Bheka Zulu: Get into the zone
Special Economic Zones fill a vital role in our economy, giving tax-incentivised infrastructure facilities to a particular sector vertical that allows them to network, build relationships, grow scale and – ultimately – bolster the local economy, writes Tshwane Automotive Special Economic Zone CEO Dr Bheka Zulu.
That South Africa’s economy is in the doldrums is nothing new, as it is expected to grow a mere 2.1% this year, dropping drastically from the 4.9% recorded in 2021. Over the next three years, Statistics South Africa anticipates gains of, on average, 1.8%. These rates are not nearly enough to help the country grow jobs and create opportunities for small, micro, and medium enterprises to be the driving force that they can be and bolster the South African economy so that it is equitable and helps close the gap between those who have, and those who are floundering in poverty.
At the same time, the hubs are a virtuous cycle because they enable one company to build a relationship with another, thus creating a chain of network and upskilling opportunities that lead to more business development.
Locally, we are blessed with a legislative framework that allows those who operate in the SEZs to benefit from a reduced corporate tax rate of 15%, in addition to a 10% allowance when it comes to the cost of new buildings owned by company that quality. In addition, the tax rebate also applies to improvements to buildings.
SEZs have proven to, over time, be a safe port for businesses, adapting and changing as the environment shifted. In fact, UNCTAD points out that the 2008/2009 global financial crisis, which brough many economies to their knees, hardly resulted in a dip for the zones. COVID-19 and the resultant lockdowns to curb the spread of the virus have also proven to be a catalyst for internal production as the world continues to reel from the shortage of items that typically get transported to countries across the ocean, such as electronic chips and timber. The report states that there are currently nearly 5,400 SEZs, about a fifth of which were established in the past five years, with another 500 to come in the next few years.
SEZs represents a fantastic opportunity for equitable growth across the country, and we remain committed to ensuring that the Tshwane Automotive Special Economic Zone continues to be an attractive destination for not only vehicle manufactures, but also those who operate in vertical and horizontal sectors, supplying parts and other items to international companies who make cars, bakkies, and trucks. It does this by providing state-of-the-art facilities to connect all in the value chain to each other, seamlessly.
Growth zones
The United Nations Conference on Trade and Development (UNCTAD), in its 2019 report on SEZs, reminds us that such zones, also known as freeports, date back many centuries to a time when traders used to move cargo from ships to sell items inland or re-export with next to no local authority involvement. These have since been replaced with modern establishments, generally located next to seaports or hubs or – in our case – close to one of the automotive production hubs in South Africa. The modern version started appearing in the 60s and really took off in the 80s.
SEZs have proven to, over time, be a safe port for businesses, adapting and changing as the environment shifted. In fact, UNCTAD points out that the 2008/2009 global financial crisis, which brough many economies to their knees, hardly resulted in a dip for the zones. COVID-19 and the resultant lockdowns to curb the spread of the virus have also proven to be a catalyst for internal production as the world continues to reel from the shortage of items that typically get transported to countries across the ocean, such as electronic chips and timber. The report states that there are currently nearly 5,400 SEZs, about a fifth of which were established in the past five years, with another 500 to come in the next few years.
SEZs represents a fantastic opportunity for equitable growth across the country, and we remain committed to ensuring that the Tshwane Automotive Special Economic Zone continues to be an attractive destination for not only vehicle manufactures, but also those who operate in vertical and horizontal sectors, supplying parts and other items to international companies who make cars, bakkies, and trucks. It does this by providing state-of-the-art facilities to connect all in the value chain to each other, seamlessly.