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INTRODUCTION

In 1996/7, the DTI completed the first phase of its work in putting into place the main macro elements of its policy approach in regard to Trade, Industry, Investment and Regulation.

During the current budget year, 199718, the DTI focused on two targets. First, a sharper sectoral and spatial focus for all DTI activities, with a concerted drive towards accelerating industrial restructuring and facilitating investment project decisions. Second, to continuously develop and implement sectoral strategies and, third, to improve co-ordination within DTI and between DTI and other government entities under the strategic framework of the Reconstruction and Development Programme.

This focus on delivery will continue into the 1998/9 budget year. The DTI's budget drives ten specific programmes namely, Administration, Industrial Sector Strategy, Investment Facilitation, Trade Facilitation, Trade Policy and Global Repositioning, Small Business Promotion, Business Environment Commercial Services & Fair Trade, Standards and Environment, Technology Enhancement in Industry, and Policy Analysis & Research.

In 199819, these programmes will have four campaign themes, namely:
- Investment Promotion;
- Trade Promotion;
- Global Repositioning of SA;
- Good Governance.

PROGRAMME 2 - INDUSTRIAL SECTOR STRATEGY

The DTI is involved in a number of Cluster and Sector working groups with organised business and labour. It is hoped that in 1998, the work of these groups will lead to clearer vision and strategies for the industries concerned and that investment opportunities will emerge that can be facilitated. 1997 has already witnessed a number of investment opportunities emerging from IDC driven cluster studies around carbon steel.

The Motor Industry Development Programme which was instituted in 1 99S, has led to increased component exports, a more competitive environment and is accelerating the restructuring of the assembly and component industries. By the middle of the 1998/9 budget year, the completion of the mid-term review of the MIDP should provide the basis for sharper and more coherent firm-level strategies to be implemented.

The Clothing and Textile industries have agreed to come forward with clear vision and strategy by June 1998 so that Government can take a final decision on the phasing out of the Duty Credit Certificate (DCC) scheme.

PROGRAMME 3 - INVESTMENT FACILITATION

The DTI has put Into place a coherent set of support measures to facilitate investment. These include the Manufacturing Development Programme (MDP, together with SME focused Programmes), IDC Programmes, SBDC Programmes, Spatial Development Initiatives (SDI) and the Industrial Participation Programme. A number of co-ordinating fora have been set up, most notable of which is the Cabinet Investment Cluster (CIC), a ministerial level co-ordinating committee reporting directly to Deputy President Mbeki.

SPATIAL DEVELOPMENT INITIATIVES

The SDI objectives of facilitating concrete investments are beginning to be realised. While most of these are in the Gauteng - Maputo SDI which was the first SDI initiated in 1996, several projects in other SDls are close to being initiated. By the end of last year 390 projects were at different stages of development to the value of approximately R77 billion with a potential to create 61 000 jobs.

Last November we launched the second SDI - the Fish River SDI in the Eastern Cape at an international investors' conference during which R12 billion worth of projects were announced with a potential of creating 30 000 to 35 000 permanent jobs. Thus far projects worth about R95m were being implemented. Last week the Western Cape SDI at Saldanha Bay was launched and will be followed later this month by an International Investors' Conference for the West Coast Investment Initiative to be held in Saldanha Bay. At the conference Government, business, and local communities will present specific
projects to potential investors.

National Industrial Participation Programme (NIPP)

The NIPP aims to maximise State and Parastatal purchases by leveraging economic benefits for the SA economy from suppliers of imported goods and services. It applies to al) State and Parastatal purchases with an imported content above US$1 Om. According to Cabinet guidelines successful tenders are obliged to participate in the SA economy if they are awarded such contracts. Such an initiative accelerates investments, joint ventures, export promotion, subcontracting work to SMMEs and PD's R&D collaboration, and job creation.

Last year the DTI signed strategic partnership agreements with Ericssons, Genera! Electric, and Siemens. These agreements resulted in 500 jobs, R23,1 m in investments, and R237m in exports.

INVESTMENT SOUTH AFRICA

This national agency had a successful year in 1997/8.- ISA completed provincial investor targeting studies and matched these against a country matrix to develop a 1998 sector specific investment marketing strategy which is being worked through with Provincial Economics Departments.- An Investor Road-Map Study was completed in November 1997, which highlighted:
- strengths and weaknesses of South African investment regulation regime. Action steps are being taken to systematically address the weaknesses.
- A national database and investor tracking system will be complete towards the end of the financial year, in March 1998.

