Chairperson, hon Minister, hon Deputy Minister, all MECs, my hon colleagues, distinguished guests, ladies and gentlemen, while recovery from the global economic crisis is evident in many parts of the world, our country is still in the midst of an economic recession in which the manufacturing and mining sectors have been the most affected.
Turning the economy around necessitates a new way of thinking and this entails making difficult decisions that shape the country's policies and programmes for the years ahead.
Further, government will need to forge relations with the business sector and organised labour to effectively deliver on public services with persistent unemployment and high levels of inequality characterising the country. It is important that future policies create and offer all South Africans better economic opportunities
The National Treasury has projected a 1,5% growth in the South African economy in 2010. The projected growth this year is expected to be driven by increased consumer spending and government investment in infrastructure. But the challenges still remain in the downstream economy characterised by a vulnerable manufacturing sector. Local manufacturing is currently at a disadvantage and is unable to compete with manufacturing in other countries due to the lack of skilled labour, the lack of investment in this sector, and the high price of raw materials required for manufacturing.
Although significant growth in the automotive industry was realised through the Motor Industry Development Programme, the majority of the components used in the production process were imported. The revenue that could potentially have been generated by local manufacturers was lost to imports of components produced internationally. There are many who argue that South African manufacturing is of poor quality, largely because of the lack of skilled labour. However, the reality is that the training of the workforce will only take place if a need for skilled workers is created.
Currently, manufacturers are being severely hampered, largely because they are unable to purchase raw materials at good value, due to high import duties. Many factories in the country have gone out of business because their customers were able to source and buy imported goods at a far lower price than those produced locally. We need to look seriously at drastically reducing the current duties imposed on the import of raw materials used for manufacturing. To be able to compete in the global market, we should consider the idea of imposing a zero rating on raw materials that are unobtainable in South Africa and raise tariffs on downstream industries to promote competitiveness and prevent loss of revenue from tariffs.
In the meantime, the Department of Trade and Industry, DTI, should also review and renegotiate trade agreements that have become either outdated or redundant, such as the Southern African Customs Union, SACU, which has long- standing, outdated agreements with our neighbouring countries which allow duty-free imports that benefit the countries involved, but at great cost to South Africa.
Our country is in desperate need of investors. The government must align itself with the business sector and form relationships that will allow local manufacturing to prosper by creating a friendly business environment as well as an attractive incentive scheme.
In just over a month, the 2010 Fifa Soccer World Cup will take place in South Africa. This historic event will bring with it many opportunities, as well as many possible risks for our nation, such as a potential economic downfall, following the World Cup.
The Department of Tourism is well prepared for the World Cup, although the recent global economic crisis as well as the restrictions that Fifa has placed on local industry have created many difficulties.
Both the DTI and the Department of Tourism should formulate an evaluation plan that will measure the effect of the World Cup in terms of its influence on the economy. It is important to understand the actual value of hosting such events in relation to the money and efforts we spend on planning and preparing for them.
In addition, we need to ensure the integration of tourism priorities and plans into local, provincial, as well as national government planning, and facilitate interdepartmental contribution to tourism growth. There is also too much separation between the overseas departments and better communication is needed between them. Resources and information should be shared between governmental departments. The departments will be more financially and strategically effective if there is efficient and consistent communication.
Sharing of knowledge and ideas between all nine provinces is also important through joint initiatives between the three spheres of government to reduce duplication and costs. This will create a better understanding of how each department is working towards branding South Africa internationally. I thank you.