SPECIAL ECONOMIC ZONES IMPLEMENTATION BRIEFING TO PORTFOLIO COMMITTEE
SPECIAL ECONOMIC ZONES IMPLEMENTATION BRIEFING TO PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 19 th APRIL 2016 CAPE TOWN
PRESENTATION OUTLINE § Introduction § Investors operating in designated IDZs § SEZ Programme Performance § What the SEZ Programme is About § Differences Between the IDZ Programme and the SEZ Programme § Creating an Enabling Environment for SEZ Development § Challenges and Goals § Conclusion 2
INTRODUCTION § The SEZ Programme is one of the key tools through which the national industrial policy is being implemented § The IPAP is the main document outlining the national industrial development agenda § As an instrument for the delivery of national industrial policy, the SEZ Programme is mainly focused on supporting, promoting and expanding the manufacturing sector § Programme performance: significant turnaround in the attractiveness of IDZs and also great investor appetite to locate in SA zones 3
COEGA: R 6. 4 billion Investment operational. R 6. 8 billion Investment secured, but not yet onsite. 4
ELIDZ : R 1. 8 billion Investment Operational. R 1. 2 billion Investment secured, but not yet on site 5
ELIDZ DRIVING INDUSTRIAL GROWTH AND INVESTMENT 6
DTPIDZ: R 372 million Investment operational. R 1. 7 billion Investment secured but not yet onsite 7
IDZ INVESTMENT ATTRACTION: GAINING MOMENTUM : 2000 – 2015/16 IDZ EST. PRIVATE VALUE EST. PRIVATE NO. OF SECURED BUT NO. OF INVESTORS INVESTMENT VALUE INVESTORS(but not NOT YET ON SITE OF OPERATIONAL operational as yet) OPERATIONAL INVESTORS(R’ 000) INVESTMENT(R'000) DIRECT EMPLOYMENT CONSTRUCTION & INDIRECT JOBS TOTAL EMPLOYMENT COEGA 33 6 489 450 29 6 800 000 7174 37 448 44 622 ELIDZ 28 1 8000 4 1 200 000 1997 23 975 25 972 RBIDZ 2 820 000 9 10 020 000 3961 4 261 DTPIDZ 6 372 000 5 1 700 000 505 − 505 TOTAL 69 9 479 450 47 19 720 000 9 976 65 384 75 360
EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Operational, Secured and Pipeline Investors sinception Operational, Secured and Pipeline Investors Since Inception 35 30 33 29 28 Number 25 20 15 10 10 5 5 0 Coega 9 6 4 5 6 2 ELIDZ Operational Investors 9 RBIDZ Signed investors but not operational DTPIDZ pipeline 9
EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Thousands Value of Operational investors: 2002 - 2015 7 000 R 6 400 000 6 000 5 000 4 000 3 000 R 1 800 000 2 000 R 820 000 1 000 R 372 000 0 Coega ELIDZ RBIDZ DTPIDZ 10
EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Thousands Secured, but not yet operational investors as at 2015 12 000 R 10 200 000 10 000 8 000 R 6 800 000 6 000 4 000 2 000 R 1 700 000 R 1 200 0 Coega ELIDZ RBIDZ DTPIDZ 11
EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Value of Pipeline Investments: 2002 - 2015 50 000 R 46 3 bn 45 000 40 000 35 000 30 000 R 13 7 bn 25 000 20 000 15 000 R 1 8 bn 10 000 5 000 0 Coega ELIDZ DTPIDZ 12
DIRECT EMPLOYMENT CREATED BY IDZs: 2002 - 2015 Total Number of direct Jobs created by the 4 operational IDZs 8000 7174 Number 7000 6000 Total Direct Jobs - 5000 Construction and Indirect Jobs estimated 4000 3000 1997 2000 1000 300 505 RBIDZ DTPIDZ 0 Coega ELIDZ 13
PROPOSED SEZs: INVESTMENT PIPELINE 14
CHALLENGES AND GOALS Challenges: § • Capacity and resources for infrastructure development to unlock investments • Fiscal constraints • Acceleration of infrastructure development • Human capital Land availability: becoming a major constraints in all regions Increase impact of SEZ investments on host regions and communities Goal 3 Increase and diversify investments in designated zones Goal 2 Goal 1 Goals Improve sustainability 15
CONCLUSION § The new SEZ Policy and Incentives Package have significantly improved the attractiveness of South African SEZs, § Significant increase in investments in the SEZs, § Significant challenges remain. 16
WHAT THE SEZ PROGRAMME IS ABOUT • • • Attract foreign and domestic direct investment • Build additional Key Objectives Industrial Development Zones Programme, 1999 - an incentive industrial hubs programme to establish IDZs • Build strategic industrial capabilities Industrial Development Zone: a type of special economic zone • Increase stock of direct providing special provisions to develop investments industrial growth in particular geographical areas • Accelerate growth • Increase value-added IDZ Programme has. Outcomes performed below expectation exports Create jobsexperienced Policy review process 2006 - to review the • challenges • Regional by the IDZ Programme diversification 17
