SA's SEZ: no real competitive incentives

There is reason to believe that SA's envisioned Special Economic Zones (SEZs) - highlighted by Minister of Finance Pravin Gordhan in his budget speech last month are not going to be one of history's great success stories, The Citizen reports.

Gordhan said that government intends making the country a more attractive and competitive destination for foreign direct investment (FDI). It would therefore likely offer companies that invested in the SEZs - especially of the labour-intensive manufacturing kind - special incentives such as a lower corporate tax rate and support for employment and training expenses.

Unfortunately, says the Citizen, a lot of SEZs, including previous South African experiments, have failed, having sucked-up a lot of money without bringing in much investment or creating many sustainable jobs. The latest iteration of South African SEZs seems to be in danger of not offering competitive incentives or a properly welcoming business environment. Most ominously, the Department of Trade and Industry (DTI) has made it clear there will be no relaxation of SA's relatively stringent labour laws in the Special Economic Zones.

Speaking at a public hearing on the SEZ Bill, DTI director-general Lionel October said "It is not in our best interest to deregulate labour laws to attract Foreign Direct Investment (FDI) and therefore exploit our workers." South Africa simply doesn't offer any particular advantage among the thousands of SEZs around the world that offer comprehensive packages of tax incentives, top-notch infrastructure and cheap labour, the Citizen says.

Read the full article on www.citizen.co.za.