Durban - The government on Wednesday announced the “first wave” of products designated in terms of its preferential procurement regulations.
Briefing the media at COP 17 in Durban, Trade and Industry Minister Rob Davies
said they included power pylons, rail rolling stock and buses, among others.
He said the designations marked an important milestone in the government’s efforts to arrest and reverse industrial decline in the country’s private sector.
“The first wave of designations for procurement from local companies will come into effect today. (They include) power pylons, rail rolling stock, buses, certain canned foods, clothing, textiles, footwear and weather products,” Davies said.
The regulations - passed in terms of the Preferential Procurement Policy Framework Act - compel state institutions, from local municipalities to government departments, to buy locally up to a certain level. The policy aims to stimulate local manufacturing.
According to a statement released at the briefing, “each designation will stipulate a minimum level of local content for the relevant sector or set of products”.
Responding to a question, Davies said in the case of rail rolling stock, the minimum level would be 65%.
There were different levels for the different designations “depending on the technical nature of the product concerned”, he said.Green link
Economic Development Minister Ebrahim Patel
drew a green link between three of the designations and the climate change conference at which they were announced.
These included power pylons, used to conduct electricity from renewable sources, and buses, which are used in the public transport industry. Also, increased rolling stock would see a shift from road transport to rail, he said.
Davies said the regulations would have no impact on foreign direct investment as “local” meant manufactured in South Africa, regardless of whether the company was foreign or locally owned.
Patel said the designations also set out recommendations for ensuring competition among domestic producers. These were aimed at preventing “collusive or unethical practices” in the value chain, such as tender rigging.