PARLIAMENTARY MEDIA BRIEFING.
Wednesday 9 February, 2000.
Minister of Trade and Industry.

The priorities identified in June 1999 in the President's address have been reaffirmed in the President's State of the Nation Address on the 8 February. A brief outline of these major areas and the nature of the issue is given in the notes that follow. Certain developments in the Department of Trade and Industry are also dealt with.

The aggregate level of saving and investment.

In the macro environment the challenge is to increase the level of investment and saving. A part of this gap will be filled by foreign investment. The challenge also lies in the domestic economy. As announced by the President an inter-Ministerial group is addressing this. In terms of the overall environment, the main Ministries involved are Finance, Labour and Trade and Industry; and in terms of specific actions to deal with investment, it is the Ministries in the Investment and Employment Committee that will deal with this.

In the macro environment the main areas of focus are:
-to continue the complex process of managing the interest rate down so as to increase investment-particularly in small and medium enterprises.
-to continue to improve the tax regime so as to support investment and saving.
-improving the levels of saving. There is a need to encourage saving and to provide for easily accessible means of doing this. The changing structures of our banking sector are being evaluated to see if we can improve intermediation between small savers and small investors.
-and to keep unit labour costs competitive by increasing productivity.

In actual investment promotion there are a range of steps being taken. These are:

-international promotion-this ranges from a more professional approach working with advisory groups (eg auto); to the re-imaging campaign and the exhibits associated with it; to the International Investor Council. The latter will meet in June and we will announce three or four more people.

-technology enhancement-as was apparent from the combination of the Presidential Export Awards and the Technology Excellence there is now a much closer link between trade, investment and technology. A key driver of economic development is technological development. For this reason, an important area of focus for the DTI is innovation support and technology development. Here the Department has made substantial progress in the last year. The DTI recently launched the Programme for Industrial Innovation or P11. P11 provides substantial incentives to private sector industrialists wishing to undertake industrial innovation research. The P11 programme is a sister programme of the highly successful Support Programme for Industrial Innovation and Technology Human Resources in Industry Programmes. These programmes comprise South Africa's key instrument for the development of technological and innovation capacity in South African firms.

-In addition, this year DTI will launch the Technology Venture Capital Fund. This fund will assist technology development agencies to develop their technology to commercialisation stage. Furthermore, DTI has noted that many SMMEs lack the capacity to purchase technology. In an attempt to accelerate the development of the SMME sector, DTI and Khula will be launching the Technology Guarantee Fund next year. This Fund will guarantee the financing costs of SMME technology procurement. For those companies wishing to purchase technology rather than develop it themselves, DTI will be launching the Technology Transfer Centre to assist in undertaking patent searches. This will ensure that South African companies have access to leading-edge technology at the best possible price.

-skills development-the new Skills Act will provide the platform that allows systematic upgrading of skills in key sectors. The Learnership Project that came out of the Jobs Summit is developing well with a particular focus on the Hospitality industry.

-SDI's, IDZ's and cross border projects. The finishing touches of the IDZ frameworks are now being dealt with. The first of these will be piloted in Coega and in Projects that the Gauteng government will announce in the near future. The more rural areas of South Africa have not been forgotten in our economic development plan. In 1999, the DTI launched the Community Public Private Partnerships Programme to empower local communities through effective partnerships in order to develop economic opportunities by developing viable investment opportunities. These investment opportunities range from tea estates to eco-tourism sites to natural fibres for the clothing industry.

-restructuring state assets.

There are certain priority areas that we are focussing on as key employment generators. These are:
-SMME'S. The President covered this and there is more detail in the Minister of Trade and Industry's address to Parliament on the 8 Feb. There is also documentation on various support measures available to the sector.
-tourism. The Minister of Environment and Tourism has announced a number of initiatives.
-cultural industries. There is collaboration between Department of Arts, Culture, Science and Technology to strengthen this sector.
-agriculture and agro processing.

