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Investing into South Africa

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Title: Investing into South Africa


1
Investing into South Africa
2
  • INVESTMENT ENVIRONMENT
  • OPPORTUNITIES

3
South Africa at a glance
  • Area 1,219, 090 km2
  • Population 49,9m (estimate)
  • Head of the State President Jacob Zuma
  • 11 Official languages with English the business
    language
  • Total GDP 2010 R2 266bn (US 309bn )
  • GDP 2010 per capita R 53 117 (US 7 254 )
  • Real GDP Growth 2,8 (2010)
  • Inflation (CPI) 4,3 (annual 2010) average)
  • Main Exports minerals mineral products,
    precious
  • metals metal products, chemical food
    products,
  • automotives components.
  • Main trading partners China, USA, Japan Germany
  • the UK.

4
SADC and South Africa
  • SADC FTA signed in August 2008 market
    of 200 million consumers
  • Future FTA with SADC,COMESA EAC with a market
    of 700 million consumers

5
PROXIMITY TO MARKETS BY SEA
  • Liverpool 25 days
  • New York 20 days
  • Buenos Aires 11 days
  • Jeddah 20 days
  • India 10 days
  • Singapore 12 days
  • Hong Kong 25 days

6
Investing in Africa an improving environment
  • The operating environment is improving visibly
    and rapidly
  • 54 countries, 35 democracies (compared to only 8
    in 1991)
  • Many countries have improved their business
    environment
  • restored macro-economic stability
  • greater predictability increased reliability of
    policy regulatory framework
  • increased transparency and improved
    decision-making
  • privatisation initiatives
  • reduced corruption
  • investment protection promotion
  • intra and inter-regional initiatives
  • High returns on investment

7
South African Economy
  1994 THEN 2004 IN 2010
GDP (billions) R 482 US 60 R 1 374 US 171 R 2 266 US 309
Merchandise exports (billions) R 69, 8 US 8.7 R 281,8 US 35.2 R566,6 US 77,4
GDP Growth 3,2 4,6 2,8
  • South Africa positioned as a manufacturing centre
    of excellence
  • Diversified Industrial sectors
  • Open economy
  • Sound business case for investment and profit
  • Gateway to Africa and markets of more than 200
    Million consumers
  • Africa is the next big story after China and India

8
South Africas leading trade partners (2010)
Import Country Rand (millions)
1. China 81,766.1
2. Germany 65,260.5
3. United States 41,068.2
4. Japan 30,709.3
5. Saudi Arabia 23,717.4
6. Iran 23,002.9
7. United Kingdom 21,885.2
8. India 20,592.0
Export Country Rand (millions)
1. China 58,525.3
2. United States 51,388.9
3. Japan 46,297.4
4. Germany 42,495.9
5. United Kingdom 26,161.5
6. India 22,204.2
7. Netherlands 17,075.5
8. Switzerland 16,743.9
9
South Africa- global perspective
  • South Africa is one of the most sophisticated and
    promising emerging markets, offering a unique
    combination of highly developed first world
    economic infrastructure with a vibrant emerging
    market economy.
  • South Africa is one of the worlds 26
    industrialised nations.
  • The country is also regarded as the gateway to
    Africa.
  • South Africa has the largest economy on the
    African continent, accounting for approximately
    25 of the continents GDP.
  • According to the World Bank, South Africa ranked
    34th out of 183 in the world for the ease of
    doing business in 2010.
  • The JSE Securities Exchange is Africas largest
    and most developed Securities Exchange and one of
    the worlds top 20 exchanges.

10
South Africa - global perspective
  • South Africa remains the worlds top producer of
    minerals such as gold, platinum, rhodium, chrome,
    manganese and vanadium.
  • South Africa holds 80 of global manganese
    reserves, 72 of chrome, 88 of platinum-group
    metals (PGMs), 40 of gold and 27 of vanadium.
  • South Africa is ranked 1 for the regulation of
    securities exchange, strength of auditing
    reporting standards by Global Competitiveness
    Report 2010.
  • South Africa scored well in various categories
    according to the 2009/10 World Competitiveness
    Yearbook (133 countries ranked) with overall
    competitiveness we ranked 45th in place.

