TRADE AND INDUSTRY STRATEGIC SESSION 25 June Implementation of IPAP2 Sector Specific Contributions Presenter: Dr Laurraine Lotter

Transcription

1 TRADE AND INDUSTRY STRATEGIC SESSION 25 June 2013 Implementation of IPAP2 Sector Specific Contributions Presenter: Dr Laurraine Lotter

2 Contributions by: 1. Ms Jane Molony PAMSA; Forestry Products 2. Mr Henk Langenhoven SEIFSA; Steel and engineering 3. Mr Nico Vermeulen NAAMSA; automotive sector 4. Mr Mark Krieg AFSA; Aluminium 5. Mr Stavros Nicolaou Pharmisa; Pharmaceutical 6. Fani Tshifularo SAPIA; Biofuels

3 Forest Product Industries IPAP Fibre shortage thanks for EIA finance now have ROD s for 8000 ha in E Cape potential for at least further ha DAFF as lead dept - lack of fiscal support for BBBEE Transformation sector charter commitments (need dti help) SMME support - Grant for small growers zero in budget despite minister DAFF announcing in press last year (Brazil, Chile and NZ have subsidised fibre all we asking is smme support as per charter) R&D approve R50 M - not forthcoming, forestry gets R3 M, has 25% of jobs in agric and agric gets 200M, R50M not excessive Support effective ITAC numerous tariff applications - yet little hope despite dti statements (Brazil has tariffs of 16% on paper and even Australia has 5%, SA zero) MCEP all aspects of pulp paper and board are excluded incorrect notion of sector being monopolistic. Structure has changed this not true. AND wwide sector is in distress. Over capacity, reduced demand. Even SA parliament wants to go paperless and save trees

4 Land security workable land claims model, communities empowered potential for further benefits from Biomass collection (IPAP green economy and SIP 8 for this and co gen) Green Cogeneration opportunities - working with DOE & NT to fast track Climate change and emissions trading recognition for carbon sequestered in plantations could assist in development incentives for community land and offset carbon tax which is set to cost our sector in the region of R250 million in Recovered paper growing collections and beneficiation work with FP&M SETA trained 600 plus entrepreneurs on going (IPAP green economy & flagship programme) Environmental risks eg: Cost of NEMA/ SEMA confusion to investment in delays small sawmill cost R4 million, 8 month delay AND mooted new licencing conditions/stipulations from DWA that threaten viability of actually planting even the 8000ha dti assisted us in getting ROD for.

5 Steel & Engineering Sector: Scenario Output: R400 billion (30% of Manufacturing) Employment: people Exports: 60% of production Imports: 60% of domestic market. CONUNDRUM: Erosion of international competitiveness (rising domestic costs plus sluggish export demand and declining world prices for products) Trade deficit of R40 bill in 2012 (from 0 in 2006) Gross Surplus: Declined from 13% to 6% (since 2007) Nett Surplus: Declined from 8% to +1% (since 2007) Employment: lost jobs (since 2007 high) or stayed the same since slump Investment: Declined by 0,5% since 2007 Fixed Capital Stock: Declined by 10% since 2007

6 Steel & Engineering Sector: Joint Solutions Work Closer together: Fragmentation of Government Departments and Private Sector interests result in uncertainty about policies and reaction required, eg beneficiation Specific Projects: NFTN, Designation, Tooling, APDP Implementation of Specific Policy Measures: eg. MCEP International Trade: deficit shows penetration; investment for competitiveness needed Institutional Failures at Local Level: basic support infrastructure and systems failing.

