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Scheme aims to boost investment in SA vehicle production

27 November 2014

South Africa has approved guidelines for the new Medium and Heavy Commercial Vehicles-Automotive Investment Scheme (MHCV-AIS), expected to stimulate investment in the production of vehicles.

The MHCV-AIS is a sub-component of the Automotive Investment Scheme, an incentive administered by the Department of Trade and Industry designed to grow and develop the automotive sector in South Africa.

"The broadening of the scope of the AIS to include medium and heavy commercial vehicle manufacturers is in line with the broader objectives of the AIS programme," said Minister Rob Davies.

"The medium and heavy commercial vehicles sector value chains are highly under- developed and there are opportunities to deepen their value addition and potential for employment creation."

The MHCV-AIS will be made available to investment projects with a production start date of 1 April 2014. The commissioning period for these projects may not exceed 18 months prior to the start of the production date.

Davies said the extension of the programme to these manufacturers was required to achieve the developmental objectives that were set to increase market size, investment, deepen supply chain, encourage technology transfer and create and sustain jobs in the automotive sector.

The MHCV-AIS provides a non-taxable cash grant of 20% of the value of qualifying investment in productive assets by medium and heavy commercial vehicles manufacturers and 25% of the value of qualifying investment in productive assets by component manufacturers and tooling companies for medium and heavy commercial vehicles.

An additional non-taxable cash grant of 5% of the value of qualifying investment in productive assets may be available to projects that meet two of the following economic benefit criteria:

• Tooling;
• Research and development in South African-related components of the project;
• Employment creation;
• Strengthening the automotive supply chain;
• Value-addition; and
• Empowerment.

"It is envisaged that these guidelines, whose main theme is to stimulate investment in the production of medium and heavy commercial vehicles, will result in increased support and will lead to growth and development of the automotive sector in South Africa," Davies said.

SANews