EDZs one of many initiatives to support growth

Finance Mister Pravin Gordhan said in his Budget speech on Wednesday that economic development zones was only one of many initiatives to support business sector growth.

"The central policy challenges we face are growth of our economy, more rapid job creation and reducing poverty. Initiatives in progress to strengthen support for business sector growth include the following:

1. Small enterprise financing has been consolidated is a new subsidiary in the Industrial Development Corporation.

2. In October 2011, a Procurement Accord was signed with business and labour. Government procurement rules include incentives for both black economic empowerment and designated local supply sectors.

3. The tax regime for small businesses has been simplified.

4. A new competitiveness enhancement programme has been initiated as part of the industrial policy action plan, building on existing production incentives in the automotive and clothing and textile sectors. A support programme is being developed in the capital goods sector, leveraging large state procurement programmes.

5. The National Tooling Initiative is under way, in support of accelerated apprentice training.

6. A draft policy framework and legislation have been published for special economic zones.

7. Technology investment is supported both through partnerships between science councils and industry and through R&D tax incentives.

8. A venture capital incentive is available for junior mining companies.

Gordhan said that assistance to the private sector goes beyond the provision of incentives, so government is looking at wider interventions to lower the cost of doing business.

Improvements are being made to economic infrastructure such as ports, roads and electricity generation to cater for the needs of business.

In addition, operational efficiency in ports and rail has been prioritised.

There is a review of the regulatory regime and its effect on businesses in a number of sectors, as well as interventions in some institutions to speed up the issuing of licences and to improve transparency in government processes. Various strategies are also in place to deal directly with sector-specific issues.

"Given the current global economic context, there is understandable caution in the business sector about investment and future growth prospects. Many firms have accumulated large cash balances instead of investing them or distributing to shareholders. The time has come to confront uncertainty – from government's side, we are committed to an environment that will encourage business investment; from the side of business, we seek investment for the long term, enhanced competitiveness and training commitments," Gordhan said.

"We released a discussion paper proposing a youth employment incentive last year. It is under discussion at Nedlac, where the labour constituency has expressed reservations. In our view these concerns can be addressed in the design and implementation of the incentive. We would all like to see greater urgency in resolving this matter," he said.