Address by Deputy Minister of International Relations and Cooperation at the Asia and Middle East Western Cape Trade and Investment Seminar, 21 November 2013.

MECs
Ambassador Sooklal,
Excellencies
Ladies and Gentlemen,
Programme Director,

It is a great pleasure to welcome you to the City of Cape Town and to address you during this august occasion of a trade and investment seminar. The idea of this trade seminar emanated from recommendations made by the National Development Plan to our Department to improve on economic diplomacy. In order to comply with the NDP, since from 2012, DIRCO began a series of trade and investment seminars to expose the economic opportunities our country can offer to our trading partners. Up to this stage, the seminars that were already conducted took place in the Provinces of Kwazulu-Natal, Free State and North West. We aim to cover all the provinces in due course.

It is important that we put this seminar in the larger global trade and investment context. According to a Mcinsey International report released earlier this year, and produced by the Keyser Centre for Economic Research; in 2010 emerging markets constituted 53 percent of global GDP-Africa 4%, Asia 28%, Latin America 10%, Central and Eastern Europe 3%, Commonwealth States 4% and Middle East 4%.  In 2030 emerging markets will constitute 74% of global GDP-Africa 7%, Asia 44%, Latin America 10%, Central and Eastern Europe 3%, Commonwealth States 4%, and the Middle East 4%. In 2050 emerging markets will constitute 83% of global GDP-Africa 12%, Asia 49%, Latin America 10%, Central and Eastern Europe 3%, Commonwealth of Independent States 4% and the Middle East 5%.

Programme Director,

So what we can say with certainty is that we are in the right place, and heading in the right direction as an intrinsic part of the emerging economies of the world and our strategic BRICS partnership. As a nation however it is critical to engage the triple challenges of unemployment, poverty and inequality as these remain the biggest threats to our young budding democracy and this therefore logically dictates that DIRCO should regard economic diplomacy an integral part of our work.

The National Development Plan aims to eliminate poverty and reduce inequality and unemployment by 2030. South Africa cannot realise these goals without drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnership throughout society and our friends outside our borders.

Ladies and Gentleman,

Our mutual and beneficial relationship with the region of Middle East and Asia are historical. The ANC historical document entitled: Foreign Policy Perspective has the following to say about the future South Africa’s relations with this region and I quote:

“This region is rapidly emerging as one of the economic powerhouses of the world. Although some of our peoples and the liberation movement have had important links with Asian countries and peoples, South Africa, under the apartheid regime had had only limited contact with this important region of the world. A democratic government will vigorously seek to extend South Africa's economic relations with Asian countries and regional organisations. We believe we have much to learn from the experience of Asia both in economic and social reconstruction. Our relations with this region will also seek to achieve a rapid, mutually agreeable technology transfer, to enable us to modernize our production processes. A democratic South Africa's relations with Asian countries will be based on the fundamental principles outlined earlier. Our link up with this region must be a dynamic one in the context of South- South relations and development. The establishment of diplomatic relations will be an independent decision based on our national interest both economic and political.”

Indeed, the new South Africa’s economic diplomacy policy has always been guided by the above principles. For instance our 2013 Strategic Plan document, speaks about contributing to the realisation of the five national priorities through strengthened bilateral cooperation with individual countries of the South, prioritising increased exports of South African goods and services; Foreign Direct Investment (FDI) with technology transfers into value-added industries and mineral beneficiation, as well as increased inbound tourism and skills enhancement. 

Excellencies,

Moving down to the Western Cape, we should ask what this province can offer to potential investors in Asia and Middle East. The Western Cape is one of the provinces that has advanced investment infrastructure. Just recently, President Zuma handed over the Saldanha IDZ Operator Permit to the Chairperson of Wesgro, Mr Ben Kodisang. The official ceremony gave the Saldanha Bay Industrial Development Zone Licensing Company Pty (Ltd), commonly referred to as LiCO, legal status as the IDZ Operator.

The Saldanha Bay IDZ is unique because it is:

The first IDZ in South Africa to apply for full Customs Control Area (CCA) license, IDZ activities are sector-specific and focus on the Oil and Gas sector but will include all sectors of the economy, and the first IDZ in South Africa to include port land in the designation.

It is equally vital that as we pursue direct and indirect investment growth, that this does not perpetuate old patterns of apartheid engineered inequality as this will only translate into social in cohesion, protest and civil unrest as the daily pressures to survive become more exacerbated. This has been a particular problem over the past few years in this province (the Western Cape) as we have seen the abuse of state power to further perpetuate white empowerment and privilege, in stark contradiction to the Constitutional provisions for redress and empowerment legislation of the past two decades.

It is ironic that as we meet today there are policy discussions in the Western Cape underway to discuss the tensions that have arisen with respect to support for empowerment legislation. This is just a smokescreen for in reality the past four years has seen a real and drastic war of attrition on black business with the most lucrative contracts going to mainly white privileged business and many black SMMEs forced to close shop in this province. This despite the fact that the Western Cape holds immense development potential across a range of sectors. Allow me to give you a snapshot of this potential.

