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South Africa: Bid to Mend Clothing, Textile Sector
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Business Day (Johannesburg)
2 July 2008
Posted to the web 2 July 2008
Mathabo Le Roux
Johannesburg
THE trade and industry department has finalised a comprehensive action plan to recapitalise and upgrade the clothing and textiles sector.
This will bring the long-awaited customised sector programme for the ailing industry to implementation, and is intended to stabilise it.
At an economic cluster briefing yesterday, Trade and Industry Minister Mandisi Mpahlwa said the department was looking beyond stabilisation to stimulate long-term growth. The plan was developed in consultation with industry stakeholders.
The department wants to broaden incentives to put the industry back on its feet. This will include a productivity-linked incentive programme to replace the export-based Duty Credit Certificate Scheme along the lines of the Motor Industry Development Programme review, which is moving away from an export-linked to a volumes-based incentive.
An incentive is on the cards for capital upgrading via the development programme for small businesses, to be relaunched tomorrow as the Enterprise Incentive Programme. The only significant incentive programme available to the industry is the export-based scheme. But few manufacturers are competitive enough to export so few take advantage of it. Tradability of the credit certificates has been a persistent problem.
It is envisaged the Industrial Development Corporation would play an important role in funding sector recapitalisation.
The government is thinking of boosting research and development funding for the industry, upgrading skills and stepping up integration in the Southern African Customs Union (Sacu). Sacu members Lesotho and Swaziland have relatively big clothing and textile industries that contribute significantly to their economies.
The department moved on aspects of its plan to improve clothing industry competitiveness since announcing a review of import duties on textiles in November. The review aims to rid the tariff book of redundancies. Duties on fabric not produced in Sacu will be eliminated, while duties on textiles not produced in sufficient quantities would be scrutinised to see if there is more scope for tariff reductions. With the cost of fabric at almost half the cost of clothing manufacturing, a more streamlined textile tariff regime will rationalise input costs.
The government is making strides with other aspects of its industrial development roll-out.
In the Business Process Outsourcing (BPO) sector, a telecoms developmental pricing agreement was reached with Telkom. Mpahlwa said the agreement would be formalised when he and his communications counterpart pronounced the BPO a strategic sector.
On the skills level, the home affairs department will in October implement mechanisms to accelerate issuing of work permits for highly skilled foreigners within 15 working days.
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The water affairs and forestry department has agreed to the use of general authorisation to speed up water licensing in areas of KwaZulu-Natal and Eastern Cape earmarked for afforestation, while a saw-log strategy is being developed.
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