Industrial Policy Action Plan (IPAP) Edge Breakfast Seminar - - PowerPoint PPT Presentation
Perspectives on the National Industrial Policy Action Plan (IPAP) Edge Breakfast Seminar Ethekwini Municipality 10.10.13 Contents Some underlying principles of IPAP Selected transversal achievement highlights Selected sector
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NDP, the programtic perspectives of the NGP and is framed by the National Industrial Policy Framework (NIPF)
that of productive sectors;
definition;
investment;
the threat of deindustrialisation and strengthen diversified manufacturing base, especially in value adding, labour intensive strategic sectors.
leadership in a context where state largely ‘steers but does not row’;
some cases subordination to, Industrial Policy, such as aspects of macro policy, trade policy, dfi finance, incentives; skills policy, regional integration, technology and innovation etc;
beneficiaries of state support in areas such as competetiveness upgrading; employment retention and creation, investment etc.
GDP Value added
200000 400000 600000 800000 1000000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Agriculture, Foresty and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction (Contractors) Wholesale and Retail Trade, Catering and Accommodation Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Balance on Current Account
Source: Reserve Bank
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milestones and lead and supporting responsibility of departments and institutions.
discovery and learning by doing with the design of appropriate measures to address these.
stakeholder engagement and intra-government integration and co-ordination.
principles and is adequately resourced.
supported IPAP has been muted.
deepened and extended to achieve wider industrial and economic development objectives.
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– Promulgation of the amended Regulations of PPPFA enabled the dti to Designate sectors/products for local procurement – First wave : buses, rolling stock, power pylons, canned vegetables, clothing, textiles, leather and footwear, set top boxes, pharmaceuticals and furniture designated, – Second wave designations to include valves, manual and pneumatic actuators, electrical and telecommunication cables and components for solar water heaters, – Research stage: energy efficient lights, pre-payment meters, medical textiles, paper, plastic products, and building and construction materials, – SABS responsible for verification of local content, – Competitive Supplier Development Programme (CSDP) increasingly supporting local companies in SOC procurement programmes. – Enormous potential exists to leverage support through private sector procurement support for localisation – mining; health etc.
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IPAP and NGP sectors with R102bn, inclusive of;
chains,
during 2012/13
Fund – matching grant finance for manufacturing R2 bn a year incentive for competitiveness upgrading; clusters, feasibility studies, working capital. Significant uptake mainly in – Agro-processing and Metals sectors; remainder spread across Chemicals, Plastics and Electro-technical sectors
peer competitor countries into manufacturing sector remains.
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economy is a major problem
programmes.
imports, especially in the textiles and clothing sector. Achievements include:
to indicate under invoicing;
replacing current manual stop and inspection programme and 1 500 additional personnel to strengthen trade facilitation with better enforcement
where 260 tonnes of goods were confiscated. Over a three year period, R1 billion worth
including criminal prosecutions, with integrated action from departments and institutions in justice cluster required.
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reflected in completion of numerous applications for increases, rebates and reductions of duties across a range of sectors.
align and re-prioritise activities - from trade facilitation to strategic support for manufacturing – by the development, accreditation and enforcement of standards and specifications.
industrial energy efficiency. SABS and SANAS have developed a range of enabling standards and accreditation programmes and increased testing capacity for various industries and products.
efficient production.
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– Skills shortage remains a critical constraint to industrial development. – Mapping of skills demand under the National Artisans Plan in progress. – Important demand side skills interventions such as the Monyetla Programme (BPS) and National Tooling Initiative (Metals) provide important learning's for applied interventions.
– R100 m Technology Venture Capital Fund, – Ongoing work, including review of policy and institutional framework, to enable stronger alignment and focus between DST and DTI and better support for commercialisation of new and acquired technologies.
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Sector Sectors s suppor supported s ted since ince 2007: scale up and br 2007: scale up and broaden inter
entions
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– Completion of the transition from the MIDP to the APDP; – Exports exceeded $12bn with consolidation of platforms and economies of scale in a narrower range of vehicles – Average annual growth in value added in auto’s sector significantly
(Auto;s 4.8% and GDP: 3,4%) – Investment commitments worth over R15 bn, and AIS incentive currently sustaining 56 197 jobs; – A number of OEM’s have recently committed/opened assembly lines and increased production capacity in South Africa such as Toyota, First Auto Works, Beijing Auto Works and Mercedes Benz. Complemented by further investments in the supply chain, with the most recent being a R400 million expansion by Johnson Controls in the ELIDZ; – Successful implementation of a 3 year Automotive Component Supplier Development Programme from 2010 to 2012. Benchmarking and improvement services delivered to 65 companies nationally; – Finalised the Medium, Heavy and Commercial Vehicle Strategy and the Electric Vehicle Industry Road Map; – Re-introduced the local manufacturing of Mini-Buses
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– Implementation of support measures has stabilised a sector in deep distress halting employment decline and factory closures. – Since inception the Clothing and Textiles Competitiveness Programme, (CTCP) R800 million per annum disbursed to participating enterprises. – The CTCP is supporting 429 companies, supporting 49 888 jobs out of a total
been created; – Designation of the clothing and textile sector has provided significant support through public procurement in support of local manufacturers.; – The footwear sector projects an increase in production from 52 million to 100 million in next 3 years. 32 000 people employed in the footwear and leather value chain. – Clusters in Cape Town and Durban and Retails clusters with Quick Response and supply agreements involving significant localisation demonstrate significant successes.
