S.Africa auto aid will boost growth, cut trade gap: government

South Africa’s existing automobile industry programme and its replacement scheme is expected to cut the trade deficit and contribute billions of dollars to gross domestic product by 2020, a government minister said on Friday.

South Africa’s automobile sector, a major employer, has been hard hit by a global economic downturn that has seen exports slashed and manufacturing curbed in Africa’s biggest economy.

Currently, the government lends support to the industry under the Motor Industry Development Programme (MIDP), which will be replaced from 2013 onwards by the Automotive Production and Development Programme (APDP), as the country tries to ramp up motor vehicle production and investment.

“Gross domestic product will be 103.3 billion rand higher by 2020 than if there is no support programme,” Trade and Industry Minister Rob Davies said in a written reply to a parliamentary question.

He said investment in the sector would be 152 billion rand higher by 2020 and employment 320,000 more than if there was no support programme.

“The trade deficit will be 833 million smaller in 2020 than if there is no support programme,” he said of the net economic benefits over the next 11 years.

Key elements of the APDP, will see stable, moderate tariffs at 25 percent applied for light motor vehicles, while duty credits issued to vehicle assemblers will provide encouragement for high level volume production.

Davies said automotive manufacturing firms located in South Africa and who meet the specified criteria to participate in the MIDP and its successor are expected to benefit.

“It is anticipated that all major vehicle manufacturers will draw upon the programme,” he said.

Carmakers BMW, Ford, General Motors , Daimler, Nissan Motor Co. Ltd., Toyota Motor Corp. and Volkswagen all have manufacturing plants in South Africa.

Sourced via af.reuters.com