Thoughts on forthcoming Special Economic Zones?

[Greig Whitton]

Looks like the first SEZs are being finalised.

I'm curious to hear what TFSA users have to say about the potential economic impact that the SEZs may have. In particular, I would love to hear from anyone who plans on utilising the SEZ incentives.

[IanF]

One thing which always makes me smile is when I get an order which goes into other countries in Africa.
They always want quick turnaround and never complain about price.
Are there SEZs that service African customers?

[Justloadit]

I must say the first 2 thoughts through my mind when reading the article was
1. Having experienced the recent union controlled strikes, investors are not going to be very exited.
2. Where is the power going to come from to power these industries?

[desA]

Lenwazo13 days ago
That is the hubris, or should I say stupidity, of this government, in particular Davis.

The South African SEZ programme began in 1995 as IDZ's. All that has changed in failed policy is the name. The IDZ's failed due to prolonged delays, politics and lack of policies as suggested above.

In case this government hasn't noticed, this country has gone from being the most lucrative and attractive investment destination for multinational corporations in the 1980's to one of the least attractive investment destinations in the world today.

The purpose of SEZ's is to create export manufacturing jobs. All investments to date in this country's so called zones have been primarily for local consumption. All that this government is creating are government owned and run industrial parks with existing negative legislation that will send investment to other destinations.

The South African SEZ programme is an idictment of this governments continued stupidity. This government and it's cronies have the arcane ability to reengineer every proven policy that works and destroy it.

A very insightful comment to referenced article.

[Greig Whitton]

Are there SEZs that service African customers?

Companies operating within SEZs can service whichever markets they choose.

1. Having experienced the recent union controlled strikes, investors are not going to be very exited.
2. Where is the power going to come from to power these industries?

The recent strikes certainly won't help, but the SEZs have been in the pipeline for several years so I suspect that there are already committed investors. The point you raise about power is a very good one and I honestly have no clue what plan (if any) is in place to accommodate additional industrial expansion.

A very insightful comment to referenced article.

Those are fair criticisms of the IDZs, so skepticism of the SEZs is completely understandable. However, there are some important differences between the two:

* IDZs were created primarily for export manufacturing. SEZs, however, can be used for regional development and target niche local economic opportunities without necessarily having to export anything.

* IDZs largely existed as isolated silos. SEZs, by contrast, will be linked to other sectors in their region through supplier development programs.

* IDZs suffered from a lack of incentives. SEZs, on the other hand, will benefit from a variety of incentives including lower tax rates, duty-free areas, extension of the Employment Tax Incentive scheme, etc.

* IDZs were hamstrung by poor planning, co-ordination, and red tape. SEZs will have a designated single point of contact ("one stop shop") to streamline and fast track administration.

I think that there are plenty of signs that government has learned from the mistakes of the IDZs. However, as always, the proof will be in the pudding (or burnt mess, as the case may be!)

[wynn]

This government and it's cronies have the arcane ability to reengineer every proven policy that works and destroy it.

Its a case of like 'tourism' in the Western Cape, "It works so lets see if we can fix it"

[desA]

With all things, please remember, - "You are in Africa, not Asia."

While the locals are still fighting over who has bragging rights over what assets can be plundered, do you really think SEZ/IDZ, or any moniker chosen - has a snowball's hope? Wishful thinking. The change cycle in SA still has 30 years to run.

I think that there are plenty of signs that government has learned from the mistakes of the IDZs. However, as always, the proof will be in the pudding (or burnt mess, as the case may be!)

They will not learn!

[Dave A]

2. Where is the power going to come from to power these industries?

Ultimately the reason why Coega didn't work to original plan.

If I was in manufacturing, I reckon the Dube Tradeport SEZ is the one to take a really serious look at - as long as the power issues are sorted out.
In fact...
It really is a good location. Food for thought, even in my line.

[desA]

For special economic zones to be effective, a certain amount of 'give' will first have to come from the government side, in order to attract new businesses. Can be infrastructure (free factory, offices, communications), tax incentives (e.g. 5 years tax-free), guarantees of fair-cost, stable, qualified labour force.

Singapore springs to mind.