Transcript Document 182164

SOUTH AFRICA’S TRADE AND
INVESTMENT OPPORTUNITIES
TRADE AND INVESTMENT WITH AGOA COUNTRIES
CONFERENCE
MONTEREY, 27 FEBRUARY 2009
CONTENTS
• Contextualizing the South African economy
• South Africa’s trade with the US (AGOA)
– Imports
– Exports
• Industrial policy framework
• Investment opportunities
• Investment incentives
CONTEXTUALISING SOUTH AFRICA
•5x size of UK, 2x size of Texas
•Population: 48.5 million
•27th largest economy in the world (GDP)
•Largest economy in Africa
•Total GDP US$283bn (2007)
•GDP 2007 per capita: (US$ 5 815)
•1st world infrastructure + financial services
•18th largest securities exchange globally
•BBB+ (Fitch + S&P)
•SA holds 80% of global manganese reserves,
72% of chrome, 90% of platinum-group metals,
40% of gold and 27% of vanadium.
•2008/9 WEF Global Competitiveness Index
(134 countries ranked):
Overall competitiveness, ranked 45th
Macro- economic stability, ranked 50th
SADC and South Africa
STRATEGIC GEOGRAPHIC POSITION TO
GLOBAL SHIPPING ROUTES
SOUTH AFRICA’S ECONOMIC
GROWTH HIGHLIGHTS
• South African economy growing.
• Current upswing currently in 8th year.
• Real GDP growth averaging around 4.5%
projected to be at 3.5% in 2009 (decline in
global demand for exports).
• Strong growth of middle class driving
consumer demand
• Management of the economy remains in line
with best international practice.
SOUTH AFRICA’S MACROECONOMIC MANAGEMENT
HIGHLIGHTS
SOUTH AFRICA’S MACROECONOMIC MANAGEMENT
HIGHLIGHTS
INVESTMENT CLIMATE
Abundant
natural
resources
Excellent
transport &
logistical
infrastructure
World class
financial
system
Economic stability &
sound macro-economic
management
Competitive
sectors/industries
Labour
Availability
Favourable cost of doing business
FAVOURABLE TAX REGIME
Corporate Income
Tax
Individual Income
Tax
Brazil
34%
15-27.5%
17-25%
Russia
24%
13%
18%
30-40%
10-30%
12.5%
China
33%
5-45%
17%
South Africa
28%
18-40%
14%
India
VAT
DOING BUSINESS (178
COUNTRIES RANKED)
SOUTH AFRICA’S ECONOMIC
GROWTH HIGHLIGHTS
• Macro-Economic Stability:
–
–
–
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Budget deficit < 2%
Inflation within target band 3-6%
Interest rates relatively low (prime lending rate is 10.5%)
Accelerated inflow of foreign capital (over US$15,5 bn in
2007)
• US$5.5bn by Industrial & Commercial Bank of China’s 20%
stake in Standard Bank
• US$4.5bn by UK Barclays Bank’s 56% stake in ABSA Bank
• US$1.5bn by US Ford Motor Company to expand next
generation pick-up truck + diesel engine production
SOUTH AFRICA’S ECONOMIC
GROWTH HIGHLIGHTS
• Main growth drivers:
– Commodities boom
– Domestic consumption growth (partially linked to
growth of the black middle class): 55000 dollar
millionaires by 2007.
– Increased investments (public & private)
• Positive net job creation:
– 1mn jobs created last 3 years
– strong employment growth construction and
financial services
– unemployment rate down from high of 32% to
around 26%
MAIN CONTRIBUTORS TO GDP
SOUTH AFRICA – US TRADE
•
AGOA currently the most important legislation for US trade and
investment with SSA.
