Development zone concept gets the nod from Absa.

Posted On Wednesday, 04 June 2003 02:00 Published by eProp Commercial Property News
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IDZs set to draw significant investment to SA, says bank.

Property-Housing-ResidentialABSA has come out in strong support of government's industrial development zone (IDZ) strategy.

 The bank is one of few private sector organisations monitoring the strategy independently. Absa's support is a strong vote of confidence in the initiative, which is aimed at attracting investment to SA.

 There has been opposition to IDZs, with questions raised about the billions of rands government is pumping in to establish its infrastructure. Commentators have warned that IDZs may become white elephants if they fail to attract substantial investment.

 At Coega, near Port Elizabeth, government is spending more than R2bn on construction of a port and other infrastructure. It is aiming to secure an investment worth more than R15bn from French aluminium manufacturers Pechiney .

 "IDZs are perhaps the most dynamic and effective tool SA can use to start improving its economy and creating jobs," says Absa's specialist on the subject, 
Mark Lentin

 He says developing countries should offer industry good incentives , because the difficulties and risks of doing business in these countries are high.

 The trade and industry department introduced the concept a few years ago, and has designated four zones to date. They are at East London, Coega, Richards Bay and Johannesburg International Airport.

 IDZs are industrial estates which offer duty-free production for export, provide transport routes, facilities, and services tailored for export-oriented industries. They are usually situated next to ports or airports to facilitate easier access to international markets.

 The trade and industry department is funding infrastructure development at SA's four zones. But East London zone head Peter Miles says his IDZ and probably others may have to source loan financing from the private sector later.

 IDZs are an adaptation of the export processing zone concept used widely throughout the world.

 "The fact that there are more than 600 export processing zones spread around the world demonstrates the phenomenal impact that they can have on an economy," says Lentin.

 IDZs are highly effective in attracting foreign investment and technology to developing countries, creating jobs, improving skills and earning hard currencies, Lentin says.

 The Absa specialist believes that small and medium companies would also benefit from the use of industrialised zones .

 "Local firms will gain knowledge and the ability to compete in the global market, and small firms will learn to go abroad to compete against the large multinational firms.

 "A lot of complex organisations, marketing and production management skills are transferred."

 He warns, however, that the concept is not a miracle cure for SA's economic ills.

 "They are just one good tool to be used in development and it is essential that all the government departments assist in providing the key ingredients that will allow them to work.

 "For IDZs to be able to contribute as a competitive, successful source of products and services for the global market, they will need the full backing of government and labour and have a competitive set of incentives to meet competition," he says. 

Last modified on Thursday, 26 June 2014 17:54

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