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– Broad agreement reached by the Inter-Departmental Task Team on the design of a fiscal incentive for the bio-fuels industry. Effect a R8.9bn annual savings on the balance of trade. Set to create 55 000 jobs and reduce CO2 emissions by 498 000 tonnes. – Agro-Competitiveness Investment Fund and the Aquaculture Development and Enhancement Programme – sector specific incentives – significant on budget incentive support. Enormous opportunity being exploited for value added exports into SSA and new export markets in middle and far east.
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– Continuous SOC engagement on supplier development and localisation has led to embedding localisation policies and programmes at Eskom and Transnet with high localisation thresholds – An Intra-Departmental Task Team Report on Iron Ore and Steel was adopted by Cabinet, mandating the DMR, DTI and EDD to secure a developmental steel price; amending the Competition Act, measures to restrict exports of scrap metals and create competition in steel production – The National Tooling Initiative was created to increase and strengthen the training and competitiveness of the tooling industry, R200 million provided by the NSF – National Foundry Technology Network established to facilitate the development of the foundry industry through appropriate skills training, technology transfer and diffusion of state-of-the-art technologies;
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– Sector strategies for wind energy and solar power developed; – Secured minimum and ongoing increasing levels of local content in the Renewable Energy Independent Power Producer Programme (REIPP) and Designation of Solar Water Heaters – Energy Efficiency Building Regulations became effective from November 2011 making the installation of solar water heaters in new buildings mandatory; – Significant investments with IDC support in solar water heater manufacture; wind tower production, solar PV structures and PV panel assembly. Includes DCD investment in wind-tower manufacture in Coega; Mainstream Renewable Power 138MW wind energy plant in Jefrreys Bay and Edison R1.2bn 30MW plant in Coega, with R1.4bn project to follow in Limpopo. – An Energy Efficiency Training Centre has been established at the NCPC and a Radiation Training Facility has been established at NECSA
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– R1.1 billion worth of investment secured from the BPS Incentive Programme, and 4 500 jobs expected to be created over the next 3 years; – A total of 3 233 recruits have been enrolled and trained under the Monyetla II Programme to date against a target of 3 000; – 2 120 of these have signed employment contracts with their respective host companies post the training against a target of 2100 (70%) yet the programme is not yet completed; – South Africa has attracted a number of the world’s biggest outsourcer companies such as Serco, Capita and WNS; – Shared services based in SA servicing clients in Africa are on the rise e.g. UTI, Ricoh, ABSA/Barclays Africa and Standard Bank Africa, – South Africa was named Offshoring Destination of the Year in 2012 at the National Outsourcing Association awards in the UK;
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importance;
automotives and textile, clothing leather and footwear sectors; business process services
in ‘public space’
impact of first wave of crisis on manufacturing (+ 200 000 of 1million jobs lost in 2009 in manufacturing)
procurement, better industrial financing, incentives etc.
deepending and extending industrial policy.
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– Resource endownment constitutes single biggest opportunity for competitive advantage; – the dti has launched a comprehensive research project that will develop a strategy to identify commercialisation opportunities in projects for forward beneficiation and backward supply chain development in key mineral value-chains. – Key consideration is required alignment with amendments to Mineral Petroleum Resources Development Act (MPRDA) to secure developmental prices
– Government is committed to a massive up-scaling of infrastructure investment programmes under the Presidential Infrastructure Coordinating Committee (PICC); – This provides a challenge and opportunity for the localisation of a wide range of manufactured inputs into the infrastructure build – especially in the construction, metals, capital and rail transport equipment and renewable energy sectors, if required institutional architecture and programmes can be secured
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– Sub-continental growth arguably the biggest stimulus to long-term growth in South Africa driven by huge commodity exploration and exploitation drive; infrastructure and consumer market of 800 million people – FTA by 2015. – To extent that SA exports severly dented by decreased demand in Eurozone and N America as a result of the recession somewhat ameliorated by increased exports to SSA – mining, capital and transport equipment, agro-processing and chemicals. – Range of export promotion support measures in place driven by DTI including export credit financing; financial support for new market penetration and trade missions.
