Transcript Progress on Special Economic Zones

Presentation to the Portfolio
Committee
Progress on Special Economic Zones
19 August 2014
Policy on the development of SEZs in South Africa (2012)
Expand
strategic
focus and
cover
diverse
regional
needs
Provide a
clear,
predictable
and
systemic
planning
framework
Clarify and
strengthen
governance
arrangement;
Provide
financing
arrangements
The
Special
Economic
Zones policy aims to position
Special Economic Zones as
an effective tool for industrial
development, and is flexible
and rigorous enough to be
responsive
to
the
development needs of all
regions, as well as the
needs of investors and other
key role-players.
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Policy on the development of SEZs in South Africa (2012)
• The SEZ Policy was introduced to provide clear
policy framework with respect to the development,
operations and management of SEZs including
addressing challenges of IDZs.
Operations
Development
Management
SEZ Policy Framework
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Policy on the development of SEZs in South Africa (2012)
The modest performance of the IDZ programme can be
attributed to:
• Lack of IDZ-specific incentives
• Ad Hoc funding arrangements
• Lack of targeted investment promotion
• Lack of focus on host regions
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Aim and Purpose of SEZ Policy
• SEZ’s positioned as an effective tool for industrial
development;
• Expand strategic focus to cover diverse regional needs;
• Provides a clear predictable planning framework to support
implementation of IPAP, NDP and NGP;
• Clarify strengthened governance arrangements;
• Expand range and quality of support measures;
• Developing a predictable financing framework;
• Developing a comprehensive programme to support the
development of SEZ’s;
• Addressing the weaknesses of the IDZ programme.
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SEZ Policy Objectives
• Facilitate creation of industrial complexes having strategic
competitive advantages for targeted investments and
industries;
• Promote beneficiation and value addition to minerals and
natural resources;
• Develop infrastructure required to support development of
targeted industries;
• Attract relevant foreign and domestic direct investment and
increasing value added production;
• Accelerate exports, economic growth and jobs;
• Contribute to balanced industrial development;
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Key aspects of the SEZ Policy
• Institutional framework (Minister, Advisory Board and the dti
facilitation);
• Governance arrangements in terms of ownership, operator,
oversight and co-ordination;
• Strategy to outline desired approach and guide to both
existing and planned SEZs
• Setting up a SEZ fund with mix of financing options in order
to encourage sound zone development;
• SEZ incentives for greenfield and brownfield investments;
• Eligible activities in line with IPAP, NDP and NGP to
comprise processing, assembly, mixing and fabrication as
well as internationally traded services
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Key aspects of the SEZ Policy
• Support systems that go beyond provisioning of world class
physical infrastructure i.e. human resource development,
business incubation, technology, R&D and others;
• Planning of SEZs focussing on host region capabilities over
the long-term and coordinated between the tiers of
government;
• Providing a one stop shop service and facility at each SEZ
to offer globally competitive value added services to
investors.
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SEZ Policy Implementation framework
• Implementation protocols required between various
agencies;
• SEZ policy to be reviewed by the Minister and monitored by
the National Advisory Board;
• Legislative framework to be established through the SEZ
Act, Regulations and Guidelines;
• SEZ strategy to be developed and reviewed by SEZ
Advisory Board;
• National marketing strategy to guide national and
international marketing efforts;
• SEZ fund to be established;
• Capacity and skills development programme and various
other workstreams to be set up.
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SEZ Policy Monitoring and Evaluation
• Measures put in place to track, evaluate and report on
performance of the SEZs; done in terms of the Government
wide Monitoring & Evaluation framework
• Various elements monitored at different levels and reported
to the Advisory Board and Licence holders;
• Focus of monitoring and evaluation to ensure measurement
of achievements to the strategic plan and SEZ master plans.
