Eastern Cape Economic Development MEC, Sakhumzi Somyo, has hailed the signing of an agreement that will see more than R1bn coming into the province to development Small, Medium and Micro Enterprises.
The Memorandum of Understanding was signed in Cape Town this weekend between Chinese automaker, BAIC and the Industrial Development Corporation.
MEC Somyo said the MOU sets processes in motion for the investment of R1.2 bn by both parties to develop SMME's in the auto sector in the Eastern Cape Province.
He said would be addition to the R11bn investment that was announced in 2016 by BAIC for the construction of a car manufucturing plant in the Coega IDZ.
Somyo said the BAIC automotive project has the 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.
"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," said Somyo.
He said the signing of the MOU came at the right time as government was going full steam ahead with the implementaion 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.
(Pic: Supplied)
