Chairperson, Members of the Executive Council of Provinces, members of the NCOP, hon members of other Houses that may be here, ladies and gentlemen.
In addressing this House on previous occasions, we have consistently argued that preserving and enhancing South Africa's industrial capacity is intertwined with the challenge of promoting a broader and more equitable distribution of economic activity throughout the country.
The impact of the recent global economic crisis and recession on the patterns of economic development in our country has reinforced our view. Strong economic forces continue to underpin the tendency to concentrate on economic activity in established urban areas whilst simultaneously excluding from economic opportunities people who reside outside these areas. As we previously reported to the House, industrial development has enormous potential to generate decent work, including through overcoming regional disparities in economic development.
The Industrial Policy Action Plan, now commonly referred to as Ipap 2, is a three-year rolling Industrial Policy Action Plan for the Medium-Term Expenditure Framework, MTEF, period commencing in the 2010-11 financial year and ending in the 2012-13 financial year. It is designed to expand our industrial base in critical sectors of production and value-added activity with the bias towards those that are more labour absorbing.
The analysis underpinning Ipap2 starts by recognising that we need to place our economy on a new and different growth path. There are critical imbalances which became evident during the recession and even before. The most important of these is that when we grew - before the recession - consumption-driven sectors led by credit finance grew to about twice the rate of production sectors.
The Ipap2 then identified as a series of crosscutting as well as sectoral interventions. The most important crosscutting interventions are those which require drastic changes in our procurement regime as well as in the manner in which we are engaging in industrial financing. The Ipap2 is a product of collaborative and collective work by the economic and employment clusters in Cabinet. Although the Department of Trade and Industry stands at the centre of much of industrial policy and practice, Ipap's success is critically dependent on bringing about greater coherence and mutual support between ourselves and other government departments and agencies.
Hon members, we are well aware that achieving success will be an enormous challenge. We believe that, were it not for our intervention in several areas of the economy, we may, in fact, face a greater danger of de- industrialisation than is now the case. Our support programmes for the motor industry, for example, have been one recent success. The recent investment commitments by Volkwagen South Africa, BMW South Africa, and the Ford motor company of South Africa bring in an investment of about R9 billion between 2009 and 2013; and we support at least 3 500 direct jobs in vehicle assembly. These investments will in turn catalyse an estimated R4 billion of the investment by component manufacturers, sustaining the further 20 000 jobs during the same period. These investments were all supported by the work we did on the Automotive Investment Scheme.
In assessing the previous Motor Industry Development Programme, the extent of the auto component sector's significant multiplier impact through strong backward linkages to other sectors of the economy, as well as its potential to make a significant contribution to create decent work, became more apparent. Our new programme will extend existing benefits previously only available to light vehicle manufacturers and first to their suppliers through the Productive Asset Allowance of the Motor Industry Development Programme to all firms in the automotive component sector.
A second example of successful intervention is the Government Assistance Programme introduced in 2008, which has put South Africa on the global map as a supplier of business process services. A total of 6 000 jobs have already been created in the past two and a half years. The challenge, now, is to attract new investments in the context of increasing competition for investment in this sector. We will, this year, be embarking on a review of our strategy to ensure that it is responsive to new realities in the sector.
Further progress can be reported in respect of the Enterprise Investment Programme, amongst others. A total of 290 projects investing R6,1 billion and creating 11 336 jobs have received approval for Manufacturing Investment Programme grant funding, in the past year. More than 60% of the approved companies are in sectors prioritised in our first Industrial Policy Action Plan, namely capital equipment, automotives, chemicals, plastics, pharmaceuticals, forestry, and furniture. A total of 68% of these approved projects have already started production. The Tourism Support Programme which is the other subcomponent of the Enterprise Investment Programme, EIP, has granted approval to 164 projects with a projected investment of R2,3 billion, creating approximately 5 000 jobs.
A third example of successful support for development is through the Black Business Supplier Development Programme, BBSDP, which assists and prepares black entrepreneurs to take up business opportunities by providing training and access to productivity and competitiveness-enhancing knowledge services. During the past year, more than 4 000 enterprises across all provinces received technical and standards training, productivity-enhancing computer software, and marketing and promotional materials. New guidelines will come into effect in the second quarter of this financial year, extending the scope of this assistance. This will include a partial grant for productivity-enhancing technology, acquisition of tools, equipment and machinery for enterprises that have strong potential for further growth and integration into the formal industrial supply chains.
