IPAP: New industrial action plan needs commitment to sustainable industry
Chairperson, South African industrial policy is fundamentally flawed in both its implementation and ultimate goal, and economic activity in this country will suffer as a result of this misguided policy.
The problem is not that there is not enough money involved, far from it. Neither is the range of industries available a challenge; indeed, South Africa has a remarkably diversified range of manufacturers. The problem is rather that the goal of the ANC industrial policy is to ingrain the bureaucracy of the state into otherwise healthy business activity. Their shotgun approach to industrial policy - giving small bits of help to everyone - is not the solution.
We do not need bigger budgets for industrial policy, but we do need smarter and more targeted policy to help those industries which would be able to sustain themselves. Only then will South Africa be able to create more sustainable jobs by building competitive and lasting industries. And the jobs that are created must be able to include those unskilled workers outside of economic activity.
The DA certainly supports the focus on labour intensive industries for government support - but the question should always be; why does a certain company need support in the first place? It is not enough to say that an industry must be labour intensive; crime is also labour intensive. The companies that receive taxpayer funds must add value to the South African economy and must be able to exist on their own after an initial period of government assistance.
If this rule is not followed, then the so called industrial policy is nothing other than a protectionist scheme to zombie businesses, kept alive unnaturally at the expense of the taxpayer.
The true test of whether industrial plan is working is not the amount of firms that rely on government assistance to survive, but the amount of firms that is strong enough to do without government help. Chairperson, the South African industrial plan has failed in this regard.
The revised IPAP is in fact nothing more than a continuation of the previous regime. Minister Davies says that the IPAP2 "builds on the National Industrial Policy Framework of 2007" - but it seems to be really a copy of the previous framework with alterations to the grammar and the font size.
Chairperson, Minister Davies further argues that the exchange rate is to blame for South Africa's lack of competition - that is certainly not the case. It is stringent labour market regulations and failing infrastructure that is the problem in this country - that certainly requires government intervention.
Finally, Minister Davies seems to think that he can lift the competitiveness of South African companies by enforcing import tariffs more stringently - our interaction with business have shown that what is needed is providing equal opportunities for South African exporters and local distributors to compete with the rest of the world. A blanket enforcement of import tariffs is not the solution; what is needed is active participation by the Department in trade negotiations and beefing up the South African trade adjudicator - ITAC with SARS - to guard against dumping and unfair business practices of trade competitors.
I thank you.
Issued by Democratic Alliance, February 18 2010
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