Speaker, special economic zones may be defined as geographically designated areas of a country, set aside for specific targeted economic activities and generally supported by special arrangements and systems that are often different from those operating in the rest of the country.
Up to now, in South Africa, we have only one form of special economic zones, SEZs, the IDZs, operating in terms of the Manufacturing Development Act of 2000. This programme has focused on export-oriented industries often located in and around ports or airports benefiting, in the main, from the duty-free entry of imports used in the production of export products through customs controlled areas. To date, four of these industrial development zones, have been designated in Coega, East London, Richards Bay and OR Tambo Airport, with three of them being operational.
Whilst these have achieved some important success with 42 operational investments worth R4 billion creating over 5 000 direct jobs and 43 000 construction jobs, some weaknesses in the implementation of the programme have been identified during the IDZ policy review. This includes a number of weaknesses in governance models, particularly in relation to the following: responsibilities of the national government, provinces, municipalities and operators of industrial development zones, lack of focus on IDZ incentives, insufficient stakeholder co-ordination and lack of integrated planning. More importantly, the existing legislation provides, as I have said already, for only one type of special economic zone.
Confronted with these challenges, and also being mindful of the potential special economic zones to achieve industrial demonstration, the current Bill seeks to bring into being the possibility of a broader range of special economic zones. The Bill provides for the following: a determination of the special economic zones policy and strategy; the establishment of an advisory board; a fund for the designation, promotion, development, operation and management of SEZs; regulatory measures and incentives for SEZs; and the establishment of a single point of contact or a one-stop shop to deliver government services. The Bill allows for a variety of special economic zones, including free ports, free trade zones, industrial development zones and sector developments or specialised economic zones.
We have also been developing the following support measures to support special economic zones: a broader SEZ incentives strategy which will allow for a 15% corporate tax in SEZs; building tax allowance and employment tax incentives; customs-controlled area incentive with a VAT exemption and duty- free entrance of imports; and a 12i tax incentive. There has been an enhanced funding strategy, infrastructure strategy, skills and supply development strategy and the one-stop shop strategy.
The DTI, in addition to developing the Bill, has been working on the development of the SEZ tax incentive strategy which has already been announced by the Minister of Finance. We have also been working with the provinces within Minmec to identify potential SEZs; at least one in every province. This potential project has now gone from prefeasibility to feasibility studies which will allow us, once the Bill is passed, to begin the process of designated new special economic zones. It is therefore important that the current Bill, which is an enabling Bill, is passed expeditiously so that we can take advantage of the eminent interest and opportunity which the special economic zones programme will provide. The House's support for the Bill will therefore be greatly welcomed. I thank you very much.
Hon Chairperson, hon members of this House, hon Deputy President, comrades, colleagues and fellow South Africans, we often sit here and wonder how we should tell you about the Bill. This Bill is so easy to speak about. It speaks about something so close to all our hearts.
The Special Economic Zones Bill takes South Africa significantly further along the journey which began in 1997, when the ANC-led government adopted a policy that allowed the establishment of industrial development zones. This was a paradigm shift in our industrial policy, which took the country - and this is so important - from an inward-looking industrial strategy to an export-led growth. This was a strategy that would promote investment in less developed areas, boost job creation and enhance the manufacturing sector. At the same time, it would facilitate integration into the global economy of which, prior to 1994, we were the pariahs.
The SEZs are indeed sharp policy tools that are used to promote rapid economic growth by using support measures to attract targeted foreign investment and domestic technology and also to facilitate what is so important - co-ordinated planning and implementation by the various government departments.
What is being acknowledged globally by the Organisation for Economic Co- operation and Development, OECD, countries and by countries like China, is that SEZs are cities in their own rights. These zones usually cover all industrial and service sectors. The Minister has already explained the different zones that will be provided, so I will not deal with that area.
The hon Wayile will highlight the industrial stimulation in the rural areas which expands this economic development footprint beyond the ports and urban areas through incentivised investments and one-stop shops. In fact, it is the one-stop shop idea that we know will cut the red tape. With this establishment, you will smooth out and fast-track processes by investors to eliminate bottlenecks in our system.
