Chairperson, ladies and gentlemen, CEOs of COTII institutions and senior officials, there won't be an opportunity in the time allocated to me to indicate the broad policy directions that we want to follow in detail.
We will therefore be circulating a longer document which contains the usual kind of departmental statement which takes place on these occasions. What I am going to do is merely to highlight a number of points. We indicate at the beginning of the speech that there are two considerations that will shape our approach to the work of the Department of Trade and Industry in this new term: The first is the electorate's mandate that is given to the ruling party. This enjoins us to create decent work and sustainable livelihoods on a scale that will enable us to halve unemployment by the year 2014. We indicate in this speech that this, in our estimation, enables us to bring about structural change in the economy.
While we have grown our economy and achieved some important goals in the last 15 years, we have not overcome a number of the structural impediments to our economic growth in a way that is enabling us to achieve those objectives. We therefore believe that the mandate requires us to overcome these structural shortcomings and to be bold, focused and decisive in our approach to tackle deep-seated challenges facing us.
The second matter which will shape our policy is the context of the global economic crisis. We point out in the paper that the crisis, which began as a financial crisis in the advanced industrialised countries, has now become a deep, real economy and jobs crisis that impacts across the entire globe, including South Africa.
We indicate that the industrial sector has been particularly hard hit by the crisis - 23 of 39 industrial subsectors are contracting - and that this is imposing some very real challenges to avoiding the possible threat of deindustrialisation which could emerge in this context.
We indicate that the way in which we are going to respond to the crisis is shaped by the framework agreement that was reached in dialogue with social partners and adopted in February 2009, and which was reiterated as the central pillar of our response by the President in his state of the nation address.
We indicate that there is a need for clear, co-ordinated economic policy to achieve our mandate objectives and to achieve on response to the crisis. And we therefore welcome the new structures of government, the economic planning commission in the Presidency and the Economic Development Department, which we believe can make important contributions to achieving the kind of coherence we need.
As the Department of Trade and Industry, we have identified industrial policy as a central plank of our response to the crisis and our efforts to place the economy on a new growth path. The completion and publication of a comprehensive National Industrial Policy Framework, NIPF, and the first Industrial Policy Action Plan, Ipap, in 2007-08, marked a significant achievement in our evolving efforts to advance industrial development in South Africa.
The NIPF was widely consulted on with stakeholders and within government, and it outlines our vision, approach and the guiding principles to industrial policy. It emphasises the strategic objective of altering the trajectory of industrialisation and economic growth to ensure more sustained employment creation; to defend, diversify and upgrade the industrial base; and to shift to high-value-added and knowledge-based industries, among other objectives.
It calls attention to the need for synergies and linkages between various policies and programmes in different arms and agencies of government. And it also emphasises a self-discovery among stakeholders to identify measures that we must take in our common effort to implement identified programmes.
When we launched the first Ipap, flowing from the framework in 2008, we identified a number of lead sectors and also some cross-cutting actions that were necessary. We began logically by choosing a number of the easier- to-do things at both the sectoral and cross-cutting level.
In the capital goods and transport equipment sector we launched the foundry and tooling initiatives and began work on the wood furniture-making projects identified in the first Ipap. We also introduced important amendments to the Competition Act.
Key achievements of our first Ipap include the completion of work on a new programme for the automotive sector - the leading manufacturing sector with critical supply linkages to about a dozen other subsectors. The Automotive Production and Development Programme will replace the current Motor Industry Development Programme.
We have also developed a new programme for the leading labour-intensive sector in the form of the Clothing and Textile Competitiveness Programme.
We are now at the stage where we are preparing for the next Ipap. This will be a three-year, rolling programme aligned to the MTEF. The next Ipap will be ready in January. In preparing the next Ipap, we have concluded that we can no longer simply choose the easier-to-do things that are identified in sector strategies. The reason for this is that if you choose the easier-to- do things you may miss some of the things that need to be done. We are accordingly preparing for a higher-impact Ipap.
Preparing for this has required that we address a number of critical capacity issues. I have been saying that delivering a higher-impact industrial policy requires acting on three Cs and an R - cadre development, co-ordination, on-going consultation with stakeholders and appropriate resourcing.
We have recently appointed the Deputy Director-General for Industrial Development and we are busy filling a number of critical posts in industrial sector units. We will also be approaching higher education institutions to develop courses and training opportunities that can contribute to industrial policy cadre building.
In the meantime, we will be undertaking a number of important initiatives. We will be working to broaden the Automotive Production and Development Programme to cover catalytic converters as well as heavy and commercial vehicles. We will also be redoubling our efforts to ensure that we have an optimum industrial policy response to the infrastructure investment programmes that are under way, in order to ensure that we maximise the opportunities they create for local industrial development.
We will be developing a new model for industrial financing and continuing to work on all of the lead sectors as well as developing in conjunction with the Department of Agriculture, Forestry and Fisheries a comprehensive strategy for agri-industries. This is all work which is ongoing and will be taking place between now and January.
While scaling up the impact of industrial policy requires programmes to be within affordability limits and properly resourced, it also requires us to be more strategic and smart as regards aligning the general programmes and activities of government and public entities with the overarching objectives and priorities of industrial policy.
