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MEC Somyo lauds new investment targeting SMMEs

Mar 27, 2017
MEC Somyo lauds new investment targeting SMMEs

Eastern Cape MEC for Economic Development, Environmental Affairs and Tourism Sakhumzi Somyo is overjoyed by the signing of a Memorundum of Understanding (MOU) between Beijing Automobile International Corporation (BAIC) and Industrial Development Coporation (IDC) which took place in Cape Town on Saturday.

MEC Somyo says the MOU sets in motion processes for the investment of R1.2 billion rand by both parties to develop SMMEs in the auto sector in the Eastern Cape Province.

This is in addition to the R11 billion investment that was announced last year by BAIC for the construction of a car manufucturing plant in the Coega IDZ which has a potential to employ approximately 1,000 people in the plant during Phase 1, with another 10,000 jobs to be created throughout the automotive value chain.

MEC Somyo said: “No one can dispute the fact that the automotive sector remains one of the biggest employers of our people. What has proved to be a challenge over time is the guranteed entrance and beneficiation of black businesses’ into the auto manufucturing value chain.”

He said the signing of the MOU came at the right time as government is going full steam ahead with the implementation of its radical economic transformation agenda which is aimed at changing patterns of economic ownership in the province.  

“Through this intiative, you are starting to walk the talk towards the right direction” said MEC Somyo.  

The BAIC Automobile project, which is currently in the construction phase at the Coega Industrial Zone in Port Elizabeth, has committed to achieve at least 60% local content on all the vehicle models (to be manufactured locally) by the fourth year of production.

MEC Somyo said this is an extra-ordinary commitment for a new entrant in the market.

“We are hopefully that other OEMs which have been in operation for decades in our country would at least match this commitment as they are currently sitting at an average of 35% at the moment.

He said soon an Industrial Park to house automotive component suppliers within close proximity to the BAIC Auto SA assembly plan will be established in the Coega IDZ and this will not be exclusively limited to BAIC Auto SA supply chain, but will cater for all other OEMs in the region and for exports into the international markets.  

“Six suppliers from China and SA have already concluded their respective feasibility studies and have expressed definitive interest to set up operations in the Industrial Park to manufacture car seats, bumpers, dashboards and interior trimmings amongst other components,” he added.

This Industrial Park is anticipated to start operations in 2018 with a guaranteed employment of not less than 600 permanent jobs.  

The establishment of the Industrial Park will also be convenient for the OEMs as they would now have their component suppliers located close to their assembling plants.  This is will ensure improved efficiencies and reduction of inventory costs for both OEMs and the suppliers resulting in a win-win situation for all concerned.

MEC Somyo urged both parties to ensure that they deliver on the contents of the MOU to radically transform the auto sector in our Province and in our country. “We must see the results of this MOU taking effect throughout the auto sector value chain for it to have real meaning in the lives of our people,” he concluded.