The designation of special economic zones (SEZs) will support a broader-based industrialisation growth path in South Africa, while helping the country achieve the objectives of the National Development Plan (NDP), says Trade and Industry Minister Rob Davies.
Speaking at the tabling of the Special Economic Zones Bill before the National Council of Provinces (NCOP) in Cape Town on Tuesday, Davies said the Bill aimed to support balanced regional industrial growth by fostering the development of more competitive and productive regional economies in South Africa.
Special economic zones are defined 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.
To date, South Africa has five designated industrial development zones (IDZs), namely Coega, East London, Richards Bay, OR Tambo and the recently designated Saldanha Bay.
“Honourable speaker, I can confidently indicate to this house that there are already eight investors in the oil and gas sector that are signing to invest at Saldanha Bay IDZ,” Davies told the NCOP on Tuesday. “Three of the five IDZs, in Coega, East London and Richards Bay, are fully operational.
“Whilst these have achieved some major successes – for example, 42 operational investments worth R4-billion – some weaknesses on the implementation were identified,” Davies said.
These included weak governance, lack of IDZ incentives, and poor stakeholder co-ordination. The criteria for IDZ designation were also biased towards the development of coastal regions and ignored economic potential existing in inland regions.
Davies said the SEZ Bill sought to boost private investment, both domestic and foreign, in labour-intensive areas in order to increase job creation, competitiveness, skills and technology transfer, and exports of beneficiated products.
To cater for various socio-economic and regional planning considerations, the Bill provides for the designation of the following types of SEZ:
- Free ports: duty-free areas adjacent to a port of entry where imported goods may be unloaded for value-adding activities, repackaging, storage and subsequent re-export, subject to special customs procedures.
- Free trade zones: duty-free areas offering storage and distribution facilities for value-adding activities within a special economic zone.
- Industrial development zones: purpose-built industrial estates that leverage domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services.
- Sector development zones: zones focused on the development of specific sectors or industries through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market.
The Department of Trade and Industry is busy preparing for the implementation of the SEZ Bill by consulting with all the provinces in identifying potential SEZs.
“As a result, together we have commissioned pre-feasibility and feasibilities studies in the various provinces,” Davies said. “The designation of new SEZs will take place once the new SEZ Act and regulations are in place.
“It is thus imperative that the SEZ Bill is expediently considered in order to take advantage of this huge imminent interest and opportunity. This house’s support for the SEZ Bill would be greatly welcomed.”