– Lessons from the localisation through the CSDP in the Transnet and PRASA rail and rolling stock tenders plus those arising from the Designation process must be carried
the full gamut of state procurement at all three spehres of government – Significant unrealised and important opportunities to deepen localisation and supplier development in the private sector – retailers, mining and construction in a more structured way to ramp up localisation
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– South Africa’s participation in the BRICS provides important opportunities to build its domestic manufacturing base, enhance value-added exports, promote technology sharing, support small business development and expand trade and investment opportunities; – Innovative proposals relating to the establishment of a BRICS-LED Development Bank and Business Council could contribute to enhanced financial support for domestic and sub-continental infrastructure and regional industrialisation efforts.
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traditional trading partners;
intensive and value-adding manufacturing sectors of the economy;
plastics and polymers;
needs of productive sectors
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undermine reindustrialisation efforts. Significantly, above-inflation increases for administered prices, with sometime triple digit premiums added by muncipalities and tariff differentials within and between munciaplities, billing inefficiencies - very adverse effects on manufacturing sector, especially vulnerable sectors;
could be less mineral intensive;
– Develop closer working relationships industry to address critical constraints at a local/regional level ; e.g sharply escalating electricity charges – Transversal and sector specific/regional research to define critical constraints and opportunities in key sectors. Mobilise tertiary institutions capacities to support regional development initiatives; technology and commercialisation
– Co-ordinate and integrate support from national government and work closely with DTI sectors and divisions – incentives; export promotion etc,. – Identify critical infrastructure support needs and investments required – clusters; hubs, supply parks etc,. – Initiate demand driven skills initiatives with tertiary institutions
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well resourced, rests on rigorous research and is the subject of extensive and robust stakeholder engagement;
programmes; building capacity; increasing leverage of existing policy platforms; strengthening sector strategies and optimising new opportunities through BRICS; regional economic integration and new market development.
understand company structure; strategies, constraints and regional specifics to ‘tailor make’ additional support measures.
resolution of policy and programme bottlenecks,
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across government departments and agencies and to redesign and strengthen where appropriate incentives to changing needs and conditions.
measures in a selected and strategic manner, including tariffs, standards, quality assurance and accreditation;
across spheres of government and instiutions and significant potential of priviate sector procurement policies and practices
and legislation that lowers costs of inputs of critical goods and services into manufacturing and other productive activities
– Strengthen integrated work on customs fraud and illegal imports – Strengthen sector capacity: – Scale up “in house” training and capacity building and “external” programmes to include other institutions – Strengthen sector methodology; deeper identification, engagement and deeper firm level engagement with medium, large, lead and dynamic firms to understand the opportunities, constraints and leverage possibilities, and cascade learnings from auto’s and CTFL to other sectors
sub-regional industrial growth and exports, especially in key sectors and value chains
bottlenecks and constraints which act as a barrier to economic and industrial growth;
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Real interest rates
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 South Africa Developed Country Average Developing country / Transition country Average
Source: The Economist
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Gross Fixed Capital Formation
50 100 150 200 250 300 Gross fixed capital formation: General government (Investment) R'bn Gross fixed capital formation: Public corporations (Investment) R'bn Gross fixed capital formation: Private business enterprises (Investment) R'bn
Source: Reserve Bank
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Manufacturing production and growth rate
0.0 5.0 10.0 15.0 20 40 60 80 100 120 140 q1 2008 q2 2008 q3 2008 q4 2008 q1 2009 q2 2009 q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 Manufacturing production (Index 2005=100) Manufacturing production (% change y-o-y)
Source: Stats SA
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Manufacturing and Retail Sales
0.0 5.0 10.0 15.0 20.0 q1 10 q2 10 q3 10 q4 10 q1 11 q2 11 q3 11 q4 11 q1 12 q2 12 q3 12 q4 12 Manufacturing Retail
Source: Stats SA
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Source: Stats SA
1110 1120 1130 1140 1150 1160 1170 1180 1190 1200 1210 q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 q4 2012
Manufacturing Employment ('000) Q3 2009 to Q4 2012
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Trade balance (Rand billion)
10000 20000 30000 Agriculture, forestry & fishing Mining Manufacturing
Source: Quantec
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Share of South African exports by region
5 10 15 20 25 30 35 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Africa Americas Asia Europe Oceania SADC
Source: Quantec
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