The Department of Trade and Industry (the dti) has been working intensively with all stakeholders over the last 18 months to give effect to the Customised Sector Programme (CSP) process. We are now at a point where very significant progress can be reported with respect to giving effect to the CSP. Immediate implementation of the CSP will entail four initial core programmes.
Clothing and Textiles Competitiveness Programme (CTCP)
In order for companies in the clothing and textiles sectors to be in a position to compete with international competitors in the domestic and international markets, it is essential that they advance their operational competitiveness to world class performance levels. The dti has therefore developed a Clothing and Textiles Competitiveness Programme (CTCP) which is being administered by the Industrial Development Corporation (IDC) and consists of the following elements:
* A capital upgrading programme available to clothing, textiles and footwear manufacturers via the Enterprise Investment Programme (EIP) administered by the dti together with preferential loans via the IDC at prime less 5%.
* A firm and cluster level Clothing Textiles Competitiveness Improvement programme (CTCIP) which will be provided on an attractive cost-sharing basis.
Contact details:
Mr Joy Balepile
Programme Manager, CTCP Desk
Tel: 011 269 3762
Tackling illegal imports
One of the most critical challenges is the combating of pervasive illegal imports within the industry, including under-invoicing. In December 2008 the South African Revenue Services (SARS) dedicated specific capacity to deal with illegal activity in the clothing, textiles and footwear sectors. It is now undertaking an ongoing series of enforcement campaigns. Either the dti or SARS can be contacted directly with information on illegal activity. The dti will be monitoring the campaign activities and work closely with SARS to agree strategic priorities.
Contact details:
Ms Elaine Smith
Director: Clothing Textiles Footwear Leather (CTFL) Desk, the dti
Tel: 012 394 1301
Response to the global economic crisis
In light of the global economic crisis, the National Economic Development and Labour Council (NEDLAC) facilitated a framework for responding to the crisis involving all key constituencies: business, labour, community and government. The framework was made public on 19 February 2009. One of the sectors identified for priority attention was the clothing and textiles sector. There is an ongoing process via NEDLAC of discussing and agreeing on concrete measures. The outcome of this process will supplement the actions which are already being undertaken by the dti above.
In the interim the IDC has approved a response programme and subject to its criteria will provide funding to firms that are in distress as a result of the crisis. Clothing and Textiles firms are encouraged to contact the IDC’s Textiles and Clothing Strategic Business Unit: 011 269 3760 for further information.
Reviewing cost structures
As a first step, import duties on textile inputs into clothing manufacturing that are not commercially produced in South Africa have been reviewed by the International Trade Administration Commission (ITAC). This comprised the revision of import duties on especially fabrics which are not being manufactured locally and / or not available locally in sufficient quantities. The review has been finalised and is now with SARS for implementation.
A rebate mechanism will be put in place allowing for duty draw backs on fabrics not domestically manufactured or not available in sufficient quantities. A review of input costs to the household textiles sector has now commenced and will in all likelihood be completed during 2009. Going forward the dti will be working with the United Nations Industrial Development Organisation (UNIDO) to undertake a comprehensive benchmarking of the clothing and textile value chain in order to potentially identify further areas of achieving efficiencies.
Contact details:
Mr Mzukisi Skenjana
Manager Clothing Textiles Footwear Leather (CTFL), ITAC
Tel: 012 394 3675
Skills upgrading
A Skills Upgrading Programme (SUP) is being finalised in collaboration with the Clothing, Textiles, Footwear and Leather (CTFL) Sectoral Education and Training Authority (SETA), Department of Labour (DoL) and the National Skills Fund (NSF). An extensive multi stakeholder process identified that there was shortage of specific technical and managerial skills in these sectors. The skills upgrading programme seeks to address these critical skills gaps and to place a large proportion of the workforce on skills upgrading courses over the next five years.
Additional areas of work
During the course of 2009 three additional areas of work will be undertaken aimed at giving effect to the CSP. The dti has commissioned research on the possible introduction of a production incentive to supplement the CTCP over a limited duration of time. The objective of such an incentive would be to assist companies to get out of survival mode and create a greater appetite for taking up the competitiveness improvement programmes offered through the CTCP. The dti will also commence work on a medium long term innovation and technology plan for the sector. The dti will also work to facilitate greater black ownership within the sector.
Textile and Clothing Industry Development Programme (TCIDP)
It is also appropriate to provide an update on other processes related to the sector in the Southern African Customs Union (SACU) region, notably developments with respect to the Textile and Clothing Industry Development Programme (TCIDP). The TCIDP has been in place since 1995 in various forms. However, there have been various challenges with respect to the programme.
First, it has only provided limited support to South African manufacturers since it is only available to exporters and the vast majority of South African clothing and textile production is produced for the domestic market. Second, it is potentially World Trade Organisation (WTO) unfriendly. Third, it has facilitated part of the rapid growth in imports. Fourth, there is evidence of abuse of the instrument within SACU in a variety of ways. The SACU Secretariat was tasked with developing an alternative to this programme some years ago but has not yet completed this task.
In order to accommodate both continuity of support and an expedited completion of the replacement programme that is to be finalized by the SACU Secretariat, it was agreed by the SACU Council of Ministers in December 2008 that the TCIDP would receive one final extension period until the end of March 2010. The extension would continue on the current basis but with a revised list of eligible products to be imported using the duty credit certificate.
The list of eligible products will be finalised through a NEDLAC process and then fed into the SACU process. It is anticipated that the SACU Secretariat would work in an expedited way to finalise the replacement for the TCIDP by the time it expires in March 2010, if not sooner.
For general enquiries, contact:
Mr Nimrod Zalk
Chief Director: Industrial Policy
Enterprise and Industry Development Division
Department of Trade and Industry
Tel: 012 394 1366
Fax: 012 394 2366
E-mail: Nzalk@thedti.gov.za
Issued by: Department of Trade and Industry
21 May 2009
Source: Department of Trade and Industry (http://www.dti.gov.za)
