Investment Promotion & Inter – Departmental Clearing House

Presentation to the Parliamentary Portfolio Committee

on Trade and Industry

Cape Town

22 July 2015

1. What is Investment Promotion • It involves several coordinated activities designed to attract, grow and retain new

foreign and mobile domestic investment. Broadly speaking, it also deals both with improving the investment climate (product development) and marketing the location’s potential to private investors.

• Investment promotion is a Government activity and most IPAs, national or subnational, are financed by the public sector.

• The establishment of a national IPA is a choice a national government can make when deciding on an investment promotion strategy.

2. Why is Investment Promotion Important? • Intense and increasing competition for foreign direct investment (FDI) • To compete for the FDI, governments need a national agency with specialized

promotional skills • Information for investors in decision making, as this is generally lacking and can

be appropriately provided and packaged by an agency

The Rationale for Investment Promotion Agencies

Source: World Bank

What is an Investment Promotion Agency (IPA)

DEFINITION The International Trade Centre (ITC) defines an IPA as an institution whose purpose is to attract investment to a country, region or city.

MAIN SERVICES

Source: ITC

4

Investment Promotion and Facilitation

Investment Promotion and Facilitation facilitates the

increase in the quality and quantity of foreign and domestic

direct investment by providing an investment recruitment,

problem-solving and information service in order to retain &

expand Investment in South Africa and into Africa. The sub-

programme is promoting South Africa as an investment

destination, with a target of R140 billion over the next three

years. The target for the investment pipeline for 2015/16 is

R 45 bn.

National Investment Promotion and Facilitation Strategy Phase 2

The objective of the project is as follows: • To develop an investment strategy and methodology for investment

promotion, facilitation, aftercare and policy advocacy. • To align IPICHs Investment Strategy with all Government programmes • To develop investment related products and service offerings • To design and develop a customised investor service and the

implementation of a one-stop-shop service for investors. • To develop sector specific promotional strategies by focusing activities and

initiatives to targeted markets. • To improve the investment climate. • To develop a 3-5 year operational plan to achieve the strategic objectives of

IPICH. • To develop a strategy for outward investment into Africa. (Phase3) • To develop a strategy for the African Gateway concept. (Phase 3)

Key Targets for Investment Promotion and Facilitation

• To make South Africa a Top Ten investment destination • To make IPICH a top five world class investment promotion agency • Seek to attract an investment pipeline of R140 billion within the next 3

years • Targeted and co-ordinated investment drive amongst all stakeholders.

Diversify and increase investment flows from emerging markets. Retain and expand investment flows from developed markets.

• Reduce the cost of doing business and administrative barriers. Improve SA investment climate and investment attraction.

• Common messaging and brand identity. Marketing and Facilitation support for the SEZ program & to host the Annual Africa Dialogue Conference

• Capacitate the unit to provide a dedicated investment promotion, facilitation and aftercare through a one stop shop service.

Investment Promotion and Facilitation Opportunities

• Investment and Export Opportunities are identified by the DTI’s Industrial Policy Framework and the resultant Industrial Policy Action Plan, the NGP and the NDP

• The above inter-alia has identified those sectors and industries which South Africa has a competitive or potential advantage in terms of economic sustainability.

• It follows that the identified sectors are the opportune areas for investment and that the products and services resulting there from have a propensity to be globally competitive.

• Manufacturing: Automotive, Agro-processing, Capital equipment & transport • Advance Manufacturing: Pharmaceuticals, bio-technology, aerospace • Mining and mineral beneficiation • Services: BPO, Oil and Gas, Infrastructure • Green economy: Renewable energy, waste management, nuclear components

Priority Sectors For FDI

• Advanced Manufacturing • Metals • Mining & Beneficiation • Biofuels • Agribusiness • Automotives & Components • Capital Equipment & Rail • Precision engineering • Aerospace • Film production • Tourism • Oil & Gas • Boat Building

