Hon Chairperson, the Portfolio Committee on Trade and Industry is probably the best committee I have ever served on. Part of the reason is that we have a chairperson who is engaged, charismatic, at times eccentric and, most of all, utterly entertaining. [Laughter.] [Applause.]
If I may begin by saying that in India, 75% of urban dwellers - that is 400 million people - will be middle class by 2025. By 2030, Indonesia will have the fourth-largest middle class in the world, consuming R20 trillion in goods and services. In China, 150 million Chinese now earn an income of R80 000 or more per year. These countries have been growing at 8% a year and they are vivid illustrations of how growth creates hope, prosperity and progress. [Interjections.] Hardly in China, ma'am.
Together with Africa, where GDP will reach R21 trillion by 2020, these examples are of a vast and growing market, which, if successfully harnessed, can fuel our own growth at similarly high levels.
It is of the greatest, most fundamental importance to understand that substantially greater trade creates more jobs at home and, therefore, reduces poverty. Shifting trade by growing new markets without abandoning existing markets takes considerable skill and sophistication.
Old established markets, of which the European Union is the largest, account for 45,9% of our exports. However, other than India and China, none of the main developing economies, including Malaysia, Brazil, Turkey and Indonesia, feature in the top 10 nations with whom we trade. It is clear from these figures that the DTI has a formidable assignment to grow our trade in nontraditional markets. The question is whether the leadership is up to the task.
I will return to this subject, but first I want to say that the DTI also has the equally formidable assignment of maintaining our presence in established markets, in what is today a brutal trading world. I am greatly concerned about how the export promotion unit of the DTI is failing our fruit export sector, for example. Support for the Berlin and Asia pavilions has dried up. I have been told, and I am quoting, that "the DTI has lost a serious amount of capacity and knowledge with the departure of key personnel in their Trade and Investment SA/Export Marketing and Investment Assistance section" and that "the replacements are not up to the task of serving the industries to the level required".
In fact, communication has broken down. Towards the end of last year, two members of middle management at the export promotion unit stopped answering their e-mails and phone calls, failed to meet agreed-to deadlines and had a completely disinterested and even hostile attitude.
In response to a parliamentary question, the DTI provided a weak response by blaming exporters for not meeting new criteria. An urgent meeting should be called with all export councils to sort out what are, in fact, communication problems befitting a spaza shop and not a state department.
On the trade side, Minister Davies is certainly not lacking for trying. He is an energetic Minister. He plays a proactive role in leading trade missions and negotiations. He identifies barriers to trade and works very hard, relentlessly, at breaking them down. He is one of the best Ministers in this government. [Applause.] However, a formidable task requires formidable effort. Trade is not shifting away from our traditional markets. Reliance on Organisation for Economic Co-operation and Development, or OECD, countries as export destinations has increased. Yes, exports to China and India have increased, but Malaysia, Brazil, Turkey and Indonesia do not feature as yet. We understand that it takes time. Our natural market, Africa, does not feature yet. Colleagues, the National Development Plan remarks:
Despite the existence of several free-trade areas, customs unions and common markets, the level of intra-African trade remains among the lowest in the world. Only about 10% of African trade is within the continent, compared to about 40% with North America and about 60% with Western Europe.
The colonial pattern of trade has stubbornly endured. It is only now that some African countries have started to reverse decades of neglect in infrastructure - thanks, in fact, to China. Minister Davies must therefore develop a plan to ramp up and diversify trade. A review of the trade missions the DTI plans between June 2012 and March 2013 shows that he has, in fact, begun to identify key markets in South East Asia, especially China, Vietnam, Thailand and Singapore, as well as India, Turkey, Russia, the Middle East and South America. Equally, eight missions to African countries are forthcoming. However, trade missions are key and they have to be strategic - which they indeed are - but that alone is also not enough.
In our estimation, Minister Davies has to tackle two further tasks that will have major budget implications for the future. The first is to educate and train existing and aspiring diplomatic staff to learn the art of economic diplomacy. The model for this art, I believe, is Indian high commissioners, who sell their companies to outsiders at every turn. The second thing is to add capacity to existing trade missions and to establish new ones in export markets with growth potential. Let me suggest a few: Macau and Shenzhen in China; Bangalore and Hyderabad in India; Rio de Janeiro in Brazil; Istanbul in Turkey; Sydney in Australia; Surabaya in Indonesia; and Guadalajara in Mexico. The investments - they are expensive - should yield handsome returns in increased trade in the future.
The Southern African Customs Union, Sacu, and the Southern African Development Community, SADC, have made halting moves in liberalising aspects of trade. Progress has been slow, especially when it comes to Sacu, and there have been reversals. We are encouraged by the work of the Tripartite Free Trade Area initiative - an assembly of 26 countries that are currently part of the Common Market for Eastern and Southern Africa, Comesa; the East African Community; and SADC. It follows an ambitious free- trade policy agenda. We are supportive of an agreement that includes proposals for a large-scale redesign of customs co-operation, the simplification and harmonisation of trade documentation, as well as procedures and transit trade and facilities.
The fact is that moving goods across most, if not all of our borders in Africa is very slow and very expensive. Cargo trucks into Zimbabwe could be delayed for up to 10 days at the border post. A staggering number of forms have to be completed and filed, underpaid officials seek bribes, and many borders simply shut down overnight. There is hope to be drawn from some very innovative reform projects in East Africa. Currently, the border between Uganda and Rwanda never closes down. Mauritius, Kenya and Botswana are ahead of us in respect of using e-government for cross-border transactions. In our 8% growth project, we recommended that South Africa models customs clearance procedures on Mauritius's electronic data interchange system. We can learn a great deal from Mauritius.
Allow me to share some information with you. On average, it takes 30 days to export a container from South Africa, through our 7 ports, but 13 days out of Mauritius. It takes 8 documents in South Africa, but it takes 5 documents in Mauritius. It costs R12 248 to export a container from South Africa, but it costs half as much - R5 896 - from Mauritius.
Our processes and pricing simply make us uncompetitive. Furthermore, the decline of our rail network means that, increasingly, goods have to be transported by road. Figures released by the National Agricultural Marketing Council show that roads transport accounts for 65% of all logistics costs, which is three times the figure in China. Rising fuel prices and new toll roads - new toll roads, colleagues - add additional costs, ultimately undermining our competitiveness, and then Transnet looms large as the dolorous dinosaur of our nation.
I conclude with a few words about industrial policy. Let me say, Chairperson Fubbs, that the DA has no difficulty with the concept. The question is: How much, how far and in which sectors? There are some excellent incentive projects under way, sponsored by the DTI. For example, the Western Cape government has, with the DTI's assistance, developed a plan to service the oil and gas exploration industry, principally out of Saldanha Bay, tapping into a production and maintenance market worth R12,24 billion.
There is the ongoing manufacturing of high-speed coastguard boats to deal with smuggling, poaching and maritime piracy up and down both of our coastlines - again, in collaboration with the DTI. There are opportunities, furthermore, for old competences to be revived, such as our military technology and the building of rail rolling stock. There are opportunities for new competences to be developed, such as biotechnology applications in the manufacturing of vaccines and pharmaceutical products to deal with the bugs that attack plants, animals and human beings. The DTI, I believe, should join the Department of Science and Technology and consider putting some real money into the scandalously underfunded Agricultural Research Council and the Medical Research Council for this very purpose. I thank you. [Applause.]