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.]