• ICT and electronics • BPO (Business Processing &

Outsourcing) and Call Centres • Chemicals • Plastics & Composites • Bio-pharmaceuticals • Leather and footwear • Forestry products & Furniture • Energy and Renewables • Infrastructure Development • Waste Management • Energy Efficiency & Cleaner

Technology

Analysis of Investment Trends

CONFIDENTIAL

Analysis of Investment Trends

CONFIDENTIAL 12

Investment Promotion and Inter-Departmental Clearing House

Financial Year: 2014/2015

R43.8 billion

Manufacturing Unilever R4bn over 4 years

Samsung (R228m) Advanced Manufacturing

Manufacturing Gestamp (R220m)

Investment pipeline for potential investors

Services CCI Call centres (R200m)

Services Four Seasons Hotel (R560m)

Services Vodafone (R220m)

Services Hunting Plc (R300m)

Manufacturing Toyota (R550m)

Source: www.doingbusiness.org

Source: www.doingbusiness.org

Source: www.doingbusiness.org

South Africa Tops the BRICS for Ease of Doing Business 2015

Source: The World Bank

19

Investment Promotion and Facilitation Strategy 20

Get the Product Right

• Use feedback from Aftercare and ranking studies to identify policy research agenda

• Research supports policy advocacy agenda

• Policy advocacy improves investment climate

Get the Message Out

• Use Value Proposition (not only cost, but quality factors that demonstrate South Africa's advantage)

• Marketing focussed on priority industry sectors

• Key Conferences/Events • Peer to Peer marketing

Proactive Prospecting

• Focus on target firms in priority industries

• Establish relationships

• Use sector experts and private sector champions to present compelling business cases to investors

Forge Investment Partnerships Focus on identifying priority industry experts

to build business case

How do we do it?

Aftercare Program

• Maintain leadership role in ensuring execution

• Provide pathfinding services to link foreign investors and domestic suppliers

• Identify policies that impede investment

Attract and Expand Investments in SA

Strategy Development and Implementation

Global Trends

Country offer

Potential 2. Map out your country’s offer

1. Understand Global Trends

3. Identify Internationally mobile projects

4. Develop selection criteria

5. Benchmark your offer

6. Make the final decision

Opportunity areas

7. Define goals and targets

8. Develop promotion/marketing strategies

9. Contact target firms

10. Evaluate the results

Investment leads

Origination Scoping Pre-feasibility

Bankable Feasibility

Pre Implement

ation Implement

ation Post

Investment

Objective/

Definition______

Project ideas and

applications are

classified as

Projects

• An initial desk-

top, techno-

economic study

of a specific

project idea or

application to

determine

interest to

pursue the

project further

• A limited study

to determine

the economic

and

commercial

viability of the

project under

different

scenarios/optio

ns.

• A detailed

study to

provide levels

of confidence in

the capital and

operating

expenditure

within

approximately

+/- 10% and to

assess the

viability to

move to the

pre-

implementation

• All activities

are conducted

that is required

for financial

closure

• Start with the

design and

basic

engineering

activities

• All activities

are conducted

that is required

for technical

completion

The project

development is

complete and the

Company now

awaits a return on

investment

Activities______

_

• Leads on E-

Room

• Initial

screening

• Initial due

diligence

• Submit

recommendatio

n

• Conduct a

scoping study

• •Write a

scoping report

• •Submit report

&

recommendatio

n (inclusive of

funding for

PFS)

• Set-up project

management

structures

(steering

committee)

• Conduct PFS

• Due diligence

on PFS

• •Write and

submit PFS

submission

report

(inclusive of

funding for

BFS)

• Conduct BFS

via project

management

structures

• Due diligence

on BFS

• •Write and

submit BFS

submission

report

(inclusive of

funding for

pre-

implementation

and/or actual

investment)

