New incentive to promote export competitiveness

The department of trade and industry has just launched its R5.8-billion manufacturing competitiveness enhancement programme (MCEP) unveiled in the February budget speech, and which has promises for trading companies in SA. “The MCEP aims to address the general ability of the SA manufacturing industry to compete against imports and to compete globally against its counterparts in other export markets,” said trade and industry minister, Dr Rob Davies. The scheme has been designed to encourage manufacturers across a broad range of sectors to invest in competitiveness-raising equipment and processes, he added. It’s also a move away from the incentives available to companies in the automotive, clothing and textile and business process outsourcing industries. This new incentive has been opened to all manufacturing enterprises not already covered by these sector-specific incentives. The budget allocation will be disbursed over a three-year period and will prioritise labour-intensive and value-adding manufacturing sectors impacted by the prevailing currency strength and volatility, as well as those taking strain as a result of the ongoing global economic crisis and electricity cost escalations. Proceeds in the scheme will be paid in the form of a cost-sharing cash grant, and the range of interventions are clustered around a production incentive – which will be managed by the dti – and a working capital facility which will be managed by the Industrial Development Corporation (IDC). The specific needs of a manufacturer will determine the nature of the application. The launch comes at a critical time for the manufacturing industry. The sector accounts for about 15% of SA’s gross domestic product (GDP), but has been contracting for more than two decades. And Davies revealed some figures that show the latest state of play in this continuing downturn in SA manufacturing. The MCEP launch, he noted, came less than a week after the release of dismal manufacturing production figures for March. These showed that domestic manufacturing output contracted for the first time in seven months in March – with output falling 2.7% year-onyear and 4.3% month-onmonth. During the 2009 recession, manufacturing shed 200 000 of the nearly one-million jobs lost over the period. Davies defined the MCEP as a “proactive response” to this entrenched de-industrialisation trend in SA.The Enterprise Organisation, a unit of the dti, will administer the MCEP, which has also been included in the latest version of the industrial policy action plan (Ipap3) revealed in early April. The opening date for applications for both clusters of interventions is June 4 when the department’s online application system will be launched.