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Zuma prioritises industrial development as SEZ bill signed into law

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The Coega Development Corporation (CDC) today welcomed what it calls a “decisive and symbolic move” by South African President, Jacob Zuma, in signing the Special Economic Zones (SEZ) Act into legislation as one of his first actions in his second term.

“The SEZ Bill is a powerful sign that South Africa is committed to pursuing industrial development and competing in an international area,” said CDC Head of Marketing and Communications, Dr Ayanda Vilakazi. “We are pleased by President Zuma’s bold and decisive move to prioritise industrial development as the cornerstone of economic development.

“Moreover we welcome any incentives put in place to benefit business, industry and South Africa as a whole. Given the profound demands on our economy for the socio-economic development of South Africa, the SEZ Bill is primed to assist existing SA IDZs in making their locations more attractive to foreign and local investors and will hopefully scale up industrial development, creating jobs, entrepreneurs and better infrastructure.”

The Minister of Trade and Industry Dr Rob Davies said this week: “The SEZ Act aims to support balance industrial development for our country, improve manufacturing capabilities, and the development of more competitive and productive regional economies – with strong up and downstream linkages in strategic value chains. Signing the Bill into Law by President Zuma is a significant milestone in pursuit of the aspirations expressed in the National Development Plan (NDP), New Growth Path (NGP) and Industrial Policy Action Plan (IPAP).”

Last year, former Finance Minister Pravin Gordhan also announced that a R2.9-billion tax incentive for SEZs would be introduced to encourage business to set up their enterprises in these zones.

“The new incentives significantly increase the attractiveness of South Africa’s existing IDZs and, coupled with the successes being achieved by the Port of Nqgura, it is expected to increase the number of investors choosing to locate within the Coega IDZ.”

The Act provides for the designation of the following types of SEZs:

  • Free Ports: Duty free areas adjacent to a port of entry where imported goods may be unloaded for value-adding activities, repackaging, storage and subsequent re-export, subject to special customs procedures;
  • Free Trade Zones: a duty free area offering storage and distribution facilities for value-adding activities within the Special Economic Zone;
  • Industrial Development Zone: A purpose built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services;
  • Sector Development/Specialised Zones: A zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market.

In terms of section 24 of the Act, Coega will remain an IDZ under the SEZ Bill.

However the organisation aims to extend its operations by establishing a Free Port area behind the Port of Ngqura.

“The Coega Free Port will develop back-of-port logistics to compliment the Port of Ngqura and create a seamless linkage with hinterland logistics services. This will include the development of a freight station and container depots,” said Dr Vilakazi.

Coega has been hard at work over the past years to develop the Port of Ngqura back of port operations and has attracted over 6 companies in the area, including General Motors and Famous Brands.

Coega will also offer the suite of SEZ incentives now open to future investors, which include a lower, internationally competitive Corporate Tax Rate, the Employee Tax Incentive (ETI), commonly referred to as the Youth Wage Subsidy, the Customs Control Incentive, and an Accelerate Depreciation allowance.

Meanwhile the Department of Trade and Industry has indicated that they are in the process of finalising the list of targeted industries, which could affect some existing Coega IDZ tenants, enabling them to apply for the SEZ-linked incentives.

“Those tenants within the IDZ that meet qualifying criteria will be able to take advantage of the various incentives,” Dr Vilakazi added. “We cannot emphasise enough the value of this symbolic first act by President Zuma and we commend him for his decisiveness and commitment to moving South Africa forward.”

The Coega Development Corporation (CDC) Industrial Development Zone (IDZ) is now a Special Economic Zone (SEZ), although the IDZ will remain in terms of section 24 of the Act. The SEZ Act was signed into law by President Jacob Zuma this week as his first major duty in office as South African president, for the second term.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.