1. the dti Implications of SONA on the dti
Presentation to the Portfolio Committee on Trade and Industry
Date : 24 February 2012

2. Contents
Introduction
Industrial Development
Trade, Investments and Exports
Legislation
Allocated Budget

3. Implications of SONA Industrialisation
SONA’s focus on massive infrastructure investment programme
Major driver of economic growth
Addresses specific needs of economy
Potential driver of economic development
The dti’s focus on promoting industrial development
IPAP: Capital goods, metal fabrication and transport equipment and green economy and others seek to build on infrastructure programme to develop local manufacturing
Budget indicated Manufacturing Competitiveness Enhancement Programme (MCEP) will receive R5.8 billion; Using the Textile and Clothing production incentives methodology; Strengthening of the sectors
Designations - December 2011
In addition to section 12I of Income Tax Act, budget referred to SEZ Bill, additional support for SEZs at R2.3bn and additional tax relief
Administered prices – Electricity and Port Charges
Investment announcements of R13 billion from OEMs amounted to R13 demonstrate massive support for the new government programme and for South Africa as an automotive manufacturing destination
R9 billion investment commitments by Ford, General Motors, Volkswagen (VW) and the Bavarian Motor Works (BMW)
A further R4 billion in assembly has been announced in the automotives components industry; which will support over direct jobs in vehicle assembly and a further direct jobs in components
The VWSA announcement means an injection of R560m into its operations; which may double production from to units in Local content on Polo and Polo Vivo models is currently 40% and VWSA has committed to reach 70% local content by the end of 2010

4. Industrial Development
Implications of SONA
Industrial Development
Procurement
The amended Regulations of the Preferential Procurement Policy Framework Act (PPPFA). Sectors designated include buses; clothing and textiles; power pylons; rolling stock; and canned vegetables. Pharmaceuticals and Set Top Boxes will follow
Progressive approach to procurement and supplier development - awarding of 72% or R2, 69bn of R4, 2bn ARV tender to SA manufacturers without additional cost to the state and in compliance with B-BBEE considerations
Investment announcements of R13 billion from OEMs amounted to R13 demonstrate massive support for the new government programme and for South Africa as an automotive manufacturing destination
R9 billion investment commitments by Ford, General Motors, Volkswagen (VW) and the Bavarian Motor Works (BMW)
A further R4 billion in assembly has been announced in the automotives components industry; which will support over direct jobs in vehicle assembly and a further direct jobs in components
The VWSA announcement means an injection of R560m into its operations; which may double production from to units in Local content on Polo and Polo Vivo models is currently 40% and VWSA has committed to reach 70% local content by the end of 2010

5. Trade, Investment & Exports
Implications of SONA
Trade, Investment & Exports
Africa Regional Development
On trade diversification, the Tripartite Free Trade Agreement (T-FTA) made up of the Southern African Development Community (SADC) the East African Community (EAC) and the Common Market of Eastern and Southern Africa (COMESA)
AU CFTA
North South Corridor (Trans Kunene)
Trade
An agreement on strategic negotiations on BRICS Telecom Submarine Cable project which entails the construction of a new high capacity kilometres.
Efforts to advance SA’s trade and investment interest at BRICS and IBSA
The top ten investment projects and the top ten value-add export products have been identified for SA’s engagement with China
Development of a BRICS engagement strategy
Engagement of fast growing emerging economies – Arabian Gulf and Asean
Reviewed strategy for investment and exports
Investment announcements of R13 billion from OEMs amounted to R13 demonstrate massive support for the new government programme and for South Africa as an automotive manufacturing destination
R9 billion investment commitments by Ford, General Motors, Volkswagen (VW) and the Bavarian Motor Works (BMW)
A further R4 billion in assembly has been announced in the automotives components industry; which will support over direct jobs in vehicle assembly and a further direct jobs in components
The VWSA announcement means an injection of R560m into its operations; which may double production from to units in Local content on Polo and Polo Vivo models is currently 40% and VWSA has committed to reach 70% local content by the end of 2010

6. Implications of SONA Legislation
Reviewing the B-BBEE and the refinement of the Codes of Good Practice will be finalized
SEZ Bill will be introduced
Review of the Co-operative Act, No 14 of 2005
Lotteries Amendment Bill
Special Economic Zones Bill 6

7. Budget allocation over the next MTEF
The departments overall budget increases year on year from 2012/13 by 32%, 14%, 7% over the MTEF period
The increases largely relate to new budget allocations for the following:-
Economic Competitiveness Support Package
2012/ R1,224 billion
2013/ R1,964 billion
2014/ R2,462 billion
SEZ’s
2012/13 - R500 million
2013/14 - R750 million
2014/15 - R1 billion

8. Thank you