South African Business 2019 edition

SPECIAL FEATURE
Act of 2014 (Act 16 of 2014). The act defines
SEZs as “geographically designated areas of
the country that are set aside for specifically
targeted economic activities, and supported
through special arrangements and systems
that are often different from those that apply
to the rest of the country”. Lower corporate
tax rates and duty-free imports are among the
advantages that accrue to investors.
SEZs come in different forms: South Africa
has several existing Industrial Development
Zones (IDZs) and a Free Trade Port (FTP). The
Coega IDZ (Nelson Mandela Bay Metropole)
and the Dube TradePort at the King Shaka
International Airport outside Durban are two
well-known examples.
The most recently licensed SEZ is the
Musina-Makhado SEZ in Limpopo, where the
facility’s strategic location on the border with
Zimbabwe is allied to the strong mineral resource
in the surrounding countryside.
Other licenced IDZs are at Saldanha Bay, East
London and Richards Bay. The Dube TradePort
aims to leverage its proximity to an airport. In
the same way, aerotropolis developments are
mooted for Ekurhuleni (OR Tambo International
Airport) and Cape Town International Airport.
Coega IDZ has attracted huge investments
from a variety of Chinese firms in the engineering,
solar manufacturing and automotive sectors.
This includes an investment from Beijing
Automobile Corporation (BAIC) which took a
65% stake in a multi-billion-rand joint venture
with the Industrial Development Corporation
with the intention of producing 100 000 vehicles.
First Automotive Works (FAW) has a R600-
million assembly plant in Zone 2 at Coega.
Richards Bay (pictured), apart from being
the country’s main site for the export of coal, is
also a registered Industrial Development Zone
(IDZ) and consequently is in a position to attract
investors in a range of sectors. Recent developments
at RBIDZ have seen an investment in
an oil and gas facility and it is hoped that the
ocean will yield finds of gas to provide cheap
feedstock.
The Maluti-A-Phofung Special Economic
Zone takes advantage of the strategic position
Harrismith holds in the Free State’s northeastern
corner. The N3 highway carries huge
volumes of cargo between Gauteng and the
ports of KwaZulu-Natal so it is logical that the
first focus of this SEZ is logistics.
Plans are far advanced for the official recognition
of an SEZ at Upington in the Northern
Cape. The 400ha site of the Upington SEZ is
close to the regional airport and is well served
by access roads. One of the goals is to capitalise
on the existing solar power industry by
promoting special investment packages to
investors in that field, and encouraging the
development of skills and services to support
that sector within the SEZ.
Another type of SEZ is an Export Processing
Zone (EPZ). All of these interventions are intended
to form of broader trade and investment
plans such as National Development Plan
(NDP) and the Industrial Policy Action Plan (IPAP).
The NDP is a broad-strokes plan that seeks to
coordinate development in a range of sectors,
and promotes ambitious infrastructural projects.
South Africa’s most recent IPAP has a manufacturing
focus, so beneficiation fits well into
the idea of diversifying and strengthening the
country’s ability to make things.
In the context of the new and burgeoning
renewable energy sector, the state (through the
Department of Trade and Industry, dti) can pass
legislation that requires developers to increase
the level of local content on the solar panels or
wind turbines that are used.
Specific incentives relating to energy savings
and reductions in environmental impact
are available, both from Eskom and the dti.
Within the dti’s Manufacturing Competitiveness
Enhancement Programme, there is a Green
Energy Efficiency Fund, all of which are designed
to make investment more attractive.
37 SOUTH AFRICAN BUSINESS 2019