Dti launches new incentive for embattled clothing industry

There was new financial encouragement for SA’s embattled clothing and textile industry launched on May 1 – a welcome tool in the armoury for the war against China’s muchsubsidised competition. This followed the department of trade and industry issuing a headline summary of the new initiative – to be managed by the Industrial Development Corporation (IDC) – to all the players in the industry. Although still short of the full detail of the scheme, the guidelines were welcomed by the industry, according to Brian Brink, executive director of the Textile Federation. The timing was also welcomed, with the industry just having lost its duty credit scheme at the end of March because such an export incentive had been put on the verboten list by the World Trade Organisation (WTO). The incentive initiative works on a completely different formula. It will be calculated as 10% of the value added by a manufacturer’s production process to the raw material cost over the year. The 10% will be held by the IDC, and the manufacturer can call on it as a contribution towards any future capital or operating costs. “Although we’d like it to be more,” said Brink, “we are not looking a gift horse in the mouth.” It only goes part of the way to making local industry competitive with China, where the clothing and textile industry sectors have a significant competitive edge – with manufacturers living in an economic dream land, being boosted by government support, tariffs and tax incentives, cheap labour and raw material costs. The local manufacturers are also keenly awaiting the IDC response to issues raised by industry about how the plan is to be implemented.