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Adoption of Special Bill Economic Zones

SA development

The adoption of the Special Economic Zones (SEZ) Bill 2013 will be a significant milestone in pursuit of the aspirations of the National Development Plan (NDP) and will also support a broader-based industrialisation growth path.

Speaking at the tabling of the bill to the National Council of Provinces (NCOP) in Parliament on Tuesday, Department of Trade and Industry (dti) Minister Rob Davies said the bill also aims to support a balanced regional industrial growth and the development of more competitive and productive regional economies.

Its adoption will also be a significant milestone in pursuit not only of the NDP but of the New Growth Path (NGP) and Industrial Policy Action Plan (IPAP).

SEZs are defined as geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements and systems that are often different from those that apply to the rest of the country.

To date five Industrial Development Zones (IDZs) have been designated which include Coega, East London, Richards Bay, OR Tambo and the newly designated Saldanha Bay in October 2013.

“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. 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,” said Davies.

The weaknesses identified include weak governance, lack of IDZ incentives and poor stakeholder co-ordination.

The criteria for IDZ designation were biased towards the development of coastal regions and ignored economic potentials existing in inland regions.

The dti identified SEZ programme as one of the appropriate mechanisms that will contribute towards the realisation of economic growth and development.

“The aim of the SEZ Bill seeks to boost private investment (domestic and foreign) to labour-intensive areas to increase job creation, competitiveness, skills and technology transfer and exports of beneficiated products,” said Davies.

The Bill introduces a variation of SEZ’s to cater for the various socio-economic and regional/spatial planning considerations of the various spheres of government at local, provincial and national level.

The bill provides for the designation of the following types of SEZs:

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: a duty free area offering storage and distribution facilities for value-adding activities within the Special Economic Zone.
Industrial Development Zone: A purpose built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services.
Sector Development/Specialised Zones: A zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market.

The SEZ Bill consultative process started in 2010 with all relevant stakeholders across three spheres of government and State Owned Enterprises.

The dti is currently preparing for the implementation of the SEZ Bill by consulting with all the provinces in identifying the potential SEZs.

“As a result, together we have commissioned pre-feasibility and feasibilities studies in the various provinces. 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,” said Davies. –

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