The Saldanha Bay IDZ feasibility study report was released for final public comment at a launch held in the Dial Rock Community Hall in Saldanha Bay. The feasibility study highlighted key information relating to the IDZ and what effect this will have on the area.

Saldanha has a strong manufacturing industry, but the town also developed into a fully fledged harbour town, as well as a commercial and institutional core (especially in terms of the Military Academy, Special Forces and Navy). The economy is based on the manufacturing industry, agricultural / fishing industry, tourism industry and harbour industries.

Saldanha Bay has long been acknowledged as an important resource for the sustainable growth and development of the West Coast region with the development of the deep-water port and the neighbouring industrial areas in the 1970’s.

Minister Alan Winde mentioned 'the purpose of the detailed feasibility study is to investigate the viability of establishing an IDZ programme in Saldanha Bay so as to inform the final decision-making by the Saldanha Bay Municipality and the Western Cape Provincial Government on whether to apply for designation of an IDZ programme by the Department of Trade and Industry (DTI) at Saldanha Bay. As such, the socio-economic benefits, costs, risks and impacts of such an endeavour to society, the governmental stakeholders and the potential private sector participants must be determined. The Feasibility Study would present the holistic reasoning of an IDZ at Saldanha Bay to assist the public sector in deciding whether to support such an initiative.' He pointed out that the IDZ would have a direct economic impact of these industries and a ripple effect on the communities served. He noted that a number of jobs would be created over the 25 year period. Operational contributions to employment would climb steadily from zero to around 4 240 direct (on-site) jobs, amounting to 16% of the Saldanha Bay current employment, and 11 975 total (direct, indirect and induced) jobs, approximately 0.1% of the country’s current total formal employment. These figures are based on the low scenario.

Minister Anton Bredell said after the launch that 'to sustain both the foundation of our current economy as well as the envisaged economic growth, we cannot trade-off our natural capital for man-made capital in a manner that erodes or undermines our natural resource base.’ He went on to acknowledge 'that one of our primary challenges is “air space” – the proposed IDZ will be surrounded by communities whose sustained quality of life will depend on maintaining air quality standards. Again, this calls for a wise consideration of the types of industries we draw to the IDZ.'
Lionel October, Director General for the DTI stated that the study highlighted five key areas but interrogated only three. These areas included:

• Offshore supply base and marine repair
• Renewable energy
• Titanium and zircon beneficiation
• Wind blade manufacturing
• Hot briquetted iron

Wesgro CEO, Nils Flaatten believes that the IDZ will have a positive effect not only on the Saldanha Bay area but the Western Cape as a whole. The low scenario sees a total of R9.3 billion in foreign direct investment (FDI) over the 25 year period. The low scenario has foreign ownership of 78% resulting in R176-billion of the R244-billion total gross turnover over 25 years being foreign-owned. Depending on whether this is reinvested or paid out, this could represent a high leakage in addition to that leakage already accounted for in the impact models (i.e. procurement of foreign materials and machinery).

In each scenario, for each rand invested by Government, the private sector will invest four rand, and for each Government rand invested, will recover approximately 30 cents in taxes. In all scenarios, between 78% and 89% of production is for export, whereas imported costs run at approximately 5%.

The draft paper will be open for comment until end November 2011, following which a decision with regards the application for designation of the IDZ will be made.

For more information and to view the full report, visit our website:
http://wesgro.co.za/publications/index.php?presentations

Technical information: Jacyntha Maclennan
Head: Wesgro IQ
Jacyntha@wesgro.co.za