Voorsitter, op 'n vraag van my in hierdie Huis aan 'n vorige President is ek verseker dat die regering oor 'n industrile beleid beskik wat enige uitdagings die hoof kan bied. Vandag weet ons dat die Industrile Beleidsaksieplan nie aan die verwagtinge voldoen het nie, en dat die doel met die Industrile Beleidsaksieplan2 is om die tekortkominge en uitdagings aan te spreek. (Translation of Afrikaans paragraph follows.)
[Mr S J F MARAIS: Chairperson, after I asked a former President a question in this House, I was given the assurance that government has an industrial policy that is able to handle all challenges. Today we know that the Industrial Policy Action Plan has not lived up to expectations and that Ipap2 aims to address the shortcomings and challenges.]
South Africa has lost global market share and was overtaken by Brazil as an important emerging economy over the last 15 years. This has detrimental consequences for us in Africa and in both South-South and North-South trade relations. The inability to attract foreign direct investment, to regain global competitiveness in strategic industries and to create sustainable jobs has become our Achilles heel.
The success of an industrial policy is not dependent on a once-off successful intervention by government, but on applicable and targeted support over a period of time. The main purpose of Ipap2 should be to speed up the process of structural change towards higher production and employment initiatives and to know when to adapt and/or terminate interventions as circumstances change or to rectify outright mistakes.
Ipap2 has identified 13 strategic sectors compared to the current 7. Most of these have shed jobs in 2009 - 870 000 to be specific. It also sets out seven policy objectives. However, there are no cost-benefit analyses or explanations linked to each of the favoured sectors. There are also no quantifiable and measurable objectives explaining the expected cost and impact of each intervention. The impression is that government has decided on the winners and leading sectors, which is contrary to the belief of the DA that successful industrial policies are always market-driven and private sector-led in partnership with government. The South African economist Jac Laubscher said that "industrial policy should aim at discovering the competitive advantages in the economy in close collaboration with the private sector instead of prescribing what they should be". Dani Rodrik of Harvard University said that "the real test for an industrial policy is whether governments can let losers go".
One gets the impression that some of the sectors made the list because they are either fashionable or ideologically attractive while others respond to strong lobbying from vested interests. Global investors are losing confidence in our credibility as an investment destination. The practical implications of the current black economic empowerment policy, as represented by the widely reported ArcelorMittal South Africa-Imperial Crown Trading, AMSA-ICT deal, the constant rumours about nationalisation and state corruption and the effects of the Green Paper on agricultural land ownership have added to negative perceptions.
In instances of successful global industrial policies, a focused and specialised approach was followed together with partnerships between government and big and small enterprises. Ipap2, in our opinion, is targeting too many diverse sectors with no real strategic thrust and targeted financial support in specific sectors to clearly lead the industrialised recovery. It ignores the fact that our strength lies in our diversity and in sectors where we can be champions, as well as the limited financial resources available. Dit wil voorkom asof geen werklike moeite gedoen is om die strategie uit te brei om vir spesifiek klein, medium, en mikro-ondernemings, entrepreneurs en koperasies te voorsien nie, en om te verseker dat die beleide van handel, swart ekonomiese bemagtiging en arbeid proaktief en op 'n holistiese wyse ondersteuning aan industrialisasie en volhoubare belegging bied nie. (Translation of Afrikaans paragraph follows.)
[It seems as if nobody took the trouble to extend the strategies to provide for specific small, medium and micro enterprises, entrepreneurs and co- operatives, and to ensure that the policies of trade, black economic empowerment and labour will provide support to industrialisation and sustainable investment in a proactive and holistic manner.]
Although Ipap2 provides for retail, financial and some service-related activities, its main focus is on growing the manufacturing sector. It is a myth that only mining, agriculture and manufacturing can be regarded as productive sectors. No mention was made of the possibility of utilising the service sector as a lead sector. Experiences in India have shown that service-led sectors' growth can be sustainable and be a leading economic sector. Today services are the largest sector in the world, accounting for more than 70% of global output, and we are not part of that.
Nie genoeg klem is geplaas op die finansile sektor wat noodsaaklik is vir ekonomiese groei en ontwikkeling nie. Die Suid-Afrikaanse finansile dienste sektor word hoog geag in die wreld en is ideaal om dienste te voorsien tussen Afrika en die res van die wreld. (Translation of Afrikaans paragraph follows.)
[Not enough emphasis is being placed on the financial sector, which is essential for economic growth and development. The South African financial services sector is held in high esteem around the world and is ideal to provide services between Africa and the rest of the world.]
South Africa has ample raw material, natural resources and low-skilled - mostly unemployed - labour. A key element of Ipap2 seems to be the importance of technological knowledge and capacity for which a highly skilled labour force is needed, which depends very much on an effective education and skills development regime, for which South Africa is not well positioned. Thus, Ipap2 is targeting an ideal labour force and not the one we have.
Other barriers Ipap2 is facing are the lack of foreign direct investments due to unpredictability and low investor confidence, low productivity and weak global competitiveness, a highly regulated but inflexible labour regime, limited availability of project funding, and the poor state of our transport infrastructure.
Ipap2 emphasised the importance of local beneficiation and how this will increase the local content of manufactured products, employment and foreign earnings. However, the reality seems to be different. For example, the Automotive Production and Development Programme is seen to be central to the success of Ipap2. The prevailing criticism is its highly mechanised nature and the very small local content in vehicles assembled, in some cases less than 30%. Companies like Volkswagen South Africa have set a target of 70% local content. However, it does appear that much of the raw material and semi-finished products are still imported and are judged to be 100% local content after some value has been added. Both Naamsa and ArcelorMittal South Africa confirmed that while South Africa has some of the best iron ore in the world, South Africa does not produce flat sheet metal to be used in the manufacturing of vehicle bodies.
Meer klem moet ook geplaas word op waardetoevoeging van Suid-Afrikaanse rou materiaal en om die arbeidsintensiewe voertuigkomponentebedryf as 'n globale kompeterende sektor te ontwikkel. (Translation of Afrikaans paragraph follows.)
[More emphasis should also be placed on value-adding with regard to South African raw material and developing the labour-intensive motor vehicle components industry as a competitive sector globally.]
Industrial development zones, IDZs, in the past were targeted and designed to drive specific industrial and export sectors. During the visit of our committee to Coega, it became clear that not enough priority and support are being committed to IDZs despite the enormous initial state investments made. The DA believes that export processing and job creation zones can be an effective mechanism that must enjoy targeted behind-the-border incentives. Such zones should be implemented in more rural areas where wage subsidies and tax incentives on profits and to first-time employees should be considered to also contribute to the economic development in those rural areas.
Agro-processing offers opportunities to effectively structure land reform through the utilisation of commercial productive land as well as existing production capacity, knowledge and expertise. This will add to rural development, strengthen the whole agrisector and contribute to food security, second tier agri-industries and their export capacity.
As we have learned from our last interactions with Eskom and the iron, steel, and automotive industries, there are still many stumbling blocks preventing Ipap2 from achieving the intended outcomes. We support the view of the committee with regard to the need for continuous evaluation of appropriate strategic industrial actions plans that will meet the demands of the time and will enjoy the full support and buy-in of government, labour, South African business and foreign direct investors. This will not only contribute to optimal employment and beneficiation in South Africa, but will assure strategic global competitive positioning, sustainability and an open-opportunity environment for all. Ipap2 must be seen as a step towards practical and achievable action plans that will contribute to the actual growing of our economy. The DA will continue to play a constructive role to develop the best options for our needs. I thank you. [Applause.]