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In its formal presentation to the Parliamentary Portfolio Committee, at the invitation of the Minister of Trade and Industry Dr Rob Davies, the Southern African Institute of Steel Construction (SAISC) responded to the announcement of the Industrial Policy Action Plan (IPAP2). After extensive consultation with a wide range of members of its industry and others in the general construction industry, the institute said that it fully supports the initiative as outlined by the Minister in the National Assembly in February 2010.

The SAISC was represented by its Chairman Molefe Kgomo, executive director, Dr Hennie de Clercq, industry development executive Kobus de Beer and Steinmuller’s Bob Stephens.
In his report Minister Davies said that IPAP2 builds on the National Industrial Policy Framework (NIPF) and the 2007/08 IPAP. “It represents a significant step forward in scaling up our efforts to promote long term industrialisation and industrial diversification beyond our current reliance on traditional commodities and non-tradable services. Its purpose is to expand production in value-added sectors with high employment and growth multipliers that compete in export markets as well as compete in the domestic market against imports,” he said.
“Our industry agrees with and supports the basic outline and purposes set out by the Minister,” says SAISC executive director Dr Hennie de Clercq. ”We are particularly supportive of the move to having Industrial Policy geared up to achieve the genuine and comprehensive involvement of all government and industry players.”

He adds that through various initiatives, substantial progress has already been made by the steel construction industry under the framework created by IPAP2. These include: scaled up efforts to promote long term industrialisation through new investments – during the last three years (2006-2009) the industry invested some R1 billion in world class equipment and facilities; achieving increased skills development and employment; increased industrial diversification with the industry now serving the power generation, mining, materials handling, petrochemical, transport, logistics, retailing, processing and high rise building industries and achieving better competitiveness against imports - the industry has responded to all major requirements including a meaningful local content for the soccer stadiums and the maintaining of a high level of export participation.

Kobus de Beer is equally optimistic about IPAP2. “It is a meaningful initiative which will help the development of industry and the economy in general in this country,” he says

He adds that an important aspect of IPAP2 is the overhaul of the Preferential Procurement Policy Framework. In this regard he says there are a number of important issues.

“Major projects should be announced and firmed up with as much lead time as possible. The lack of certainty, like with the indefinite deferment of nuclear power projects and the new refinery at Coega, results in missed opportunities and hasty execution plans.

“More focus on and demand for local content is needed, including a “local content preference” as a predefined percentage based on local content achieved by value. It is disturbing that, for example, in the supply of cellular masts and power pylons capable South African companies are needlessly losing sales and reducing their labour complements in the face of Indian and Chinese competition.

“Aligned to this, it should be reiterated that skills are available or can be made available in the industry and many examples exist were people were trained for specific requirements in relatively short periods. The lack of skills is almost never a consideration when promoting local content.

“The introduction of more meaningful financial assistance interventions is welcomed as essential. Many of our competitor countries enjoy capital investment and working capital assistance and the establishment of an EXIM Bank would materially assist SMME’s and companies trading across borders.

“It should be noted that incentives such as the EIP (Enterprise Investment Scheme) are used by the industry and that it would have been even more effective during the past three years had it been possible to introduce the incentives earlier or to backdate applications. Also, import tariffs should be used more widely to prevent dumping and to provide a time period for South African industries to become proficient or competitive,” says de Beer.

With regard to the sensitive issue of pricing de Beer points out that the input prices for locally supplied steel have not been a constraint as shown by the low incidence of structural steel being imported - even if duty free. “The substantial growth of structural steel exported - from 100 000 tons in 2006 to in excess of 200 000 tons in 2008 - illustrates the point,” says de Beer.

De Clercq says that SAISC is conscious of the fact that for IPAP2 to succeed, close cooperation from industry is essential. “In this regard it should be known that we are a registered UNIDO SPX Centre and actively participate in profiling, benchmarking and seeking CSDP opportunities with ESKOM, Transnet, PetroSA and others.

“Regular feedback opportunities should be created for IPAP2, thereby allowing industry and government to report on progress and identify and deal with shortcomings or opportunities. Also, the establishment of a “direct line” of communication with the Minister and his personnel to consider urgent appeals or opportunities should be considered,” he concluded.

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