In this regard - and this is so important - you will have co-ordination between the Department of Trade and Industry, the economic area, and the Department of Home Affairs. It is the Department of Home Affairs, the Department of Economic Development and the Department of Trade and Industry working together in synergy that will fast-track this process.
Of course, you heard us talking about public-private partnerships, or the triple P. I know there was some talk in the committee about the possibility of having only private ones. Internationally, it is now proven that you must have the public sector and government's involvement if you want to succeed with SEZs. The Minister has referred to a fund that has now been established. There are incentives established which will kick in in January 2014.
Where in the world - in an emerging country - are you going to get to this extent: a corporate tax cut from 28% to 15%? That is going to happen and it will bring in investments. I must say that all members of the committee were supportive of this. The members of the opposition also supported the ANC in this regard.
However, what concerned us was the issue of leakage. You know, things falling off trucks, as it were, never getting to Lesotho and winding up here. We have been fortunate in this particular model, where you will have the Department of Home Affairs, the SA Revenue Service, Sars, and the Customs Controlled Area operating to prevent leakage. Companies will have to be effectively managed in South Africa to qualify for these incentives. They should generate at least 90% of their income from services or sale of goods from activities attributable to a fixed place of business in the zone.
I would like to re-emphasise that the company will, of course, have to be established within South Africa and in the zone itself.
There are issues around the industrial development zones. The Bill calls for IDZs to become part of the SEZs within a three-year period. There are transitional arrangements in this particular regard.
The other area I would like to refer to is that of the emphasis on the triple P. As you know, infrastructure development for industrialisation is at the forefront of the government's New Growth Path. The ownership of SEZs depends on each country's needs and the industrial development strategy. There is no question of one approach, but rather an analysis of a specific country and customising the SEZ to suit that particular country. Given South Africa's industrial development path, the Special Economic Zones Bill allows for SEZs to be owned by various spheres of government.
We welcome public-private partnerships as an opportunity to accelerate growth in our economy. The public-private partnership has great success stories in many countries. It will have a successful path in South Africa as well. As we said, the establishment of the one-stop shops will facilitate easy registration, licensing and other arrangements that businesses have indicated took so long during the IDZs. Perhaps investors got tired of waiting.
Another issue that came up during the committee meeting was that of flexible labour. We need flexible labour legislation. [Interjections.] Well, just a minute. The World Bank does not agree to it being a good idea at all. In fact, after a serious study which included Africa - a study that was not done by us but by the World Bank - the bank came out with an unqualified statement saying that there is no correlation between cheap labour and a successful SEZ. In fact, it discourages that. Of course, from time to time, the World Bank does have some brilliant ideas, and we certainly think that was a good one. We support that particular one.
While we globally took account of issues in OECD countries, we were also well aware that SEZs had done extremely well in China. D Z Zeng in Building Engines for Economic Growth and Competitiveness in China in 2010 indicated that there are a number of benefits like direct economic benefits, which include employment generation and forex, and indirect economic benefits - like skills upgrading and technology transfer. That is a very important component which also leads to exports diversification and, in general, enhances the trade efficiency of domestic firms.
We truly welcome, understand and accept the fact that, in South Africa, we face serious competitive challenges when we export our goods, notwithstanding some of the many comparative advantages that we enjoy. The Special Economic Zones Bill will enable us to actually open the door to facilitate and overcome those serious challenges, because we will not have the duties stacked on top of this. It offers opportunities to all business people - to those who are not only interested in making money. Yes, making money is a good idea. Make profits, but ensure that your workers and staff also benefit and that there is no exploitation of people's working conditions or wages. We all know where that is leading.
There are other issues in this regard, but the hon Sue Van der Merwe will be dealing with two very important areas.
We may ask ourselves what the committee members do when the department has done something and tabled the Bill. Well, so often we know that it is in the robust engagement within the committee that we are able to generate better legislation. The hon Van der Merwe will go into detail where this occurred.
