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Investment floodgate for Coega

Sep 04 2016 07:36
Lubabalo Ngcukana

BIG DEAL Coega IDZ CEO Pepi Silinga signs a deal with Dong Haiyang, president and CEO of the BAIC, which will see R11 billion invested in Port Elizabeth and the Chinese car manufacturer building a plant at the Coega IDZ precinct. Picture: Lubabalo Ngcukana

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Another major Coega Industrial Development Zone (IDZ) deal associated with the automotive sector is in the pipeline.

An enthusiastic Eastern Cape Premier Phumulo Masualle told City Press this week, after the signing of the R11 billion investment by the Beijing Automotive International Corporation (BAIC) in Coega in Port Elizabeth, that more investments were on the way, but could not be drawn into revealing details.

“We are working very hard on attracting other investments. In fact, I expect that I will be coming back here [Port Elizabeth] soon with another investor in terms of manufacturing,” Masualle said.

Sakhumzi Somyo, MEC for finance and economic development, said the BAIC investment signified gains for the provincial economy.

“Here at Coega, there is another pronouncement that is coming our way. It is going to carry another job-creation element. It’s something closer to the auto sector,” he said.

The BAIC deal with the Industrial Development Corporation (IDC) and the Coega IDZ marks South Africa’s largest investment in 40 years and culminated
in a sod-turning ceremony held in an open field in Coega this week, where BAIC Automobile SA will base its plant.

By 2022, the car manufacturer is projecting an initial annual production of 50 000 units, which will be doubled when it reaches its full capacity.

In its first phase, the company intends appointing 2 500 people in direct jobs – 1 000 of those employed will be locals and 10 000 indirect jobs would made available.

“We are excited at the development. It’s the largest manufacturing investment we have had as a province. It reaffirms the Eastern Cape as the home of the auto sector. This means more jobs will be created around here. We are quite pleased. We have many unemployed young people,” he said.

Dr Dong Haiyang, president and CEO of the BAIC, said the company wanted the South African plant to be the group’s gateway to the world.

“From this point, South Africa will be the first fully functional production base for the BAIC in the world,” Haiyang said.

He said work on the plant in Coega would start in 2018, with the first vehicle produced by 2022.

The BAIC has more than 30 plants around the world.

In South Africa, the BAIC will have four car models, including a medium-sized sedan, an SUV, a 1-ton bakkie and off-road vehicles.

He said the company’s target market for export would at first be the African continent, with west and north African countries being the primary target market.

Haiyang said the next stage would be to export the vehicles from South Africa to European countries.

“We are quite confident of our investment in South Africa. It is strategic,” Haiyang said. He said that 60% of vehicles produced here would be exported, while 40% would be sold locally.

Christy Xiaowei Liu, BAIC SA Investment CEO, said that initially 25 car dealers would be appointed throughout the country and that the company was currently in the process of recruitment.

“In terms of job creation, we will hire 1 000 employees locally. Indirectly, including vehicle-component suppliers, dealer networks, financial services and all these other value chains, we will create around 10 000 jobs in the long run,” she said.

According to IDC CEO Geoffrey Qhena, the first phase, which includes construction, would cost R4.5 billion. About R1.2 billion will be spent on the construction site and the balance spent on the land and equipping the factory.

Qhena said the IDC, which owns a 35% share in the project, had invested R1 billion. He said the IDC planned to hold on to its share.

Economic Development Minister Ebrahim Patel said: “What you see here is a country embracing its future, setting its capital in infrastructure and building the foundations of long-term growth ... We hope the BAIC will find many local South Africans who have the requisite skills and that our institutions in the Eastern Cape will be able to produce the needs of the factory and investors,” Patel said.

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