Speech delivered by the South African Minister of Trade and Industry, Dr Rob Davies, MP, at the South Africa United Arab Emirates Business Forum held 13 November 2011 at Dubai Chamber of Commerce and Industry
14 Nov 2011
Senior Director of Dubai Chamber of Commerce, Atiq Juma Nassib
Ladies and gentleman
It is indeed a great honour for me to be part of this occasion and to deliver an address to the Dubai-South Africa Business Forum.
South Africa’s trade and economic relations with the United Arab Emirates (UAE) were strengthened in September 2005 when my predecessor, former Minister Mpahlwa visited the UAE with a South African business delegation. The business sectors we focused during that period included energy, infrastructure development, trading, agro-processing, agricultural and financial services sectors. You will all agree with me that a lot of work was done in those sectors since then and significant progress has been recorded.
It is interesting to note the level of investment that has occurred in each other’s countries. The United Arab Emirates is the 24th largest investor in South Africa, and have invested a total of R1.07 billion since 2003, representing 0.25% of total capital investment in South Africa whereas South Africa is the 19th largest investor in the UAE, having invested R3.33 bn since 2003.Trade between our two countries has also increased by 80% during the period 2006 to 2010. South Africa’s main products exported to UAE were mineral products, base metals, natural or cultured pearls and products of chemical or allied industries.
However, South Africa recognises the need to further strengthen our trade and economic ties. South Africa has a R361 million trade deficit with UAE, exports amounted to R6,1 billion during 2010 with imports amounting to R6,5 billion. This state visit with its accompanying business delegation provide us with an opportunity to network, and explore ways of expanding the economic and trade relations between the two.
Furthermore, this visit is well timed to further strengthen our economic and trade relations in this turbulent the global economic arena. The global financial and economic crisis has presented significant challenges for the world’s economies. Our economies have also not been immune to this even though this was triggered in the US and a further crisis developed in the Eurozone.
At the height of the global financial crisis South Africa's economy shrank 1.7% in 2009. Due to our well developed business services support and dynamic investment environment with a number of global competitive and comparative advantages and opportunities, the South African economy was able to recover in 2010. In April 2011 the International Monetary Fund (IMF) projected South African gross domestic production would grow by 3.5% in 2011 and 3.8% in 2012.
The World Economic Report of 2011 has ranked South Africa 50th on the global competitive index ranking. This shows an improvement for South Africa, as we moved from position 54 in 2010 to position 50 in just a year’s time. More encouraging is that the World Bank has ranked South Africa 34th out of 183 in the world for the ease of doing business in 2010.
This state visit signifies the importance of the UAE as a partner to South Africa. The sectors that this Business Forum is focusing on are strategic in both our economies. South Africa is a promising emerging market in the world and it presents a basket of investment opportunities in particularly, but not limited to our priority sectors which we have outlined in the IPAP 2, which was launched this year. South Africa is fast becoming a centre of manufacturing excellence offering promising opportunities in both trade and investments in automotive components, capital equipment, aerospace, chemicals, agro-processing, to name a few.
Beyond these lucrative opportunities that the South African market offers, co-operation between government and the private sector puts us in an advantageous position, particularly in the global markets. Currently South Africa is the largest investor within the African continent, with our companies having established valuable expertise, knowledge and the required relationships to succeed in this promising market. By combining expertise and developing synergies, we believe that both our companies could contribute to the socio-economic development of the African continent.
Developing economies’ world trade has increased 4.5 times, from USD2.7 trillion to USD11.9 trillion since 1999. The swiftest progress has been trade between developing nations, which amounted to near USD5 tr in 2008, accelerating by 23% per annum since 1999. The advanced economies’ share of the developing world’s total trade has declined from 75% in 1999 to 60% in 2009. It estimated that the market size of the developing world by 2020 will be larger than the developed world. It is therefore important that the developing nations trade amongst each other. Moreover rather than the exchange of commodities, the structure and composition of trade between developing nations should be advanced and manufactured goods.
Since the launch of IPAP, which guides the implementation of the industrial policy, the economic arena has improved with the introduction of government interventions and sector strategies. The IPAP represents a significant step forward in strengthening our efforts to promote long term industrial development and industrial capacity beyond our traditional strengths in commodities and non-tradable services. Our industrial policy seeks to expand production in value-added sectors with high employment and growth multipliers. In addition to manufacturing we will focus on sectors such as energy and energy saving industries as well as those that have the potential to develop long term advanced capabilities: nuclear, advance materials and aerospace.
We believe that such sectors can specifically contribute towards an increase of bilateral trade, investment, tourism, science and technology, financial services as well as industrial cooperation between South Africa and the UAE. In addition, given the geographic position of both countries as hubs it would also enable both countries to achieve a lot together.
We are confident that there are enormous opportunities in our country and the sub-continent, particularly for upgrading existing or new investments in manufacturing across a range of sectors both for domestic demand and export, including to the emerging African markets. Another important priority for us is to broaden African integration through advancing the agreed process to negotiate a Trilateral Southern African Development Community-East African Community-Community of Eastern and Southern Africa (SADC-EAC-COMESA) “grand” free trade area (FTA). Once established, this would bring into existence an FTA literally from Cape to Cairo with 700 million consumers.
In conclusion, there is certainly greater room to grow the volume of two way trade, create a more diversified balance of SA exports, a greater proportion of beneficiated and higher value goods and services in our export basket to the UAE.
Issued by: Department of Trade and Industry
14 Nov 2011
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