Budget Speech 2014 Boosting Growth

 

 

The next phase of growth is about the dynamism and agility of the private sector and the synergies created with government. Government will continue to provide an enabling environment for businesses to grow and create employment.

 

Over the past five years, we supported businesses by relaxing exchange control regulations to support those who wanted to invest in the African continent. We provided tax incentives for manufacturing businesses to expand operations, improve competitiveness and acquire new machinery. We also opened up opportunities for the private sector to build and run our renewable energy plants and introduced the employment tax incentive. The result was an increase in job creation. Now, this effort has to be scaled up to make a bigger impact on growth, jobs and development.

 

Removing constraints

 

Over the medium term we will:

 

 

2.        Increase investment in economic infrastructure, including rail, water, roads and ports

 

3.        Pursue the exploration of shale gas to provide an additional energy source for our economy.

 

4.        Provide business support programmes and special economic zones that encourage industrialisation and improve local

 

Regulatory improvements

 

Government has been engaging business on specific steps that can be taken to make it easier to do business in our country. Arising out of that process, we will now streamline regulatory and licensing approvals for environmental impact assessments, water licenses and mining licenses. As announced by President Zuma, Parliament is finalising amendments to give effect to this very positive development which will cut the time it takes to start a mine from application to final approval to under 300 days.

 

There is further work in progress on lowering the cost structure of the economy, for example through improved efficiencies in freight logistics. Minister Carrim has published a new policy on broadband, which will in due course lead to modernisation of our communications capabilities. Several cities are bringing WiFi connectivity to their environs.

 

SARS is taking further steps to lower the cost of tax compliance in South Africa.

 

Africa

 

Investment into Africa has reached R36 billion a year, in a range of industries. South Africa is the second largest developing country investor on the continent. In 2013, 29 per cent of our exports were destined for Africa. In 2012, 12 per cent of our dividends came from Africa, up from just 2 per cent a decade earlier. Increasing these inflows will be crucial for closing the current account deficit. Foreign assets owned by South African firms are an important source of income, and reduce our vulnerability to future domestic downturns. In addition, 18 large African firms now have debt and equity listings on the JSE.

 

Today, further steps to simplify trade and investment with Africa are announced. The HoldCo regime for African and offshore operations will be extended to unlisted companies, and the limits for listed companies will be increased. This regime creates a simplified tax and foreign exchange framework for companies that trade with Africa.

 

South Africa is an important centre for financial services such as fund and asset management. We propose new “Foreign Member Funds”, which will simplify the foreign exposure rules. These funds will support South Africa as a hub for African fund management and provide a domestically-regulated channel for investors to obtain foreign exposure.

 

Promoting investment

 

Increased investment in the economy by both the private and public sector is at the heart of creating jobs and growth.

 

Government is committed to providing policy certainty for domestic and foreign investors. Working together with Minister Davies and the Department of Trade and Industry, a holistic framework for investment is being finalised. This framework flows from the National Development Plan, which places investment at the centre of our economic growth plan.

 

We have a number of incentives in place, which have provided substantial benefits to both foreign and domestic investors. Moreover, under the guidance of Minister Davies, a new Promotion and Protection of Investment Bill has been released for public comment. This entrenches the rights of all investors, ensuring that property rights are protected, in line with the Constitution.