Western Cape Business 2017 edition

Special Economic Zones

Special Economic Zones are boosting growth on the West Coast Dedicated development hubs on the West Coast are tapping into the potential of two of the fastest-growing economic sectors in Southern Africa – oil and gas and manufacturing for the renewable energy sector. The Department of Trade and Industry (dti) is the lead agent in the creation of Special Economic Zones (SEZs), which are part of the national Industrial Policy Action Plan (IPAP). SEZs are designed to attract investment, create jobs and boost exports. Industrial Development Zones (IDZs) are a type of SEZ. Several incentives are available to investors in SEZs. These include tax breaks from the South African Revenue Service (SARS), subsidised interest rates from the Industrial Development Corporation (IDC), subsidies for employees earning below a certain level and subsidies for the training of the workforce, incentives and grants from the dti, and incentives from national electricity utility Eskom. Other benefits might include a building allowance, employment incentives and the fact that an SEZ is a customs-controlled area. Skills transfer is another stated aim behind the SEZ programme. Specific incentives relating to energy savings and reductions in environmental impact are available, both from Eskom and the dti. Within the dti’s Manufacturing Competitiveness Enhancement Programme there is a Green Energy Efficiency Fund, all of which are designed to make investment – of the right kind – more attractive. Atlantis The suburb of Atlantis was one of apartheid’s bad experiments that left residents stranded far north of the metropolis with no industry or employment to speak of. The planned creation of an SEZ with a focus on green technology is already changing that reality. The SEZ is a collaboration between the Western Cape Provincial Government (whose unit GreenCape is taking the lead), the City of Cape Town and the dti. Although the SEZ has not officially been established, several important investments have been made into the area and the idea is gaining traction. Spanish wind-tower manufacturer Gestamp Renewable Industries (GRI) has added to its initial investment of R300-million, which created 200 jobs. Others include Resolux (R25-million), which WESTERN CAPE BUSINESS 2017 58

SPECIAL FEATURE makes internal components of wind turbines; Kaytech (a geotextiles firm) which has recently expanded (R130-million), as has Skyward Windows (double glazing, R50-million). All told, there has been about R680-million invested Atlantis in the green technology field. Chinese giant Hisense established a high-tech factory in Atlantis in 2013, and is keen to expand its investment down the value chain, especially using green technology to make more efficient fridges and television sets. The proposed Atlantis Green Tech SEZ has several particular incentives available. These include: • Financial measures including an electricity tariff subsidy • Exemption from land-use application fees • Assistance from the City of Cape • Town for companies to obtain faster environmental authorisation from the Department of Environmental Affairs and Development Planning The state (through the dti) is likely to pass legislation that requires developers to increase the level of local content on the solar panels or wind turbines that are used in renewable energy projects. Any movement in this sphere could benefit Atlantis. Saldanha Bay The Saldanha Bay Industrial Development Zone (SBIDZ) has formally been in existence since 2013 and has ambitious plans to tap further into the burgeoning oil rig maintenance and repair business. About 130 rigs round the Cape every year, and at the moment South Africa attracts only a tiny fraction of them to its ports. The SBIDZ fits neatly into two over-arching visions: Operation Phakisa (the national government’s strategy to unlock value from the “Oceans Economy”) and Project Khulisa, the targeted growth strategy of the Western Cape Provincial Government, which includes servicing and repairing of oil rigs as a priority. South Africa currently accounts for 1% of the global market of ship repair and refurbishment. Priority sectors at Saldanha are upstream oil and gas and marine engineering and services, and 32 companies have already signed non-disclosure agreements as investors in the IDZ. The IDZ is run by the SBIDZ-Licencing Company, which works together with the Transnet National Ports Authority (TNPA) on many joint projects. These are being undertaken to create good conditions for possible investors. Quay-side infrastructure has been upgraded including a wastewater treatment plant and a new road and bridge over the MR559. Fencing and access control points in support of the customs zone are being constructed. Three major projects are under way or in the planning stage and are overseen by national government, the Southern African Oil and Gas Alliance (SAOGA) and SBIDZ-LC: Offshore Supply Base Basil Read won the contract to extend TNPA’s general maintenance quay to create an Offshore Supply Base (OSB). The quayside is 294m with a further 3.8ha being available onshore for support operations. It will cater for ships and rigs looking for oil along both coasts of Africa, and any other rigs passing along the coast. Berth 205 This is the name of a planned specialised rig and vessel repair quay that will be able to cater to the latest design in oil rigs. Mossgas Jetty Equipment and vessel-servicing facility: this planned 1 000m-long jetty will be perpendicular to the shoreline of the Port of Saldanha Bay. It will have a maximum width of 120m and be able to serve several ships or rigs in need of repairs or servicing at the same time. In addition, there will be a floating dock. TNPA has done several studies on the possible location of the jetty and the local and international market will be canvassed for companies to do the work. 59 WESTERN CAPE BUSINESS 2017