Government SEZ Bill will support economic growth and opportunities

sez.jpgThe Special Economic Zones (SEZ) Bill 2013, according to the government will support a broader-based industrialisation growth part and be a significant milestone in pursuit of the aspirations of the National Development Plan (NDP).

Rob Davies, Department of Trade and Industry Minister says, “The bill aims to support a balanced regional industrial growth path, along with the development of more competitive and productive regional economies.”

SEZs are defined as geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements and systems that are often different from those that apply to the rest of the country.

Says Davies, “The aim of the SEZ Bill seeks to boost private investment (domestic and foreign) to labour-intensive areas to increase job creation, competitiveness, skills and technology transfer along with exports of beneficiated products.”

The Bill introduces a variation of SEZ’s to cater for the various spheres of government at local, provincial and national level.

It also provides for the designation of the following types of SEZs:

  • Free Ports: duty-free areas adjacent to a port of entry where imported goods may be unloaded for value-adding activities, repackaging, storage and subsequent re-export, subject to special customs procedures.
  • Free Trade Zones: a duty-free area offering storage and distribution facilities for value adding activities within the SEZ.
  • Industrial Development Zone: a purpose-built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services. (To date there are five Industrial Development Zones (IDZs) – Coega, East London, Richards Bay, OR Tambo and Saldanha Bay).
  • Sector Development / Specialised Zones: a zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market.

Source: Transport World Africa

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Aerotropolis for Gauteng…stuff’s about to happen

Oliver Reginald Tambo International Airport (east of Johannesburg) to become Africa's first aerotropolis

Oliver Reginald Tambo International Airport (east of Johannesburg) to become Africa’s first aerotropolis

The Gauteng Provinicial government has announced that Africa’s busiest airport, OR Tambo International Airport is set to become the location for the continent’s first aerotropolis. Work on the development of the aerotropolis, centred at OR Tambo International Airport, seeks to leverage public and private sector investment at the airport and surrounding areas. In supporting industrial development in this precinct, approval has been granted for the creation of an Industrial Development Zone (IDZ) in the area surrounding the airport. Heard this all before, but what’s different this time around?

An aerotropolis is an urban plan in which the layout, infrastructure, and economy is centered around an airport, existing as an airport city. It is similar in form and function to a traditional metropolis, which contains a central city core and its commuter-linked suburbs.The term was first proposed by New York commercial artist Nicholas DeSantis, whose drawing of a skyscraper rooftop airport in the city was presented in the November 1939 issue of Popular Science.The term was revived and substantially extended by academic and air commerce expert Dr. John D. Kasarda in 2000, based on his prior research on airport-driven economic development. Wikipedia

Jack van der Merwe, who successfully oversaw the development of the Gautrain project, has been appointed to lead the initiative of developing the aerotropolis. The proposal for the airport to become a terminal city with air, rail and road networks fuelling economic development. It is envisaged to include a commercial component, hotel, conferences, exhibitions and a residential component.

One of the key initiatives of the national government is the e-Thekwini-Free State-Gauteng freight and logistics corridor, known as the Strategic Infrastructure Project 2 (SIP2), which seeks to improve the movement of goods from the Durban port to Gauteng, and to business enterprises nationally as well as in southern Africa.

City Deep/Kazerne cargo terminals and the planned Tambo-Springs Freight and Logistics Hub are to be the focal points for the movement of goods for the export market. Phase 1 of the City Deep/Kazerne Terminal expansion and roads upgrade was underway at the continent’s largest and busiest in-land container terminal. This includes a redesign and upgrading of the roads network in and around the City Deep Terminal to provide for better flow of freight traffic and linkages with the national highways – the cost of the road works would amount to R122 million. At some point the issue of non-tariff barriers to import/export trade will need to be discussed…..and overcome.

Transnet has completed the first phase in the actual improvements of the terminal. It will be investing R900 million in upgrading the terminal. A detailed road design work, including feasibility studies and the development of a master plan, are underway for the Tambo-Springs Inland Port. Now, we’re talking…….