CABINET INVESTMENT CLUSTER (CIC)

The CIC consists of 13 National Departments responsible for investment and infrastructure. Over the past year the CIC, among other things, undertook the following:
- Developing a National View of Provincial Growth and Development Strategies;
- Drafting a consolidated report on Government Capital Expenditure;
- (Co-ordinating political decisions on SDls;
- - Facilitating bi/tri-laterai policy processes in key areas.

46rom a series of meetings the CIC has managed parity to identify blockages and recommended unblocking actions or policy interventions required to ensure smooth investment flows between National Departments, and between the National and Provincial Governments. Together with the Department of Arts, Culture, Science and Technology and the Department of Environmental Affairs and Tourism, the three Departments (including the DTI) developed a joint approach which would focus on optimal SMME involvement in Cultural Tourism initiatives. A pilot project in the Lubombo SDI area was proposed. The Cabinet Investment Committee have initiated a national investment projects register which is expected to come on line towards the end of the 1997/8 budget year.

National Empowerment Fund:

The National Empowerment Fund Bill will probably be tabled in Cabinet in
March. It is envisaged that the Fund will have three subsidiaries:

- Unit Trust (Lefa Trust) - which wilt make unit trusts accessible to poor and uninformed people and will be charged with cultivating a culture of saving;
- Equity Fund - which will assist people from disadvantaged backgrounds with start-up finance;
- Invest directly in underlying assets and sell shares directly to historically disadvantaged people and to engage them in economic activities.

The NEF will function on commercial basis. Its aim is to ensure that the current privatisation of state assets also benefit the poor.

Government Procurement

The DTI assures at the State Tender Board that the following are adhered to:
- Preference system for locally manufactured goods;
- Preference system for previously disadvantaged individuals (PDls);
- SMME promotion.

Between April and November 1997, 30% of the- tenders were awarded to firms owned by PDls and SMMEs and 95% of the tenders were awarded to local manufacturers.

PROGRAMME 4 - SMALL BUSINESS PROMOTION

Centre for Small Business Promotion (CSBP)

During 1997/8, the CSBP:
- Compiled a range of information booklets including:
- How to register trade marks and patents
- Potential small business partners in RSA (targeted at large RSA firms and foreign investors)
- Guide to exporting for SMMEs
- Tendering procedures and procurement guidelines
- Business Information Centre launched in October in collaboration with Pretoria Metro
- Supported weekly national TV programme "Your Own Business"
- Began the National Small Business Regulatory review by appointing the Review Team and preparing for the appointment of an advisory Board to oversee the process of the legislative review.

Successfully held the 2nd National Conference on Small Business in November, with a focus on the role of local government in furthering local economic development through promoting small business.

CSEP's objective in the 1998/9 year will be to improve the Legal & Regulatory environment that impacts on small business development. This will be effected through reviewing existing and proposed legislation in the areas of labour, taxation, property and land ownership, finance, by-laws and procurement and to recommend new legislation where applicable.

The Centre hopes that through its activities and interventions it will assist 110 858 businesses.

NATIONAL SMALL BUSINESS COUNCIL

The National Small Business Council has the following programmes:
- Competitive edge in 30 towns;
- 9 Provincial PSBC Resource Centres;
- Business chambers unified in 30 towns;
- Specific studies on SMME constraints.

Small Business Development Corporation

The first phase of the restructuring of the SBDC was completed resulting in the state's reduction in share ownership from 50% to 20%, the capital being used to capitalise Khula. In the process the SBDC's mandate was revised. The SBDC Limited is to provide loans and equity investments to small and medium sized enterprises (SMEs) in the R50 000 to R3m range. During the year ending 25 March 1997 the SBDC granted loans to SMEs to the value of R243m. Of these 43% went to Industrial (Manufacturing), 43% to Commercial (Retail), and 14% to Service.

NTSIKA ENTERPRISE PROMOTION AGENCY

During 1 997/8, Ntsika provided the following assistance to service providers (SP) General support -12 SPs equipped with computers, 124 trainers & counsellors trained. Technopreneur Programme - 11 technical colleges were funded, and training was provided for 152 trainers, 15 cocoon managers, 660 potential entrepreneurs. SLOT Programme - training was provided to 10 trainers, 140 potential entrepreneurs Service Provider Interim Grant (SPIG) Facility - 40 service providers were funded, 7188people received assistance. University Small Business Unit Programme - 6 business units received funding, 4343 people received assistance.