In the context of these evidence-based achievements, we are convinced that we need to move swiftly forward with the work which we have identified in Ipap2. We are, now, as I have been saying, firmly in implementation mode. This Ipap2 kicked off at the beginning of the financial year on 1 April and all the quarters which we have identified started on that date.
Hon members, I had an opportunity to speak on matters of trade policy in the National Assembly yesterday. I don't want to repeat the points in detail here. I do, however, welcome the continued keen active interest of the National Council of Provinces in international trade matters and we look forward to continue to work with and to brief you further on many of the important matters. We obviously indicated, yesterday and in the past hour, that the Trade Policy Paper underwent a number of processes and it's close to being finalised. We indicated that there are some very important developments taking place in the Southern African region, particularly with a forthcoming summit of heads of state and governments of the Southern African Customs Union to debate and discuss a way forward to turn soccer from a mere arrangement of convenience built around the revenue-sharing formula into a real instrument for developmental integration. We have indicated that we will pursue the work to enhance and develop the free trade area which came into force in the Southern African Development Community, SADC, in 2008; and we are also genuinely committed to extending African integration through pursuing the Trilateral SADC-East African Community-Common Market for Eastern and Southern Africa, Comesa, free trade arrangements which, when it comes into force, we'll put in place a free trade area quite literally from Cape to Cairo in an area of 700 billion people.
We pointed out some important developments which will be taking place in our relations with countries of the global South; the Southern African Customs Union, SACU-Mercosur Preferential Trade Agreement is now before Parliament for ratification. We are working energetically on trade negotiations with India and when those processes are complete we have committees to work on the trilateral arrangement between Mercosur, India and SACU. We've indicated that we do not see much prospect of the World Trade Organisation, WTO, completing, this year, very important issues that are at stake there, but our commitment is to continue to engage with parliamentarians on all of these matters.
Hon members, industrial policy requires a supportive regulatory environment to support business and protect consumers. In 2008, the Department of Trade and Industry piloted three major pieces of legislation through Parliament which were assented to by the President last year; and two of them are intended to come into force in October this year. The new legislation in question will impact on all our citizens. Firstly, there is the new Companies Act. This simplifies business registration, reduces unnecessary onerous financial reporting burdens on small, medium and micro enterprises, SMMEs, and provides new protection against unscrupulous practices for businesses in financial distress. We believe that this is a major piece of policy reform and, in fact, we are embarking on road shows around the country right now to alert businesses about the importance of this legislation.
Secondly, the new Consumer Protection Act provides, for the first time, safeguards for consumers through compulsory product description and labelling, product safety regulations, product choice and information disclosure. In addition to these two, the implementation of the Competition Amendment Act - which is now passed into the custody of the Department of Economic Development - will allow sectorwide and general market inquiries to be conducted to deal with uncompetitive outcomes and restraints on competition in key sectors of our economy.
To implement these new pieces of legislation, the necessary regulatory processes will be finalised this year. Given that the new laws will impact on all our citizens in all our provinces, we are beginning - as I said - to initiate and undertake widespread education and awareness campaigns, not only on the Companies Act, but also on the Consumer Act and on the competition legislation. With regard to the Fifa 2010 World Cup, we have published for comment the Fifa Ticketing Regulations. These regulations seek to ensure that the granting of temporary licenses provide opportunities for small, medium and micro enterprises from previously disadvantaged communities.
I thank all the MECs and provincial legal authorities for their co- operation in developing the 2010 liquor policy and Regulations. While we have been concentrating on developing new regulations, we are, at the same time, engaged in undertaking an impact assessment and comprehensive review of the gambling industry and legislation pertaining to this.
In consultation with colleagues at provincial level, we have established a Gambling Review Commission to assess the extent of gambling activities and its socioeconomic impact. The commission has conducted public hearings and will produce a report which we intend tabling in Parliament in the second half of this year.
Chairperson, enterprise development remains a key objective. We continue to learn as we implement. Based on these lessons, part of our response to improve support for SMMEs is based on the one-stop-shop framework. This framework provides for the collocation of SMME's support services through the relevant agencies at both national and provincial government level. The Small Enterprise Development Agency, Seda, is engaging with both provincial and municipal structures not only to collocate, but to cofund the delivery of some of the products and services within the Seda branches.
