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"ECONOMIC FOCUS IN THE WESTERN CAPE"

Acting Consul General Mr Gregory De'eb, the Chairperson of the South African Business Forum, Mr Dana Botha, Chairperson of the Cape Chamber of Commerce and Industry, and Wesgro, Mr Mike Thompson, honoured guests, ladies and gentlemen...

Since the visit to Cape Town in 1999 by Sir Donald Tsang and a very high-powered delegation of business people, I have been eager to follow-up his visit and reciprocate. After sadly being denied this opportunity last year, it is a privilege and honour for me as proud Premier of the Western Cape Province of South Africa to stand here today and address you on the economic focus points of our region.

Last year, during our visit to China and South Korea, a taxi transport crisis erupted in the Western Cape, forcing me to cut my trip short and regrettably miss the Hong Kong leg.

But crises sometimes have the tendency to turn out for the better. Like former United States President Richard Nixon said:

"The Chinese use two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger - but recognise the opportunity."

The opportunity we are fortunately presented with now is that of bringing a dedicated visit to a region I have been wanting to see for a very long time: Hong Kong.

The purpose of our visit is, apart from sampling the treasures of your fascinating region, to promote the Western Cape as an excellent investment region, rapidly growing regional economy, and top international tourist destination. I am proud to say that our province already offers a diverse range of exciting investment opportunities on one of the world's main trade routes. And with a world class business and physical infrastructure, the Western Cape is the ideal location for businesses seeking to serve African markets.

Many of you here today have already explored investment, business and trade opportunities in the Western Cape and South Africa. Dit is heerlik om soveel Suid-Afrikaanse gesigte hier in die vreemde te sien. Ek sou u vreeslik graag ook in Afrikaans wou toespreek, wat ek seker is u nie te dikwels hier van 'n podium af hoor nie. Maar uit hoflikheid teenoor ons Hongkongse gaste, sal ek voortgaan in Engels. Na die tyd kan ons gerus gesels.

For those of you who did not understand what I have just said, I said Springbok rugby is getting better and better by the day !

Ladies and gentlemen, just like Hong Kong the Western Cape and South Africa have been living through a very exciting transitional phase for the past seven years. Although it poses a tremendous challenge, I can assure you it is also an extremely stimulating, inspiring and rewarding experience for a country. Between the Western Cape and Hong Kong there are numerous tangent points we can help each other with. There are equally as many similarities we can employ and develop further - together.

As many of you might know, the existing trade relations between the Western Cape and Hong Kong are already of the strongest. Over a period of five years, from 1996 to 2000, the value of Western Cape exports to Hong Kong grew by 62 percent. During this period Hong Kong constantly ranked as between the 10th and the 12th most important trade partner to the Western Cape. Together with Japan, Hong Kong constitutes the two Asian regions carrying the most Western Cape products on their shelves. Last year Western Cape exports to Hong Kong, which mainly consisted of food products like fish, amounted to R347 million or US$43 million.

In turn the Western Cape last year imported goods, mainly electronic equipment, worth R440 million or US$54 million from Hong Kong. Imports from Hong Kong to the Western Cape grew to 46% over the last four years.

It is evident that trade relations between our regions are already excellent. To improve this even further, we have many incentives, which I will refer to a bit later.

Let me first concentrate on what I was invited here today to speak about: the economic focus points of the Western Cape.

ECONOMIC GROWTH

Growth stimulating action is constantly underway in the Western Cape - in various sectors including food processing, metal processing, IT software and services, quality clothing, film-making, tourism and high value crafts. Economic growth in the Western Cape is approximately 1,7 percent per year greater than for the national economy as a whole. Compared to other provinces, it boasts the second highest economic growth in the country at 3 percent. The province contributes 14 percent to South Africa's GDP. The Western Cape's performance is a very strong contributory factor to South Africa's picture of macro-economic stabilisation.

