Durban shipbuilding scheme gets State backing

Kwazulu-Natal-based heavy engineering firm Duys Engineering has received accreditation for a shipbuilding initiative under the outgoing Strategic Industrial Project (SIP) tax-incentive scheme.

CEO Henk Duys believes that there are immense possibilities around the Durban shoreline, especially in the construction of ships or parts on contract from European countries.

The shipbuilding industry has been dormant from Durban for some time, and while it has good basic infrastructure, much of the equipment needs upgrading.

Duys indicates that a yard with modern equipment will bring in international investment into the area.

World demand for ships is on the increase and such an investment would create many jobs in the area.

He has also had interest from overseas firms seeking a company to build hulls, tugs and trawlers.

The company, which has been accredited by the National Ports Authority as well as provincial and local authorities, has received approval for a R95-million project from the government to fulfil this vision.

However, a recent deal to acquire a shipyard has fallen through, putting start-up of the project on hold for some time.

Duys has not lost hope, however.

He told Engineering News Online that he intends to make a success of the project and envisages spending some R150-million on a yard.

A project such as this will fail without government support, he says, as international competition, especially from the east, is fierce.

According to the first July government gazette, the company applied for, and qualified for, some R47,5-millon for plant and machinery, R3-million for buildings and other assets worth some R44,4-million.

Approved in March, the project was expected to go into commercial production in September this year and was to run from October to September 2008.

The company's project was awarded seven points and afforded preferential status and will receive a tax incentive of R28,5-million.

This amount, that will be deducted from national revenue, is balanced by the fact that the company will create 1 000 direct and 6 000 indirect jobs before its completion.

SIP is a government initiative that aims to encourage local and foreign investment into the country by allowing tax breaks.

Its two fold purpose creates jobs as well as allowing companies to profit from sectors such as IT, research and development as well as manufacturing, as government views these sectors as essential to South Africa's future competitiveness.

R10-billion was earmarked for this project for a four-year period that started in August 2001.

Finance Minister Trevor Manuel has not extended the project's budget beyond this month.

By the end of December last year, some 34 projects worth R16,8-billion had been awarded SIP status.

These projects are expected to create some 6 242 direct jobs and another 80

643 indirect ones and the fiscus will forgo some R2,39-billion in taxes.

SIP involves high-level cooperation between the South African Revenue Services, the National Treasury and the Department of Trade and Industry.