THE NATIONAL COUNCIL OF PROVINCES
QUESTION FOR WRITTEN REPLY
Question 260
Mr R A Lees (DA-KZN)) to ask the Minister of Trade and Industry:
Whether any (a) subsidies, (b) preferential tariffs and/or (c) other forms
of incentives were granted to (i) motor vehicle manufactures and/or (ii)
motor vehicle component manufactures during the period 01 January 1999 up
to 31 December 2009; if not, what is the position in this regard; if so,
(aa) what is the (i) name and (ii) purpose of these (aaa) subsidies, (bbb)
preferential tariffs and/or (ccc) other forms of incentives, (bb) what are
the names of the companies which were granted these subsidies and (cc) what
was the total amount paid to each company in each case over the specified
period in respect of each subsidy that was granted to each of these
companies?
Response:
Between 1st January 1999 and 31st December 2009, an amount of R309, 278,
517 was paid by the dti to motor vehicle and vehicle components
manufacturers through the following incentive programmes:
Summary
Table 1: the dti funding summary to the Automotives Sector (1999 â 2009)
| |Direct support |Indirect Support|Total (R) |
| |(R) | | |
|SMEDP |36, 074, 913 |0 |36, 074, 913 |
|IDZ |134, 000, 000 |0 |134, 000, 000 |
|CIP |8, 503, 169 |0 |8,503,169 |
|EMIA** |44, 465, 916 |0 |44, 465, 916 |
|SIP |86, 234, 519 |0 |86, 234, 519 |
|Total |309, 278, 517 | |309, 278, 517 |
Source: TEO â
EMIA up to end 2009/10
1. The Small and Medium Enterprise Development Programme (SMEDP)
The SMEDP was part of a suite of investment support incentives introduced
by the dti in the year 2000, with the objective to elicit higher levels
of private sector investment that would create employment and promote value
adding in the country. Between 1999 and 2009, the dti, through the SMEDP,
has supported approximately 100 automotives projects to the value of R36,
074, 913. A complete list of companies supported is attached as annexure A.
The SMEDP offered a grant of up to 10% towards qualifying costs of new and
expansion projects. In August 2006, the dti announced a temporary
suspension of applications for the SMEDP incentive in order to modify and
improve the programme. The programme has since been replaced by the
Enterprise Investment Programme (EIP), which was launched in 2008 and no
payments have been made to the Auto sector for the EIP to date.
2. Industrial Development Zones (IDZs)
An IDZ is a purpose-built industrial estate linked to an international sea
or air port that leverages fixed direct investments in value added and
export-oriented manufacturing industries. The aim of the IDZ programme is
to promote the competitiveness of the manufacturing sector and to encourage
beneficiation of locally available resources.
the dti spent a total of R134 million on the construction of the
Automotives Supplier Park (ASP) at the East London IDZ between 2006 and
2008. The Supplier Park manufactures and supplies car components to the
Mercedes Benz assembly plant in East London. The total investment from both
the dti and the Eastern Cape Province amounted to R429 million.
3. The Critical Infrastructure Programme (CIP)
The Critical infrastructure Programme (CIP) is an incentive programme that
aims to attract huge manufacturing investment in South Africa through
investment in enabling critical infrastructure. The CIP is a 70/30 non-
refundable matching grant scheme intended to leverage strategic investment
projects by specifically supporting infrastructure development that would
enable investments.
Through the CIP, the dti spent R8, 503, 169 on the construction of the
Nelson Mandela Bay Logistics Park, a vehicle component supplier park for
Volkswagen in Uitenhage.
4. Export Marketing Assistance Scheme (EMIA)
The EMIA scheme, which encompasses nine sub-programmes, was introduced in
2000 as a vehicle to develop the South African export market and promote
exporting of local products and services internationally. The scheme
partially compensates exporters for costs incurred in respect of activities
aimed at developing export markets for South African products and services
abroad, and to recruit new foreign direct investment into the country. From
1999 to end 2009/10, the EMIA programme supported projects in the
automotives sector, to the value of R44, 465, 916.
5. STRATEGIC INDUSTRIAL PROJECTS - SIP
SIP was an incentive programme designed to encourage investments into South
African industry by both local and foreign investors. Its primary aim was
to significantly contribute to growth, development and competitiveness of
specific industry sectors by providing industrial investment allowances, in
the form of tax relief, to qualifying industrial projects. The key
objective of the SIP programme was to promote large scale industrial
investments in South Africa and to create employment opportunities.
The SIP programme was approved by Cabinet on 17 August 2000 and was
governed by article 12G of the Income Tax Act, 1962 (Act no 58 of 1962) and
the regulations published in the Government Gazette of 21 November 2001.
Applications were accepted until 31 July 2005 and additional investment
allowances were approved up to but not exceeding R10 billion.
Only 2 projects benefited for tax allowance;
|Name of the |Industrial project |period |Allowance |
|co. | | |deducted |
|Trident |Stamping of metal and |01/07/2005 to|R55 340 240 |
|Steel (Pty) |aluminum blanks for the |30/06/2006 | |
|Ltd |automotive industry | | |
|Foretex-Ikhw|Aluminum suspension parts |01/01/2009 to|R30 894 279 |
|ezi (Pty) |for DCSA |31/12 2009 | |
|Ltd | | | |
|TOTAL | | |R86 234 519 |