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Coega learning from China’s approach to economic growth

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Vuyokazi Tyida, CDC’s Manager: Investment Promotion formed part of the South African delegation that visited Tianjin for SEZ training, to assist in the development of capacity and skills across all three spheres of government involved with the SEZ programme. Vuyokazi says that we have much to learn from China’s united approach to economic growth:

Vuyokazi Tyida
Vuyokazi Tyida

When it comes to successful Special Economic Zones (SEZ), which make meaningful contributions to economic growth and socio-economic development, China’s Tianjin SEZ in the Tanggu District is a real eye-opener.

The Tianjin Economic-Technological Development Area (TEDA) was formed in 1984 and is considered a free market zone. A major hub for foreign business investment, it is designed in such a way that it looks like its own city with schools, residential areas, transportation networks and a port.

Developing SEZs in China has proved to be a great opportunity for the country to present itself as a major economic role player. Yet even though the Chinese method of running SEZs has been successful it has also not been without its share of teething problems.

Indeed, initial failures of China’s SEZs caused many investors to withdraw their investments and close offices. The upside, however, was that this then left the country to step up its game and implement new regulations, which simplified red tape in the SEZ sphere, especially to entry and exit procedures and wage guidelines. These improvements eventually led to an increase in foreign investment in China’s SEZs – and the ultimate success of the zones.

Under Minister Rob Davies’ plans, South Africa’s SEZs are in the process of evolving from its industrial development zones (IDZs) – Coega, East London, Richards Bay and, most recently, Saldanha Bay, which will focus on oil, gas and marine repair.

Our industrial approach is different to that of China and as such will require a tailor made approach to fit South African (SA) needs. Although, SA can definitely learn from the Chinese approach.  In May this year, a South African delegation visited Tianjin for SEZ training to assist in the development of capacity and skills across all three spheres of government involved with the SEZ programme. The three-week training intervention included interactions with Chinese policy makers, academia, SEZ operators and consultants, as well as study tours to a number of SEZs in China.

While China is understood to be a communist state with its governing structures slightly different to that of SA. The South African approach to policy is more consultative. We need all role players to make it work; we need to understand the concept and importance of SEZs.

However, calling on a variety of organisations, such as South African Revenue Services (SARS), the Department of Trade and Industry (DTI) and many more, for input also means that the interest in SEZs is fragmented, which makes it more difficult for us to drive SEZ development forward. Government decisions need to be explicitly clear and take firm decisions.

The training and knowledge absorbed during our delegation included, amongst others, the following broad issues:

  • Achievement and experience of China’s economic reform
  • Construction and development of Tianjin Economic-Technological Development Area (TEDA)
  • Practice of investment attraction in TEDA
  • Policy and development of free trade zone
  • Planning, construction and management of TEDA
  • Examination and approving, practice and procedure of foreign investment
  • Foreign direct investment in China: development, strategy and policy
  • Development of science and technology of China and construction of Sci-Tech Park
  • Environmental protection and development of TEDA
  • Fiscal and taxation management system and related policy of TEDA
  • Labour and personnel resources management of TEDA

The potential for South Africa is in our hands. For South Africa’s SEZs to take off and be successful it is imperative that all stakeholders put their full weight into one basket, and that our SEZs unite to complement and not compete against one another.

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