The document summarizes economic cooperation opportunities between South Africa and Ukraine. It outlines South Africa's economic mandate to increase exports and attract foreign direct investment. Key opportunities for Ukraine companies include sectors identified in South Africa's Industrial Policy Action Plan such as metals, automotive, agro-industries, and chemicals. The document also provides an overview of South Africa and Ukraine's economies and bilateral trade, which is currently dominated by South African commodity exports. It identifies various South African investment incentives and support programs available to foreign investors.
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1. Economic Cooperation
between South Africa and
Ukraine
Ambassador CA Basson
23 February 2017
Ukrainian ICC
Ukrainian League for Industrialists
and Entrepreneurs
LLC Stanley Group
2. Content
1. South African Embassy Mandate
2. South Africa, Southern Africa & Africa
3. Economic Facts and Trends
4. Competitiveness and Doing Business
5. Economic Success Stories
6. South Africa-Ukraine Trade
7. Investment Opportunities
8. Major Investment Programmes
9. Investment Incentives & Support
10.B-BBEE
3. 1. South African Embassy Mandate
Mandate:
Engage in economic diplomacy to increase
value added South African exports and attract FDI
to priority sectors as identified in the Industrial
Policy Action Plan (IPAP)
Opportunities in IPAP:
• Metals Cluster
• Automotive
• Agro Industries
• Green Industries
• Chemicals, Pharma & Plastics
• Advanced manufacturing
4. 1. South African Embassy Mandate
Support to Ukrainian companies:
• Ukrainian companies interested in IPAP
• South African strategic imports
• Guidance on South African economic sectors
• Ukrainian companies responsible for their
own marketing, identifying business partners
and due diligence.
6. • SADC FTA signed in August 2008 –
market of 250 million consumers
• Future FTA with SADC,COMESA &
EAC with a market of 800 million
consumers
• Africa with population of over 900
million and growing economy
2. South Africa, SADC, Africa
7.
8. •Area 1,219, 090 km2
•Population 52m (2013)
•11 Official languages with English the business language
•Total GDP : 2014 (US$ 350.6bn )
•GDP 2014 per capita: (US$ 12 105)
•Real GDP Growth: 1.5% (2014 Est)
•Inflation (CPI): 4.0 % (annual 2014 average)
•Main Exports; minerals & mineral products, precious
metals & metal products, chemical & food products,
automotives & components.
•Main trading partners: China, USA, Japan ,Germany &
the UK.
2. South Africa, SADC, Africa
9. •South Africa positioned as a manufacturing centre of excellence
•Diversified Industrial sectors
•Open economy
•Sound business case for investment and profit
•Gateway to Africa and markets of more than 900 Million consumers
•Africa is the next big story after China and India
South Africa Ukraine
2004 2015 2015
GDP (Billions) US$ 171 US$ 324 US$ 87
Merchandise exports US$ 35.2 US$ 97.9 US$ 35,4
GDP Growth 4.6% 1,3% -9,9
3. Economy - GDP
10. Export Country
2015
Rand
(millions)
1. China 73,602
2. United States 66,564
3. Japan 46,224
4. Germany 53,742
5. United Kingdom 38,778
6. India 39,912
7. Netherlands 23,149
8. Switzerland 11,480
Import Country 2015
Rand
(millions)
1. China 185,223
2. Germany 119.526
3. United States 67,133
4. Japan 38,845
5. Saudi Arabia 28,133
6. India 49,979
7. United Kingdom 31.613
8. Iran 83,979
3. Economy - Trade
11. 3. Economy – Fiscal position
• Budget balance at -4 % (2014)
• Decline to 3.5% by 2015
• Current Account : -5.4% of GDP
• Balance of Payment: +0.3%
• Foreign reserves: US$ 48 bn
• Capital Formation: 17.8% of GDP
12. 4. Competitiveness & Doing Business
