Tax holidays, free land and reduced labour costs are some of the incentives that IDZs around the wor

'Pity the poor SA IDZ marketer competing with hundreds around the world' Meaningful tax incentives crucial ED RICHARDSON IT’S ALL too easy to criticise the management of South Africa’s Industrial Development Zones for lack of delivery. After all, the concept has been around for nearly ten years, and none has delivered on the early promises. Still flushed with the miracle of a peaceful transfer of power and under the mantle of Madiba, the country was going to attract billions of dollars, yen, euro etc in foreign investment. All we needed to do was provide the land and a world eager to throw money at Africa in general and South Africa in particular would rush in. Unfortunately, investors have to answer to their shareholders, who just want to see their money work. It has been a bit of a shock to realise that sentiment plays virtually no role in a decision on where to spend piles of money. One of the things investors look for is meaningful tax incentives – something that the finance ministry under Trevor Manuel has firmly resisted. Our competitors for investment – and there are many around the world – woo investors with tax holidays. They understand that the jobs and downstream work created by the big investments will all pay taxes. To those of us less schooled in these things, it seems like a good deal. We make it worth your while to invest in our country and you create new money in return. In today’s highly competitive global environment, it is often these tax holidays which represent the major part of the return investors get for their money. Pity the poor South African IDZ marketer who is trying to compete against the hundreds of other IDZs and Export Processing Zones (EPZs) around the world which do offer such incentives – along with free land, reduced labour costs, and highly competitive logistics costs. Which brings us to the next challenge – the lack of investment by Transnet in the infrastructure needed to support the IDZs. Take Coega. An investor starts doing his or her sums and wants to talk to the port operator. Up to very recently, the answer was “sorry, we don’t have one”. Now, we are told, South African Port Operations plans to have some cranes in the brand new Ngqura harbour by 2008 – that after the infrastructure of the harbour was completed in 2005. It is, at present, serving as a wonderful refuge for visiting whales. The fishing off the harbour walls is also said to be good. The Richard’s Bay IDZ has similar challenges. While it has a harbour, it does not have suitable rail links or container handling facilities. As does the East London IDZ, with a shallow harbour, insufficient rolling stock and no container cranes (just like Ngqura). Then there’s the whole question of power supply. When the IDZs were first mooted around 10 years ago, the attraction was South Africa’s abundant supply of cheap electricity. That is no longer true. The only good news is that most of our competitors are also running out of power. Which means that we have an opportunity to improve the attractiveness of our IDZs – providing government makes it possible for Eskom and private suppliers to get moving. Then the are the rail links. More correctly, the absence of rail link and rolling stock. All our IDZs claim to provide easy and efficient access to the Southern African market through road and rail links. That is simply not true, because Spoornet (by its own admission) is not able to meet the demand. In short then, the IDZs are a good idea. Without them we would have very little to offer investors. They are the ticket to the game. But, in order to win, we need serious team work – between Sapo, the National Ports Authority, Spoornet, the DTI, the Department of Finance, Home Affairs, local authorities, business and the rest of us in both our business and private capacities. We are all part of the South African marketing team – and, as such, we have a right to insist that our team-mates pull their weight.