DTI excludes steel product inputs in designations

New regulations now give the dti authority to designate sectors and products for local procurement. Designations help government boost SA's industrial development through local procurement.

The latest designations applied in particular to flat primary steel products, the dti said.

Intermediate input industries, such as those of flat primary steel products, generally enjoyed significant protection in the form of a high level of domestic market dominance, coupled with high logistics costs for imported alternatives, the dti noted.

The department said it was of the view that this was a patently sensible decision.

"The absence of such an exclusion would effectively allow such intermediate products to be priced at any level chosen by the producer in the context of high domestic market dominance, with a single company often the sole domestic producer of a range of product lines," the department said.

The designation process, the department said, would provide a massive boost to industries over the coming years provided they ensured that their products were competitively priced both in relation to imports and in relation to prices charged in other comparable markets.

This general principle will apply across public procurement, and is not specific to any particular input sector and is in keeping with government's objectives of building a competitive domestic manufacturing supply chain.

Five sectors, including rolling stock; power pylons; bus bodies; canned/processed vegetables; and textile, clothing, leather and footwear, have so far been designated for local production with minimum local content thresholds.

Each designation stipulates a minimum level of local content for the relevant sector or set of products.

The revised Preferential Procurement Policy Framework Act regulations came into effect on December 7 2011 and empower the dti to designate industries, sectors and sub-sectors for local production at a specified level of local content.

Public procurement was one of the key industrial levers in the Industrial Policy Action Plan (IPAP), the dti said. It launched the 2012/13 to 2014/15 IPAP this week.