SA is open for business`

Source: Iol, 28/12/2015

Pretoria - South Africa remains a reliable investment destination
which is open for business, writes trade and industry minister Rob
Davies.


Much has been said about the flight of capital from South Africa in
recent weeks, suggesting the country has become an investment
pariah.

This sentiment has been coupled with the decision by
ratings agencies to downgrade South Africa`s investment status. We are
cognisant of both the domestic and international factors that have
contributed to concerns about the stability of South Africa`s
economy.


As we conclude 2015, it would, however, be important to contextualise
some of the successes we have had in building an investor friendly
environment. Among others, we have finalised the new Protection of
Investment Bill, which aims to balance the rights and obligations of
investors and government while also preserving the right of government
to regulate in the public interest. One of our most significant
interventions has been the establishment of a One Stop
Inter-Departmental Clearing House which will provide efficient support
to investors to ensure that South Africa offers an investment friendly
environment.


We are also implementing Incentives and support services for investors
through our Special Economic Zones (SEZs) programme. As part of the
suite of SEZs the six Industrial Development Zones (IDZs) established
between 2002-2014, have attracted a total of 59 investors on site with
an investment value of more than R10.7 billion.


This is important for the country`s growth and development agenda
because research shows inward investment is the most reliable
predictor of future economic growth and South Africa`s Gross Domestic
Fixed Investment (GDFI) to Gross Domestic Product (GDP) currently
stands at approximately 20 percent. This is benchmarked against the
international norm where the fastest growing developing countries have
Gross Domestic Fixed Investment (GDFI) to Gross Domestic Product (GDP)
ratios of above 30 percent. The target in the National Development
Plan for FDI inwards is also set against this international benchmark
of 30 percent.


In as far as South Africa`s ability to attract investment goes, it
bodes well for our country that despite a global trend which indicates
declining FDI levels, we have been able to attract more than R140
billion in the 2013/14 financial year. This is almost double the
amount of FDI in 2012. South Africa was also the recipient of $3.31
billion in FDI from January 2015 to July 2015 which also saw the
creation of 5 037 jobs.


Our efforts to create an investor friendly environment are bearing
fruit and we have deveIoped a robust investment pipeline over the past
five years. We have converted a number of these projects into
committed investments, culminating into launches this year. I would
like to indicate a few areas where we are doing very well:
South Africa and the automotive sector
South Africa`s Automotive Production and Development Programme (APDP)
is one of our most successful programmes which have attracted
private-sector investment of more than R 25.7 billion over the last 5
years.

In the past year, we have seen additional
commitments by Mercedes – R 2.4 billion, General Motors – R 1 billion,
Ford – R 3.6 billion, Metair Group – R 400 million, BMW – R 6 billion
in manufacturing the X3 range in its Rosslyn plant; Goodyear R 670
million and VW - R 4.5 billion. Earlier this month, Beijing Automobile
International Corporation, China`s fifth largest car manufacturer,
announced an investment of R 11 billion in a completely knocked down
vehicle manufacturing plant in South Africa.


These investments must be seen within the context of our national
developmental agenda. In this regard, our automotive programme
supports 56197 jobs and is expected to create 21 836 new jobs. In
addition, this sector employs about 9 million people directly in
producing vehicles and the automotive components that go into
them.

It is estimated that each direct automotive job
supports at least another five indirect jobs, resulting in more than
50 million jobs globally linked to the automotive industry.


South Africa and manufacturing
South Africa is undertaking one of the largest rail investment
programs. Through our designation and localisation policy we are
scaling up private sector investment, building up local capacity and
capability.


Multinationals have affirmed South Africa as a regional manufacturing
hub investing in new plants, machinery, technology and upgrading
existing plants. Unilever has invested R 4 billion in state of the art
plants across the country which are blue prints for their future
global production locations. These new investments also contribute to
sustainable development, are energy efficient, water neutral and
reduce the carbon footprint.


Similarly, other fast-moving consumer goods companies such as Nestle,
Proctor and Gamble, Samsung, Hisense and Kimberley Clark have also
invested in South Africa. The Hisense plant located in Atlantis in the
Western Cape, now exports to Africa and is ranked as the second most
productive plant outside of China for Hisense. Domestic companies,
which are also gearing up for the African and Global markets such as
Nampak, Mpact and Tiger Brands, have also expanded their production
capacity and investment. These companies have retained and expanded
their investment and have been supported through the 12 I Tax
Allowance program.


