Industrial Development Zones (IDZs) are purpose-built industrial estates geared for duty-free production for exports, and they play a hugely important part in South Africa’s macro-economic policy.
They provide transport, logistics and business services tailored for export-oriented industries.
The Eastern Cape is leading the way. The province’s two IDZs, at Coega and East London, are far further down the line than any other IDZ in the country.
Both have been granted operators’ permits, and investment is flowing in. Both are next to airports and seaports, and have direct road and rail links. Both IDZs are developing automotive production clusters linked to the strong and expanding industry already established in the Eastern Cape.
Through its IDZ programme, the national Department of Trade and Industry aims to generate sustainable local and foreign direct investment while creating jobs, encouraging skills and technology transfer, encouraging development of small, medium and micro-enterprises, and increasing foreign exchange earnings.
The IDZs offer prime, reasonably priced industrial land with easy access to a harbour, airport, rail and road. Service costs are very competitive.
The Coega and East London IDZs offer sophisticated infrastructure; low land costs; easy access to skilled and competitively-priced labour; low energy costs; fast-track construction; compliance with international quality, health and environmental standards; and a clustering of industries for efficiency and to reduce costs.
Investors also benefit from direct cost savings and operational efficiencies. Each IDZ offers a central Customs Secured Area (CSA) that is deemed to be outside South Africa for customs purposes.
This allows companies in the IDZs to import raw materials and inputs to be used for export goods, duty-free. Exports from the IDZs are VAT-free if goods and services are sourced from South African customs territory.
The CSA is complemented by an adjacent industrial and services area for supplier industries.
Investors in the IDZs can also qualify for the range of national incentives from the Department of Trade & Industry, including the Strategic Investment Programme, the Small Medium Enterprise Development Programme, the Critical Infrastructure Facilitation Programme and the Skills Training Programme.