Gauteng  Province is to get 2 484 new modern trains as part of the Passenger Rail Agency of South Africa (PRASA) rolling stock for fleet recapitalisation and refurbishment programme.

The province will be making major investments in road infrastructure in the coming financial year and these include reconstruction and upgrading of the R55 (Voortreker Road) to a dual carriageway road between Olievenhoutbosch and Pretoria West; rehabilitation of the remaining section between Main Road and Maunde Street in Atteridgeville; reconstruction and upgrading of William Nicol Drive (K46) between Fourways and Diepsloot as well as reconstruction and improvement of the remaining section of the Old Pretoria to Cullinan Road between the Chris Hani Flats and Cullinan, among others. Wow, and the toll fees?

The department has been allocated a budget of R4.77 billion for the 2013/14 financial year. Of this amount R1.4 billion has been earmarked for roads maintenance and upgrading, R1.7 billion for public transport operations and R802 million for the running cost of the Gautrain Management Agency. Source: EngineeringNews

So, all-in-all, the above together with other recent noises of incentives and benefits for foreign and local investors in SEZs, the future holds some promise and interest…..

SEZ – Lessons for South Africa from international evidence and local experience

A bold paradigm shift in South Africa’s economic policy is required to ensure the success of the country’s new special economic zones (SEZs) programme, according to Centre for Development and Enterprise (CDE) executive director Ann Bernstein.At the launch of the new CDE report on SEZs, she explained that South Africa’s current economy favoured skill and capital-intensive industry, which was not making the cut in terms of job creation.

“South Africa needs to create the right kind of environment for the emergence of businesses that can employ large numbers of unskilled people. That is what we should use the SEZs to do.“This will require bold leadership and engagement with the difficult choices on labour costs and flexibility that must be made. The alternative is to waste resources and energy yet again on a policy that fails,” Bernstein urged.

The report, titled ‘Special Economic Zones: Lessons for South Africa from international evidence and local experience’ suggested that South Africa should establish at least two large SEZs that were focused on low-skill, labour-intensive industries such as the clothing and textile sectors and enable them to compete globally. “Without reform, the only way South African companies can compete with Chinese, Vietnamese and Indian companies is by mechanisation, which results in fewer people being employed, and a greater reliance on skills,” Bernstein pointed out. “International evidence shows that the most successful SEZs were public–private partnerships,” Bernstein noted. Further, the report showed, as recognised by government, that South Africa’s industrial development zones (IDZs) that include Coega, East London and Richards Bay, had largely failed to boost economic growth, create jobs, promote industrialisation or accelerate exports.

Bernstein attributed this to the lack of a clear definition for what these zones should entail, as well as a strategy for attracting investors. “The IDZs are basically just industrial parks – it’s no wonder they have not been successful in attracting new investors and creating jobs.” Although the Department of Trade and Industry (DTI) had spent R5.3-billion on developing these zones, the vast majority of the 33 000 jobs created were short-term construction jobs, with only 5 000 permanent jobs created.

Bernstein said countries such as China, Costa Rica, Mauritius and Latin America countries could be viewed as benchmarks for South Africa in terms of IDZs. Rising costs in Asia, especially China, where labour-intensive firms were looking for new regional locations, were creating opportunities for IDZs in South Africa. The CDE argued that South Africa should seize the opportunity to compete for a sizable portion of the jobs that could sprout from this.

“A bold new SEZ strategy could become a platform for new companies and new investors that use unskilled labour rather than machines,” Bernstein indicated. “South Africa’s new SEZ programme needs to be a presidential priority. The DTI needs to be fully supported by all other departments of government. Unless the whole of government gets behind the effort, we’re not going to see the kind of investor uptake that would actually make a difference,” CDE research and programme director Antony Altbeker said. Trade and Industry Minister Rob Davies is set to table the draft SEZ Bill in Parliament later this year, while Finance Minister Pravin Gordhan announced that R2.3-billion would be allocated to the establishment of SEZs were in the 2012/13 Budget.

However, the CDE’s report warned that the Bill provided no clarity about what would differentiate SEZs from industrial parks, its envisaged governance arrangements for SEZs was confusing and said the role of the private sector was unclear. Source: Engineering News