According to Ntsika their programmes in 199819 will include:
- Counseling 5 280 entrepreneurs;
- Train 37 630 employees;
- Assist 37 630 youth, women, disabled, and rural entrepreneurs;
- Establish 893 businesses.

According to Khula in 1998/9 it will facilitate:
- Capacity building of RFls;
- 50 000 loans through RFls to SMMEs, sustaining 75 000 jobs;
- 1800 credit guarantees, 36 000 jobs sustained, and R270m in loans.

PROGRAMME 5 - TRADE FACILITATION
July 1997 saw the demise of the General Export Incentive Scheme (GEIS). GEIS was introduced under the Apartheid system as a counteractive measure against sanctions and tariffs. The scheme constituted a general, untargeted subsidy and did not achieve its objective in a cost-effective manner. In August 1997 the DTI launched the Export Marketing and Investment Assistance Scheme (EMIA) which is designed to reimburse certain marketing cost incurred by exporters and replaces the old Export Marketing Assistance Scheme. It places emphasis in assisting Small, Medium, Micro Enterprises (SMMEs) and previously disadvantaged business people. Up to the end of October EMIA had assisted 1351 businesses with support worth R28 992 563.

Export Credit and Foreign Investment Reinsurance (ECFIR)

In line with current industrial, trade policy, and strategies, South Africa is increasingly becoming an exporter of capital goods and services, particularly to fast-growing developing economies within and outside of Southern Africa. We are forced to compete in this regard with industries and firms based in developed countries. Apart from being a foreign exchange earner, these projects secure export markets for many years due to spare parts, maintenance and technology services, which are often provided over this lifespan of the project.

The objectives of ECFIR are to promote trade with countries outside the Republic by providing for reinsurance of insurance contracts in connection with export transactions, investments, y and loans. During the first ten months of 1997 the total value of projects approved was not less than R3,5 billion involving 27 projects, of which not less than R2,1 billion (16 projects) was in respect of projects in SADC countries. These projects also generate economic activity, development, and growth in the recipient country. In 1996 the Export Finance Scheme (EFS) for Small and Medium Businesses (SMEs) was introduced. Up until October 1997 it has guaranteed a total of 90 contracts valued at R54 mil.

Export Promotion

In 199718, the DTI spent R3, 3 million to assist 296 exporters with market research. In the meantime South African businesses participated in not less than nine foreign exhibitions held in far-flung countries like Malaysia, USA, France, Zimbabwe, and Tanzania. The Department also spent R1,8 m to assist 14 outward selling missions to countries like India, Thailand, Japan, Cuba, Ghana, Italy, USA and Korea. The Department also spent R0,4m to assist seven inward buying trade missions. The Department also spent R1, 2 in outward and inward investment missions.

PROGRAMME 6 - TRADE POLICY DEVELOPMENT

The DTI is currently involved in two major sets of concurrent negotiations which will lead to the creation of free trade areas with SADC and the EU within a period of five to twelve years respectively. In 1996 the Department completed the "Global Economic Strategy Project" which served as a tool to assess and prioritise South Africa's foreign economic relations in terms of trade and investment potential for SA across a range of markets. The results of this analysis informed us that our future prosperity requires focussed attention on strengthening linkages with vast and untapped markets in Africa, Latin America, and Asia. This DTl's "Butterfly Strategy" is designed to seize the opportunities that these markets offer. Guided by the ideal of African. Renaissance, the (Government is pursuing its objectives of trade policy development and implementation in Africa in order to promote the regeneration and development of the continent. Following the signing of the SADC Trade Protocol, negotiations have- taken place at NEDLAC and with SADC countries to identify sensitive sectors and/or products as a prerequisite to making a substantive offer of market access to SADC countries. At the same time consultations on the renegotiations of the SACU Agreement also took place. A comprehensive review of the negotiation process will be undertaken at Ministerial level before the end of budget year 1997/98. The year 1997 saw significant growth in trade with other African countries with trade and investment missions to East Africa and Joint Commission with Egypt and Iran as well as the review of the provisions of the trade agreement with Malawi. The year also saw the conclusion of all aspects of the trade negotiations with Zimbabwe. In 1998t9 SA will continue to play her role in the renegotiations of the SACU agreement and the SACU/Zambia Preferential Trade Agreement. Bilateral talks will continue with other Southern African states on matters of common concern like Motor Industry Development Programme, investments, and excise duties.

