 1 650.8 118.2 1 637 116 12

Coal, Oil and Natural Gas

6 15 881.7 2647.1 554 92 6

Automotive OEM 6 1 628.3 271.3 1 060 176 5

Rubber 4 1 448.6 362.1 868 217 1

Industrial Machinery, Equipment & Tools

4 276.0 69.0 509 127 4

Consumer Products 3 252.8 84.0 504 168 2

Hotels & Tourism 3 2 523.4 841.1 718 239 1

Alternative/Renewable energy

3 5 814.1 1937.8 146 48 2

Biotechnology 2 526.8 263.1 212 106 2

Business Services 2 146.2 73.1 56 28 2

Communications 2 84.0 42.4 161 80 2

Metals 2 2 548.0 1273.7 1 829 914 2

Minerals 1 14.3 14.3 13 13 1

Plastics 1 377.9 377.9 497 497 1

Leisure & Entertainment

1 54.0 54.0 4 4 1

Engines & Turbines 1 54.0 54.0 13 13 1

Automotive Components

1 128.5 128.5 165 165 1

Total 70 34 461.7 492.0 9 184 131 52

Why invest in South Africa? •Most sophisticated, diverse and promising emerging market globally.

•2nd largest economy in Africa and member of BRICS, Business

council

•World Bank has ranked SA the 82nd most attractive FDI destination

globally

•Very stable economy and politics

•Has sound financial and legal systems, World class infrastructure

•4th largest source of gold and diamond globally

•Has 3 quarter of global platinum reserves

•Large deposit of uranium, coal and other mineral resources

Why invest in South Africa?

Cont….. •Situated in continent with 7 out of 10 fastest growing economy

•Gateway to Africa status reaffirmed at BRICS Summit

•Potential access to large market such as SADC FTA , SA-EU TDCA

(FTA), SACU-MERCUSUR PTA, SACU-EFTA, SACU-INDIA PTA

under negotiation.

•Opportunities through US-AFRICA Growth and Opportunity Act

•Excellent transport and logistical infrastructure, availability of skills

•Favourable cost of doing business

•Lots of investment incentives and industrial financing

Country Overall Rank Getting credit Protecting investors

South Africa 82 68 24

China 78 68 119

Russia 35 29 51

Brazil 125 105 43

India 100 29 4

South Africa’s among the BRICS for Ease of Doing

Business

Source: World Bank Group, 2017

PUBLIC PROCUREMENT : LOCALISATION & DESIGNATION

Designated Sectors

Rolling stock

Power Pylons

Bus Bodies

Canned / Processed Veg.

Textile, clothing, Leather & Footwear

Pharmaceuticals

Set – Top boxes

Furniture

Sectors Ready for Designation

Power & Telecom Cables

Solar Water Heaters

Valves

Manual & Pneumatic

Actuators

Sectors for future Designation

Energy efficient lights

Tissues

Pre-payment Meters

Medical Textiles

Coated Paper

Sanitary Towels & Related

Plastic products

Building Construction

Materials

The Policy Environment

Mineral Beneficiation Action Plan

Iron Ore & Steel

Titanium

Platinum group metals

Polymers

Precious metals & Jewellery

Mining Capital

Equipment Inputs

•MINERAL BENEFICIATION

Sector Sub-sector

Agro-processing Food processing in the milling and baking industries

Beverages viz. fruit juices and the local beneficiation, packaging and export of

indigenous teas

Fisheries and aquaculture i.e. freshwater aquaculture & marinculture

High value natural fibres viz., organic cotton & downstream mohair production High value organic food for the local and export market Biofuels production viz. biodiesel, bioethanol & biogas.

Processing of seed oils; tea extracts, including buchu, honeybush; and other oil

derivatives (avocado, amarula etc)

Business Process

Outsourcing & IT

Enabled Services

•Call Centres

•Back /office Processing

•Shared Corporate Services

•Enterprise solutions e.g. fleet management and asset management

•Legal process outsourcing

Composites •Manufactures of fiberglass

•Carbon fibre

•Composite training academy looking for partners with skills/knowhow in composites

Investment Opportunities

Sector subsector

Green

Economy

Industries

Power generation:

• Independent power generation, energy infrastructure & alternative

energy

Renewable energy:

• Onshore wind power – manufacturing of turbines/blades

• Solar PV and Concentrated Solar Power – manufacturing/assembly

• Biomass

Energy efficiency and energy saving industries:

• Solar water heaters

• National Cleaner Production Centre (CSIR)

Waste Management:

• Reducing landfill

• Lowering greenhouse gas emissions from landfill sites


Sector Sub-sector

Automotives &

Components

- Engines, radiators , filters & components thereof

- Air Conditioners/ Climate Control systems

- Alarms & Tracking devices

- Axles, transmission shafts

- Body parts & panels

- Catalytic converters, Silencers & Exhaust systems and components

- Seats & parts thereof, seatbelts, leather covers

- Suspension & shock absorbers, springs and parts thereof

- Steering wheels, columns & boxes

- Ignition, starting equipment, gauges & instrument parts

- Lighting equipment

- Wiring harnesses, instrument panels vehicle interiors, electronic drive train

components, body parts

- Advanced robotics


Chemicals , plastic fabrication & pharmaceuticals

• Basic chemicals

• Water treatment chemical products

• Man made fibres

• Plastic products: polypropylene and polyvinculchloride

• Medical (drips & syringes), manufacture of active pharmaceutical

ingredient

• (APIs) for key anti-retrovirals (ARVs)

• Manufacture of reagents for AIDS/HIV diagnostics

• Production of vaccines and biological medicines

Creative and Design

Industry

Film and Media

• Film studios, treaty film co-production ventures, distribution

infrastructure,

• servicing of foreign productions.

• Production of film and documentaries, commercials, stills photography

and

• multi-media

• Post-production

• Design

• Jewellery manufacturing and design

• Fashion design

Incentives: South Africa offers various investment incentives, targeted

at specific sectors or types of business activities

Incentive Benefit Main Conditions

Automotive Investment Scheme

(AIS

A taxable cash grant of 20 percent

of the value of qualifying

investment in productive assets

-Motor vehicle assemblers/manufactures.

-Motor component manufacturers

People- Carrier

Automotive

Investment Scheme

-Cash grant of 20%-35% of

qualifying investment in

productive assets

-SKD vehicle assemblers: grant of

20% qualifying investment costs

-CKD vehicles assemblers: 20%

qualifying

-Component manufactures: 20% of

qualifying investment costs

-Manufacturers of medium and heavy

motor vehicles

- Component manufactures that is

part of OEM’s supply chain

Incentives: Cont…..


Section 12i Tax

Allowance Incentives

-Up to R900m additional

investment allowance with

preferred status

-R550m investment allowance of

any other Greenfield pro

-R550m depending on status viz.

preferred or qualifying projects.

-Training allowance/ deduction of

up to R30m or R36 000 per

employee.

-Greenfield project

-Brownfield projects

Capital investment > R 200m

Critical Infrastructure Fund

Infrastructure projects intended

to service IDZ, shall qualify for a

grant of 30% of the qualifying

infrastructure development cost

The minimum qualifying

infrastructure development cost is

R15m



Manufacturing

Enhancement

Competitive

Programme (MCEP)

Encourages existing manufacturers

to enhance competiveness

through production technologies

Existing manufacturer, MCEP is non

taxable cash grant ranging from 10% -

25% of manufacturing value added

over a two year period

Aquaculture

Development

Enhancement

Programme

-Reimbursable cost sharing grant

up to R40m qualifying costs in

.machinery, own land, leasehold

improvement, bulk infrastructure

-Primary, Secondary and Ancillary

Aquaculture operations for both

marine and freshwater

-New projects, upgrade or expansion

-



Foreign Film and TV

Production and Post-

Production incentive

-20 % of Qualifying South African

Production Expenditure

-Shooting in SA & post-production

with QSAPPE of R1,5 million in

SA, incentive at 22,5%

-Shooting in SA & post-production

with QSAPPE of R3 million and

above in SA, the incentive at 25%.

-Foreign shooting, QSAPPE of

R1,5 million in SA, incentive

22,5% and 25% for R3 million

and above

Capped at R50 million

-Minimum QSAPE R12m

-50% principal photography in SA

-minimum 4weeks of shooting in SA

-Minimum 80min

-Minimum of 2weeks for post

production to be carried out in SA



Business Process

Services

-3year operational expenditure

grant (OPEX)

-

-project to employ 80% youth

between age 18-35 yrs

-New/existing projects must have

created 50 new offshore jobs in SA

end of 3yrs from start of operations

-JV arrangement with one party

registered in SA as legal entity

INDUSTRIAL DEVELOPMENT ZONES (IDZ) IN

SOUTH AFRICA

•South Africa offers a number of world-class Industrial

Development Zones (IDZ’s).