In addition to this, we continue with the implementation of our broad-based black economic empowerment, BBBEE, initiatives. Following the closure of the public commentary period, a team of the DTI and National Treasury is now working on aligning the Preferential Procurement Policy Framework Act, PPPFA, with the BBBEE Act. One of the aims of this alignment is to strengthen industrial development in support of the new growth path in our economy. We will further strengthen the broad-based black economic empowerment legislation by creating a punitive dispensation to prevent circumvention of broad-based black economic empowerment while developing incentives to promote greater compliance with BBBEE policy.
The launch of the BBBEE Advisory Council earlier this year signifies an important milestone. This is so because one of the key functions of the council will be to monitor the implementation of broad-based black economic empowerment by all organs of state, public entities, government departments, sector charter councils, and the general public at large. Aspects of the Act that require immediate attention include dealing with fronting, the policy implementation framework, regulation of the verification process and refinement of the codes; work is proceeding on all these matters.
In the area of co-operatives development, in consultation with the National Economic Development and Labour Council, Nedlac, we are finalising the Co- operatives Development Strategy and a Co-operatives Amendment Bill. My colleague, Deputy Minister Ntuli, will spell out some of the key issues later in the debate.
Hon members, with regard to regional economic development, our efforts have not always yielded the requisite results. However, as I indicated earlier, we believe that industrial development is a key component for addressing unbalanced regional development. Going forward, our policy focus will be on financial and institutional support as well as specific measures to support and develop small-scale industries through the promotion of regional industrial clusters. Our Regional Industrial Clusters Programme will have the following features: Firstly, the use of an industrial cluster approach to unlock economic development in underdeveloped areas.
Secondly, the identification of economic regions agglomerating a number of municipalities within and across provinces, and implementing the targeted economic development strategies for each economic region.
Thirdly, the concentration and co-ordination of various support measures within the DTI with support programmes from other governments, state-owned enterprises and the private sector organisations to support enterprises within an identified cluster.
Fourthly, the provision of a wide range of business development support services to enterprises within supported clusters.
In addition to all of these, we intend to work energetically with the other spheres of government to support local economic development.
Chairperson, as part of these efforts to broaden participation in economic activity, the DTI is also increasing support for entrepreneurial development. We have begun doing so by undertaking innovative, collaborative and strategic partnerships with institutions of higher learning. We have also set targets for skills development to produce additional engineers, technicians, and other skilled people to increase the number of qualified people in a variety of areas.
The advancement of women's economic empowerment cannot simply be a platitude. We have, therefore, integrated gender equity measures into our programmes to facilitate the participation of women in the economy and to enhance their contribution to the overall objective of empowerment. Further initiatives for this year include seeking Cabinet approval for strengthening the SA Women Entrepreneurs Network as an Apex body for women sectoral organisations. This work has been spearheaded by Deputy Minister Ntuli. We will also be approaching the Cabinet with a strategy on gender and women economic empowerment outlining integrated solutions that include directly tackling barriers that prevent women's economic emancipation.
In addition, given the higher than average rate of unemployment that our youth is facing, interventions will seek to increase the participation of youth in the economy and create jobs for young people. We will be submitting the Youth Development Strategy to Cabinet for approval during this financial year.
Finally, to deliver on our mandate, the DTI has to be a high performing organisation. Beginning with the new Human Resource Strategy, we are well on the road to developing a professional programme for economists, specialising in industrial policy and sector work. All in all, greater support will be provided for our bursary scheme, our postgraduate research programme and internship programmes as well as various functional skills and management development programmes. Good progress has been made in filling our senior management positions. In addition to this, we are focusing on the development of women in the department to create a pool of talent for senior management positions.
Finally, Chairperson, in the light of the challenges facing the Public Service around financial mismanagement, I would like to commend the department on its efforts in continuously receiving unqualified audit reports from the Auditor-General and in ensuring that suppliers are paid within a 30-day period. I thank our Deputy Ministers, MaNtuli who is with us today, and Thandi Tobias-Pokolo, who, unfortunately, is ill, the director-general and the staff of the DTI, the chief executive officers, and the chairs of the boards and all the workers in the various agencies. I thank you and I trust that this House will support the DTI's Budget Vote. [Appaluse.]