I would like to indicate that it was a real pleasure working with all the committee members on this Bill. They brought a lot to the legislation. We learnt from each other, which is the way to move. I would like to try to persuade all members, especially those who did not quite agree with our point of view in the ANC, that this is the time for the private sector to come along and work together. Let us work together, and not against one another, to grow the economy. The ANC supports this piece of legislation wholeheartedly. I thank you. Malibongwe! [Applause.]
House Chair, it is my great pleasure to speak in favour of this Bill, and this is why no nation is perfect, and we certainly are no exception. As long as our founding President Nelson Mandela's dream of elevating what someone once called the "better angels of our nature" proves to be elusive, we will remain an imperfect nation.
We must always invoke the principles of the first democratic administration to rebuke the inequalities, poverty, joblessness and hypocrisy of pervasive corruption that plague the administration of President Zuma, whose values simply bear no resemblance to that of Mr Mandela.
One of the few bright sparks in the darkness that defines this administration is the Department of Trade and Industry's, DTI's, replacement of the lacklustre industrial development zones with the more promising SEZs. The DA supports the SEZs because they can become engines of innovation that solve the following: problems of joblessness and slow economic growth. They can also become places of experimentation where trade unions partner with businesses to put sustainability above profits; disputes are efficiently and effectively resolved in ways that are just and fair; bureaucratic red tape is minimised; necessary infrastructure gets laid down by government on time and to scale; corruption is punished to the full extent of the law; and practical solutions to practical problems of doing business are found.
The SEZs could be places where the positive qualities - the better angels of our nature - rise to the challenge. We have come this far as a nation because, as a people, South Africans are resourceful. We have a can-do- attitude; possess an entrepreneurial spirit; embrace risk-taking ethos; are problem-solvers; and once were - and certainly must be again - future- oriented nation-builders. How this contrasts with President Zuma, who constantly looks in his rear- view mirror and is fearful of what is coming; trapping us in the past, keeping us prisoners of apartheid, bringing out the worst qualities of greed and self-serving opportunism, and stripping government bare of its resources at every turn. We now have an opportunity with the SEZs, but Minister Davies has to solve some problems for them to succeed.
It appears as though the SEZs will take much too long - some say close to two years - to get off the ground. Then there are some constitutional issues that require clarity. Firstly, is it constitutional for SEZs to have different protection and benefit regimes? Secondly, is it constitutional for Minister Davies to exercise power and perform functions beyond that conferred upon him by law?
The Special Economic Zones Bill does not specify what laws and which regulations Minister Davies may suspend or derogate or which type of incentive he may or may not implement. This leaves considerable uncertainty and a measure of personal licence which even he may find to be unwarranted, and a step of unrestrained personal power taken too far.
Finally, chapter six leaves openings for corruption and the possibility that operator licences will be given to politically connected entities. Parliament needs to satisfy itself that these and other issues are addressed to ensure that the SEZs reach their full potential.
The DA supports the Special Economic Zones Bill. I thank you. [Applause.]
Mr Chairman, I think the most interesting bits of news have come from the chairman of our portfolio committee, the hon Fubbs. The corporate tax in the special economic zones will be 15%. That is to be commended because it is the private sector that will drive these SEZs, and they must be encouraged.
I think the department and also the committee staff should be congratulated for good presentations during this process. The constitutional legal service offices were extremely helpful, and our chairlady worked very hard. We had good presentations by stakeholders.
This Bill is about building and growing South Africa's economy by creating special economic zones. Strangely enough, the world has many special economic zones, but many have been failures. In this country, we have had a history of special economic zones and many of them were failures. With this Bill, in terms of the National Development Plan - you will notice that the chairlady was very careful to talk about the New Growth Path and not the National Development Plan - we need to grow our export promotions; grow our domestic and regional demands; strengthen our industrial base; and promote labour-absorbing industrialisation activities.
