Proposed Amendments on the APDP Phase 2 Program; Draft Block Exemption for Ports and Rail

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Proposed Amendment to Include Electric Vehicles (EVs) in APDP Phase 2 Program

On 19 June 2024, ITAC published an amendment to include Electric Vehicles (EVs) and their components within the APDP Phase 2 program. The program offers several incentives for local manufacturers to increase their competitiveness and grow the industry further.

Listed below are the various incentives available under the program:

    • Production Rebate Certificates (PRCs) – Rebates on customs duties paid on imported materials.
    • Stable Tariffs – Predictable customs duty rates for certain components.
    • Automotive Investment Scheme (AIS) – Grants for manufacturers to invest in new models or production lines.
    • Volume Assembly Localization Allowance (VALA) – Additional allowance based on the number of vehicles assembled locally.

However, to qualify for these benefits, manufacturers in South Africa must be registered with the South African Revenue Service (SARS) and comply with Broad-Based Black Economic Empowerment (B-BBEE) requirements. Additionally, they must manufacture eligible products that meet a minimum local content threshold, expressed as a percentage of locally sourced materials.

The current Schedule 4 rebate usage under Chapters 87 and 98, from 2021 to 2023, has remained fairly constant, averaging 21.5%.

All interested parties have until 10 July 2024 to submit comments on the proposed amendments.

 

Publication on the Draft Block Exemption for Ports and Rail

South Africa’s rail and port infrastructure has severely deteriorated over the years, which has had a detrimental impact on the country’s efforts to industrialise and grow the economy. Exporters face a harsh reality as their goods struggle to compete globally due to inefficiencies, forcing them to either reduce their operations or move their investments elsewhere, sacrificing valuable opportunities for domestic development. On the other hand, importers are burdened with increasing import costs, making goods in the country more expensive. As a result, consumers ultimately feel this pinch through higher prices, impacting their ability to afford imported goods.

On 18 June 2024, the Department of Trade, Industry and Competiton published a gazette for public comment proposing exempting a category of agreements and practices amongst firms in the port and rail industry from applying sections 4 and 5 in the Act. The act ensures fair competition by preventing unfair business deals and stopping dominant companies from abusing their power.

With the hope of curbing the challenges experienced by the rail and port industry, the newly proposed exemption aims to reduce costs and minimise losses experienced due to operational inefficiencies. Additionally, the Department seeks to address and resolve challenges encountered in the South African rail and port industries.

Listed below are the various categories of agreements or practices that the minister intends to exempt:

    • Coordination on port capacity and capacity of a port to accept new cargo and diverting cargo between ports;
    • Coordination on the flow of traffic into the ports, including weather forecasts, stack levels, equipment breakdowns, and productivity shifts.
    • Coordination on night runs to ease congestion during peak hours.
    • Coordination on management, maintenance, and upgrades of port facilities and equipment.
    • Coordination on the repair and maintenance of rail lines identified by the rail industry.
    • Coordination on volumes to support a dedicated rail service.
    • Coordination on sharing capacity on locomotives.

However, it is important to note that these regulations exclude discussions and agreements related to fixing the selling price of goods and services to customers or consumers, collusive tendering, and resale price maintenance.

Under the proposed regulation, rail and port companies considering agreements or practices outlined within it will need written confirmation from the Commission to ensure they comply with the regulation.

The Commission has the right to revoke the confirmation granted if various stipulated terms of Regulation 6 are not met.

All interested parties have up until 9 July 2024 to respond.

 

 

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