Hon Deputy Speaker, hon Members of Parliament, colleagues and South Africans, especially the unemployed, industrialists and many people in the manufacturing sector, the Industrial Policy Action Plan, Ipap2, is no dream. We believe it is a reality capable of dynamically industrialising South Africa using manufacturing to drive it while generating millions of jobs.
The Portfolio Committee on Trade and Industry spent many weeks deliberating on Ipap2. It came to the conclusion that it is a radical shift to grow a developmental economy by taking a deliberate decision to ensure that investment targets the production sectors of the economy to arrest the decline in manufacturing and accelerate employment creation.
Within the context of a new growth path, Ipap2 focuses on value-adding sectors with the potential for high employment creation and growth multipliers. Indeed, it identified a number of constraints, among which are the following: exchange rate overvaluation and volatility; high cost of capital; failure to adequately leverage public procurement; monopolistic pricing of key inputs; a low skills base to support industry; aged, unreliable and expensive rail and port systems; and low productivity levels, currently.
The key overarching issues raised during the public hearings were as follows: employment creation; equity challenges; coherence between micro- and macroeconomic policies; and all of the issues that have been identified as constraints.
With regard to employment creation, will Ipap2 create 10 000, 20 000, 50 000 or 60 000 jobs? It will create million of jobs if it is implemented effectively.
The National Union of Metal Workers of South Africa, Numsa, welcomed the government's break from its neo-liberal economic orthodoxy in that it confronts the structural challenges faced by our economy. Many other stakeholders, in their submissions to the committee, argued - and this went across the board from unions, academics, businesses and industrialists - that no country has developed without a focused and well-resourced industrial policy.
Prof Patrick Bond asserts that the impact of the global financial crisis merely highlighted the existing and inherited contradictions of the neo- liberal macro- and microeconomic policies pursued. In fact Minister Davies, with whom we have a very strong and constructive relationship, acknowledged that the advances of the past 15 years did not bring about structural changes that would absorb the marginally unemployed people into new productive, income-earning activities.
Manufacturing has become the most productive sector, and, as I said, it is manufacturing that Ipap2 is highlighting. It is the biggest contributor of the production sector - 54,3% in 2008. But, it has been varied, and there is a steady decline in productivity and competitiveness. Due to all of those constraints I raised before, manufacturing, especially within the automotive, clothing and textile factory areas, has been identified as the engine of sustainable growth and job creation in developing countries.
In the submissions, we and many other people called for coherence between macro- and microeconomic policies and welcomed the reality that Ipap2 recognises this and that it will ensure that this coherence takes place.
Cosatu and Mr Jennings from the PG Group raised their concerns in respect of a stable and competitive currency. Cosatu called for the devaluation of the currency while Mr Jennings said - he reflected the position of a number of people who were exporting - that the current strong value of the currency threatened the export sector, particularly the automotive component, etc.
Public procurement and industrial financing will be dealt with by hon Radebe.
The committee called on government to significantly recapitalise the Industrial Development Corporation, IDC, and review its legislation and align it with the objectives of the developmental economy. In fact, as Business Unity South Africa, Busa, pointed out, the way it is currently legislated, it acts like a commercial bank.
The competition policy will be dealt with by hon Radebe, and hon Khumalo will certainly deal with the impact of standards, quality assurance, accreditation and metrology, SQAM, on developmental trade.
I can't cover all sectoral issues. Hon Radebe will be looking at minerals, iron ore and steel. But we went so far as even to bring in the green and energy-saving industries because there is absolutely no doubt that Ipap2 recognises the scope of the green industry to drive economic development.
The automotive sector itself has been growing. You will see this outside. The localisation content in vehicles that are produced by Volkswagen South Africa began at about 10% to 20%. Today it is reaching more than 70%. But the National Association of Automobile Manufacturers of South Africa, Naamsa, is concerned about the impact of the dispute between Kumba Iron Ore and ArcelorMittal South Africa.
The conclusion of the committee is saying that we will encourage - and we believe that Ipap2 also encourages this - regional dimensions here and promote regional integration. But it is also of the view that the transport system and logical infrastructure must be improved to support Ipap2. Telecommunications will note the shortage of critical skills and the like. Two or three of the key recommendations are that there is an integrative co- operative approach between departments and sectors.
In fact, there is absolutely no doubt that it is essential that the public and private sector work together. Of course, the fact that there was overwhelming support from those who came to the public hearings, ranging from unions to business, industrialists and manufacturists, simply indicates that Ipap2 has been too long in coming.
Of course, there is the issue of black economic empowerment, BEE, which is meant to broaden the base, upstream and downstream. The committee was of the opinion that the current tendency towards elitism and BEE must be surgically removed. Hon Speaker, I would like to thank all committee members for their active, robust deliberations here. The committee and all of us - opposition parties included - believe that the targeted outcomes that we dealt with and those that we believe Ipap2 generates can be achieved through this implementation. It is no dream. It is an achievable, implementable programme to which the entire Cabinet must give their wholehearted support. It cannot be limited. If it is limited it will cost us our development, and we will not achieve millions of jobs. Thank you. [Applause.]