• Vast mineral resources:
• No.1 for PGM, Chrome, Manganese
• No.3 for Gold, Coal &
• Corporate Tax rate of 28%
• Well developed legal system bases on sound constitution
• Well developed & independent public institution (legal, economic
etc)
• Prime Interest Rates at 9.25%
• Gateway to Sub-Saharan Africa
• JSE top 20 of global exchanges
• Well developed infrastructure:
• 3 of Africa’s busiest International airports (JNB, CTN, DBN)
• Africa’s largest container Port in Durban
• Mobile telecoms subscription at over 90%
• Well developed rail & road infrastructure
• Over 45 000 MW electrical generation capacity & network
16. • Preferential Export market access:
• EU (FTA and TDCA)
• SADC
• USA- AGOA (Africa Growth Opportunity Act)
• Future Trilateral Free Trade Area (SADC-EAC-COMESA)
• Preferential trade with India & Mercusor
• Special Export Zones (SEZ)
• Coega Port & Industrial Zone (heavy industries)
• East London Industrial Zone (Automotive Cluster)
• Richardbay Industrial Zone (Bulk metal industries)
• Saldahna Bay Industrial Zone (Oil, Gas, Steel)
4. Competitiveness & Doing Business
19. • Successful automotive cluster
• 272 000 exports from BMW (3 series), Mercedes Benz (C-Class), Toyota
pick up, VW Polo, Ford Pick up, Nissan Pickup
• Exports to USA (C-class, 3-er) UK (Polo, Toyota pickup, Ford Pickup,
Japan (C-class), Australia (Toyota, C-Class), GM
• 14% of Global Catalytic convertor supply
• 40-70% local content
5. Success Stories
20. • Coal & Gas to Liquid Technologies
• Sasol Fischer-Tropsch Process
• Deep Mining Technologies
• Some of deepest mines in the world (3 km)
• Mobile solutions & technologies
• Mobile banking & transactions
5. Success Stories
21. • Bilateral trade has recovered from 2009
Source: www.thedti.gov.za
0
500
1000
1500
2000
2500
ZAR-Mill
Название оси
SA - Ukraine Ukraine - SA
6. South Africa- Ukraine Trade
22. • SA exports dominated by commodities
Source: www.thedti.gov.za
Minerals
75%
Vegetable Products
11%
Transport
Equipment
10%
Prepared Food
Products
1%
Other
3%
SA Exports to Ukraine
6. South Africa- Ukraine Trade
24. Imports from South Africa
• US$ 52 406 000
(SARS figures for period
Jan – Sept 2016)
• US$ 93 013 000
(Ukrstats figures for
period Jan – Oct 2016)
Monetary Value
25. Imports from South Africa
SARS figures (Ukrstats figures in
brackets):
• US$ 37 943 000 – Manganese ores
and concentrates
• US$ 452 000 – Iron and Steel
• US$ 454 000 – Chromium ores and
concentrates
Sectors/products (1)
30. Exports to South Africa
• US$ 37 400 000
(SARS figures for the period Jan
– Sept 2016)
• (US$ 35 696 000
(Ukrstats figures for the period
Jan – Oct 2016)
Monetary Value
31. Exports to South Africa
• US$ 9 557 000 – Floating dock
• (US$ 9 587 700 – Floating dock)
• US$ 3 852 000 – Mainly parts and
accessories of printers, copying
machines and facsimile machines, as
well as kneading, crushing and
grinding machines
Sectors/products (1)
32. Exports to South Africa
• US$ 1 513 000 – Dried peas,
shelled, whether not skilled or split
• US$ 15 587 000 - Mainly wheat
and buckwheat
• (US$ 20 053 000 – Grains)
Sectors/products (2)
33. Exports to South Africa
• US$ 656 000 - Refined sugar,
chemically pure sucrose
• (US$ 911 000 – Sugars)
• US$ 1 340 000 - Mainly electric
heat resistors
• US$ 383 000 – Parts of aeroplanes or
helicopters
Sectors/products (3)
34. Exports to South Africa
• (US$ 11 200 – Aircraft components)
• US$ 649 000 – Preparations of
cereals, flour, starch or milk
• US$ 217 000 – Mainly long-life milk,
condense milk and custard
• (US$ 230 600 – Milk, dairy products,
eggs and honey)
Sectors/products (4)
35. Exports to South Africa
• US$ 731 000 – Sanitary towels,
napkin liners for babies, etc.
