DTI revises manufacturing incentives

7 April 2014

Revisions to the Manufacturing Competitiveness Enhancement Programme (MCEP) guidelines have been approved by Trade and Industry Minister Rob Davies and were published on Wednesday last week.

The MCEP is a key action programme of the Industrial Policy Action Plan (IPAP), designed to drive growth and promote competitiveness in the manufacturing sector. It includes a package of incentives specifically designed for established manufacturers, with the aim of promoting competitiveness and retaining jobs.

The programme has been implemented by the Department of Trade and Industry since June 2012.

By the end of March 2014, 524 applications had been approved, with more than R4- billion committed to support manufacturers and more than 100 000 jobs to be sustained, according to departmental spokesperson Sidwell Medupe in a statement issued on Thursday.

Consultation with various stakeholders during the 2013/14 financial year had led to the amendments of the MCEP guidelines. The latest revision were published on Tuesday.

Tightening measures

"It was learnt that the highest percentage grant benefit of 61% went to larger enterprises, while only about 39% of the grant went to small- and medium-size enterprises, following which it was decided that some tightening measures were required.

"These measures are meant to support as many entities as possible and to ensure that the MCEP continues to support the entities targeted by the programme," said Medupe.

Analysis of the total grants approved also indicated that 4% of the total grant commitment went to small entities (with assets below R5-million), while 10% went to those with assets of between R5-million and R30-million, 25% went to entities with assets between R30-million and R200-million, and 61% went to entities with assets above R200-million.

Components and focus areas affected by the recent revision are the introduction of total grant limit under capital investment, green technology, enterprise-level competitiveness improvement and resource efficiency, as well as cluster competitiveness improvement, which now has separate guidelines.

Registration requirements

Furthermore, clarification has been provided with respect to the registration requirements, bonus grants and the inclusion of manufacturers in the private-sector defence industry.

Over and above these amendments, the Broad-Based Black Economic Empowerment (B-BBEE) requirement of the MCEP has been amended to align it with B-BBEE policy as well to ensure that applicants meet this requirement within the period of three years.

MCEP guidelines were also reviewed in July 2012 , which resulted in the relaxation of minimum requirements on capital investments and provided a clearer definition of total assets.

After further comments and inputs were received, version three of the guidelines was published in November 2012.

Source: SAnews.gov