Chairperson, hon members of the NCOP, leaders of the Department of Trade and Industry, DTI, Deputy Ministers, members of the broad DTI family, ladies and gentlemen, we have repeatedly indicated in addresses in this Council that the promotion of economic growth, development and decent jobs requires us to work together across the three spheres of government, as well as in active collaboration with nonstate actors, including business and labour.
Achieving a higher level of synergy of effort is becoming an increasingly evident imperative as we move forward in a number of areas of responsibility in the DTI. These include industrial policy, the promotion of small, medium and micro enterprises and cooperatives, the management of specific regulated activities such as liquor and gambling, and also the area of international trade and investment promotion.
Our department's main contribution to the collective national effort to place our economy on the New Growth Path, capable of generating five million new jobs by 2020, is through the implementation of our Industrial Policy Action Plan. This is both our flagship programme and the programme that shapes and informs all other activities of the Department of Trade and Industry.
In April this year we released the latest iteration of our three-year rolling Industrial Policy Action Plan 2, Ipap2. This took place against the background of pleasing news that year-on-year growth for the first quarter of 2011 was 4,9% for the manufacturing sector, the highest of any of the economic sectors recorded. However, employment growth in the sector continues to lack output, which remains a major concern and a focus of attention as we move forward. Amongst other things, the latest iteration of Ipap2 highlighted a number of successes achieved during the year 2010-11. These include, firstly, the finalisation and strategic implementation of the Automotive Investment Scheme, AIS. This framed an environment which led a number of automotive assemblers and component supplier companies to announce investment commitments totalling R13 billion, which will support the creation of 24 000 jobs. Of particular significance is the expansion in local component sourcing by the original equipment manufacturers, which is important because most of the job creation in the automotive sector will emerge from smaller companies producing components.
Secondly, we saw the implementation of new procurement policies underpinning significant localisation in a number of sectors. An important example was the awarding of 72% of the recent antiretroviral, ARV, tender to local companies, which will not only result in the growth of the sector locally, but has also led to significant savings for the government. We also saw an advance in localisation and supplier development programmes within some state- owned enterprises, SOEs, resulting in a commitment, for example, to ensuring that 90 of 100 locomotives that will be procured by Transnet will be manufactured in South Africa.
Thirdly, we saw good progress in creating employment opportunities for young people in Business Process Services, BPS, where investments totalling R82 million were announced, which will yield in the region of 1 800 jobs.
Fourthly, with green industries becoming increasingly important globally, Ipap2 identified significant opportunities for business development and job creation in this area. As part of Ipap2, the South African Bureau of Standards, SABS, has successfully drafted new standards for solar water heaters; wind energy turbines; energy efficient lighting; appliances and products; electric batteries and alternative fuel vehicles; and co- generation of electricity and biofuels. Building standards have also been revised to ensure high levels of energy efficiency and mandatory installation of solar water heaters in new buildings. The Interdepartmental Committee, IDC, saw a significant take-up of its specific facility for the production and installation of solar water heaters. Some of the major steps forward that we anticipate making during the current year include further progress regarding the reform of procurement regulations and processes to support localisation. On 6 June 2011 the Minister of Finance gazetted the new preferential procurement regulations, which will come into effect on 7 December. These regulations will empower the DTI to designate specific industries or sectors of critical and/or strategic importance, where tenders should prescribe that only locally manufactured products will be considered, or that only locally manufactured products with prescribed minimum thresholds for local content will be considered.
The DTI is currently hard at work to ensure that when the new regulations come into effect we will be ready with a number of designations to ensure that, as our infrastructure investment programmes advance, they will act as a catalyst to local industrial development.
Work to leverage more from the balance sheet of the IDC has already unlocked between R70 and R100 billion of additional resources to finance new initiatives. And this year we anticipate finalising work to identify a new model of developmental financing for industrial development that we hope can result in an increasing quantum of funding being made available to support industrial development at affordable rates of interest.
While manufacturing remains the backbone of the South African economy due to a combination of factors, it remains largely concentrated in the three main regional hubs. In this regard there is consensus that we need to regionally diversify manufacturing industries to new economic regions in addition to the current hubs. Industrial development zones, IDZs, if effectively managed, can be useful instruments for promoting a more regionally diverse manufacturing industry.
During the 2010-11 financial year two IDZs, namely Coega and the East London IDZ, attracted nine investors with an estimated investment value of R620 million. These investments will support an estimated 4 551 construction jobs and a further 1 400 direct jobs. These developments point to the potential that exists in the IDZ model, which, however, does need to be improved and developed. I am pleased to be able to indicate to the Council that, together with our colleagues in the provinces, we have almost completed a policy review which will be the basis on which we propose working together to advance greater regional diversification of industrial development.
In line with these developments, we continue to learn from our efforts to promote the development of small businesses and cooperatives. An early conclusion of an ongoing review which we have commissioned is that we need to give more priority to incubation programmes, which both our own experience and that of other countries tells us is a particularly promising way to grow real entrepreneurs.
The problem we have is that there are only about 35 recognised incubation projects in South Africa, whereas Brazil, for example, has many hundreds. The Small Enterprise Development Agency, Seda, has embarked on a programme to roll out 250 incubation programmes over the current Medium-Term Expenditure Framework, MTEF, period. I trust that Seda will work with both provincial and local government agencies to ensure that this programme delivers what we need.
On the regulatory front, members will be aware that the new Companies Act is now in force. We strongly believe that the implementation of this new Act will simplify business registration processes, reduce red tape and enhance the transparency of company management.
With regard to implementation, since our previous Budget Vote in this Council, the Companies and Intellectual Property Commission and the National Consumer Commission have both been established and are now operational. More work will be undertaken in the current financial year to extend the provincial footprint of the National Consumer Protection Act, working in harmony with provincial consumer protection agencies.