WHAT THE SEZ PROGRAMME IS ABOUT Corporate tax rate: 15% • Infrastructure development Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs • Industrial Development a type of special economic zone SEZZone: Incentives providing special provisions to develop industrial growth in Package particular geographical areas • IDZ Programme has performed below expectation • Enhanced Policy review 12 i process 2006 - to review the challenges experienced by the IDZ Programme Duty Free (Customs) and VAT Free 18
DIFFERENCES BETWEEN THE IDZ AND SEZ PROGRAMMES • IDZ Programme SEZ Programme Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs • Focused only on coastal • Focused on all regions with • Industrial Zone: a type of special economic zone regions or regions. Development with an significant growth potential providing international port special provisions to develop industrial growth in particular geographical areas • Competitive incentives package • No significant package of • IDZ Programme has performed below expectation incentives • Focuses on the development • Policy review process 2006 - to review the challenges experienced of strong industrial eco • Mainlyby just an incentive the IDZ Programme systems programme 19
CREATING AN ENABLING ENVIRONMENT FOR SEZ DEVELOPMENT The success of the SEZ Programme depends on a range of factors including the right policy framework, appropriate institutional architecture, coordination among key role-players, and execution. • Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs • Industrial Development Zone: a type of special economic zone Capacity Monitoring SEZ providing Buildingindustrialandgrowth in Regulations special Advisoryprovisions to develop Programme Evaluation Board particular geographical areas • IDZ Programme has performed below expectation • Support to SEZ CEOs Provinces Policy review Forum process 2006 - to Marketing Inter-Dept. and Coordinatio review. Promotion the challenges nexperienced by the IDZ Programme 20
CREATING AN ENABLING ENVIRONMENT § Legislation and regulations: SEZ Act now operational, and regulations on applications for designation, operator permit and funding in place. § SEZ Advisory Board: Appointed and operational. § Capacity Building Programme: Implemented in partnership with Chinese Government. § Inter-Departmental Coordination: Joint Task Team between the dti, National Treasury, SARS and ITAC established. Other departments and SOEs part of Project Steering Committees on needs basis § Provincial support: All provinces supported to set up Project Management Units and undertake SEZ planning, development and management. 21
CREATING AN ENABLING ENVIRONMENT FOR SEZ DEVELOPMENT The SEZ Programme focuses on much more than just building worldclass industrial infrastructure, and focuses on building robust industrial eco-systems in the host regions. • Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs • Industrial Development Zone: a type of special economic zone Financing Productivigrowth in to. Investment develop industrial and Industrial Social Business providing special provisions Infrastruct Incubation ure particularure geographical areas Facilitation ty Support Incentives Innovation • IDZ Programme has performed below expectation Research Marketing Education and One Stop and Logistics and Technolog Shop Promotion Training y • Policy. Developme review process 2006 to review the challenges experienced nt by the IDZ Programme 22
SEZ PROGRAMME PERFORMANCE § On-going monitoring and reporting to assess progress of the SEZ Programme and that of individual SEZs. • Industrial Development Zones Programme, 1999 Quarterly - an incentive § Quarterly reports from individual SEZs and SEZ programme to establish IDZs Performance Report. • Industrial Development a type of special economic zone Key. Zone: Indicators providing special provisions to develop Investments industrial growth in particular geographical areas • INDICATORS IDZ Programme has KEY performed below expectation • Policy. Exports review process 2006 - to review the challenges experienced by the IDZ Programme Design ations Jobs 23
DESIGNATION OF ZONES Designated and Operational Zones Designated but non-Operational Zones (set-up phase) Applications - Coega - OR Tambo Airport - Atlantis - Dube Trade. Port - Bojanala - East London - Maluti-a. Phofung - Richards Bay - Saldanha Bay - Musina/Makhado 24
SEZ INVESTMENT PERFORMANCE OVERVIEW TO 2015 Number of Operational, Secured and Pipeline Investors in 4 operational IDZs; i. e. Coega, ELIDZ, RBIDZ & DTPIDZ 47 investors secured but not yet operational 69 investors on site and operational 29 investors in the pipeline Operational IDZs (4) 25
THANK YOU 27
- Slides: 27