• (US$ 2 001 200 – Vegetables)
• (US$ 105 330 – Coffee, tea)
• US$ 711 800 – Ready-made grain
products
Sectors/products (5)
36. • Metals Cluster
• Steel Profiles, Construction steel, Piping,
• Locomotives & wagons, Industrial components
• Automotive
• Component and systems manufacturing
• Trucks, busses, tractors and special vehicles
• Agro Industries
• High value intensive agriculture
• Food processing for export markets
• Green Industries
• Solar panels and PV cells
• Wind turbines
• Chemicals, Pharma & Plastics
• Polypropelene articles & components
• Pharmaceuticals (APIs)
7. Opportunities (Industrial Plan)
37. • Advanced Manufacturing
• Nuclear components
• Aerospace and defence components and systems
• Titanium metal products
• Nanotechnologies
• Business Process Services
• Back Office Operations (Financial, medical, legal etc)
• Call Centers
• Remote & Offshore support services
7. Opportunities (Industrial Plan)
38. • Economic Infrastructure
• Euro 30 billion for Rail infrastructure & rolling stock (2012-2017)
• Euro 300 billion for Nuclear Power plants (2017 – 2030)
• Euro 10 billion for sea port expansions
• Telecoms
• Automotive Cluster
• Euro 200 million Mercedez Benz recap (2013)
• Euro 100 million Nissan expansion
• Euro 100 million VW expansion & localisation
• Other
• Euro 100 million renewable energy programme
8. Major Investment Programme
39. Incentive Benefit Main Conditions
Section 12i Tax
Allowance
Tax deductions of up to R 900m
depending on status viz.
preferred or qualifying projects.
Training allowance/ deduction of
up to R30m or R36 000 per
employee.
Valid until December 2015
Capital investment > R 200m
Critical Infrastructure
Fund
Infrastructure projects intended
to service IDZ, shall qualify for a
grant of 30% of the qualifying
infrastructure development cost
The minimum qualifying infrastructure
development cost is R15m
The Location Film &
Television production
Incentive
To encourage and attract large
budget films and television
productions that will contribute
towards SA economic
development and international
profile and increase foreign
direct investment
Foreign owned qualifying productions
9. Investment Support & Incentives
40. Incentive Benefit Main Conditions
BPO & O Investment
Incentive
The BPO&O Investment Incentive
comprises an Investment Grant
and a Training Support Grant
towards costs of company-specific
training. The incentive is offered
to local and foreign investors
Local and foreign investors
establishing projects that aim
primarily to serve offshore clients
Competitiveness
Improvement
Programme
Grants are to be used for the
following interventions:
World-class manufacturing
principles.
Training
Labour relations and employee
wellness programmes
Product related
Supply chain integration
Industrial engineering
Competitiveness improvement
Bottom line business processes
Clothing and Textile companies and
clusters
9. Investment Support & Incentives
41. Incentive Benefit Main Conditions
Production Incentive
(PI)
Aims to help the industry upgrade
its processes, products and
people.
Clothing manufacturers
Textiles manufacturers
Cut, Make and Trim (CMT) operators
Footwear manufacturers
Leather goods manufacturers and
Leather processors (specifically for
leather goods and footwear
industries).
Automotive
Investment Scheme
(AIS
A taxable cash grant of 20 percent
of the value of qualifying
investment in productive assets
Motor vehicle
assemblers/manufactures.
Motor component manufacturers
Manufacturing
Competitiveness
Enhancement
Programme (MCEP)
The MCEP comprises two sub-
programmes:
• The Production Incentive (PI)
i.e. 7% to 5% of the manufacturing
value added.
Industrial Financing Loan
Facilities viz:
• Pre-/Post-Dispatch Working
Capital
• Industrial Policy Niche Projects
Fund
The MCEP is available to South
African-registered entities engaged
in manufacturing Standard
Industrial Classification (SIC 3),
engineering services that support
manufacturing, and conformity
assessment agencies (SIC 88220)
servicing the manufacturing sector.
9. Investment Support & Incentives
42. Incentive Benefit Main Conditions
The Enterprise
Investment Program
(EIP)
The EIP (manufacturing) is a cash
grant for locally based
manufacturers who wish to
establish a new production
facility, expand an existing facility
or upgrade an existing facility in
the clothing and textiles sectors
the EIP will be used to stimulate
investment within manufacturing and
tourism, it will also be used to
deliver on some of the IPAP's key
performance areas, as well as
priority sectors.
Foreign Investment
Grant
To compensate qualifying foreign
investors for the cost of moving
qualifying new machinery and
equipment from abroad to SA.
Foreign investors only
Industrial
Development Zone
Exemption from VAT when
sourcing goods and services from
South African customs territory
and duty-free imports of raw
materials and inputs for export
Prospective IDZ operator companies
must apply for permits to develop
and operate an IDZ
9. Investment Support & Incentives