11
South Africa emerging market perspective
  • Of 14 emerging markets Australia, Canada,
    Russia, Mexico,
  • China, Poland, Spain, India, Korea, Brazil, SA,
    Colombia Chile
  • Argentina
  • South Africa is
  • 2nd most sophisticated financial market
  • 2nd lowest effective business tax rate
  • 4th ranked for ease of accessing capital
  • 4th ranked i.t.o. the cost of capital
  • 6th ranked for infrastructure
  • 7th for FDI as a of GDP (2008)
  • 8th ranked i.t.o labour productivity

Source Brazil National Confederation of
Industry. Competition Brazil 2010 A Comparison
of selected countries
12
South Africas Competitiveness
2010 World Economic Forum 2010 World Economic Forum 2010 World Economic Forum
Country/Economy GCI 2010 GCI 2010 GCI 2009 Change 2009-2010
Country/Economy Rank Score Rank Change 2009-2010
Switzerland 1 5.63 1 0
Sweden 2 5.56 4 2
Singapore 3 5.48 3 0
United States 4 5.43 2 -2
Canada 10 5.30 9 -1
United Kingdom 12 5.25 13 1
Australia 16 5.11 15 -1
Malaysia 26 4.88 24 -2
China 27 4.84 29 2
Chile 30 4.69 30 0
Thailand 38 4.51 36 -2
Poland 39 4.51 46 7
Spain 42 4.49 33 -9
India 51 4.33 49 -2
Hungary 52 4.33 58 6
South Africa 54 4.32 45 -9
Mauritius 55 4.32 57 2
Brazil 58 4.28 56 -2
Vietnam 59 4.27 75 16
Russian Federation 63 4.24 63 0
Argentina 87 3.95 85 -2
Zimbabwe 136 3.03 132 -4
Angola 138 2.93 n/a n/a
13
South Africas investment environment
  • South Africa today is one of the most
    sophisticated and promising emerging markets
    globally, mainly because of

14
South Africa Global Economic Powerhouse
  • Financial Times data on inward investment shows
    that South Africa is
  • 1 country for RD inward investment in Africa
  • 1 country for environmental technology inward
    investment in Africa
  • 1 country for ICT Electronics inward
    investment in Africa
  • 1 country for financial services inward
    investment in Africa
  • 1 country for creative industries inward
    investment in Africa
  • 1 country for transport equipment inward
    investment in Africa
  • 1 country for life sciences inward investment in
    Africa

15
Presence of Industrial Clusters
  • Regional leader in environmental technologies
  • World class ICT sector
  • The largest financial services hub for the region
  • Largest transport equipment cluster in Africa
  • Major creative industries centre
  • Largest life science centre in the region

16
Infrastructure Development
  • Securing Electricity Supply
  • Eskom has spent over R75.5 billion on the capital
    investment
  • programme since 2005, and has delivered some 5
    031 Megawatt of
  • new electricity generating capacity into the
    system as well as
  • thousands of kilometres (3 051 km) of high
    voltage transmission lines to transport
    electricity across the country.
  • Eskom, through its Medium Term Power Purchase
    Program (MTPPP), has signed agreements with three
    Independent Power Producers (IPPs) since April
    2010, totalling some 277 MW with a number of
    contracts in the final stages of completion,
    which will bring the contracted power purchases
    to around 400MW this year.
  • Eskom has embarked on returning to service its
    previously mothballed coal-fired power
    stations. . The total RTS (return to service)
    portfolio will add 3 800 MW nominal capacities to
    the national electricity supply system.

17
Infrastructure Development
  • Water
  • The Department of Water Affairs has identified
    seven (7) new augmentation water resources
    infrastructure projects to support the domestic,
    industrial, agriculture and energy sectors
  • Communication infrastructure
  • Broadband Infraco continues to invest in its
    national backbone fibre optic network with R243
    million spent in the 2009/10 financial year.
    Broadband Infracos fibre optic cable network now
    covers approximately 12 250km country-wide.
    Enables the country to extend connectivity to the
    SADC Region to countries such as Lesotho,
    Namibia, Botswana, Mozambique, Zimbabwe and
    Swaziland.

18
Infrastructure Development
  • Transport infrastructure
  • Maintenance of secondary road infrastructure
    using labour intensive methods of construction
    and maintenance. We have set aside R6.4 billion
    in 2011/12, R7.5bn in 2012/13 and R8.2bn for
    2013/14, amounting to a total of R22.3bn in the
    medium term. At least 70 000 jobs will be created
    in 2011.
  • Rail modernisation programme
  • The Gautrain forms an integral part of our rail
    modernisation programme.
  • Starting in June 2011, the Gautrain will move at
    least 40 000 people hourly on the commuter line
    between Johannesburg and Tshwane stress-free and
    in less than 40 minutes.
  • The system includes 125 feeder buses operated by
    a consortium that includes taxi operators.
  • The recapitalization of PRASA rolling stock,
    Extension of the Gautrain from Sandton to
    Hatfield, and the Modernisation of our
    long-distance passenger and freight services.