Growth in the Western Cape is aimed squarely at boosting economic growth, and at broadening the base of people - particularly previously disadvantaged people - who participate in business in the province.

OVERALL ECONOMIC STRATEGY

We have an overall economic strategy that pulls together the Western Cape Provincial Government's anchor policy objectives of:
* Creating an enabling environment for sustained economic growth;
* Improving government services and infrastructure;
* Empowering the poor through the provision of basic services; and
* Containing the spread of disease, especially HIV/Aids.

Set against a global backdrop of increased competition and innovation, this strategy centres around the steady transition from a mainly industrial society to one based increasingly on knowledge as capital. The strategy focuses on maximising the extent to which value is added locally to the region's economic output. This it does while encompassing education, institutional transformation, governance and social inclusion. The aims of the strategy are to propel the region further onto the international commercial stage, and to narrow the gap between the rich and the poor.

THE WHITE PAPER

Ladies and gentlemen, in order to build a society based on knowledge as capital, a society in which firms are eager to participate in its global future, we needed a vision and strategic framework. In March this year the Western Cape Provincial Cabinet approved a White Paper, entitled Preparing the Western Cape for the Knowledge Economy of the 21st Century. It seeks to lay foundations for the province to become:
* The Learning Cape;
* The International Cape;
* The Enterprising Cape;
* And the Cape of Good Hope for All.

By Learning Cape I mean growing and creating a truly world class primary and secondary education system. We want to raise the skills and competency levels of our population though widespread further education, so that people and businesses are equipped to acquire and apply knowledge effectively in a rapidly changing world. This makes provision for promoting industry-linked teaching, collaboration and research at tertiary institutions. Right now a new science park, a collaboration between the University of Cape Town, the South African National Advisory Council and the private sector, is being developed.

When I say International Cape, I mean establishing a world class infrastructure and environment for business, and putting the Western Cape in the fast lane of the information and communications super highway. We want to make the Western Cape the most attractive region in the Southern Hemisphere for investors and tourists, and market the brand, "the Cape", as a name associated only with quality design and environment-friendly production capabilities.

Using a single brand is part of a joint marketing initiative announced earlier this year by the Western Cape Government and Cape Town City Council. The aim is to combine marketing and branding strategies to promote the Cape more effectively to tourists, investors and traders - both locally and internationally. We are currently communicating with the various stakeholders and drawing up strategies and implementation plans. In October a branding summit will be held, pulling together all the research and work done so far, and kick-starting the creative process around the development of the brand. I must congratulate Hong Kong on the impressive work and successes you have achieved in this regard - your excellent example definitely tops the list of international case studies we will be looking at.

Ladies and gentlemen, I must emphasise that tourism is a very important employment generator, revenue earning industry and economic upliftment tool for the Western Cape. It is one of the province's two principal growth engines (agriculture being the other), and contributes a considerable amount to provincial employment.

As far as the Enterprising Cape goes, we want the Cape to become known as a leading centre for research and development, and for innovation. This means fostering a strong venture capital and private equity base in the Western Cape.

Finally, the Cape of Good Hope for All: Just as the region as a whole cannot afford to be left behind, equally no single part of the community must be left out. We need the flow of benefits from employment and skills training to extend to the poorest sections of the Western Cape.

As Premier of the Western Cape I have much faith in the goals we set for building a society based on knowledge as capital. It has been proven to be successful all over the world, and especially here in Asia.

TRADE, BUSINESS AND INVESTMENT INCENTIVES

Ladies and gentlemen, I would now like to expand on the numerous trade, business and investment incentives the Western Cape has to offer, starting with our excellent port facilities and ship turnaround times. Cape Town's Table Bay Harbour is one of the most efficient harbours in Africa as far as timing and effectiveness are concerned. If your ship arrives on Friday, we will have your goods in the factory at the very latest on the Tuesday. On average it takes 22 hours to off-load 800 containers from a vessel. Between 6 and 8 cargo vessels from the Far East call at Table Bay Harbour every month. The 22-hour turnaround time could even be improved if we find investors for a vertical reefer stack to counter our notorious South Easter wind. Investing in 12-meter reefer boxes (refrigeration containers) will also help satisfy the increased demand for these boxes.