•
South Africa AGOA eligibility: 02 October 2000
•
SA exports to US under GSP and AGOA
•
AGOA has contributed to SA’s export growth into the US market
•
Top 5 AGOA exporter (with Chad, Angola, Gabon, Nigeria)
•
Top destination for US exports in Africa: 24% growth in 2007
•
SA currently exports the widest range of products in SSA:
–
–
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–
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automotive products
wine
citrus fruit, processed foods (juices, jams), fish (lobster)
Cut flowers
Footwear, leather, textile and apparel goods
US TRADE WITH AGOA
ELIGIBLE COUNTRIES
US TRADE WITH AGOA
ELIGIBLE COUNTRIES
TOTAL SOUTH AFRICA – US
TRADE
10
9
8
7
6
5
4
3
2
1
0
2003
2004
2005
U.S. Exports
Source: US Department of Commerce
2006
2007
U.S. Imports
2008
SOUTH AFRICA – US TRADE
• Top 10 SA exports to US (4-digit HS Code)
–
–
–
–
–
–
–
–
–
–
Platinum
Motor vehicles
Ferro-alloys
Centrifuges + centrifugal dryers
Titanium ores and concentrates
Diamonds (rough, polished or set)
Acyclic hydrocarbons
Aluminum, plates, sheets and strip
Parts and accessories of the motor vehicles
Hydrogen, rare gases and other non-metals
Source: Department of Trade and Industry, south Africa
SOUTH AFRICA – US TRADE
• Top 10 SA imports from US (by sections)
– Turbo-jets, turbo-propellers, gas turbines
– Telephone sets, incl. for cellular network
– Self-propelled bulldozers, angle dozers, graders,
levellers
– Motor vehicles for the transport of goods.
– Passenger motor vehicles
– Medical + surgical appliances
– Automated data processing machinery
– Petroleum coke
– Motor vehicle parts & accessories
– Petroleum oils
SOUTH AFRICA – US TRADE
• TREND: Value added imports from US vs mainly
commodities exports to the US by South Africa
• The dti challenge: ensuring product diversification and
increased value added + beneficiated exports to the US and
globally.
• How?
• Industrialisation to encourage value-added exports.
• Sustainable investments by SA and foreign companies/entities.
• Infrastructure development to reduce cost of doing business +
facilitate trade (US$78bn committed by government for
infrastructure development).
• Reforming trade policy to complement industrial policy
• Increasing overall competitiveness: aim to increase share of
global trade, create a skilled workforce and attract job-creating
investments
SA National Industrial Policy
Framework (2007)
Aim: increase SA’s competitiveness, build manufacturing capacity,
ensure industrialisation, diversification and value-added output.
Key sectors/industries:
Agro-processing
Automotives and components
Chemicals and allied industries
Clothing, textiles and footwear
Electro-technical industries
BPO and IT-enabled services
Mining and metal-based industries
Capital equipment and allied services
Transport equipment
Aerospace
Tourism
Energy (renewable)
Film + creative industries
INVESTMENT
OPPORTUNITIES IN SOUTH
AFRICA
AGRO-PROCESSING
• Wine production, confectionary (sweets, choco + baking
products) indigenous meat processing (ostrich, venison,
crocodile), indigenous teas (rooibos, honeybush), fruit +
vegetable processing plants, floriculture, freshwater fisheries +
aquaculture (tilapia, African catfish, oysters, abalone).
AUTOMOTIVE INDUSTRY
• Engine parts/components, vehicle interiors (natural fibre trim),
electronic drive chain components, body parts (lights, painted
plastic components, glass, airbags), aluminum forgings +
castings.
CHEMICALS + ALLIED
INDUSTRIES
• Pharmaceuticals: R&D, active pharmaceutical ingredients.
• Beneficiation of polypropylene, used in auto + construction
industries.
• Production of titanium dioxide pigment, beneficiation of fluorspa
ELECTRO-TECHNICAL
INDUSTRIES
• Software + mobile applications, pre-paid smart metering
solutions, upgrading of microchip manufacturing, radio
frequency identification, security and monitoring solutions,
financial software, defense-related electronics.
MINING + METAL-BASED
INDUSTRIES
• Downstream processing + value addition of iron, steel,
aluminum, ferro-alloys, platinum group of metals, diamonds.
• Conversion of metal products: metal fabrication, pipe & tube,
foundry products, wire, jewellery.