19
Economic Achievements
  • South Africas Rand is the second best-performing
    emerging market currency of the 26 monitored by
    Bloomberg in 2009
  • South Africa is the fourth-fastest growing mobile
    communications market in the world. The country's
    three cellular network operators - Vodacom, MTN
    and Cell C - provide telephony to over 39-million
    subscribers or nearly 80 of the population.
  • South Africa was ranked the 21'st largest crude
    steel producing country in the world by the World
    Steel Association (worldsteel) in 2008. South
    Africa is also the largest steel producer in
    Africa, producing 48 of the total crude steel
    production of the continent during 2008.

20
Economic Achievements
  • South Africa is home to the world's deepest mine
    Western Deep gold mine in Gauteng province delves
    3.6 kilometres into the earth. Moab Khutsong gold
    mine in North West province has the world's
    longest winding cable, able to lower workers to 3
    054 metres in one uninterrupted four-minute
    journey.
  • South Africa is a world leader in coal-based
    synthesis and gas-to-liquid technologies. It is
    among the lowest-cost producers of ethylene and
    propylene in the world, thanks to abundant access
    to low-grade coal and leading-edge process
    technology.
  • Sasol has flown the worlds first passenger
    aircraft using the companys own-developed and
    internationally approved 100 synthetic jet fuel.
    Sasol took to the skies with the worlds first
    fully synthetic jet fuel flight on Tuesday, 21st
    of September 2010.