• Set-up final

project

structures with

required

policies and

procedures

• Fund raising &

finalisation of

funding

agreements

• Address all

conditions

precedent of

shareholders

and debt

agreements

• Start with basic

engineering

• Project

achieves

financial

closure

• Continue with

detailed

engineering

• Procurement of

capital items

• Construction

• Commissioning

/ Commercial

Operation

• Technical

completion

• Monitoring of

investment

Outcomes _____

• Request to

accept

application/idea

on IDC project

system

• Desk-top,

techno-

economic study

• •IDC Project

Scoping

Submission

• Pre-feasibility

study

• Project Pre-

feasibility

Submission

• Bankable

feasibility study

• Project

bankable

feasibility

submission

• Financial

closure =

project fully

funded +

unconditional

funding

agreements

(debt and

equity)

• Pre-

implementation

memo

• Technical

completion =

completion test

is met and

completion

guarantee

released

• Implementation

Memo

• Repayment of

IDC funding

• IDC exit

INVESTMENT DECISION

MAIN STEPS FOR THE PROCESS OF INVESTMENT DECISION MAKING

• Marketing Strategy • Management

strategy • Governance Strategy

Production Plan

Sales and Marketing Plan

Capital Plan

Human Resource Plan

Location Plan

Overall Strategy Plan

Defining the scope for investment

Feasibility Study

Formation of Business Plan

Judgement of Feasibility of Business Plan

Final Decision on Investment

Move to Executive Phase

Domestic Research

Reconfirm the items to be researched

Identification of Optimal Information Source

Field Research

Investment Environment Research

Ground-level Actual Hearing and Research

Formation of Entry -Strategy

Investment Marketing

& Promotion

5 Sector Units

*Advance Manufacturing

*Manufacturing

*Green Economy

*Resources

*Services

Investment Facilitation

(Visas & Work permits)

Investment Information

IPICH IPICH is the National Investment Promotion Agency within government

MANDATE To facilitate the increase in the quality and quantum of Foreign and Domestic Direct Investment by providing an efficient and effective investment recruitment, problem solving and information service in order to retain and expand investment in South Africa and into Africa.

Investment Unit of DTI – ideal platform to

be developed and serve as the inter-

governmental clearing house.

According to research by investment specialists, as much as 70% of new investments are re-investment/expansion of existing companies

– which means investor aftercare is paramount.

Investor Challenges alluded to in SONA 2015 Municipalities Licensing Zoning Permits Environmental Impact Assessments Electricity Water Home Affairs ITAC SARS CIPC Finance Incentives

Investors require a quick efficient service for registration, permits and licensing.

27

MANY LOCAL IPA & INSTITUTIONS

India ebiz portal India has a very complex business environment and is ranked 142 out of

180 countries in the World bank’s ease of doing business.

In order to improve the investment climate the Modi Government announced on the 2O February 2015, an ebiz portal , integrating 11 central government services, to facilitate faster clearances for businesses

Launching the portal, finance Minister Arun Jaitley, said that discretionary power would end with the portal.” India is committed to steps to foster business environment.

Ebiz is important as it will bring transparency and will improve efficiency, intergrate services and promote electronic delivery of services

The single window portal by the department of Industrial Policy and Promotion (DIPP) will provide all business and investment related clearance 24/7 with an intergrated payment gateway.

India has developed an IT platform as the single window clearance.

What is Proposed A central nodal operational structure needs to be established at national level to act as an implementing body and to serve as the convener for the Inter-Departmental Clearing House, to effectively service investors, local and foreign, coordinate the One Stop Shop’s in the SEZ’s and the work of the Provincial Investment Agencies and local authorities. The Inter-Departmental Clearing House would function through an Investment Council which is championed by the DG of the dti including the relevant DG’s of the economic cluster and operationalized by the DDG: Investment Promotion. The DDG: Investment Promotion will set up the Investment Council and serve as the secretariat. The policy matters regarding investment and business will be channelled via the Minister of Trade and Industry who is the chair of Outcome 4.