We have five existing industrial development zones. Coega has been very unsuccessful, nothing happened at OR Tambo and only Richards Bay and East London have been moderately successful. And Saldanha, which is brand new, looks as though it could be very successful for the oil and gas industries.
These proposals have gone through the National Economic Development and Labour Council, Nedlac, process and various concerns were raised. But, once again, we found that this Bill is not as good as it could be. It has got a shotgun approach. Section 22 will allow almost anybody to apply for a licence for a SEZ, but deliberately excludes private enterprise from applying. It is all centralised government control. Once again, the left dictates to South Africa on how we should run our economy.
Despite the international trend towards private enterprise driving SEZs, the Minister turns his face against it. We cannot expect every municipality to apply for an SEZ. At the same time, coastal towns and places with airports could apply for SEZs. Upington, for example, has a good international airport. They could do a tremendous amount to develop technology and the industry for the solar power industry - the same applies to Limpopo's Polokwane International Airport.
Another issue is on the question of job creation. As I am talking to you, there are 30 000 automobile workers out on strike. Most of them are around the Coega development zone. I do not know whether Vavi or Dlamini is behind it, but maybe hon Wayile will tell us when he makes his speech.
The point that the chairlady of our committee does not understand is that nobody wants cheap labour. We want easy labour. You must be able to hire and fire, and do it easily. If one fires, you must be able to fire fairly but easily. That will make a big difference to the SEZs.
The Minister, again, typically with his ideological background, wants all kinds of controls on these SEZs. I think we should be aware that in Ethiopia, Nigeria, Kenya and even Angola - where you can have a business registered and started within 24 hours, and remember Angola is heavy Marxist Leninist - they have completely changed their attitude towards investment. People will not come to South Africa if they can go to countries where they are free to move their labour, employ labour and invest more effectively. Cope hopes that the SEZs will prove more effectively. Cope will support the Bill. I thank you. [Time expired.]
House Chairperson, this Bill has substantially improved since the IFP's hon Dr Oriani-Ambrosini reacted to the presentation of its first draft to the committee by calling it an "ideological monstrosity." At that time the Bill revealed the premise that doing business in South Africa is too difficult and that special economic zones had to be established with different rules to make it easier.
Some of the issues of constitutionality raised by the IFP through Dr Oriani- Ambrosini in the committee have been addressed, which assures us the department can listen when it wants to. The Bill, however, does empower the Minister to give incentives and special measures to those enterprises located in the special economic zones and gives no indication of what this may be over and above subsidies. We are plainly giving the Minister a blank cheque without any measure of parliamentary input or approval. This is a major concern.
Government's involvement in the establishment of SEZs is important, but we do want to stress that the role of government should primarily be to create an enabling environment for businesses to operate in. And we hope that these SEZs will do just that to enable us to address the high levels of unemployment, which have been revealed as standing at a staggering 25,7%.
Our cost of doing business has increased, and we can no longer afford to industrialise solely large welfare programmes for industrialists that are underpinned not by economic reasons but by their quest to empower and to enrich the few. This Bill, if passed and not overseen properly, could become a conduit for a huge waste of taxpayers' money with little benefit to our real economy, which is capable of prospering and thriving without the benefit of the government's steroids.
Since 1992 the IFP has been proposing that Durban should be established as a free port. Southern Africa does need its own Singapore, Hong Kong or Macao. One would need to pursue this type of vision and provide Southern Africa with independent centres of growth and development.
As the IFP supports this Bill, we do want to stress that the most important thing would be to look at the issue of job creation. We should ensure that we are able to create self-help and self-reliant businesses which are sustainable and are able to improve the lives and collective sustainable livelihoods of the masses of our people who are plagued by poverty and are struggling every day to deal with and face it. I thank you. [Applause.]
Chair, the special economic zones contemplated by the Special Economic Zones Bill present a vast improvement on the existing industrial development zones that only allow for limited benefits to create an enabling environment for business to grow. The IDZs have not been particularly successful in providing for an incubation and growth space for business and industrial activity.
