Strategic Industrial Projects (SIP) is an incentive programme designed to encourage investments into South African operations from both local and foreign investors. Its primary aim is to contribute to the growth, development and competitiveness of specific industry sectors by providing industrial investment allowances, in the form of tax relief, to qualifying industrial projects. Added to this, the programme’s key objective is to attract industrial investments in South Africa that serve to upgrade South African industry and create employment opportunities. An amount of R3-billion was allocated in the form of tax allowances over a period of four years, starting from August 2001. This allowance is intended to lower the cost of investing in critical industrial projects.
The SIP incentive programme is managed within the dti by The Enterprise Organisation (TEO) in terms of the Income Tax Act (Act No 58 of 1962, as amended) and Regulations 22848 of 21
November 2001. The SIP is one of a number of incentive schemes administered by TEO.
This incentive programme has proved very successful – according to the ANC Daily News Briefing of 15 April 2003, ‘Twelve projects have been approved in the Strategic Industrial Programme, introduced only last year, generating new investments of R2.9-billion and creating 1 700 direct and 8 085 indirect jobs.’
In his 2004 Budget Vote Speech, Minister of the Department of Trade and Industry Mandisi Mpahlwa commented, ‘A suite of new investment incentives was introduced including … the Strategic Industrial Programme. Over R4-billion in new direct investment has been secured through the Strategic Industrial Programme. Through these programmes new jobs have been created and thousands of existing jobs were retained.’
Among other sectors, the programme is set to benefit computer and computer-related activities. Mark Harris, the
managing director of IBM, said in the Daily Labour News on 27 February 2003 that the programme is a positive initiative on the part of government because it allows companies to use tax relief to develop local manufacturing, which will create jobs.
The SIP programme allows local IT companies to be more competitive in the global market, encouraging the export of local products and services and create job opportunities in South Africa.
Application procedure
1. Register
To register and obtain a Login and Pin Code to proceed with the completion of an online SIP (www.thedti.gov.za/offerings/offering.asp?offeringid=131) application contact Francisca Strauss at
2. Application Submission
The applicant will receive a letter of acknowledgement, stating the date and time the application was received and feedback regarding additional information that may be required.
3. Evaluation Process
The evaluation process begins with the gathering of additional information. An assessment is made as to whether the mandatory
requirements and point scoring procedure have been complied with, and an evaluation report is then compiled which forms the basis for the adjudication process.
4. Ministerial Approval
The adjudication process results in recommendations for Ministerial actions. The Minister makes a final decision regarding approval of the proposed project and communicates the final decision to the Adjudication Committee, the Commissioner of SARS and the applicant. The applicant’s particulars are published in the Government Gazette and a report of all approved projects is submitted to Parliament, with a copy going to the Auditor-General.
5. Implementation
The Minister’s decision is implemented and the applicant receives a letter of approval for the allowance.
6. Progress Reports
On an annual basis, and within six months after the close of each year of assessment, progress reports on the approved
project must be submitted to the dti.
