30 January 2013

South Africa: Boost for Local Manufacturing

Pretoria — Local producers of electrical and telecommunication cables, as well as components of solar water heaters are set for a major boost.

The Department of Trade of Industry on Tuesday, 29 January 2013, announced the further designation of electrical valves, manual and pneumatic actuators, electrical and telecommunication cables as well as components of solar water heaters for local production and content in the public sector procurement system.

These are the latest products to be added to the sectors that are already designated for local production.

Sectors already designated for local production, with minimum local content thresholds, are rail rolling stock, power pylons, bus bodies, canned/processed vegetables, certain pharmaceutical products, furniture products and the textile, clothing, leather and footwear sector.

Trade and Industry Minister Rob Davies has signed the necessary authorisation in terms of his powers under the Amended Regulations of the Preferential Procurement Policy Finance Act (PPPFA).

Public procurement forms part of the department's industrial levers in the Industrial Policy Action Plan (IPAP).

The revised PPPFA regulations - which came into effect on 7 December 2011 - empower the minister to designate industries, sectors and sub-sectors for local procurement at specified levels of local content.

"In the year ahead, the dti will significantly scale up designations and other procurement policy levers in support of domestic manufacturing.

"This will be done at the same time as the dti deploys a range of other supportive and inter-locking instruments to raise the competitiveness of South Africa's manufacturers. This will be done in close collaboration with business and labour," said Davies on Tuesday.

The designation policy instrument is one of a suite of policy levers designed to maximise support for domestic manufacturing. The others are the Competitive Supplier Development Programme (CSDP) - which is led by the Department of Public Enterprises and governs the procurement programmes of state owned companies - and the National Industrial Participation Programme (NIPP).

This instrument obliges overseas companies, which have won tenders worth more than US$10 million, to provide 'offset' obligations through investments in the domestic economy.

At the end of 2012, national Cabinet signed off on a set of policies which tighten the NIPP framework, close existing loopholes and align the policy with other public procurement instruments.

The dti said details of these provisions will be made public when the new regulations are signed off by Davies.

Further details of these measures will be set out in the 2013 Industrial Policy Action Plan, which will be launched in April.

National Treasury will at a later stage circulate the instruction notes, which will regulate the environment within which government departments and public entities may procure designated products. The instruction notes will have minimum local content thresholds.


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