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SEZ Regulations
SEZ Act: Chapter 7 Section 41 -The Minister may, after consultation with the
Advisory Board, make regulations and publish a draft in the Gazette for written
submissions over a period of 30 days
Progress:
Project Plan:
April – June 2014: Preparation of draft
Regulations – First draft
July 2014: Initial discussions with main
government stakeholders: SARS (Customs, VAT,
Corporate Tax) and National Treasury.
Narrowed areas requiring further consensus:
SEZ Fund – its design, capitalisation and
administration
SEZ Incentives – how to reference in the
Regulations, how to refer to governing legislation
Definitions of SEZs – correct wording that
corresponds to SARS Customs legislation
End August 2014:
Final
Draft for Internal Consultation:
dti/NT/SARS, existing IDZs,
Provinces, NEDLAC
End September 2014:
Regulations ready for gazetting
October 2014: Proposed
Regulations gazetted, 30 days
public comment, consideration
and consultation with Advisory
Board
November 2014:Regulations
Finalised and Gazetted
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SEZ Advisory Board
SEZ Act: Chapter 3, Sections 7 -19. Project Plan:
The Minister must appoint 15 persons
as members of the Advisory Board, as
prescribed by the Act
Progress:
April – June 2014: Preparation for
appointment
July 2014: Identification of ex officio
members, design of appointment
process (7.2, ss. h & i), preparation of
advertisement
August 2014: Advertisement in
daily newspapers – 10 August 2014
• Interview process and
appointment
• Finalise Board remuneration
•Terms of Reference
•Board Charter
•Induction Pack
End August 2014: Finalise Board
Remuneration
End September 2014: Finalise ToR,
Board Charter, Induction Pack,
conduct interviews
October 2014: Appoint Board
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SEZ Incentives
SEZ Act: Chapter 4 Section 21.
3. Accelerated depreciation Allowance
for Buildings in the SEZs: New building to
The Minister may, determine and
be depreciated for 11 years at 20% in the
implement support measures, including first year and 8% thereafter.
incentive schemes, for operators, and
Improvements to buildings to be
businesses operating within Special
depreciated at 20% p.a.
Economic Zones.
4. Customs Controlled Area (CCA): VAT
1. Lower Corporate Tax rate of 15% for Exemption and duty free area
qualifying companies locating in an SEZ 5. 12i Tax Allowance: Up to 100% tax
allowance for green and brownfield
2. Employment Incentive: For
employees earning lower salaries in the projects in the SEZ (for preferred status)
and up to 75% allowance for projects in
SEZ – no age limit.
the SEZ if they are qualifying status
Project Plan:
The Tax incentives’ effective date will
coincide with that of the SEZ Act.
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Progress on SEZs
In accordance with SEZ Act Chapter 7 Section 39 (3), (5),
Consultations are under way with relevant IDZs and provinces
to agree on a suitable approach to transition IDZs to SEZs
within 3 years
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Progress on SEZs Feasibility Studies
Province
Region
Focus
Status
Eastern Cape
Mthata
Agro-processing
Technical Feasibility and
Business plans stage
Free State
Harrismith
Automotive Logistics, Agro-processing
and Pharmaceutical
Public consultations
Gauteng
JHB
ICT and Electronics
Pre-Feasibility stage
KZN
KSIA
Agro-processing, and Electronics
Designated
Limpopo
Tubatse
PGMs
Technical Feasibility and
Business plans stage
Musina
Logistics, Petrochemical, and trade hub
Technical Feasibility and
Business plans stage
Mpumalanga
Nkomati
General Logistics
Technical Feasibility and
Business plans stage
Northern Cape
Upington
Solar Corridor
Technical Feasibility and
Business plans stage
North West
Rustenburg
PGMs
Technical Feasibility and
Business plans stage
Western Cape
Atlantis
Renewable Energy
Technical Feasibility and
Business plans stage
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Progress on SEZs
In the process of:
1. Appointing an SEZ Advisory Board
2. Establishing SEZ Secretariat
3. Finalising SEZ Regulations
4. Finalising the Feasibility Studies for proposed SEZs
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