Local industry has been hard hit by the global financial crisis, which has now become a "deep real economy and jobs crisis", Trade and Industry Minister Rob Davies warned on Tuesday.

"The industrial sector has been particularly hard hit by the crisis, with 23 of 39 industrial sub-sectors... contracting," he told MPs in the National Assembly.

Opening debate in the House on his department's budget vote, he said this was "imposing some very real challenges to avoid the possible threat of de-industrialisation, which could emerge in this context".

"Central plank"

Davies said his department had identified industrial policy as a "central plank" of its response to the crisis and its efforts to place the economy on a new growth path.

A "long version" of his speech, handed to members, notes manufacturing production in South Africa declined by 21.6 percent in April this year, compared to April 2008, while mining production in March this year dropped by 12.8 percent.

Unemployment — in terms of the "strict definition" — increased from 21.9 percent in the fourth quarter of last year to 23.5 percent in the first quarter of this one.

The current account deficit remained "unsustainably high" at R170-billion.

The economic outlook for the next few quarters pointed to continuing sluggish performance, the document states.

Davies said his department was preparing a new Industrial Policy Action Plan (IPAP), a three-year rolling programme, aligned to the medium-term expenditure framework, which would be ready in January.

It would also develop a new model for industrial finance, including making more strategic use of the Industrial Development Corporation to advance industrial development.

"We need to ensure we maximise the massive opportunities presented by procurement arising from the R787-billion infrastructure programme, and ensure that we meet the target of reducing the imported content of the programme from 40 percent to 30 percent."

Turning to anti-competitive behaviour among companies, he said the Competition Amendment Bill, soon to be enacted, would allow authorities "to proceed against individual directors or managers taking decisions leading to anti-competitive conduct".

It would send out a strong signal that government intended to enforce real compliance.

Davies also vowed to crack down on illegal imports.

"We will also be taking steps to crack down on under-invoicing and illegal imports. [We plan] to significantly upscale our efforts in this regard. There is growing evidence under-invoicing and illegal imports has become widespread and pervasive."

"Compelling" case

There was a "compelling" case for stronger South-South trade and co-operation.

Referring to Brazil, Russia, India and China, Davies said his department would develop and implement a five-year work programme to strengthen economic relations with these economies.

Speaking earlier at a parliamentary media briefing, he said talks would soon be held to thrash out problems with the distribution of national lottery funds, and legislative changes to solve these would be introduced.

"We're looking to create a situation where lottery funds pass through a lot more rapidly to the beneficiaries. Sitting on a couple of billion rand is not acceptable to us," Davies said.

Sapa

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