New procurement regulations will empower the Department of Trade and Industry (DTI) to designate specific industries of critical or strategic importance, it was revealed on Wednesday. Public sector tenders will also only be considered for locally manufactured products with a prescribed minimum threshold for local content.
Trade and Industry Minister Rob Davies said this on Wednesday when presenting his department’s budget vote speech in the National Council of Provinces — Parliament’s higher house.
New government procurement regulations were announced by Finance Minister Pravin Gordhan earlier in June and they are due to come into effect from December 7 this year.
Davies said the DTI was hard at work to ensure that when the new regulations come into effect it would be ready with a number of designations to ensure that as its infrastructure investment programmes advance they will act as a catalyst to local industrial development.
Davies pointed out what he described as pleasing news that manufacturing growth in the first quarter of this year grew at a “pleasing” 4.9% year-on-year, but expressed worry that jobs growth had not kept pace in the sector.
He said the DTI’s policy was centred on the three-year rolling industrial policy action plan, the backbone of which was the manufacturing sector.
Davies said manufacturing remained largely concentrated in three main regional hubs.
“In this regard, there is consensus for the need to regionally diversify manufacturing industries to new economic regions in addition to the current hubs. Industrial development zones (IDZ), if effectively managed, can be useful instruments for promoting a more regionally diverse manufacturing industry,” he said.
Davies said that during the 2010/11 financial year, two IDZs, namely Coega and the East London Industrial Development Zones attracted nine investors with an estimated value of R620-million.
He said these investments would support an estimated 4 551 construction jobs and a further 1 400 direct jobs.
“These developments point to the potential that exists in the IDZ model, which however needs to be improved and developed. I am pleased to indicate that together with our colleagues in the provinces we have almost completed a policy review which will be the basis on which we propose working together to advance greater regional diversification of industrial development,” Davies said. — I-Net Bridge