Industry gets R17bn boost

Cape Town - The 2009 budget offers R17bn in industrial support, including tax incentives for particular sectors.

While Minister of Finance Trevor Manuel labelled weak exports as South Africa's "Achilles' heel", he said that strategies to boost exports, and thereby job creation and economic growth, will go hand in hand with initiatives to ensure South Africa emerged from the crisis on "sounder footing".

These include strengthening consumer protection and promoting competition as well as strengthening development finance institutions.

As part of government's plan to shore up long-term industrial restructuring - by giving support to sectors that encourage export and job creation - Manuel's budget this year introduces an R870m production subsidy for the besieged motor industry.

Manuel argued that this time of restructuring, aimed at shielding against the effects of the global financial crisis by increasing exports and employment, is "an opportunity to address regulatory and microeconomic barriers to our competitiveness".

"This involves detailed sectoral analysis and ongoing consultation with affected industries and interest groups - it's the key to sustained, faster, long-term growth," said Manuel, who committed R1.6bn more to industrial development and small enterprise support programmes as well R1.8bn to rural development and small farmer support.

While the Small Enterprise Development Agency received a R200m shot in the arm to help small businesses create jobs and access trade opportunities, significant extra money was directed at consumer protection and competition agencies.

The National Consumer Tribunal, the South African Bureau of Standards (SABS), the Competition Commission and the newly-created National Regulator for Compulsory Specifications receive an extra R150m this year. The SABS benefits from another R258 tranche for new testing equipment.

As for development finance institutions, Manuel said that proposals to strengthen the balance sheets of the Development Bank of South Africa and beleaguered Land Bank were also being considered. They played a critical role in supporting service delivery at municipal level as well as improving agrarian reform, in particular access to finances for farmers.

The Industrial Development Corporation is also assessing its possible role as a partner in supporting investment and employment in sectors or industries affected by the cyclical slowdown.

In its long-term industrial restructuring mission, Manuel said government would be "mindful" of the need to avoid passing on risks to taxpayers that would be better managed in the business sector.

- Fin24.com