At the multilateral level, SA has increased its participation in fora like WTO, UNCTAD, and other UN agencies and is committed to the Uruguay Round of negotiations. In her negotiations with the WTO, SA has made two offers one of which has gone through the ratification stage in Parliament and the other Is in the process of being finalised. These offers are the Basic telecommunication Services and the Financial Services. Following her application for membership, SA in 1997 followed developments of the Cairns Group as an observer.

PROGRAMME 7 - IMPROVING THE BUSINESS ENVIRONMENT

There are a number of initiatives that DTI will undertake during 1998/9 to improve the standard of governance and regulatory measures which influence the business environment.

NATIONAL CONSUMER AFFAIRS OFFICE
- preparations for the redrafting of the Usury Act are underway and the DTI expects to publish a discussion document soon.

- Amendments to the Estate Agents Act, to provide for greater protection to potential purchasers of property, was published and commented on and has been forwarded to the State Law Advisors for certification.

- The Business Practices Committee investigated 206 new complaints of harmful business practices and eleven reports were prepared and various notices published in this regard.

- The Harmful Business Practices Amendment Bill, to harmonise national and provincial legislation and co-ordination, was published and commented on and was submitted to Cabinet for approval.

GAMBLING, LOTTERIES & LIQUOR LEGISLATION

The National Lottery is on track for the first allocation of lottery revenue to be allocated to worthy causes in early 1999. Elements of the project that have been completed to date include the approval by Parliament in October 1997 of the National Lottery Act, the finalisation of a Request For Proposal (RFP) from potential lottery operators and advertising for the appointment of the CEO and staff structure for the National Lotteries Board. The operator of the National Lottery will be selected in accordance with the normal tender procedures and the recommendation will be made by the Board to the Minister of Trade and Industry who will announce his decision towards the middle of the year. It is anticipated that the National Lottery will be up and running early in 1999; DTI and Provincial role players have published a new liquor policy document and a draft Liquor Bill. The bill, which provides for substantial empowerment opportunities and will facilitate new entrants into the liquor industry, and will be tabled in Cabinet in March. The appointment of a National Gambling Board, in terms of the National Gambling Act, is awaiting the comments of six Provincial Premiers and draft regulations have been completed for consideration of the future Board.

TRADE REMEDIES GROUP

At end-December 1997, 15 anti-dumping and countervailing investigations were completed.

PROGRAMME 8 - DEVELOPMENT AND IMPLEMENTATION OF STANDARDS

- By end October 1997, the calibration and testing division of the South African National Accreditation System (SANAS) had accredited 71 test laboratories and 150 calibration laboratories.
- DTI participated in the development of the White Paper for Environmental Management Policy for South Africa which was co-ordinated by the Department of Environmental Affairs and Tourism.
- The negotiation of the SADC Trade Protocol should be accompanied by measures to ensure the removal of trade barriers like;

Differing technical standards and regulations; Absence of a comprehensive regional system of acceptance of parties' conformity activities, that is, test reports and certificates. Measurement, whether it be the calibration of equipment to national measuring standards or the verification of instruments used in trade, e.g., scales. SA will be taking part in SADC discussions on related matters in Luanda in March.

PROGRAMME 9 - TECHNOLOGY PROMOTION TECHNOLOGY FOR HUMAN RESOURCES IN INDUSTRY PROGRAMME (THRIP)

In 1997/8 THRIP absorbed R24.1m and realised 173 projects involving 1053 students 166 companies, 5 technicons and 13 universities. 17.7% of total registered students on THRIP projects are black and 25.3% are female. THRIP funding will in future be used to leverage and increase the number of black and female students following technological and engineering careers.

SUPPORT PROGRAMME FOR INDUSTRIAL INNOVATION (SPII)

This programme which provides support for the development phase of technologically innovative new product, processes and/or software has been extremely effective. The cumulative cost between 1993-97 of R43.2m has realised 2075 jobs, R91 m in exports and R1 20m in tax revenues. DTI will continue to enhance support measures around technology promotion during 1998/9.

CONCLUSION

In 1998/9, DTI will continue to drive at creating employment through accelerating industrial investment, expanding exports and trade, facilitating an enabling business environment and modernising regulatory policies so as to improve our structure of govemance.

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