Illegal imports are undermining the government’s job-creation efforts, Trade and Industry Minister Rob Davies warns. Speaking at a Congress of SA Trade Unions industrial policy conference in Cape Town, he said authorities were looking at “massively” cracking down on such activity.
“One of the biggest problems we have in terms of all of our efforts to create and save jobs is that we have a huge amount of illegal activity which is undermining us. “We have huge illegal imports of clothing… and many other products, coming into South Africa illegally. We have a massive under-invoicing.”
Singling out clothing as an example, he said a recent study by his department had found a 60 percent difference between what China said it had sold in clothing to South Africa, and what local authorities recorded coming in. This effectively negated the tariff in place on clothing imports, the South African Press Association reported.
“This means the tariff has absolutely no impact because the volume of imports that are coming in, are coming in at a 60 percent value less than it really is. They the illegal importers are paying no duty effectively. That’s the problem that we are faced with.” Davies said the illegal imports were linked to illegal trading. “We find that many shops are springing up, not just in big centres, but also in small towns, specialising in these kind of products.”
Such shops often employed illegal immigrants, often did not comply with health and safety laws, and often did not pay taxes. “I think we’ve got a huge issue and a huge challenge… We’ve been doing a few small campaigns here, a few small raids there – we need to massively upscale these operations. We need to put our heads together and see what we can do with this illegal economy.”
The minister was also critical of local clothing firms, SAPA said. “The diagnosis we made about the clothing and textile industry was that we find that there are far too few firms – in the sector – that are prepared to invest and actually improve the productivity of their operations.” “Typically, what happens in the industry is they’re facing competition and therefore they run the factory until the machines break down, then they close the factory and fire the workers.” Davies said any clothing and textile firm keen to tap into government’s incentive scheme could only do so if it was set on “improving the capacity of their company”.
To date, only 94 companies had taken advantage of the incentive scheme, which was started last year. This had led to the creation of 1000 new jobs. The minister also scotched notions of an export processing zone (EPZ) in the Western Cape. “We are not going to go that way as a national government, and the national government will have the call on this particular matter. We are not going to create export processing zones, we are not going to suspend labour law in any part of the country… ,” he said.
Davies drew a distinction between EPZs and industrial development zones (IDZs), saying a lot of work had been done with a view to establishing one at Saldanha on the West Coast. In an opening address to the conference, Economic Development Minister Ebrahim Patel said it would not be easy to realise government’s target of creating five million new jobs over the next decade. “Five million jobs in 10 years is an enormous stretch,” he said.