There are growing calls for government to extend incentives granted to manufacturers within special economic zones (SEZ) to all exporters. Industry experts believe government’s policy of excluding manufacturing and investments outside SEZs from government support and incentives is working against its expressed goal of growing exports and stimulating economic development. “The Department of Trade and Industry developed SEZs to stimulate growth and enhance manufacturing capacity and skills but they narrowed their focus,” said Merafe Moloto, founder and CEO of Moloto Capital Investments, a company that aids black industrialists and opens up export markets. She told FTW that the only SEZ that worked was the Coega Industrial Development Zone (IDZ). “Many others are struggling to get off the ground yet only those who invest in the SEZ – or move their production facilities to an SEZ – qualify for tax incentives.” She added that companies that invested in an SEZ were eligible for a preferential 15% corporate tax rate, employment incentives and relief from value added tax and customs and excise duties. “This helps those located within SEZs to produce goods at a more competitive price and have a more equal footing against cheap imports, but what about those that fall outside the SEZs?” According to Moloto, the process of applying for tax and other incentives was onerous and opaque. Research and related engagement firm, Manufacturing Circle, agrees with Moloto and has been lobbying for SEZ benefits to be extended to areas that fall outside the industrial zones but have existing infrastructure. “In every province there’s an area where there’s infrastructure that falls outside a designated zone,” said executive director, Phillipa Rodseth, who pointed out that the Vaal Triangle in Gauteng was one such example. “There are two value chains there – steel and petrochemicals – and the infrastructure simply needs upgrading. Surely, from a cost benefit analysis, government would get more bang for its buck by incentivising these areas,” she added. A report by Cova Advisory & Associates – commissioned by the Manufacturing Circle – advocates for what it terms “single factory” special economic zone programmes. Joint MD of Cova, Tumelo Chipfupa, said that these would offer investor flexibility in terms of location, labour and material inputs and infrastructure.
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