Challenges that cannot be resolved will be escalated. Policy and reforms will be tabled in Outcome 4 and upon approval will be implemented council. The Ministerial Committee will be escalated authority to unblock and fast track issues of the clearing house

INTER-DEPARTMENTAL CLEARING HOUSE

• Inter-Departmental Clearing House is an investment facilitation or a “single-window” mechanism where relevant government agencies are brought to single cohesive structure that coordinates and streamlines processes to provide prompt, efficient and transparent services to investors;

• It shortens and simplifies administrative procedures and guidelines for issuance of business approvals, permits and licenses, thereby removing bottlenecks faced by investors in establishing and running businesses.

• Inter- Departmental Clearing House for Investors will provide: Facilitation of the entire investment value chain; Will provide specialist advisory services to investors; Co-ordination between the various line ministries; Communication of these services to potential investors; and Be the single-window clearance for registration, licensing and

permits.

dti

• HO • TISA • IDAD • ITED • IDD • CIPC • NEF • NCR • NRCS • ECIC • BPD • CCRD • FOREIGN

OFFICES • SABS

dha

• HO • FOREIGN

OFFICES • VFS • CIVICS

DIRCO

• HEAD OF MISSIONS

• FOREIGN OFFICES

• SUPPORT OF VISAS

COGTA

• HO • MUNICIPAL

& LOCAL GOVERNMENT

• INFRA-STRUCTURE DELIVERY

TREASURY

• HO • DBSA • PIC • SARS • CUSTOMS • SARB

EDD

• HO • ITAC • IDC • COMPETITION

COMMISSION • PICC

DOC

• HO • BROADBAND

INFRACO • SENTECH • ICASA • TELKOM

DMR

• HO • REGIONAL

OFFICES • STATE

DIAMOND TRADER

• STATE MINING COMPANY

• PROSPECTING & MINING

DEA

• HO • REGIONAL

OFFICES • EIA

WATER & SANITATION

• HO • REGIONAL

OFFICES • TCTA • WATER

BOARDS • LICENSES

DAFF

• HO • REGIONAL

OFFICES • FOREIGN

OFFICERS • LAND

BANK • PERMITS

DRDLR

• HO • PROVINCIAL

OFFICES • TRANSFER &

ZONING OF LAND

DOH

• HO • MCC/SAHPRA

DOL

• HO • EMPLOYMENT

SERVICES • UIF

DST

• HO • TIA • CSIR • NRF • SANERI • SKA

DOE

• HO • REIPP • NERSA • NECSA • LICENSING

DPE

• ESKOM • TRANSNET

DOT

• HO • LICENSING • INFRA-

STRUCTURE • PRASA

NATIONAL GOVERNMENT DEPARTMENTS COORDINATION

SA has 18 government departments involved in policy regulatory, registration permits and licensing

What will the Inter-Departmental Clearing House do?

• Setup an Inter-Governmental Structure that will serve as the Inter-Departmental Clearing House.

• It will firstly it will coordinate the relevant government departments involved in regulatory, registration, permits and licensing.

• Reduce the silo mentality, turnaround times , red tape and improve service delivery

• Improve the Investment Climate and ease of doing business by identifying bottlenecks, administrative barriers and have a plan of action to improve service delivery.

How will it be setup? • The Inter-Governmental Structure will be setup and championed by the DG of the

dti for the Inter-Departmental Clearing House ( IDCH). The will be operationalised by the DDG of Investment within the dti, that will also be the secretariat. Each department would identify a DDG that will serve on the secretariat. The role of the DDG will be to coordinate the Government units within their respective departments and serve as “trouble-shooters” and facilitate and fast track matters of the clearing house.

• The DDGs would meet monthly but would fast track matters on a daily basis as required.

• The DG Forum would serve as the investment council and would include the CEOs of SOEs and SEZs. Investment planning , roll out, monitoring and evaluation and investment climate will be discussed and these will be operationalised by the clearing house. The DG Forum will meet on a bi – monthly basis.

• The Ministerial Committee will serve as the authority for escalated clearing house issues .

• Issues of policy and regulatory will be discussed at Outcome 4, Chaired by the Minister of Trade and Industry.