Die feit dat daar nou moontlik belastingvoordele geskep word vir besighede wat hulle in 'n spesiale ekonomiese sone, SES, vestig, is natuurlik van groot belang en sal die moontlikheid van suksesvolle beleggings in sodanige sones versterk. Dit is juis een van die groot nadele van die wet wat 'n groot rol gespeel het in die gebrek aan bewese sukses in sones soos Coega. (Translation of Afrikaans paragraph follows.)
[The fact that possible tax advantages are now being created for businesses that want to be established in a special economic zone, SEZ, is naturally of great importance and will strengthen the possibility of successful investments in such zones. This is precisely one of the big disadvantages of the Act that played a major role in the lack of proven success in zones like Coega.]
It is therefore positive to see government taking important lessons from the lack of success of the current IDZs. Business looks for an enabling environment and will not participate in any schemes unless it appears to be beneficial from a profit point of view. The Minister will also have to look further than tax incentives to lure business.
Broad-based black economic empowerment is a driver of cost as evidenced by an increasing number of researchers. I makes sense to address this as well. We suggest that the Minister introduces a further benefit that has the result of creating jobs and eradicating poverty in certain targeted areas. Instead of focussing on ownership in a SEZ zone, the focus should be on job creation as set out in the Bill's objectives. This can be achieved as follows: free all businesses in certain SEZs from BBBEE and instead require them to strive for certain job targets, with employment not taking place based on the national demography, but on socioeconomic measures. The employees can then participate in the share scheme that will allow for broad empowerment by way of ownership.
Op hierdie wyse word daar gefokus op die belangrikste aspek om armoede uit te wis, naamlik werkskepping. Swart ekonomiese bemagtiging, SEB, werk te beperkend en verryk net 'n paar individue. Nadat daar op 'n bre basis werk geskep is, kan aandag gegee word aan die bemagtiging van die werkerskorps.
Indien die SES op hierdie wyse besigheid sou lok, kan dit daartoe lei dat sones in erg verarmde gebiede in Suid-Afrika tot stand kom, soos 'n beoogde Noord-Kaapse ontwikkelingskorridor, 'n Transkei-korridor, 'n Mpumalanga- korridor, en talle ander. In die Noord-Kaap sal dit beteken dat bruinmense oorwegend in diens geneem en bemagtig sal word, asook die Khoisan-volke. (Translation of Afrikaans paragraphs follows.)
[In this manner the focus is on the most important aspect for eliminating poverty, namely job creation. Black economic empowerment, BEE, is too limiting and cause the enrichment of only a few individuals. After jobs have been created on a broad basis, attention can be given to the empowerment of the worker corps.
If the SEZ should lure business in this way, it can lead to the creation of zones in very poor areas in South Africa, such as an envisaged Northern Cape development corridor, a Transkei corridor, a Mpumalanga corridor, and various others. In the Northern Cape it will mean that predominantly coloured people will be employed and empowered, as well as the Khoisan people.]
Thus, we wish to impress upon the Minister to take an open-minded approach when approving SEZs. SEZs can be a true instrument for development.
Hon Chairperson, hon Members of Parliament, hon Ministers, the ANC welcomes and supports the Special Economic Zones Bill, especially during this important month in which we are celebrating the achievements made by women of this country. Challenges remain, and some of the elements of this Bill seek to ensure that we redress some of those imbalances. Furthermore, we must take note that 17 August 2013 marked 31 years since the brutal killing of the late Ruth First; hence the strategic importance of the Bill in terms of addressing the plight of women.
The special economic zones will be able to overcome many of the limitations of the industrial development zones, IDZs, which have had greater industrial challenges. One of the serious challenges is to ensure that we attract investment through foreign direct investment. But, the SEZs can now expand on the scope and impact of the IDZs.
The SEZs will accelerate economic growth; promote investment into less developed areas; promote investment to enhance the manufacturing sector; and promote job creation.
I want to focus on rural development. We all know that, for a number of historical reasons, the rural areas have been marginalised and investment has focused on the areas that were normally referred to as EWV areas. This Bill seeks to ensure that we redress some of those particular imbalances created by the apartheid government.