CAPITAL EQUIPMENT + ALLIED
SERVICES
• Manufacturing + assembly of mining, agricultural and
construction equipment.
• Recapitalisation of equipment (boilers, tool dies + moulds,
petrochemical equipment).
• New investments in turbine assembly + components, machine
tool manufacturing.
TRANSPORT EQUIPMENT
• Rolling stock: locomotives, wagons, coaches.
• Permanent infrastructure + equipment: railways, bridges,
harbours.
• Ship and oil-platform building and maintenance.
CLOTHING AND TEXTILES
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Large-scale manufacturing of industrial textiles using polyester.
Manufacturing of synthetic + natural fibre textiles.
Wool + mohair production + knitwear.
Cotton spinning, weaving, knitting
BPO + IT-ENABLED SERVICES
• Call centres, Back Office Processing, Shared Corporate
Services (legal, accounting etc.)
• Enterprise solutions: fleet management, knowledge + asset
management.
AEROSPACE
• Aviation related services, including maintenance, repair and
overhaul + training
• Specialised manufacturing of aviation components + systems.
• Unmanned arial vehicles, satellite –related services, design
expertise.
TOURISM
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Adventure, eco-, sport-, business- and cultural tourism.
Leisure complexes + world class golf courses.
Harbours + waterfront developments, cruise liners.
Transfrontier conservation areas.
ENERGY
• Power generation (solar, hydro, nuclear, wind etc.)
• Energy infrastructure.
• Alternative energy / ‘green’ energy.
FILM + MEDIA
• Establishment of film studios.
• Production + co-production ventures: film, still photography,
documentaries, commercials, multimedia.
• Distribution infrastructure.
• Services for foreign productions
DESIGN
• Jewellery manufacturing and design.
• Fashion design + production.
INVESTMENT INCENTIVES
• The Enterprise Investment Programme: Manufacturing
– An investment incentive cash grant for locally-based
manufacturers who wish to establish a new production
facility, expand and existing facility or upgrade and existing
facility in manufacturing industries.
• The Enterprise Investment Programme: Tourism Support
– Investment incentive cash grant, payable over a period of 23yrs, to support development of tourism enterprises so as to
stimulate job-creation and encourage geographical spread of
tourism investment country-wide.
• Accommodation services, passenger transport services, tour operators,
cultural services, recreational and entertainment services.
INVESTMENT INCENTIVES
• Foreign Investment Grant
– To compensate qualifying foreign investors for the cost of
moving new machinery and equipment from abroad to South
Africa.
• Critical Infrastructure Programme
– A cash grant for projects designed to improve critical
infrastructure in South Africa, including:
• Rail and road transport systems
• Electricity transmission and distribution systems
• Telecommunications networks – cabling and signal
transmission systems
• Sewage systems – network and purification
• Waste storage, disposal and treatment systems
• Fuel supply systems – piping for liquid, gas and fuel conveyer
transportation.
INVESTMENT INCENTIVES
• Industrial Development Zones
– Purpose-built industrial estates linked to international ports
that leverage fixed direct investments in value-added and
export-oriented manufacturing industries. Benefits include:
• Quality infrastructure
• Expedited customs procedures
• Duty-free operating environments
• Business Process Outsourcing and Offshoring Investment
Incentive
– Comprises an Investment Grant and Training Support Grant
towards costs of company-specific training. Incentives
offered to both domestic and foreign investors establishing
projects that aim primarily to serve offshore clients.
INVESTMENT INCENTIVES
• Location Film and Television Production Incentive
– Incentive programme consisting of a Large Budget Film and
Television Production Rebate Scheme.
– Foreign owned qualifying producers are rebated a maximum
of R10million for the production of large budget films and
television productions.
• Automotive Production and Development Programme
Key elements:
– Local assembly allowance
– Production incentives
– Automotive investment allowance
Contact Details
Lerato D. Mataboge
Trade and Industry Office
Embassy of the Republic of South Africa
Washington, DC
Tel: +1 202 274 7973 / 5 / 7
Email: [email protected]
www.thedti.gov.za
www.saembassy.org