We need to use more actively the instruments of public procurement to advance industrial policy objectives, and this includes procurement by state organs governed by the Preferential Procurement Policy Framework Act. We will be exploring together with our colleagues in government how we can build in stronger mechanisms to support local industrial development while also promoting BBBEE.
We need to ensure that we maximise the opportunities presented by procurement arising from the R787 billion infrastructure programme, and ensure that we meet the target of reducing the imported content of the programme from 40% to 30%. This will also help us to reduce the high current account deficit and ensure the sustainability of the infrastructure build programme.
We identify in the speech the need for a more strategic role for development financial institutions and for public entities, and to align them more closely with industrial policy. This includes institutions that are involved in standards, quality assurance and metrology. We want them to be playing a more strategic role in advancing industrial policy objectives. They can do so by locking in our exports to markets which require high standards, and locking out low-quality and unsafe imports into the domestic market. We want to see the competition authorities acting more energetically and we record that, despite recent successes, anticompetitive conduct in the economy remains disturbingly pervasive.
We hope that the Competition Amendment Bill passed last year, which we are hoping will soon be enacted, will allow the authorities to proceed against individual directors or managers taking decisions leading to anticompetitive conduct. We believe this will be a strong signal that we intend to enforce real compliance with competition law.
We want to achieve an alignment between trade policy and industrial policy. In this regard, we need to make it clear that we need industrial policy to inform trade policy, including tariff policy.
We have already taken a number of decisions on the basis of evidence presented to us to lower and, indeed, eliminate tariffs on upstream, capital-intensive, now mature industries, which produce inputs that are important cost items for the downstream industries.
We've taken some decisions and there are some more decisions of this nature in the pipeline. But if, on an evidence-based approach, we conclude that it is necessary to reduce or even remove duties, we will continue to do so.
At the same time, where processes of self-discovery and the development of the sector strategies lead to the conclusion that some particular industry or sector requires some increase in tariffs, and we have the space to do so under WTO rules, we must have the courage to provide such support.
We will also be taking steps to crack down on underinvoicing and illegal imports. We are taking measures and consulting on how we can actually significantly upscale our efforts in this regard. There is growing evidence that underinvoicing and illegal imports are becoming widespread and pervasive.
We are working with Sars and stakeholders to crack down on such practices. Make no mistake, we are looking to crack down on the big fish and we will prosecute anyone we discover with the full force of the law.
Turning to trade negotiations, we continue to be actively engaged in the Doha Round and have became aware recently of efforts to relaunch the Doha Round negotiations after the period of hibernation.
Our focus in the Doha Round negotiations will be to continue working with like-minded countries to ensure the Round is concluded on the basis of the developmental mandate on which it was launched. For us, the content of an agreement is as important as the fact of its conclusion, and we insist that a successful conclusion can only be one in which the outcome is proportionate and significantly addresses the imbalances and inequities in the global trading system that disadvantages developing countries.
In particular, we insist that South Africa cannot be expected to undertake disproportionate industrial tariff cuts that will undermine our industrial policy and employment-creation objectives. We are making every effort to ensure that this issue and concern is placed in the foreground in the current discussions.
The global crisis has also highlighted the importance of strengthening intraregional co-operation and South Africa remains committed to deepening regional integration in Southern Africa in order to strengthen mutually beneficial intraregional trade and development.
This, in our view, requires an agenda that does not focus exclusively on unrealistic timetables for formal trade integration arrangements, but also on co-operative programmes to build regional productive capacities and promote regional infrastructure development. These are, in fact, we believe, the vital prerequisites for further steps in trade integration in developing regions.
We remain concerned that the interim Economic Partnership Agreements, EPAs, now signed between some members of the SADC-EPA configuration and the EU, could undermine regional integration. I am happy to say that we recently had a discussion with the European Commissioner, Baroness Ashton, who has agreed to work with us on one of the possible impediments, which is the question of rules of origin. However, we still have to confront the possible impact of some of the provisions in the interim EPAs that could have a negative impact on Sacu. Our request is to try to minimise the damage that this could do to Sacu. We are going to focus on South-South trade with some of the major partners. We have a section on regulatory support industrial policy.
On broadening the economic participation, on BEE we are pushing for the establishment of the BBBEE Advisory Council and for Khula to be moving on its direct programme of establishing a retail presence. We are also looking forward to the Small Enterprise Development Agency, Seda, now having a period of stability and enhancing its services to small business.
Finally, we are saying that the scale and depth of the work requires that we have the necessary strategic and technical capabilities within the Department of Trade and Industry. Ours is not a quest to set up the organograms or major structures, but the motto that we have adopted is that of continuous improvement.
We need to continue to strengthen co-ordination mechanisms within government. Therefore, we are very strongly supporting the work of the Ministry of Economic Development. We will continue to work at fostering strong partnerships within the Nedlac framework with the social actors.
In conclusion, let me thank the Deputy Ministers for their support, the Department of Trade and Industry and the team for their support and serving with me in the short time that I've been in office. As I've said, anything else I would want to say is in the longer version, which we distributed to the hon members. Thank you very much. [Applause.]