To further encourage and build a competitive manufacturing sector,
South Africa has introduced a Manufacturing Competitiveness
Enhancement Programme (MCEP). Since its establishment, the MCEP has
approved 1 153 projects with a projected investment value of R28
billion. The programme helped to sustain more than 200 000 jobs since
its inception in agro-processing, metals, chemicals, plastic, electro
technical, printing, pharmaceuticals and wood.


Total grants under this programme include:
• R 2.1 billion in the agro-processing sector with an investment value
of R 8 billion and 100 000 jobs retained,
• R 990 million in the chemicals sector with an investment value of R
3.3 billion and 33 000 jobs retained,
• R 1.5 billion in the metals sector with an investment value of R 6.4
billion and 36 000 jobs retained,
• R 330 million the wood sector with an investment value of R 960 million
The Manufacturing Investment Programme (MIP) has also approved 2 314
projects, with projected investment of R 49 billion and 58 127 jobs
created, and a total incentive value of R 6.8 billion
• 624 projects in agro-processing
• 578 and 509 in Metals and Chemicals subsectors, respectively
South Africa and the Clothing and Textiles Competitiveness Programme
South Africa`s Clothing and Textiles Competitiveness Programme (CTCP)
has also yielded results.


Between the inception of the programme in 2010 and March 2015, over R
3 billion was approved to support investment in the sector. As a
result 68 000 jobs were retained in the sector, 6 900 new jobs created
and 22 new factories in leather and footwear sector opened.


By maximising the efforts of government and the private sector, this
sector has been successfully stabilised, is steadily regaining
domestic market share and is beginning to grow exports.


In the leather and footwear segment, the DTI is partnering with the
private sector to establish a National Footwear and Leather
Cluster.

This has already been directly responsible for the
creation of approximately 2 000 sustainable jobs and a reduction of R
1.4 billion in the sectoral trade deficit.


South Africa and new economic sectors
South Africa is also becoming a frontier for new sectors of FDI such
as the green economy, oil and gas, shipbuilding and the ocean economy
amongst others. Our Renewable Energy Independent Power Producer
Programme (REIPP) has become world renown and a policy blueprint for
other countries and has attracted R190 billion in investments in the
four rounds of bids. The Global Climate Scope report 2015 ranks South
Africa 4th from 55 countries for its attractiveness for investment in
clean technology.


As the oceans economy gains momentum, we welcome new investment in oil
and gas manufacturing and infrastructure. This investment further
enhances and supports South Africa`s efforts in establishing Saldanha
Bay IDZ as an oil and gas serving hub for the African
continent.


The R900 million Burgan Fuel storage terminal in Cape Town was
launched which is a partnership that has been established between
Dutch terminal operator VTTI, Thebe Energy and Jicarro, a 100 percent
black owned entity.


Hunting, a UK company, established a new R 300 million facility in
Brackenfell in the Western Cape to supply the African Oil & Gas
market.


South African BPS value proposition
South Africa`s Business Process Services (BPS) sector continues to
maintain its status as a leading global outsourcing destination while
moving up the value chain in terms of service offerings.
Highlights for the sector include being nominated as "Offshoring
Destination of the Year" at the National Outsourcing Association (NOA)
awards in the UK and new investment from American Multinational EXL,
CCI in Kwa Zulu Natal and Webhelp who are providing services to
Vodaphone of the UK.


South African film production sector
South Africa is now globally recognised as a premier film production
location. Disney`s The Jungle Book is due for release in April
2016.

Top rated TV drama series Black Sails has been
renewed for a third and fourth season.


In the Hospitality sector, Marriot Hotels earlier this year announced
they would expand their national footprint and the Westcliff hotel,
following investment from Singapore, was refurbished and rebranded as
Four Seasons.


We are mindful of our challenges and goals set out in the NDP. We are
committed to implement the 9 point plan for South Africa to achieve a
higher level of inclusive growth.


As we conclude 2015, we are confident that South Africa continues to
provide a reliable and attractive investment destination for
multinationals who continue to use South Africa as a base for their
regional and continental operations.


We have laid the platform for Regional Integration and Intra-Africa
Trade and the roll out of the infrastructure program will serve as a
catalyst to boost trade and investment on the continent.


Global economic conditions are affecting all countries and in an
increasingly inter-connected world, no country is immune from its
effects. What I am confident of is that South Africa remains an
attractive investment destination that is open for business.