However, let me point out that the success of the SEZs also depends on the level of co-ordination between various government departments. The Special Economic Zones Bill allows for ownership of SEZs by provincial governments and local municipalities.
With regard to rural development, one of the limiting factors of the IDZs was that they could not be established near ports and airports, and that automatically excluded all the rural areas. The newly introduced SEZs will tackle the issue of development in rural areas because they can be established anywhere in the country.
The Department of Trade and Industry, DTI, proposed 15 locations designated for SEZs in eight of the nine provinces in our country. Those proposed locations are in the less developed areas of the country, including Musina, Tubatse and Komatipoort in Limpopo; Harrismith in the Free State; and the Wild Coast in the Eastern Cape, just to mention a few. Six of the 15 proposed SEZs are into agro processing, the sector which is the main contributor to employment in rural areas and to the employment of semi-skilled and unskilled labour. The proposed SEZs in the agro processing sector are in line with proposals from a particular municipality in the Eastern Cape for the designation of SEZs in the agro processing sector. This is an attempt to ensure that we also embark on a paradigm shift because, normally, we have been focussing on what was referred to as a nodal approach to development, which has led to a number of people in rural areas migrating to the city. This is something that this country cannot afford.
The establishment of the SEZs in rural areas is in line with the support of our country's employment initiatives, especially ragarding women, youth and people with disabilities. But, central to that, is the issue of black economic empowerment, which is a non-negotiable issue. We cannot establish SEZs exclusively for a particular group of people who benefitted in the past at the exclusion of the majority.
The participation of people in rural areas, women, the youth and people with disabilities in economic activity is the ANC-led government's agenda. The designation of SEZs in rural areas brings the reality to this particular agenda. The creation of decent work and other socioeconomic benefits in the region where the SEZ is located, promotes skills and technology transfer.
Despite the move towards promoting greater employment, government recognises that human resources are this country's most important asset. Therefore, it should be noted that government will not compromise regarding the reduction of labour standards which are coded as labour market flexibility. A number of people have confirmed that our labour standards are consistent with some of the International Labour Organisation's, ILO's. Therefore, there is no basis for workers to be subjected to slavery conditions during this particular dispensation.
With regard to encouraging co-ordination between government and the private sector, another challenge for the IDZs was the lack of co-ordination between the various levels of government. The Special Economic Zones Bill addresses this by better co-ordination and clearly defined collaboration between government and the private sector.
The involvement of government in such designated areas for development is paramount. The ANC once more supports the Bill. Thank you very much. [Time expired.] [Applause.]
Hon Chair, in noting our economic indicators of the gross domestic product, GDP, growth of 0,9% in the first quarter of 2013; the unemployment rate of some 25,6 to 40%; our current account deficit standing at 5,8% of our GDP; and a gain coefficient of 0,62 - being one of the highest if not the highest in the world - the ACDP is of the opinion that something must be done to kick-start our economy.
With the South African and global economies battling to grow and create jobs, the ACDP is confident that the introduction of SEZs could potentially be the catalyst needed to revive our economy. This year, our economy has grown at a rate of 2% compared to 2,5% in 2012. If we wish to create another 5 million jobs by 2020, it is imperative that we look at best practice initiatives and introduce interventions that will boost economic activity. However, South Africans need to be assured that SEZs will not suffer the same fate as our industrial development zones.
The establishment of the IDZs was intended to attract investment, and increase exports and the competitiveness of South African products in the five zones: Port Elizabeth, East London, Richards Bay, Gauteng and Saldanha Bay. To date, the lacklustre investment in the country's industrial development zones and their failure to meet the ambitious goals have attracted mixed reviews regarding the international competitiveness of South African IDZs.
The ACDP supports the promotion of the competitiveness of South Africa's enterprises through leveraging investment in export-orientated manufacturing industries and promoting the export of value-added manufactured goods.