Another incentive to do business with and invest in the Western Cape is our well-educated and highly skilled workforce, which allows for efficient and competitive production. Many major national and international companies have chosen our province as headquarters for their industries. Approximately 300 major foreign companies have offices in the Western Cape, of which the majority are head offices. We have very competitive factor costs, for example our industrial electricity rates are among the cheapest in the world. Our office and factory space is available at a greatly affordable rate.

In the Western Cape generous relocation, technology and export incentives await investors. We offer substantial exchange rate and excise benefits, particularly for exporters of manufactured products. And, investing in the Western Cape is the perfect way to start penetrating the largely untapped and hugely captivating African market.

More good news for current and potential foreign investors is that the South African Department of Trade and Industry has recently released a whole list of newly approved incentive and financial assistance schemes.

A new tax incentive based on the old Strategic Investment Project Programme (SIPP) is currently being planned. This is designed to attract projects worth R3 billion over four years and is expected to take the form of a tax break.

DTI INCENTIVE SCHEMES

Other incentive schemes provided by the Department of Trade and Industry include:

Accelerated Depreciation - This is available to local and foreign firms establishing new manufacturing plants or expanding existing ones. Its aim is to encourage investment in manufacturing, and it provides for depreciation of the plant and machinery over three years, and the land and building over ten years.

The Foreign Investment Grant is available to foreign investors with foreign shareholding of a minimum of 50 percent, investing in new machinery and equipment to establish projects in South Africa.

Foreign and local firms investing not more than R100 million in land, buildings, plant and equipment in new or existing projects, qualify for the Small, Medium Enterprise Development Programme. The main objectives of this programme are to create wealth, generate employment, develop entrepreneurship, promote empowerment, utilise local raw material, and ensure sustainability of projects receiving incentives in the long run.

Firms which qualify for this programme, will also be considered for the Skills Support Programme, which provides for training grants. This programme is designed to encourage greater investment in training, improve industrial training systems, and create opportunities for the introduction of new advanced skills.

It is crucially important for our country and province to offer these incentives. It gives us an opportunity to actually put our money where our mouths are, and strengthen our relations with overseas regions even further. Many of you might be aware that the Western Cape holds valued official co-operation agreements with nearly ten overseas regions, including Shangdong here in China and Pusan in South Korea. Earlier this year we signed a sister state agreement with California in the USA, now the fifth largest economy in the world. The fruits of that agreement are already ripening. It promises to deliver baskets full for both the people of the Western Cape and their foreign partners to indulge in. It is my hope and belief that the same will happen here in Hong Kong. Should you need more information on specific investment opportunities in the Western Cape, or have any other inquiries, my Wesgro colleagues and I are here to help.

Before I conclude it is very important that I stress the following: As South African business people in Hong Kong, you have a vital role to play: not only in establishing and furthering business and trade relations between our two countries, but also in being valuable ambassadors for the Western Cape and South Africa. You are our contacts and references here in Hong Kong. Allow me to assure you today, that we are yours back home. Thank you very much for the hard and impressive work you do here, while missing out on the "braaivleis en sonskyn".

Ladies and gentlemen, I have dwelled long enough on the important issues of the day. Now it's time to go on to the more pleasant part, by many referred to as networking. Being from the old school, I have no idea what that means, but it always looks to me like a very enjoyable exercise, because every time you get to go home with a heap of new business cards. They say this mingling could also turn out to be very profitable. This was apparently already evident in the years BC, when Horace said: "He who mingles profit with pleasure, wins every hand."

I thank you. Ek dank u. She she.

Issued by the Office of the Premier, Western Cape, 10 August 2001