Billions for industrial policy plan

21 Feb 2008 - Business Day

The trade and industry department will received an additional R2,3bn from the budget to support the national industrial policy framework over the next three years.

Tax incentives worth R5bn over the same period have been allotted for industrial investment and job creation.

The funding arrangement was announced despite the treasury’s uncertainty over the economic viability of state-supported industrial development.

Finance Minister Trevor Manuel reiterated yesterday that business development was not the core responsibility of the government, but admitted that industrial development had a “rightful claim” on public support, broadening opportunities to draw the marginalised into the mainstream of economic activity.

The allotted tax breaks and support will give some impetus to the industrial policy action plan that is being rolled out. However, the extent of treasury’s funding pales in comparison with the ambitious scope of the plan.

In drafts of the customised sector programmes for the development of earmarked sectors, the extent of support envisaged by the trade and industry department becomes apparent.

For the stabilisation of the clothing and textiles sector alone, for instance, the mooted capital requirements are R7bn, which would usurp the treasury allocation in its entirety.

And to develop the forestry, and paper and pulp industry, R1,5bn for afforestation and further “substantial” investments are envisaged. In reality, customised sector programmes, while receiving a hefty lift in allocations from the national treasury, will receive only R39m in the current financial year, rising to R49m in each of the following two financial years.

It has become clear, however, that the trade and industry department will rely increasingly on the Industrial Development Corporation for funding of the plan.