SA faces tough global competition for IDZ investment

Are South Africa’s IDZ plans taking shape? FTW takes a closer look.
All roads lead to Coega. ED RICHARDSON INDUSTRIAL DEVELOPMENT Zones have not attracted investment as quickly and in as much volume as many would have expected. Isolated as South Africa was from the global economy, it has come as a surprise to many just how competitive the international investment market is. There are well over 1 000 Export Processing Zones and Industrial Development Zones around the world. And, guess what? They all offer much the same thing – access to markets, cheap labour, free or cheap land, purpose-built infrastructure, one stop investment shopping, etc. Does this mean that South Africa’s policy of establishing IDZs to attract investment is flawed? That’s like asking whether we should stop playing soccer and rugby because there are so many other countries competing in the sports. When it comes to attracting investment in bricks, motor and manufacturing capacity, we need to have the basics in place just to be in the game. The good news is that South Africa’s IDZs are coming on stream at a time when Foreign Direct Investment (FDI) flows are increasing. According to Standard and Poor’s November report on FDI Trends in Emerging Market Economies, FDI inflows to these countries increased at a rapid pace in 2004, reaching US$286 billion—a 42% increase over 2003. Africa attracted just US$18.1-billion of that. With Coega having signed investments totalling over R3-billion (US$460-million) over the past five months, the tide could be turning.