The Minister of Trade and Industry, Dr Rob Davies, has approved guidelines of the Automotive Investment Scheme (AIS). The scheme is part of the Automotive Production and Development Programme (APDP) which is intended to replace the Motor Industry Development Programme (MIDP) in 2012.
The AIS replaces the Productive Assets Allowance scheme (PAA) of the Motor Industry Development Programme (MIDP) which elapsed in December 2009. The AIS is intended to grow and develop the automotive sector through investment in new and replacement automotive models as well as the manufacturing of automotive components. The objective is to increase plant production volumes, sustain employment and strengthen the automotive value chain.
The scheme will provide qualifying firms with a taxable cash grant of 20 percent of the value of qualifying investment in productive assets. In order to qualify for the 20 percent grant:
* A light motor vehicle manufacturer must introduce a new or replacement model and demonstrate that it will achieve a minimum of 50,000 annual units of production per plant within three years
* A component manufacturer must prove that a contract has been awarded for the manufacture of components to supply into the Light Motor Vehicle Manufacturing Supply Chain, and that the investment will achieve at least 25 percent of total entity turnover from the Light Motor Vehicle Manufacturing Supply Chain.
An additional taxable cash grant of 5 or 10 percent over and above the 20 percent taxable cash grant is available to projects that:
* Demonstrate that the investment will result in base year employment levels being maintained throughout the incentive period and in the case of light motor vehicle manufacturers demonstrate also that the said levels will be maintained during the model phase-out period; and demonstrate that the investment will result in the following economic benefits stipulated in the guidelines:
* Substantial support for the local tooling industry
* Significant Research and Development in South Africa related to the project
* Maintain employment levels throughout the incentive period and or result in the creation of new jobs
* Strengthening the automotive supply chain through backward and forward linkages
* Substantial increase in local value addition
* Increase in unit production per plant for OEM’s in line with vision 2020
* Increase in turnover for component manufacturers.
A budget allocation of R2,69 billion has been made available for the next three financial years starting in 2010/11 to 2012/13. The AIS will be available for projects that commenced production with effect from 1 July 2009 and will consider applications from the following projects that comply with the AIS guidelines requirements:
* Investment projects by component manufacturers which commenced production between 1 July 2009 and 30 September 2010
* Investment projects by light vehicle manufacturers which commenced production between 1 July 2009 and 31 December 2010.
Projects which commence production after 30 September 2010 in respect of component manufacturers and 31 December 2010 in respect of light vehicle manufacturers must apply three or six months before the start of their production, respectively.
Application forms for the scheme will be available on the Department of Trade and Industry website http://www.dti.gov.za/ from 14 June 2010.
Enquiries:
Bongani Lukhele
Cell: 074 299 8512 or 078 526 8572
E-mail: BLukhele@thedti.gov.za
Issued by: Department of Trade and Industry
2 June 2010
