SPECIAL ECONOMIC ZONES IMPLEMENTATION BRIEFING TO PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 19th 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

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

COEGA: R 6. 4 billion Investment operational. R6 COEGA: R 6.4 billion Investment operational. R6.8 billion Investment secured, but not yet onsite.

ELIDZ : R1. 8 billion Investment Operational. R1 ELIDZ : R1.8 billion Investment Operational. R1.2 billion Investment secured, but not yet on site

ELIDZ DRIVING INDUSTRIAL GROWTH AND INVESTMENT

DTPIDZ: R372 million Investment operational. R1 DTPIDZ: R372 million Investment operational. R1.7 billion Investment secured but not yet onsite

IDZ INVESTMENT ATTRACTION: GAINING MOMENTUM : 2000 – 2015/16 NO. OF INVESTORS ON SITE EST. PRIVATE INVESTMENT VALUE OF OPERATIONAL INVESTORS(R’000) NO. OF SECURED INVESTORS(but not operational as yet) EST. PRIVATE VALUE OF SECURED BUT NOT YET OPERATIONAL 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 000 4 1 200 000 1997 23 975 25 972 RBIDZ 2 820 000 9 10 020 000 300 3961 4 261 DTPIDZ 6 372 000 5 1 700 000 505 − 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 since inception

EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Value of Operational investors: 2002 - 2015

EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Secured, but not yet operational investors as at 2015

EST. VALUE OF PRIVATE INVESTMENTS IN THE ZONES Value of Pipeline Investments: 2002 - 2015

DIRECT EMPLOYMENT CREATED BY IDZs: 2002- 2015 Total Number of direct Jobs created by the 4 operational IDZs

PROPOSED SEZs: INVESTMENT PIPELINE

Goal 1 Goal 2 Goal 3 CHALLENGES AND GOALS Challenges: Goals 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 Goals Goal 1 Increase and diversify investments in designated zones Goal 2 Increase impact of SEZ investments on host regions and communities Goal 3 Improve sustainability

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.

WHAT THE SEZ PROGRAMME IS ABOUT Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme Key Objectives Outcomes Attract foreign and domestic direct investment Build additional industrial hubs Build strategic industrial capabilities Increase stock of direct investments Accelerate growth Increase value-added exports Create jobs Regional diversification

WHAT THE SEZ PROGRAMME IS ABOUT Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme Corporate tax rate: 15% Infrastructure development Enhanced 12i Duty Free (Customs) and VAT Free SEZ Incentives Package

DIFFERENCES BETWEEN THE IDZ AND SEZ PROGRAMMES Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme IDZ Programme Focused only on coastal regions or regions with an international port No significant package of incentives Mainly just an incentive programme SEZ Programme Focused on all regions with significant growth potential Competitive incentives package Focuses on the development of strong industrial eco-systems

CREATING AN ENABLING ENVIRONMENT FOR SEZ DEVELOPMENT Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme 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. Capacity Building Programme Monitoring and Evaluation Marketing and Promotion Inter-Dept. Coordination Regulations SEZ Advisory Board Support to Provinces SEZ CEOs Forum

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.

CREATING AN ENABLING ENVIRONMENT FOR SEZ DEVELOPMENT Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme The SEZ Programme focuses on much more than just building world-class industrial infrastructure, and focuses on building robust industrial eco-systems in the host regions. Productivity Support Financing and Incentives Innovation and Technology One Stop Shop Business Incubation Investment Facilitation Marketing and Promotion Logistics Industrial Infrastructure Social Infrastructure Education and Training Research and Development

SEZ PROGRAMME PERFORMANCE Industrial Development Zones Programme, 1999 - an incentive programme to establish IDZs Industrial Development Zone: a type of special economic zone providing special provisions to develop industrial growth in particular geographical areas IDZ Programme has performed below expectation Policy review process 2006 - to review the challenges experienced by the IDZ Programme On-going monitoring and reporting to assess progress of the SEZ Programme and that of individual SEZs. Quarterly reports from individual SEZs and Quarterly SEZ Performance Report. Key Indicators Designations Investments Exports Jobs KEY INDICATORS

DESIGNATION OF ZONES Designated and Operational Zones Coega Dube TradePort East London Richards Bay Designated but non-Operational Zones (set-up phase) OR Tambo Airport Maluti-a-Phofung Saldanha Bay Applications Atlantis Bojanala Musina/Makhado

SEZ INVESTMENT PERFORMANCE OVERVIEW TO 2015 Number of Operational, Secured and Pipeline Investors in 4 operational IDZs; i.e. Coega, ELIDZ, RBIDZ & DTPIDZ Operational IDZs (4) 47 investors secured but not yet operational 69 investors on site and 29 investors in the pipeline

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