Incentive packages crucial to foster global competitiveness

Investment incentive
packages need to be
developed specifically for
the Eastern Cape if it is to
be globally competitive,
says Les Holbrook,
executive director of the
Border Kei Chamber of
Business.
According to Eastern
Cape economist Derek
Zimmerman, the provincial
economy grew by 3.15% in
2010 – below the national
average of 3.48%.
In Port Elizabeth and
surrounding towns in
the Nelson Mandela Bay
Metro (NMB), there has
been jobless growth over
the first decade of the new
millennium.
Manufacturing output
has dropped by 10% over
the past decade, with the
only real boost being in
the construction sector
thanks to the building of
the Coega IDZ, the port
of Ngqura and the Nelson
Mandela Bay stadium.
According to the Stats
SA Labour Force survey
for the second quarter of
2011, 16 000 jobs were
lost in the Eastern Cape
between the first and
second quarters of this
year.
With factories
continuing to close across
the province, institutions
such as the Border Kei
Chamber and local
government are looking at
ways of attracting foreign
and local investment.
One of the main reasons
that Coega – and the
East London Industrial
Development Zone to a
lesser extent – have failed
to deliver the promised
jobs and economic boost
is that South Africa is
offering no meaningful
incentives to foreign
investors.
Investment zones around
the world court companies
with tax holidays, cheap
(or free) land, training
support and often more
relaxed labour laws within
the zones.
Neither the East London
nor Coega IDZ is able to
offer these because they
are under the control of
national government, and
the South African Revenue
Service has refused allow
what it sees as a “dilution”
of its tax base.
However, earlier
this year the provincial
government announced
the establishment of a
R2-billion Eastern Cape
Industrial Jobs Stimulus
Programme (ECIJSP)
aimed at creating jobs
through incentives,
and encouraging the
diversification of the
provincial economy.
Eastern Cape finance
MEC Phumulo Masualle
said in his budget speech
that the target was to
create a minimum of
30 000 new jobs in the
next three years.
The programme targets
companies in green
industries, agro-processing
and other non-automotive
sectors indentified in
the Provincial Industrial
Development Strategy
(PIDS).
Little has been heard of
the programme since its
launch in March this year.