7 Domestic performance data: Automotive sector INDICATORS * 2014* 2015* 2020* Cars/LCVs production Medium and Heavy Commercials production , 2 mil Vehicle exports units Vehicle exports value (R mil) Component exports value (R mil) Employment OEMs Employment suppliers Investment OEMs (R mil) Investment suppliers (R mil)

8 Auto industry challenges Policy certainty and predictability with appropriate levels of support and investment incentives Average annual volumes per platform produced to increase to globally competitive levels (minimum units) with local content levels to increase to 70% plus for volume producers SA Supplier Competitiveness to improve to/align with average European costs Focused Industrialisation Strategy to broaden SA supplier chain and increase manufacturing depth Productivity to improve from 18 cars to 30 cars per employee per annum and continued industrial relations stability Massive investment in Training and Skills development at all levels Substantial improvement in logistics competitiveness and infrastructure

9 CHALLENGES FACED BY THE DOWNSTREAM ALUMINIUM INDUSTRY FLOOD of low cost imports - Numerous member companies have closed High costs energy and raw material, ports and logistics Skills, Uncompetitive Volumes, Out dated equipment IPAP PROGRAMS AFSA INPUT TO STRATEGIC SESSION 25 JUNE 2013 Preferential Price for scrap An essential intervention in reviving the foundry sector (57% of aluminium castings based on scrap, 40% sold to automotive sector) Fleet procurement to provide competitive volumes Skills development NFTN training, welding initiative CSDP and UNIDO/SPX initiatives NFTN partnership between the dti and the private sector FINANCING IDC and support programs (MCEP and AIS) APDP and Vision 2020 competitive volumes, local component manufacture 9

10 AFSA INPUT TO STRATEGIC SESSION 25 JUNE 2013 EXAMPLES OF PRIVATE SECTOR ACTIONS National Foundry Technology Network Localise valve castings Investigation of foundries in the automotive supply chain Concept for automotive foundries to become competitive KEY will be buy-in from all role players Industry is ready to engage AIS Support Investment by a member in a State-of-the-Art High Pressure die casting and machining line to produce Purchase of a new energy efficient furnace Renewable Energy Supply locally produced extrusions to fabricate frames and supports for PV panels 10

11 AFSA INPUT TO STRATEGIC SESSION 25 JUNE 2013 SUPPORT REQUESTED THAT WILL ENHANCE CURRENT SUCCESSES Extrusion billet to be deemed local Expedite payments under AIS Support in the revival plan for foundries in the automotive supply chain Preferential price of scrap is a vital component Review of port tariffs Review of electricity prices to industry and increases implemented by municipalities 11

12 DOMESTIC PHARMACEUTICAL INDUSTRY PRIORITIES (Pharmisa 1) SITUATION ANALYSIS Sector remains under pressure Trade deficit continues to grow Designation not fully implemented BRICS priority sector Significant export potential

13 DOMESTIC PHARMACEUTICAL INDUSTRY PRIORITIES (Pharmisa 2) IMPLEMENTATION OF DESIGNATION / PREF PROCUREMENT Intent is to attempt to level the playing field Departmental cohesion Has only been half implemented Issue of who pays How much premium? Predatory price

14 DOMESTIC PHARMACEUTICAL INDUSTRY PRIORITIES (Pharmisa 3) CUSTOMISED, FLEXIBLE INCENTIVES / UNFAIRLY INCENTIVISED IMPORTS Customisation Comparable menus SEZ s Flexibility by Treasury

15 Accelerated development of biofuels sector The Minister of Trade and Industry, Dr Rob Davies at the Launch of the IPAP 2013/14-15/16 on 4 April 2013 mentioned key benefits of biofuels industry are R8.9bn annual savings on the balance of payments, the creation of 55,000 new jobs and reduction of 498,000 tonnes p/a in CO2-equivalent emissions. Progress to date Publication of Regulations regarding the Mandatory Blending of Biofuels with Petrol and Diesel on 23 August 2012 The Minister of Finance tabled biofuel production incentive in his 2013 Budget tax proposals. Next steps Business requires the following: The Minister of Energy should urgently determine a commencement date of the Regulations regarding the Mandatory Blending of Biofuels with Petrol and Diesel Urgent announcement of regulated price of biodiesel or bio-ethanol sold by licensed biofuels manufacturer Urgent sharing of the support mechanism for licensed petroleum manufacturer to cover additional costs incurred in blending and distribution of biofuels blends Urgent resolution of technical issues regarding biofuels blends.

16 Comment elements Policy coherence Environmental legislation remains a challenge Administered prices continue to impact competitiveness Inter sector links being explored Commitment from private sector to partnership Delays in implementation of policy announcements How can we better work together on areas of common interest and re-inforce each other s visions