•These are perfect for manufacturers as they are purpose-built

industrial estates linked to international ports that leverage fixed

direct investments in value-added and export-oriented

manufacturing industries

•Exemption from VAT when sourcing goods and services from

South African customs territory and duty-free imports of raw

materials and inputs for export

•Industry &

•Service Area

•Customs

•Secured

•Area

•Services

•Enterprises

•One

•Stop

•Center

•IDZ

•An IDZ is located adjacent to a

•port allowing importation of raw

•materials, plant machinery &

•equipment; and the export of

•finished products;

•IDZ’s are considered part of

the Customs Territory of

South Africa.

•Coeg

a

•EL

• RCB

•ORT

•Customs Territory

•of

•South Africa

•Customs

•Controlled

•Area

•IDZ’s

• Saldana

SPECIAL ECONOMIC ZONES (SEZ)

• Government has identified Special Economic Zones as a mechanism

that will contribute towards the realisation of its economic growth and

development goals;

• And is committed to support and facilitate the designation, regulation

and development of Special Economic Zones in South Africa;

• Special Economic Zones will be designated in areas to promote

targeted economic activities, supported through special arrangements ;

• and support systems including incentives, business support services,

streamlined approval processes and infrastructure,

• 10 SEZ has been identified

SEZ TARGETS

10 SEZs

1200 investment projects = 120 each

100,000 direct jobs = 10,000 each

• 10 SEZs from 2015 @ 300ha

•60% FDIs + 40% Domestic

Incentive Licensee Operator Investor

1. Customs Duties & VAT (in CCA) √ √ √

2. Employment Incentive √ √ √

3. Building Allowance* √ √

4. 15% Corporate Tax* √

5. 12(i) Additional Benefits (points & %) √

6. SEZ Fund for CAPEX (Infrastructure) √ √

* Provided that the Minister of Finance has agreed to allow this benefit to the SEZ, and that the company is involved in activities that have not been excluded.

7. SEZ Management support, infrastructure, security, OSS

SUMMARY: INCENTIVES

Products to offerPriority

Sectors

Automotives Aerospace, Rail &

Marine

Capital

Equipment &

Allied Services

Electro technical Textiles, Clothing,

Leather & Footwear

BPO & IT

enabled services

PR

OD

UC

TS

Aluminium Tubes Rolling stock Stackers/sprayers/

plough

Security Equipment Wool Reverse

Management

System

Catalytic Converters Tyres (Rings) Cranes Toll Equipment Geotechnical Fabrics Toll Management

System

Engine Parts Rolling Stock Valves/Tools Set Top Box Man made fibre IP Solutions

Dumpers Air Filters Energy Meters Leather

Excavators Cyclone Cables

Interiors Coal Washries Antenna

Upholstery

Cold House

equipments

Micro Motors Safety equipments

Trailers

Large Diameter

pipe

tractors

Exhaust Fans

(mining)

Drilling Equipment

Conveyor Belt

Transmission line

equipment

Food Processing

equipments

Retail Equipment

Products to offer cont…..Priority Sectors Tourism Cultural

Industries

Mining & Metals Chemicals &

Pharmaceuticals

Agro Processing

PR

OD

UC

TS

Hospitality Services Arts & Craft Steel Phosphoric Acid Wine

Venues for

conferences &

seminars

Aluminium & Alloys Fluorspar Fruit Juice

Gold Titanium Dioxide Fresh Fruit

Platinum DAP Protea Flowers

Precious stones Alcohol (potable) Sugar/Jam

Copper Solvents Paper & Pulp

Zinc Paraffin Timber

Nickel Starch (Maize) Logs

Ferrous Essential oil's Waste Paper

High Grade Steel Radio isotope Packaging

Drill bits Rutile Wine Accessories

Fluorspar Engineering Plastic Dried Fruits

Diamond Explosives (Mining) Live stock feeds

Coal Agro Chemicals Olive oil

Scrap Metal Industrial Enzymes

•

Contact Details

Mr Rajan Kumar, Advisor: Business Development,

Email: [email protected]

Mobile: 9987345599

Tel +91 22 2353 0894

Address

Gandhi Mansion

20 Altamount Road

Mumbai

South African Consulate General

mailto:[email protected]

DHANYABAD

organised by: world trade expo · •south africa at a glance • area 1,22 million km2 population...

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