Special economic zones in foreign countries have a proven track record of positively contributing to addressing challenges such as unemployment, inequality and various economic disadvantages which are rife in South Africa. The ACDP is of the opinion that the same could be done here in our country.
We hope that when introduced, these zones will in particular benefit our underdeveloped rural areas by creating a platform which will see foreign skills being transferred to our local labourers.
The ACDP will support this Bill. I thank you. [Applause.]
Hon Chairperson, the Special Economic Zones Bill has the potential to unlock real job creating growth in our economy. The SEZs can work to create jobs by attracting new investments in South Africa, but in order to do that, our SEZs need to be globally competitive. I argue that global competitiveness in the SEZ space requires three things: firstly, an attractive suite of incentives; secondly, simplicity of process; and lastly, seamless integration with the infrastructure.
This Bill does not deal directly with incentives save for providing an enabling environment for the government to design and offer a comprehensive set of incentives to potential investors. The entire SEZ project rises and falls on the attractiveness of incentives that government comes up with. Therefore, we will keenly watch those developments.
The incentives announced by the Minister of Finance earlier this year provide an excellent start, though it remains to be seen whether the Minister can get agreements on the actual implementation of that package. However, incentives alone will not be enough, because there will always be some other place or some other government that will try to top whatever we can realistically and sustainably offer. This brings me to the second critical ingredient, which is infrastructure.
The major test of this department, and indeed this legislation, will be whether the department can work with other departments and spheres of government to deliver special economic zones which offer easy access to efficient world class transport networks, energy networks and government services.
There must be process simplicity. A potential investor scanning the globe for the next place to locate his or her factory will not be willing to wait around while national, provincial and local governments lumber into action. Investors will simply move elsewhere. The process outlined in this Bill is cumbersome and relies on several ministerial decisions by both the Minister of Trade and Industry and the Minister of Finance.
In the portfolio committee, the DA pushed consistently for a much more simplified process for the application and designation of a special economic zone and the appointment of an operator. The department assured us that the process, from beginning to end, would not take longer than six months. That is on record and we will hold them to it.
Finally, the DA was successful in strengthening the role of local and provincial governments in designing and offering their own incentive packages, which we believe will be critical to the success of the SEZ project. Local governments in particular have an enormous scope to offer cost-saving incentives to investors, in rates, service charges and, particularly, electricity charges. We hope that local governments around the country will make good use of this opportunity.
Special economic zones can grow our economy and create jobs. However, in order to do so, the government will need to ensure that they are internationally competitive, that they get quickly and efficiently connected to reliable infrastructure networks and services and that the process to be followed is simple to understand and can be easily and quickly implemented. Thank you very much.
House Chairperson, hon members, the Minister described special economic zones with a definition, but in its simplest definition, a special economic zone is a geographical region which is designed to export goods and provide employment. According to the simplest form, it is a special area with special incentives designed as a special mechanism to help the country to achieve its development goals. And part of what the committee has done to amend this Bill is to make sure that it is accessible and provides a seamless structure to achieve its objectives.
There are many international examples of success stories in SEZs. Our international partners, such as China, also referred to by our chairperson, have established a number of SEZs with dramatic success in furthering economic development, creating jobs and promoting exports.
The Chinese SEZ programme began in 1980 when about five areas were designated in various provinces. Since then, many more have been established. These areas have great growth and the development dividend has been quite spectacular.
In India, the global crisis and the dramatic collapse of trade during 2008- 09, hurt exports in that country as in other emerging markets. The SEZs were the one source of solace for the economy, registering impressive growth in exports during that period.
If we consider the potential impact of this piece of legislation on our economy and, indeed, on the communities and the people that will be affected, it is a much anticipated Bill. However, the Bill is also, in a sense, a technical Bill because it provides all the designation of the zones, their promotion and development, and also for boards and the regulation issues around licences and permits. It is necessary that this House considers and passes legislation that is both progressive in terms of our national objectives and practicable and implementable.
