The Department of Trade and Industry was also very close to finalising Saldanha Bay as a special economic zone, he told members of the trade and industry committee.

Director-general Lionel October noted that three potential zones showed the greatest promise — Upington as a centre for solar energy; the Dube trade port, which elicited interested by Indian business during the recent Brics (Brazil, Russia, India, China and South Africa) summit in Durban; and a platinum beneficiation SEZ.

The feasibility study of Saldanha Bay showed it had strong potential as a hub on the West Coast for the oil and gas industry, he said.

Mr October told MPs the department had been given six months to finalise the selection of zones from those identified and studied.

Mr Davies noted that the existing industrial development zones (IDZs) were beginning to gain traction because of the way they were managed and promoted. He cited the example of the East London IDZ, which had seen strong growth in investments over the past four years.

Briefing the committee on the Special Economic Zones Bill, Mr October said the East London IDZ had 21 investments worth R1bn, with an additional R1.4bn having been transferred by the department. It had created 1,179 direct jobs and 6,379 construction and indirect jobs.

Coega had attracted 20 investments valued at R1.1bn, with R4.4bn transferred by the department. It had created 3,778 direct jobs and 37,156 construction and indirect jobs.

Richards Bay had attracted investment of R650m, government transfers of R331m and had created a total of 180 jobs.

Mr October said there had been extensive consultation on the bill, which arose from an assessment of the "modest" performance of the existing IDZs. The bill would provide a legal framework for the zones and for granting special incentives for businesses operating there such as duty free inputs.

The Treasury has also signalled other possible incentives such as a lower tax rate — possibly as low as 15%, according to the Department of Trade and Industry's deputy director-general Tumelo Chipfupa. A labour incentive is also possible.

He said major areas of agreement had been reached between business, labour and community representatives in the National Economic Development and Labour Council (Nedlac).

Labour wanted to have three Nedlac representatives on the 15-member SEZ boards and the department had agreed to this on condition they met the criteria in terms of qualifications and knowledge.

Nine representatives would be from government and there would be three independent experts.

Business argued against municipalities having the right under the bill to propose SEZs as it said this was not their core business and they lacked the capacity for this. The department, however, had decided to retain this clause, Mr October, said because there were municipalities that did have this capacity and in any event the applications for SEZs would undergo rigorous evaluation.

The department also decided to go ahead with the idea of these SEZs being operated as public-private partnerships even though labour disapproved of this on the grounds that it would be a form of private ownership.

African National Congress MPs were concerned that if the private partner had a dominant share in the PPP it would be able to control the SEZ.

Source: BD