21
Investment Opportunities
Sector Sub-sector
Business Process Outsourcing IT Enabled Services Call Centres Back /office Processing Shared Corporate Services Enterprise solutions e.g. fleet management and asset management Legal process outsourcing
Electro Technical Software mobile applications Smart metering Embedded software Radio frequency identification Process control , measurement instrumentation Security monitoring solutions Financial software
Clothing, Textiles, Leather and Footwear Manufacturing of Industrial Textiles using Polyester Production of other natural fibre textiles such as flax Wool and mohair production downstream opportunities for yarns, knitwear and fabric.
22
Investment Opportunities
Sector Sub-sector
Agro-processing Fisheries and aquaculture i.e. freshwater aquaculture marinculture Food processing in the milling and baking industries Beverages viz. fruit juices and the local beneficiation, packaging and export of indigenous teas High value natural fibres viz., organic cotton downstream mohair production High value organic food for the local and export market Biofuels production viz. biodiesel bioethanol
Automotives Components Engine parts/components, vehicle interiors, electronic drive train components, body parts, catalytic converters, aluminum forgings castings, diesel particulate filters and leather products
Chemicals and plastic fabrication Beneficiation of polypropylene used in automotive components building and construction industries, packaging materials Medical (drips syringes), manufacture of active pharmaceutical ingredient (APIs) for key anti-retrovirals (ARVs) Manufacture of reagents for AIDS/HIV diagnostics Production of vaccines and biological medicines
23
Investment Opportunities
Sector Sub-sector
Metal fabrication, capital and transport equipment Downstream processing and value adding of iron, steel, aluminium, stainless steel ferroalloys and the platinum group of metals (PGM) Conversion processes of metal products i.e. metal fabrication, pipe tube, foundry products, wire and jewellery Manufacturing and assembly of mining, agricultural and construction equipment Utilities i.e. reticulation plants and pipe lines. Machine tools and tooling (auto, packaging, mining and aerospace industries) Electrical motors Services in the engineering, construction sectors Rolling stock i.e. locomotives, wagons and coaches Production of permanent ways i.e. railway lines, signalling equipment, electrification, bridges and stations Harbour construction and equipment Ship- and oil platform building and maintenance
24
Investment Opportunities
Sector Sub-sector
Tourism Accommodation hotels, boutique hotels, lodges resorts Urban integrated tourism/ entertainment precincts Adventure, - eco-, sport-, conference - and cultural tourism. Infrastructure development. Leisure complexes world class golf courses. Harbour waterfront developments. Transfrontier conservation areas. Tourism transport aviation, rail, cruise liners etc Green building and green technologies for tourism Attractions and activity based tourism Museums and heritage Cultural, music, arts festivals and events
Aerospace Aviation related services, including maintenance, repair and overhaul (MRO) Rotary and fixed wing components. Aviation training services Specialised manufacturing of avionics, including health usage monitoring systems Aerostructure components, specifically composites and sheet metal (aluminium and titanium) Small and micro-satellite capability including sensor platforms Satellite related services (including tracking and control and applications development) Specialised design expertise, systems level as well as first tier level. Unmanned Arial Vehicles (UAVs)
25
Investment Opportunities
Power generation and distribution Independent power generation, energy infrastructure alternative energy
Renewable energy and energy saving industries Solar water heating, evacuated tube plants, concentrated solar heating, wind and biomass energy production
Advanced Manufacturing Advanced materials manufacturing viz. Nano-materials High performance materials based on natural resources (advanced bio- composites) Composites (intelligent textiles used in medical, building and construction industries) Continuous fibre reinforced thermoform composites Digital TV and Set Top Boxes due to migration to full digital television as analogue will be switched-off by November 2011. Nuclear Build Programme i.e. joint ventures, consortiums and the establishment of new companies to grow South Africas nuclear manufacturing capability and nuclear supply industry to supply into the nuclear build programme Electricity Demand Side Management Solutions to improve electricity efficiency usage.
26
Investment Opportunities
Creative and Design Industry Film and Media Film studios, treaty film co-production ventures, distribution infrastructure, servicing of foreign productions. Production of film and documentaries, commercials, stills photography and multi-media Design Jewellery manufacturing and design Fashion design
27
Coega IDZ PORT INFRASTRUCTURE
28
Incentives
Incentive Benefit Main Conditions
The Enterprise Investment Program (EIP) The EIP (manufacturing) is a cash grant for locally based manufacturers who wish to establish a new production facility, expand an existing facility or upgrade an existing facility in the clothing and textiles sectors the EIP will be used to stimulate investment within manufacturing and tourism, it will also be used to deliver on some of the IPAP's key performance areas, as well as priority sectors. 
Foreign Investment Grant To compensate qualifying foreign investors for the cost of moving qualifying new machinery and equipment from abroad to SA. Foreign investors only
Industrial Development Zone   Exemption from VAT when sourcing goods and services from South African customs territory and duty-free imports of raw materials and inputs for export Prospective IDZ operator companies must apply for permits to develop and operate an IDZ
29
Incentives
Incentive Benefit Main Conditions
Section 12i Tax Allowance Tax deductions of up to R 900m depending on status viz. preferred or qualifying projects. Training allowance/ deduction of up to R30m or R36 000 per employee. Valid until December 2015 Capital investment gt R 200m
Critical Infrastructure Fund   Infrastructure projects intended to service IDZ, shall qualify for a grant of 30 of the qualifying infrastructure development cost The minimum qualifying infrastructure development cost is R15m 
The Location Film Television production Incentive To encourage and attract large budget films and television productions that will contribute towards SA economic development and international profile and increase foreign direct investment Foreign owned qualifying productions
30
Incentives
Incentive Benefit Main Conditions
BPO O Investment Incentive The BPOO Investment Incentive comprises an Investment Grant and a Training Support Grant towards costs of company-specific training. The incentive is offered to local and foreign investors Local and foreign investors establishing projects that aim primarily to serve offshore clients
Competitiveness Improvement Programme Grants are to be used for the following interventions World-class manufacturing principles. Training Labour relations and employee wellness programmes Product related Supply chain integration Industrial engineering Competitiveness improvement Bottom line business processes Clothing and Textile companies and clusters
31
Incentives
Incentive Benefit Main Conditions
Production Incentive (PI) Aims to help the industry upgrade its processes, products and people. Clothing manufacturers Textiles manufacturers Cut, Make and Trim (CMT) operators Footwear manufacturers Leather goods manufacturers and Leather processors (specifically for leather goods and footwear industries).
Automotive Investment Scheme (AIS A taxable cash grant of 20 percent of the value of qualifying investment in productive assets Motor vehicle assemblers/manufactures. Motor component manufacturers
32
the dtis Investment Services
  • Sector Information
  • Finance to explore investment opportunities in SA
  • Facilitating direct Government support in the
    form of
  • - information on investing in SA and the
    Business Environment
  • - detailed investment Incentives
  • - investment facilitation
  • - after care ongoing contact
  • Contact Details
  • the dti Call Centre 0861 843 384
  • the dti Switchboard 27 12 394 0000
  • Investment Promotion 27 12 394 1339/1032
  • Website www.thedti.gov.za
  • E-mail investmentsa_at_thedti.gov.za
  • Postal Address Private Bag X 84, Pretoria
    0001
  • South Africa
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