DA's Plan for Growth and Jobs - Democratic Alliance

LONG-TERM POLICY PROPOSALSPolicy outcome: Reduce Barriers to EntryEstablish Jobs ZonesEstablish Jobs Zones in close proximity to each of South Africa’s ports and airports to attractand retain investment in key labour-absorbing industries in order to stimulate employmentcreation in these job-rich sectors. Jobs Zones will feature considerably stronger incentivesthan the national government’s current Special Economic Zones (SEZs), and will draw oninternational best practice to boost South Africa’s competitiveness vis a vis comparabledeveloping countries. Countries such as Costa Rica and Panama, for example, have offeredgenerous zone-based tax incentives to companies like Intel and Dell that do simple, largevolumerepackaging work. Their experience is that many companies that graduate from thetax holidays chose to remain invested in the country. In addition, they find that the presenceof the multinational promotes the establishment of local, related start-ups. Core aspects ofthe Jobs Zones policy include: (i) Generous exemptions from labour legislation. All investorsoperating in Jobs Zones will be exempt from restrictive aspects of South African labourlegislation in order to enhance flexibility, productivity and competitiveness with regard tolabour input costs. Amendments to the Basic Conditions of Employment Act and the LabourRelations Act will be made accordingly; (ii) Strong tax and trade incentives for investorsoperating in Jobs Zones. These will include a five year income tax holiday for all newinvestors followed by a flat tax lower than the normal rate once the holiday expires, no taxeson production inputs or capital goods, no value-added taxation, no freight taxes on thetransportation of raw, secondary or finished goods, allowing foreign-owned companies torepatriate all profits without any taxation, duty free import of machinery, goods and rawmaterials, all proceeds from exports can be retained in institutions abroad and can be spentin whatever way the exporter sees fit; (iii) Prioritise Jobs Zone investors for preferential loansthrough the Industrial Development Corporation (IDC) to fund and support industrialdevelopment projects. Applicants for preferential IDC loans will have to demonstrate the jobcreatingpotential of their project in order to be considered for such funding.Introduce an Opportunity Voucher schemeThe voucher will provide funding to young adults who would like to start their ownbusinesses or further their education and skills development. The vouchers will be allocatedaccording to strict requirements based on an assessment of the skills needed to accelerateeconomic growth. They will be available to individuals who have completed matric and willbe designed to help pay for further education, and boost the small business sector. Thevoucher would entitle the graduate (a) a partial subsidy of university or FET college fees; (b)seed capital to establish small or micro enterprises subject to a well-formed business plan;and (c) a state guarantee to cover loans extended by commercial banks to graduates toestablish small or micro enterprises subject to a coherent business plan and otherrequirements. The value of the voucher will be up to a maximum of R6000, and would varyaccording to the region where the applicant is applying. The voucher would be paid overthree years, i.e. R2000 per year. Where the voucher is utilised to pursue further educationand training, funding for the second and third years will conditional on the recipient passinghis or her exams. For recipients seeking to establish small businesses, qualification forsecond and third year funding will be based on an assessment of the commercial viability ofthe enterprise.41 | P a g e