Tshiame – President Jacob Zuma on Tuesday launched the much anticipated Maluti-a-Phofung Special Economic Zone (MAP-SEZ) demonstrating government’s promotion of industrial development.
“This launch and the development of the Maluti-a-Phofung SEZ demonstrates our promotion of industrial development which is key to the nation’s long-term economic success and prosperity,” said President Zuma.
He said South Africa wants to change the way its economy is currently structured.
“Our current reliance on exporting minerals and other raw materials to other countries is a sure recipe for an economy that enriches the few at the expense of the majority. This, of course, will just deepen the already high levels of inequality in our society,” said the President.
The launch of the SEZ brought the tally of Special Economic Zones in the country to eight. SEZs are geographically designated areas of a country that are set aside for specifically targeted economic activities.
Also speaking at the launch, Trade and Industry Minister Rob Davies said that to date South Africa’s Special Economic Zones have collectively attracted over R9.5 billion worth of investments. They have also created over 10 000 direct jobs and 65 000 indirect jobs.
These achievements remain modest, said the Minister.
“The Maluti-a-Phofung SEZ information is telling us that this zone is receiving a pipeline of investments with the value of R2.6 billion and I believe it’s around about R1 billion of investment that’s here already,” said Minister Davies.
The Free State SEZ was once an apartheid era industrial park that was established to provide access to cheap black labour.
Concurring with Minister Davies, President Zuma added that the industrial parks were introduced not so much because of economic potential but merely to sustain the apartheid system of separate development.
The current development is part of government’s efforts to create economic development and growth opportunities closer to where people live.
“This we do through promoting industrialization and also the development of township and rural economies,” he told a packed marquee on the premises of the SEZ.
In addition, government is fully committed to pursuing and implementing radical economic transformation, said the President.
SEZ critical to transform economy
The Special Economic Zones and Industrial Parks programme that is run by the Department of Trade and Industry (dti) is critical to efforts to radically transform the South African economy.
Minister Davies said SEZs can also achieve several objectives including that they can contribute to bringing industrial activities away from the established centres to other parts of the country where there is a deep potential to develop industries.
“Some type of intervention is necessary to create the momentum that drives industrial development,” said the Minister.
The Special Economic Zones also continue to play a role in attracting Foreign Direct Investment (FDI).
Through the Special Economic Zones Programme, South Africa also continues to play an important role in the attraction of foreign and domestic direct investment into the economy.
Namely the eight zones are: Coega and East London IDZs in the Eastern Cape, Dube TradePort and Richards Bay IDZs in KwaZulu-Natal, OR Tambo IDZ in Gauteng, Saldanha Bay IDZ in the Western Cape, Maluti-a-Phofung IDZ in the Free State, and Musina-Makhado SEZ in Limpopo.
Incentives for business
Among the tax incentives offered by the MAPSEZ is the Preferential 15% Corporate Income Tax instead of 28% for a period of 10 years. Other incentives include that import duty tax will be reduced on materials and equipment procured for manufacturing.
Other allowances for companies in the MAPSEZ include a research and development allowance of 50% for any new technology that enhances productivity and efficiency. The other is energy savings incentives for the use of green energy building techniques and technology.
Bulk infrastructure projects at the site include the perimeter fence and gate house project that took place over an 11 month period. During the contract of the project 81 jobs were created.
The critical roads project, which ended on 15 December 2016, created a total 22 jobs.
Next month the MAPSEZ will begin with its bulk services upgrades project. The project will focus on upgrading existing infrastructure in order to accommodate new investors.
The project will include works to bulk water and sanitation, bulk electricity, major roadworks and site platforms for new and existing tenants.
The President declared the Maluti-a-Phofung SEZ open, while also urging business to integrate the local small businesses.
“I am quite certain that this makes good business sense. In this regard, we need to appreciate the initiative of Distell to develop an agro-processing cluster in this region,” said President Zuma.