Donwald Pressly
The declaration of the Saldanha Bay harbour area as an industrial development zone (IDZ) is in its final stages of approval by the presidential infrastructure co-ordinating committee and the Department of Trade and Industry (dti), and it is expected it will go before the cabinet next month.
The chief director of infrastructure support at the dti, Kaya Ngqaka, said the government had supported the process of declaring the area an IDZ “all along”.
While he did not divulge the details of the final phase of discussions between the co-ordinating committee and his department, he confirmed that once the process was complete, Trade and Industry Minister Rob Davies would take the matter to the cabinet. This was likely to happen in October.
With cabinet approval, Davies would be able to issue a licence to establish the IDZ.
An application for the IDZ has been made by the Saldanha Bay IDZ Licensing Company, which is a subsidiary of Wesgro, the Western Cape investment promotion agency.
The idea of an IDZ in Saldanha started about six years ago and Wesgro carried out a pre-feasibility study three years ago. It found there was significant potential for three industrial clusters – a renewable energy production and manufacturing cluster, an oil supply base serving the oil and gas sector, coupled with a maritime ship building and repair cluster, and a steel and minerals production and manufacturing cluster.
An IDZ is, according to the SA Revenue Service, “a purpose-built industrial estate linked to an international air or sea port which might contain one or multiple customs controlled areas tailored for manufacturing and storage of goods to boost beneficiation, investment, economic growth and the development of skills and employment”. There is also relief provided from customs for raw materials imported for beneficiation.
Customs-controlled areas offer relief from customs duties at the time of importation into the area, including machinery used in manufacturing.
Earlier this year economist Barry Standish of the UCT Graduate School of Business estimated that 6 000 jobs could be created in the area, including 2 600 direct jobs, in the first year. Jobs ultimately could climb to 15 000.
It is also estimated that the new IDZ could attract up to R42 billion in investment.
Western Cape Finance MEC Alan Winde, assisted by MP Erik Marais, has been in close contact with the dti to drive the project. Winde envisaged that once the IDZ was declared, it could be transformed into a special economic zone (SEZ) “but this legislation is still going through Parliament”.
The Special Economic Zones Bill will provide potential investors with tax incentives, including lower corporate tax rates, and a flexible labour regulatory regime, including possible wage subsidies for newly employed workers.
The aim of an IDZ is to create “purpose built” industrial estates that seek to leverage domestic and foreign direct investments in value-added and export-orientated manufacturing industries and services.
Winde said existing IDZs had not performed as well as expected. Thus Finance Minister Pravin Gordhan had looked at tax deductions and training reductions which were now included in the SEZ legislation.
He expected that the new Saldanha IDZ would be bumped up to an SEZ. The area was well position for the development of an oil and gas hub due to the deep water harbour.
He said a major investment by the shipping firm UAL had been lost in the area because of the slow process. “We need to move on this… we need to be open for business,” he said, noting that Mozambique and Namibia were developing their harbours to attract international shipping business.
There are operating IDZs in Richards Bay, East London and Coega, near Port Elizabeth.