Industrial development zones continue to attract investors.

Byline: Charlotte Mathews

Industrial development zones continue to attract investors The Department of Trade and Industry is reviewing policy on initiatives after lessons learnt in past few years, writes ALMOST 10 years after they were introduced and billions of rands of investment later, SA's industrial development zones (IDZs) have enjoyed mixed success. Only two zones are fully up and operating and another three are starting to get off the ground, but on the whole they seem to be attracting a good level of investor interest.

An IDZ is a similar concept to an export processing zone, a concept offered by a number of other countries. Export processing zones are specially delineated areas, usually close to an airport or seaport, where export-oriented companies can enjoy tax concessions and capital investments. A priority is to boost job creation in underdeveloped regions.

According to Department of Trade and Industry statistics, the government has so far spent R2,8bn on three IDZs, of which R2,4bn has been on Coega. Another R650m has been put into IDZs by the Eastern Cape and KwaZulu-Natal. In some aspects, SA's IDZ policy is considered more attractive than other countries' export processing zones. However SA's refusal to make concessions on labour regulations has been criticised as inhibitive to investors. Kobus Marais, Democratic Alliance spokesman on trade and industry, says a problem with SA's IDZ incentives is they are mostly linked to infrastructure.

SA's IDZs should be converted into fully fledged export processing and job zones in which only labour-intensive industries will be permitted; new ventures enjoy a sustained tax holiday; businesses must be registered with the (Department of Trade and Industry) as exporters; duty free imports of machinery, equipment and raw materials are allowed; firms are exempt from the more onerous labour laws; and the full repatriation of profits and capital will be permitted, Marais says.

Vanessa Tang, consultant at the University of KwaZulu- Natal's school of economics and finance, says in a 2008 paper on the Coega IDZ that few export processing zones in Africa have been …