A special, world class suite of incentives – available to both current and future investors in the Coega Industrial Development Zone (IDZ) – is driving investment appetite and supporting existing investors, the Coega Development Corporation (CDC) said today.
Unlocked by the new Special Economic Zone (SEZ) policy, promulgated last year, the long-awaited suite of incentives are primed to make SEZ’s more attractive to both domestic and foreign investment.
“For a long time, our ambitions as an IDZ were limited by a small and comparatively uncompetitive suite of incentives, on a global scale, linked to the initial IDZ policy. The SEZ legislation has changed that – and we are starting to see the difference policy is making on the ground.
“Together with the new incentives available, domestic and foreign investors can leverage their global competitiveness through these, other rebates and a specialised customs controlled areas available at the Coega IDZ,” said Dr Ayanda Vilakazi, CDC Head of Marketing and Communications.
On the back of incentives, existing investors have mooted plans to expand their businesses. Chinese auto company First Automotive Works (FAW) announced the new six-speed, six-ton 3.8-litre 8.140FL – priced at R239 000 – will be the 12th vehicle of FAW’s South African fleet to be produced at Coega.
FAW’s national sales executive Eugene van der Berg was quoted in The Herald saying that the company was to “invest further into Coega”.
“We are planning to build an additional plant there to manufacture cars,” Van der Berg said.
In terms of the newly announced SEZ incentives, The Coega IDZ will in future be able to offer qualifying investors a corporate tax rate of 15% Corporate Income Tax and in the customs controlled areas Value Added Tax and Customs duty suspension. The Coega IDZ also offers cluster investors the possibility of accessing a suite of government incentives that maximise benefits and facilitate supply chain integration.
These include, but are not limited to, one-time and/or recurring incentives as itemised below:
- Special Economic Zones – SEZ Proposed Benefits: Reduced corporate tax 15%; Building allowance 10% per annum; VAT/Customs Duty Free Zone; Employment Tax Allowance Employees earning up to R6 000; and other applicable benefits that may be announced from time to time.
- General Manufacturers (Manufacturing Competitiveness Enhancement Programme -MCEP): Cash grant available to existing manufacturers; 30% -50% of qualifying capital costs; 50% -70% of qualifying Competitiveness Improvement costs.
- Specialised Sector Incentives such as the Automotive Investment Scheme (AIS) offers: Cash incentive grant available to automotive component manufacturers and OEMs; 25% to 35% of qualifying capital costs; Over a three year contractual term.
- Production Incentive Programme (PIP) which is available to manufacturers of clothing, textiles, footwear, CMT operators, non-automotive leather and leather goods manufacturing offers: Tax free cash benefit; Calculated on the “Manufacturing Value Addition”; Rate: 7.5% to 31 January 2016.
- Aquaculture Development and Enhancement Programme (ADEP): Cash incentive grant aimed at promoting investment in the aquaculture sector (maximum benefit of R40 million); Available to new and expanding SA entities engaged in primary, secondary or ancillary aquaculture activities (marine or freshwater); Grant ranges from 20–45 % of the qualifying investment in Land and buildings and/or Plant and equipment including work boats.
- Tax Based Incentives on Industrial Policy Projects (IPP) (12 i) – additional tax allowance calculated on qualifying investment cost. Available to large manufacturing investment projects (> R50 million) calculated on the qualifying investment cost of plant and equipment, buildings and training cost: Supports investment made over a four year term – 35% -55% Outside of an IDZ, and 75% -100% Where investment is within an IDZ.
- Export promotion incentives SA based companies (new market development) support: Individual exhibitions; Primary market research / foreign direct investment; Individual inward missions; Group Schemes; Group inward buying missions; National pavilions and Outward selling missions.
- The Critical Infrastructure Programme (CIP) offers: Cash incentive grant; Calculated on the approved infrastructure development costs; Benefit is calculated at between 10% (minimum) and 30%; Maximum incentive: R30 million per project.
- Qualifying projects un der the CIP include: Basic Services Infrastructure; Transport Road and bridges; Electrical infrastructure Industrial parks (IDZ/SEZ); Bulk water supply Electrical transmission lines; Sanitation; Renewable energy; Telecommunications; Water pipelines; Purification; Sewers and Telephone lines.
Coega also offers investors an integrated resource point, with service offerings that include:
- Identifying the ideal location in the Coega IDZ in order to optimise logistics and minimise impact on the environment;
- Conducting environmental impact assessments;
- Access to more than 100 environmental impact studies that have already been completed;
- Drawing up business plans;
- Accessing finance;
- Helping investors to access and qualify for incentives;
- Fast-tracking applications through administrative processes;
- Technical support for construction; and
- Shared facilities management services, such as the information technology infrastructure, cleaning and maintenance.
- Integrated human capital solutions are available to investors, including: recruitment services, integrity checking, HR consulting, psychometric assessments, skills training and skills development planning.
The IDZ is served by two ports and is characterised by its proximity to the deep water Port of Ngqura, which is in Zone 1 of the Coega IDZ.
Customised solutions for investors include serviced sites, and a ‘plug and play’ approach that offers:
- Facilities for skills development (with personnel to provide customised solutions);
- Custom-controlled areas;
- Environmental assistance (where applicable);
- An ICT services base infrastructure, which allows for the connectivity of voice/data/internet and video services up to the boundary of the tenants’ premises, and
- Support with safety, health, environment and quality services.
Dr Vilakazi encouraged current and potential investors to take a closer look at the incentives and location advantages offered and contact Coega’s expert staff in Business Development for assistance.
Author: Shaanaaz Loggenberg
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