We reported previously that in December 2009 we launched a Gambling Review Commission to define a new framework for the regulation and roll-out of gambling activities, taking into account both business dynamics and the need to protect the public from unhealthy overstimulation in the context of new developments in the industry. This commission has completed its work and Cabinet has approved our submitting the report to Parliament. It will be tabled as the report of the commission, and it is my earnest hope that both Houses of Parliament will engage with that report and assist us in defining a sensible and sustainable framework for the regulation of this activity.
The DTI, together with the provinces, also regulates the liquor industry. This industry provides employment to thousands of people, and is therefore important economically. However, the negative impact which alcohol abuse, as part of substance abuse, has on our society was recently highlighted at an interministerial conference organised by my colleague, the Minister of Social Development. The National Liquor Regulators' Forum, combining liquor regulators at both national and provincial levels, has developed a number of proposals aimed at more effectively combating alcohol abuse. I trust that in the next National Liquor Policy Council meeting we will be able to engage with these proposals in a spirit of working together to achieve more.
In the Presidency Budget Vote debate in the National Assembly on June 14, President Zuma indicated that we were reviewing the Broad- Based Black Economic Empowerment Act, BBBEE Act, and the codes in order, among other things, to more effectively combat fronting, including complex fronting. He also emphasised the use of BBBEE to support productive activity and training and skills development. A number of proposals have been discussed in the Cabinet Economic Sectors and Employment Cluster. The proposals are being refined for presentation to Cabinet, and through Cabinet to Parliament in the near future.
It is evident that in an increasingly globalised world the prospects for local and regional economic development are greatly influenced by trends in international trade relations. Conversely, through developments at local and regional levels we may impact in varying degrees on what happens in the international sphere. Therefore, while the primary focus of this Council is on provincial and local economic development, giving effect to this mandate also requires engagement with matters of the international economy, and of international trade and investment.
As we all know, the global economy is making a very tentative recovery from the worst recession in 70 years, and this has had very significant implications for our economy, in particular jobs. As the economic recovery in our key traditional export markets in the developed north remains slow, there is at the same time sustained growth in the large developing economies of China, India and Brazil, while Africa is increasingly being seen as the next growth story after China and India.
All of this is necessitating a process of trade adjustment, as we redirect and accelerate our export promotion efforts towards the fast-growing developing countries. Already we have seen a fourfold increase in our exports to our fellow Brics countries - Brazil, Russia, India and China - between 2006 and 2010, while our imports from those countries has doubled. Our admission to Brics earlier this year enables us to participate in a programme to develop a new framework for intra-Brics co-operation. We indicated in early discussions with our fellow Brics members that what we seek is not just a further quantitative increase in that trade, but also a qualitative shift, which will see us exporting more value-added products to those countries.
We have also identified a need to move forward with the promotion of developmental integration on the African continent. This strategic approach is beginning to bear fruit. Last year, the heads of state of the Southern African Customs Union, Sacu, met twice, and those summits have helped to forge a more coherent developmental integration work programme for Sacu. On the basis of that platform, the DTI is focusing on identifying regional value chains that support industrial development across all of the Sacu member states.
We also continue to work to consolidate gains made under the Southern African Development Community, SADC, free trade area. Earlier this month, our President hosted the Tripartite Summit of SADC, the East African Community, EAC, and the Common Market for Eastern and Southern Africa, Comesa. This summit launched a process of negotiation over the next three years of a tripartite free trade area that will encompass all three regional groupings. The economic potential for this tripartite FTA is in our view considerable. It will draw together the markets of 26 countries, with a combined gross domestic product, GDP, projected to reach over US$1 trillion by 2013, and with a population approaching 600 million people.
Substantive progress has also been made in promoting targeted foreign direct investment from a range of countries including China, India, Russia, Brazil, Japan, Spain, Germany, France, the United Kingdom, UK, the United States of America, USA, and countries of the Middle East. This work programme will translate into an investment pipeline of R115 billion's worth of projects over the next three years. Chairperson, R28 billion of this has already been secured, with a potential to create 13 000 jobs.
Finally, I would like to report some very specific local economic development, LED, efforts. During the past year, as a pilot project, the DTI supported the uMngeni Local Municipality in developing the Business Retention and Expansion Strategy, BRE Strategy, and an agricultural development programme.
The department also supported catalytic projects through the Industrial Development Corporation, IDC's, Vutha'Mlilo Fund to create an enabling environment aimed at economic development. Completed projects include the training and employing of youth through a Local Economic Development Cadet Programme in which learners were trained in economic development and governance, and placed in local economic development, LED, agencies in municipalities across the country.
In total 10 projects were supported by the Vutha'Mlilo Fund. They include a forestry initiative in KwaZulu-Natal, the Business Retention and Expansion Programme across several provinces, a chicory production and beneficiation and tourism project in Ingquza in the Eastern Cape, mining in Mutale in Limpopo, and an energy project in the Blue Crane Municipality in the Eastern Cape.
The DTI, in partnership with the University of Johannesburg, UJ, concluded an agreement for UJ to offer a capacity-building programme to provide skills support to municipalities with regard to local economic development.
In conclusion, let me thank the chairperson, Comrade Gumede, and members of the select committee for all the hard work and support they have given to our programmes in the past year. Let me also thank the Deputy Ministers Tobias-Pokolo and Elizabeth Thabethe for the support I receive from them, and also thank the new Director-General of the department, Mr Lionel October, who was not yet appointed when we were here last year, the Deputy Directors-General, DDGs, and all the members of the DTI family for their support.
I have pleasure in calling on the NCOP to support the Budget Vote of the DTI. Thank you very much. [Applause.]