Renewable Energy

In terms of renewable energy, the Western Cape is considered a leader in the sector, being the first province to have a Sustainable Energy Strategy and a Policy for Solar Water Heaters. To ease the strain on energy demand currently, the province has set itself renewable energy targets of 15% by 2014.

Over the past decade, the development of South Africa’s oil and gas resources and the rapid growth of upstream opportunities in West Africa have led to an accelerated growth in upstream markets and there is now a significant oil and gas supplier base in South Africa.

Africa produces 8 million barrels of crude oil per day, some 10% of the world production. The market for offshore oil and gas platforms and components, services and repairs to support these operations is large and growing. The Western Cape and Cape Town is ideally placed to service this growing demand – it is geographically close to West Africa, and offers well-developed infrastructure as well as cost-efficient engineering capabilities. Most international exploration and oil refining firms have a presence in the City of Cape Town.

Tourism

Tourism is one important sector that offers opportunities to potential investors. The Province of the Western Cape and Cape Town as a global destination city for tourism has grown in popularity over the past decade. This is largely due to the efforts of organisations such as Cape Town Tourism and Cape Town Routes Unlimited. The Western Cape is the main leisure tourism destination in South Africa and is home to the majority of the top tourist attractions in South Africa. These tourist attractions range from natural attractions such as Table Mountain and Cape Point to historical and cultural attractions such as Robben Island. In 2012, Table Mountain was confirmed as the 5th Natural Wonder of the World.

The Western Cape has good institutional and physical infrastructure along with a range of hotels and accommodation in the City and surrounds. The Province boasts a strong international and domestic brand as a tourism destination. The South African Government has identified Tourism as a priority sector, and in 2008, the national Department of Trade and Industry (the DTI) introduced the Enterprise Investment Programme (EIP) which has a dedicated tourism incentive.

Agri-Business

Agriculture and agribusiness is one of the most important sectors in the Western Cape, and involves all the different activities that link the entire value chain from the farm/forest/fishery to the consumer. This includes inputs, production, processing, marketing and distribution of agricultural, forestry and fishing products.

The combined contribution of agriculture to the gross regional domestic product (GRDP) of the Western Cape is just under 5%, but these sectors are very important to the provincial economy and its export profile. The winter rainfall of the Boland and the year-round rainfall of the Southern Cape provide agricultural conditions that make the crop mix and production potential unique. As many as 11 commodities contribute significantly to agricultural production, with fruit, poultry/eggs, winter grains, viticulture and vegetables together comprising more than 75% of total output.

Again despite its immense potential this sector remains fraught with challenges with many practices reminiscent of the feudal age, slave wages, inhumane living conditions, regular physical beatings and abuse. Just to illustrate, the Cape Times, on Monday reported the large scale hail damage to crops and near decimation of the fruit crop of this season. What it doesn't say is that most established farmers and farming coops will merely file exorbitant insurance claims whilst the poor farmworkers face the bleak prospect of no seasonal work and the prospects of a bleak season of poverty, hunger and suffering. So it is vital that as we support efforts for emergency relief for this sector, we factor in ways to provide some safety net for those who will be most affected.

Creative Industries

The main sectors comprising the creative industry include graphic design, advertising, film, video and animation, music, performing arts etc. This exciting sector in the Western Cape and Cape Town is a melting pot of creativity, attracting foreign and local investors and merging international trends with local creative culture. In 2011, Cape Town was awarded the 2014 Design Capital of the World.

In conjunction with Cape Town Partnership, the Creative Cape Town theme was developed which promotes cultural and creative industries as part of the economic strategy for the Central City. National events like the Design Indaba, the advertising sector’s Loerie Awards, and the country’s leading fashion week happens in Cape Town. Cape Town also offers affordable production costs for film and video production (15% cheaper than Australia and 20% cheaper than Europe), as well as the biggest visual effects studio in South Africa and the Cape Town Film Studio.

The province also boasts huge potential in mining, the IT and knowledge sectors and in property development. In many ways, the Western Cape encompasses most of what the country has to offer.

I would like to wish you well in your deliberations and I urge you to admire the beauty of this province and so that you can be able to encourage companies from your country to consider investing this province. In conclusion let me remind you of what President Mandela said on the 6th December 1996 addressing the business community. He said and I quote: 'One cannot over emphasise the contribution that business people can make, not only to growth and development in the Western Cape and the country as a whole, but also to the political life of the region and the nation.

I thank you.

For further information, please contact Mr Clayson Monyela, Spokesperson for DIRCO, on 082 884 5974.

ISSUED BY THE DEPARTMENT OF INTERNATIONAL RELATIONS AND COOPERATION

www.dirco.gov.za
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