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Johannesburg - News that a long-awaited Department of Trade and Industry incentive scheme to stimulate manufacturing in the clothing and textile industry would be announced in May has been broadly welcomed.
This scheme replaces the old export incentive scheme which lapsed in March. Only exporters had benefited from the old scheme and the qualifying items had been reduced to seven in the past year.
All manufacturers will benefit from the new initiative, which will be managed by the Industrial Development Corporation (IDC).
Department of Trade and Industry chief director Abisha Tembo says the new scheme has been finalised and the department is currently completing the guidelines for applications.
The incentive initiative will be calculated as 10% of the value that a manufacturer's production process has added to the raw materials over the year.
This 10% can be applied as a credit at the IDC as a "discount" on capital and operating capital dues.
Tembo says the department wants to ensure that the fund is used to grow the industry and not, for instance, to buy motor cars.
Treasury has granted R1.7bn for this purpose over the next three years, with R400m being set aside for the first year.
Tembo says the department is confident that applications for the full R400m will be received in the first year.
Johann Baard, head of the Cape Clothing Manufacturers' Association, says the manufacturing incentive scheme will not in itself save the industry, but it will undoubtedly be an important contributor to the long-term viability of the industry.
Further initiatives that have been tackled since May last year or even earlier include the finalisation of a skills development programme and a number of measures to combat illegal clothing imports.
Thousands of jobs are still being lost in the clothing and textile industry.
In the three months to the end of March, 2 360 jobs were lost, 47% of these in KwaZulu-Natal, according to figures from the South African Clothing and Textile Workers Union, Sactwu.
But there were fewer job losses in the first quarter of 2010 than in the corresponding quarter of 2009, when almost 4 100 losses were reported.
- Sake24.com