SPECIAL ECONOMIC ZONES: EXPANDING INDUSTRIAL CAPABILITIES

by Rob Davies, Minister of Trade and Industry

Minister-DaviesSouth Africa’s special economic zones policy and programme aims to deepen and expand industrial capabilities in partnership with foreign and domestic direct investors in mind. The Industrial Policy Action Plan (IPAP) outlines the type of desired industrial capabilities and the approach is not so much as to pick winners but rather to support emerging strong performers with the potential to significantly impact broader economic development.

The special economic zones programme entails coordinated and strategically sequenced interventions in three areas i.e. sector, regional and land development. Sector development entails clarifying the desired industrial capabilities, industrial clusters or product capabilities to be developed and supported. The regional dimension focuses on clarifying the regional context in which the desired industrial capabilities are to be developed as well as strengthening the regional innovation systems without which industrial development cannot be sustained. Land development focuses on administrative arrangements such as processing applications for permits and licences and compliance related environmental and other impact assessments.

Clarity on these three areas is critical for an effective programme and has to precede its design, together with strategic interventions to unlock foreign and domestic direct investment and translate foreign direct investment into domestic industrial capabilities. Countries that succeeded in integrating and synchronising interventions in these three areas have generally performed better with their special economic zones programmes.

In South Africa, special economic zones are an important component of industrial policy. While the global experience with special economic zones remains mixed, special economic zones have led to huge economic gains. In China for instance, some regions have undergone significant transformation from focusing on primary industrial activities to being modern industrial hubs. The Department of Trade and Industry intends to coordinate government-wide efforts to ensure that special economic zones effectively contribute to the country’s industrial development goal..

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SPECIAL ECONOMIC ZONES: EXPANDING INDUSTRIAL CAPABILITIES

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