Document: Industrial Policy Action Plan (IPAP 2) 2010/11

The 2010/2011 Industrial Policy Action Plan or IPAP2, as it has become known, builds on the National Industrial Policy Framework (NIPF) and the 2007/8 IPAP. IPAP2 is a product of extensive collaborative work by the Economic Sectors and Employment Cluster of Ministers.

The 2010/11 – 2012/13 Industrial Policy Action Plan rests on four cornerstones,

• First, government intends to develop proposals to enhance access to concessional industrial financing for investment in IPAP priorities, and other productive sectors on terms comparable to those of our major trading partners.
• Government will revise procurement legislation, regulations and practices to enable the designation of large, strategic and repeat or ‘fleet’ procurements in a range of sectors. This will aim to sequentially increase competitive local procurement and supplier development opportunities, minimise ‘leakages’ from the domestic economy, and support meaningful Broad Based Black Economic Empowerment (B-BBEE) in all 3 spheres of government and in SOE’s.
• Government will deploy its trade policies more strategically. This includes intensifying the campaign led by SARS against practices such as customs fraud, under invoicing, smuggling and illegal imports - all of which profoundly undermine productive capacity and employment in the economy.
• Anti-competitive practices will be targeted, particularly where these concern intermediate inputs to downstream labour absorbing production as well as consumer goods to low income households.

New areas of focus of industrial policy include:

• Metals fabrication, capital and transport equipment, green and energy saving industries and agro processing, will be qualitatively

IPAP2 will build on and broaden interventions in sectors which were identified in the first Industrial Policy Action Plan, namely:

• Automotives and components, medium and heavy vehicles; plastics, pharmaceuticals and chemicals; clothing, textiles, footwear and leather; bio-fuels; forestry, paper, pulp and furniture; cultural industries and tourism and Business Process Services (or Call Centres.)

The third cluster focuses on sectors with the potential to develop long-term advanced capabilities:

• Nuclear, advanced materials and aerospace.

It is estimated that the IPAP will result in the creation of 2 477 000 direct and indirect decent jobs over the next ten years. It will diversify and grow exports, improve the trade balance, build long term industrial capability, grow our domestic technology and catalyse skills development.

In terms of IPAP2 there are 83 key action plans (KAP’s) that need to be addressed across departments, SOE’s and public agencies. The action plans are not the responsibility of the DTI alone and will be subject to rigorous monitoring and evaluation.

IPAP2 has four major transversal interventions:

• Industrial Financing
• Competition Policy
• Developmental Trade Policy
• Public Procurement

In terms of local government, it is only the changes to public procurement policy and legislation that will have implications and operations responsibilities. These include:

• Identifying the opportunities to improve domestic procurement leveraging across the three spheres? E.g. the $10 mil offset programme.
• The use of public expenditure to support many of the IPAP sectors
• Revising the National Industrial Participation Programme (NIPP) and integrate the Competitive Supplier Development Programme (CSDP).

Concerns and questions for SALGA and Local Government include:

• While provinces have been encourages to align their economic development strategies to IPAP2, it will more difficult to so at local government level.
• Interventions to support IPAP2 sectors will continue to be located in urban industrialised centres and will therefore not be geographically spread,
• Sector driven strategies operate at the provincial / regional level and therefore are not regarded within LED unless consciously aligned.
• The Minister has emphasised that comments and suggestions are welcome