In each of the above areas the activities are also part of the follow-up on the Job Summit and the Integrated Rural Development Strategy.

Trade promotion.

Whilst the after-effects of the East Asian crisis continued to be felt in South Africa in 1999, the nature of South Africa's exports to the world continues to move away from primary goods and towards high value-added, sophisticated manufactured products. The Department of Trade & Industry has worked hard in this area and 1999 saw the launch of 10 new export councils designed to facilitate export growth. A further 8 export councils will be set up this year, ranging from capital equipment to high-value cut flowers. Moreover, SA has embarked on a concerted effort to re-image SA as a high quality producer of sophisticated goods and services also offering competitive investment opportunities. DTI's contribution to export development culminated in the National Export Week and President's Export Awards, celebrating SA's export successes and working to create an export culture amongst South African industrialists.

This year will see an intensification of these initiatives with the launch of the National Export Advisory Council. The Council will work towards articulating and operationalising a national export vision called Vision 2020. Furthermore, we will focus more attention on the co-ordination of export institutions in order to create a regulatory environment supportive of existing and potential export enterprises.

Trade Agreements.

There is not much more that can be said about the EU agreement.

However, we are seeing progress in reaching an agreement with our SADC neighbours for a Free Trade Area. Negotiations around the various countries' tariff offers have now been completed. South Africa has ratified the Agreement in this Parliament and attention will now turn to the difficult issue of Rules of Origin. South Africa remains committed to the Agreement and sees much potential for the further beneficiation of Africa's produce through the incentives given by the FTA Agreement.

In particular, we believe that SADC will benefit greatly from the local beneficiation of cotton and wool in the region rather than their export to Asia for processing. The challenge for us this year will be in efficiently implementing the Agreement and in strengthening our customs administration to ensure that unfair competition is not unleashed on our domestic industries.

Progress in renegotiating the revenue-sharing formula of SACU was unfortunately slow last year. However, it is hoped that this will be finalised during the current year and further that proposals for the creation of new institutions to administer the SACU Agreement will also be agreed upon shortly.

Two important new initiatives will start this year. These are with Brazil and India.

Business Regulation.

This will be a priority area for the Department of Trade and Industry in this year. The global economy we face in the new millennium is one increasingly characterised by the need to create a stable, enabling environment for business transactions to take place. Moreover, the business environment and the regulation thereof have become key determinants of a country's competitiveness, which ultimately decides that country's potential for economic development and employment generation.

To support this area of policy development, the DTI launched a number of new initiatives last year. In September, the Competition Commission, Competition Tribunal and Competition Appeal Court were launched. These institutions will come to play a key role in regulating and indeed encouraging fair trade and competition amongst all businesses operating in South Africa. This year will also see the re-launch of the South African Corporate Registration Office (SACRO). In line with international trends, we have computerised the SACRO and we expect this to have a substantially positive impact for businesses needing to register with the Companies Office. This, once again, shows our commitment to create an enabling environment in which small, medium, micro, and large enterprises can operate and flourish.

However, business regulation also involves the protection of consumers from unlawful business practices. Here, we will be launching a wide-ranging policy process, under the auspices of the National Economic Development and Labour Council (NEDLAC). The outcome of this process will be a comprehensive policy framework within which consumers are protected from unlawful or discriminatory business practices. We are also focusing an increasing amount of attention on the Micro-finance sector of the economy. While we acknowledge that the sector plays a role in providing finance to many unbanked, previously disadvantaged individuals, we are concerned that the practices employed by these agencies border on the unlawful and the immoral.

The Department of Trade & Industry will continue to develop regulations, which will serve to govern the activities of Micro-Finance lending institutions in a transparent manner without undermining the rights of either borrowers or lenders.

This year will also see the launch of South Africa's first National Lottery. The National Lottery will have a substantial impact on the lives of many ordinary people, not least through the raising of funds and distribution thereof through a range of community service provider agencies.

In the labour market there is a process going forward.

In communications the development of the whole e-commerce and information internet law is going to be crucial.