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East London IDZMain Title:
Sub title
By: Joe Bloggs
23 March 2010
Trade and Customs 2013
The Role of IDZ,s in Exporting Goods,
investment and local Socio-Economic
GrowthBy: Thando Gwintsa
Date: 10 September 2013
Industrial Development Zones in South Africa
Brief Overview of an IDZ– Connectivity Locally and Internationally– Ecology for industrialization– Economic Catalyst– Social transformation Platform
• Programme Challenges– Value Proposition-Integrative model– Customs Controlled Incentive (CCA)– Progress on CCA Implementation– Other trade facilitation solutions (PPP)– Vision for new SEZ environment
Connectivity – locally and globally
3
Ease of access to
regional transport
infrastructures
Local economy OEM
industrial capabilities
strengthened
Dedicated shared
service and
logistics facilities
Purpose-built
industrial sub-zone
communities
Economy and Ecology for industrialisation
4
Industries clustered
for synergy and
productivity
Global standard
production facility
construction
Innovative shared
infrastructure &
logistics solutions
Just in sequence
production and
OEM supply
Modern and well-
secured industrial
complex
Economic catalyst and generator
5
Fixed investment
into local industrial
property sector
Income generator
for Metro services
& utilities
Catalyst Platform for:
Development and upgrading of skills;
Acquisition of new industrial technology;
Supported production/process innovation;
Extension of trade & other industry networks;
Safety, health & environmental best practice adoption
Direct and Indirect
Employment
stimulus
National fiscus
contribution from
export earnings
Development of
sector chains and
value addition
Taxation and other
duty contributions
Social transformer
6
Incubator for
emergent
entrepreneurs
Regional
communities
development
(spillover linkages)
SMME opportunity
generator and
support channel
Corporate social
investment
opportunities
Mechanism for
international skills
transfer
Supply chain
transformation
Industrial sector
equity / gender
transformation
Decent
employment
IDZ Programme Challenges� International Competition Models (linked to regional economy)
� Investor uncertainties� Delays in policy implementation
� Delays in Incentive Implementation (Esp. Customs ControlledArea incentive)
� Increased administrative burdens. Workflow is still largelypaper-based...resulting in huge HR cost – VAT 267
� Legislative uncertainties� The SEZ Bill + Regulations and Customs Bills + Regulations have not been are
still pending leading to further delays.
� Unclear institutional Arrangements and UncoordinatedImplementation
� Red Tape (increasing the Cost of doing Business)
� THE NEW SEZ BILL HOPES TO DEAL WITH THESE CHALLENGES
7
IDZ Legislation Progression
• 2000 - Original IDZ Regulations – Government Notice No. R 1224 – Manufacturing Development Act
• 2006 - IDZ Regulations Amended (IDZ Operators adversely affected) and Section 21A Introduced
• 2009/>2013 – Customs Bills/Acts…still pending
• 2012/2013 – SEZ Bill/Act…still pending(Policy review in 5 years time)
• 2018 - ??? – SEZ ZonesWhat will happen? Will we be ready?
Current Restrictive CCA Model
IDZ Operator
benefits minimised
Will lead to
duplication physical
security and Human
Resources
implements
Complex Customs
Declarations
Current Status Overview for CCA
Implementation
Representations:
• Applications to the DTI, SARS, ITAC
Changing Legislative Environment:
• The SEZ Bill/Act (Regulations – when?)
• Customs Control Bill (Regulations – when?)
• Customs Duty Bill (Regulations – when?)
• New Compliances/Re-Registrations etc.
Current Status:
• Compliances under prevailing conditions
• Pursuance of current Legislative Benefits
Ne
xt 1
8/2
4 M
on
ths
Ne
go
tiate
SE
Z B
ill
CCA Implementation Progress to Date
The East London IDZ has begun to unlock the Value and potential of the CCA
1st CCAs approved in South Africa
1st CCA Enterprises approved in South
CCAE Investors are receiving full rebate of Customs duty and VAT on all imports
70% - 100% reduction of Security lodgement requirement for ELIDZ/CCAE investors
e.g. up to +/- R 6,000, 000 cash flow benefit for some investors
“There are inroads into unlocking some of the other potential Benefits of the CCA” and we continue to work with GMLS to package these solutions
Expanded Marketing Opportunity
Unlocking Benefits for existing and future Automotive Suppliers
(VAT zero-rating/exemption + item 498.01 Customs Duty Rebates + APDP/3rd
Schedule = Competitive Marketing Combo)
Section 21 A (10) (a) & (b)
• SARS has a provision that allows for the inclusion of 3rd Schedule, MIDP
manufactures in IDZs.
Potential Solutions…
Potential PPP Solutions for CCA
• All require and are attracted by Customs Benefits ,
• All require 100% Customs legislation compliance ,
• All have the requirement of additional Customs rebate programmesand potential sales into the domestic market,
• All require local and international supply chain solutions• All require logistical corridors and shipping services
• All require the most economical investment solutions• All require Trade & Customs Compliance Training and Capacity
Building Initiatives
What does does What does does
the typical
potential investor
want?
Potential PPP Solutions CCA
•One stop shop for key government and supply chain related services
– SINGLE WINDOW OPERATION
•Cutting costs through bulk purchasing and reducing red tape
•Faster clearance and release relevant to customs procedures
•Clear legislative guidance and compliance
•Predictable application and explanation of rules, regulations etc.,
•More effective and efficient deployment of resources through
shared services
•Harmonisation & Simplification of existing practices & procedures
aligned to international and regional conventions
What can we
offer that is of
value?
Vision for SEZ Environment
1. Fully established Zone where goods and services can move without customs interventions.
1. Fully established controls through electronic means – no physical gates and controls
1. Fully operational Single Window Service – meaning that all current and future investors relay all governmental / authoritative interventions through the SWS and investors have easy access to the benefits.
1. Operator fully functional as the integration link between micro (investors) and macro (governmental) levels.
Vision for SEZ Environment
5. Fully compliant and accredited investors with well established controls and disciplinary measures implemented and controlled by the Operator.
6. Operator fully recognized by SARS and dti as the authoritative body in control of the IDZ with well established obligations to National, Provincial and Municipal government.
7. Fully functional SEZ Board taking into account the national strategic economic plan placing the Operator in the position to be selective in respect investors allowed into the zone.
8. A waiting list of a variety of investors waiting for an opportunity to be allowed into the zone.
Vision for SEZ Environment
9. Dynamic Trade links and corridors to sea and air ports
10. Zone Integrated to logistics operators. A potential international transit point.
11. Springboard to full integration into SACU, SADC, and domestic market
12. Facilitation of transport access to the region – coastal feeder vessel
13. Powerful conduit/tool for beneficiation and value addition
Vision for SEZ Environment
14. Strategic and competitive location of the SA Competitive Industries and supporting industries
15. Creation of a complete activities and efficient value-added chain process within one integrated location
16. Piloting ground for export as well as investment policy breakthroughs (pro-business, accountable and transparent). Research centre and conduit to academic institutions
