07-04-2014, 03:52 PM
Trade and Industry Minister Rob Davies on Monday responded to reports that incentives for manufacturers will be weakened due to regulations that lower caps on grants offered in the Manufacturing Competitiveness Enhancement Programme (MCEP).
Last week, the Department of Trade and Industry (dti) announced that the revised guidelines of the MCEP came into effect on 1 April 2014.
The programme offers incentives designed to drive growth and promote competitiveness in the manufacturing sector. It includes a package of incentives specifically designed for established manufacturers, with the aim of promoting competitiveness and retaining jobs.
“We faced a significant uptake of the MCEP. It was either that we make a small number of large awards or larger amounts of small awards, and we opted for the second [one]. So the maximum [amount] has been reduced from R50 million to R30 million. That’s the main thing. We wanted to support a larger number of enterprises,†said Minister Davies at the launch of the sixth iteration of the Industrial Policy Action Plan (IPAP) in Johannesburg.
A consultancy company has said that the changes will largely reduce the incentives for large companies offered by the programme.
The changes also related to broad-based black economic empowerment (B-BBEE), in addition to the reduction of the amounts of money available from the department for different parts of the programme.
The programme has been implemented by the dti since 4 June 2012.
“As at 31 March 2014, 524 applications were approved, with over R4 billion committed to support manufacturers and over 100 000 jobs to be sustained,†the department said last week.
Consultation with various stakeholders during the 2013/14 financial year necessitated the amendments of the current MCEP guidelines, which resulted in the latest revision of the guidelines that were also published on 1 April.
“It was learnt that the highest percentage grant benefit of 61% went to larger enterprises, whilst only about 39% of the grant went to small and medium size enterprises, following which it was decided that some tightening measures were required.
“These measures are meant to support as many entities as possible and to ensure that the MCEP continues to support the entities targeted by the programme,†said the dti in a statement last week.
Analysis of the total grant approved also indicated that 4% of the grant commitment went to small entities (with assets below R5 million), while 10% went to those with assets of between R5 million and R30 million; 25% went to entities with assets between R30 million and R200 million and 61% went to entities with assets above R200 million.
Components and focus areas affected by the recent revision are the introduction of total grant limit under Capital Investment; Green Technology; Enterprise-level Competitiveness Improvement; Resource Efficiency as well as Cluster Competitiveness Improvement, which now has separate guidelines.
Furthermore, clarification has been provided with respect to the registration requirements, bonus grants and the inclusion of manufacturers in the private sector defence industry.
Over and above these amendments, the B-BBEE requirement of MCEP has been amended to align it with B-BBEE policy, as well to ensure that applicants meet this requirement within the period of three years since the launch of the MCEP.
MCEP guidelines were reviewed in July 2012 following various consultations and that review resulted in the relaxation of minimum requirements on capital investments and provided a clearer definition of total assets.
Further comments and inputs were received and Version 3 of the guidelines was published in November 2012. – SAnews.gov.za
Last week, the Department of Trade and Industry (dti) announced that the revised guidelines of the MCEP came into effect on 1 April 2014.
The programme offers incentives designed to drive growth and promote competitiveness in the manufacturing sector. It includes a package of incentives specifically designed for established manufacturers, with the aim of promoting competitiveness and retaining jobs.
“We faced a significant uptake of the MCEP. It was either that we make a small number of large awards or larger amounts of small awards, and we opted for the second [one]. So the maximum [amount] has been reduced from R50 million to R30 million. That’s the main thing. We wanted to support a larger number of enterprises,†said Minister Davies at the launch of the sixth iteration of the Industrial Policy Action Plan (IPAP) in Johannesburg.
A consultancy company has said that the changes will largely reduce the incentives for large companies offered by the programme.
The changes also related to broad-based black economic empowerment (B-BBEE), in addition to the reduction of the amounts of money available from the department for different parts of the programme.
The programme has been implemented by the dti since 4 June 2012.
“As at 31 March 2014, 524 applications were approved, with over R4 billion committed to support manufacturers and over 100 000 jobs to be sustained,†the department said last week.
Consultation with various stakeholders during the 2013/14 financial year necessitated the amendments of the current MCEP guidelines, which resulted in the latest revision of the guidelines that were also published on 1 April.
“It was learnt that the highest percentage grant benefit of 61% went to larger enterprises, whilst only about 39% of the grant went to small and medium size enterprises, following which it was decided that some tightening measures were required.
“These measures are meant to support as many entities as possible and to ensure that the MCEP continues to support the entities targeted by the programme,†said the dti in a statement last week.
Analysis of the total grant approved also indicated that 4% of the grant commitment went to small entities (with assets below R5 million), while 10% went to those with assets of between R5 million and R30 million; 25% went to entities with assets between R30 million and R200 million and 61% went to entities with assets above R200 million.
Components and focus areas affected by the recent revision are the introduction of total grant limit under Capital Investment; Green Technology; Enterprise-level Competitiveness Improvement; Resource Efficiency as well as Cluster Competitiveness Improvement, which now has separate guidelines.
Furthermore, clarification has been provided with respect to the registration requirements, bonus grants and the inclusion of manufacturers in the private sector defence industry.
Over and above these amendments, the B-BBEE requirement of MCEP has been amended to align it with B-BBEE policy, as well to ensure that applicants meet this requirement within the period of three years since the launch of the MCEP.
MCEP guidelines were reviewed in July 2012 following various consultations and that review resulted in the relaxation of minimum requirements on capital investments and provided a clearer definition of total assets.
Further comments and inputs were received and Version 3 of the guidelines was published in November 2012. – SAnews.gov.za