Therefore, it is very encouraging that, although all the submissions that the committee received supported the concept of the SEZs, we received a number of important and thoughtful submissions to improve the concept from the public. One of the most frequently repeated issues was that the streamlining of structures in line with the accountability of the Bill be emphasised. The Bill has, therefore, been amended by the committee to account for some of these concerns.
In the Bill that we received, there was a good deal of confusion about the respective roles of the licensee and that of the operator. In the amended Bill, the committee has made numerous small changes and some substantial ones as well, acknowledging some of the problems and dealing with them.
Simply put, the process starts with an application from a government entity or a public private partnership to the Minister - which is important - for the designation of an area as an SEZ. The successful applicant then becomes a licensee and establishes an SEZ entity and a board, and this board, in turn, appoints an operator who must develop, manage and operate the zone. Businesses wishing to relocate to the area must apply to the operator, who must make recommendations to the board.
The committee spent considerable time on refining this process and, we believe, it is now a workable structure which will also fulfil the policy objectives of driving industrial and economic growth. In the Bill special attention is given to making it as simple as possible for businesses to apply to the operator of the zone to access the benefits.
One such imperative in clause 35 is the requirement that the operator of the zone must, and I quote, "facilitate a single point of contact or a one stop shop that delivers the required government services" and provides simplified procedures for setting up and conducting businesses in that SEZ. We hope that this might create a positive precedence for general application in our society for accessing government services.
The preamble of the Bill recognises that measures must be implemented to enhance domestic and regional demand, to attract foreign investment to our country while, at the same time, strengthening the South African industrial base and promoting a labour-absorbing industrialisation path. It envisages that the SEZs will be a mechanism that will contribute to the realisation of our economic growth and development goals.
The ANC supports this Bill. We believe it is a forward-looking piece of legislation, intended to focus on new sources of competitiveness that lie in innovation and productivity in the zones, supported by streamlined services and incentives. We trust that it will be supported in this House and quickly become law.
I just need to say that the opposition parties present some rather baffling arguments here. In the committee, they agree with almost everything, meekly, like pussy cats, but put them on this platform, and they come out all hell, fire and brimstone. This is a good Bill; politicking will not change it. Thank you very much. [Applause.]
Chairperson, I can hold my breath nearly as long as I have to respond, and I cannot go into details, but I just want to say thank you to everybody for the support of the Bill.
I want to say that on this occasion, I actually agree with what the hon Hill-Lewis had to say, namely that promoting special economic zones is not just about engaging in a race to the bottom in the provision of incentives. It is also about other things. It's about the development of the infrastructure; it is about developing a vision; it's about designing the relationship of the SEZ with productive activities. It is about the entrepreneurship of the operators. And I think that this is the experience of the East London IDZ but also the international experience. It is how the thing is run and managed as well as what is presented to the potential investors. So, I think what we are providing for here is for a process that allows us to move in that direction.
The idea that there could be corruption in the awarding of licences is, I think, not really the issue here. In fact, the Minister operates through a board, and the board is bound in terms of section 31 to follow fair, equitable, transparent, competitive, cost-effective procurement processes. I think there are plenty of cheques and balances in that regard.
The points that were made about clause 22, I think, were misunderstood. This is a clause that allows the Minister of Trade and Industry to work with other Ministers to fast-track a whole range of environmental permits and work permits, etc. It is part of joined-up governments and speeded-up processes.
The Bill provides for a lot of inclusion of the private sector as owners and licensees through partnership in public-private partnerships, PPPs, as operators and developers at the SEZ itselfs, and as businesses and investors in the SEZs and beneficiaries of all that is offered in the SEZs. As I said before, what we are doing in order to fast-track this is that we have already started a process together with the provinces and the municipalities to identify potential SEZs. We have been doing this work and it has proceeded from prefeasibility to feasibility studies. Those proposals will be put to the board, which will apply its mind, and hopefully we can begin to designate a number of SEZs in different parts of the country in the near future. I thank the hon members for their support. We are looking forward to our productive engagement in rolling out these SEZs in the near future. Thank you. [Applause.]
Debate concluded.
Bill read a second time.