• Clearing House matters will be on the agenda and monitoring and evaluation reports will be tabled in Outcome 4

• The Government Technical Assistance Centre (GTAC) and MPAT will support the capacity building of officials and process improvement to improve service delivery

• One stop shop pilot done with GGDA, at Gauteng Investment Centre (GIC),

• VFS Centre, introduced at GIC, on 1 June by Minister Gigaba, for corporate and business permits.

• Long term, Expedited Visas beyond BRICS Countries in pipeline to be introduced.

• Facilitated energy connection for TEGA Industries with Ekurhuleni Municipality allowing them to expand a second plant.

• Municipal facilitation and energy constraints been addressed at Nestle plants in Harrismith, Babelegei, Estcourt and East London.

• Community and Municipal facilitation for Unilever at Lords View

• Facilitation with DOL and community for Rayal Trading at Bronkorspruit.

• Facilitation for Samsung with NRCS for Letters of Authority (LOA) and SARS on customs

INTER-DEPARTMENTAL CLEARING HOUSE PROGRESS

Inter-Governmental Clearing House

Structure

Presidency

Outcome 4

Minister dti -

Chair

DG - Forum

DDG – Clearing

House

Policy & Regulatory Permits & Licensing Infrastructure Finance & Incentives

Investment Policy

Investment Climate

Escalated Clearing House

Matters MinMec

Technical

MinMec

SOEs

SEZs and

PIPAs

dpme, dti, Treasury,

dha, DOL, DPME,

Water & Sanitation,

DEA, COGTA, Rural

Development & Land

Reform, DOE, DAFF,

dst, DOH, dpe, EDD,

dot, dtps

dti, dha, DMR,

COGTA, dea, Rural

Development & Land

Reform, Water &

Sanitation, DOL,

dirco, DAFF, DOH,

EDD, DOE, dpe, dot,

dtps

EDD, dti, dpe,

COGTA, Water &

Sanitation, dot, dtps

dti, Treasury, DOE,

DAFF, dst, EDD

Economic Sector

Employment &

Infrastructure

Development (ESEID)

Technical Cluster

Secretariat &

Operational Cluster

Investment

Council

Energy War

Room

Inter-Departmental Clearing House

Secretariat

IDCH – Contact Centre

Investor Service & Aftercare

Sta

kehold

er

Managem

ent

Due D

ilig

ence,

Incenti

ve

Facilit

ati

on,

Fundin

g &

Fin

ance

Inte

r-

Govern

menta

l Facilit

ati

on

Investor Information

Imm

igra

tion,

Labour

& T

ale

nt

Lic

ensi

ng,

Perm

its

& R

egis

trati

ons

Marketing, Communication,

Operations , Legal & Financial Management

IT and CRM

Regulatory &

Compliance

Monitoring & Evaluation

Envir

onm

enta

l Im

pact

Ass

ess

ment

37

INTER-DEPARTMENTAL COORDINATION

dti TISA IDAD IDD CCRD BPD ITED

dha Immigration Permits Corporate Account Civics

DOL Employer Services

Cross Border IDD CCRD

Each DDG is to internally coordinate in their respective departments, be the focal point and the “trouble-shooter” for the Inter-Governmental Clearing House.

39

IPICH

Investment

Promotion One Stop Shop

Investment

Climate &

Policy

Advocacy

•Incentives

Sector and Skills

Development

Promotion

•Image Building

•Branding

•Lead Generation

Investor Servicing

•Development Package

preparation & delivery

•Aftercare

ONE STOP SHOP

Policy

Input

Investment

Climate

Systematic

Feedback

Aftercare

Investment

facilitation

Detailed

information

Investor

interest

Image

building

& branding

Key Features of a OSS

... Planning & coordination

Regulatory documentation

Utilities

Shared services

Information dissemination

Licensing & permits

Information search

One Stop Shop

Establish an Inter-Departmental Clearing House

Upgrade current Investment Unit into division IP & IDCH X X X

Operationalise IDCH and Secretariat X XOperationalise DG Forum XMonthly meetings of IDCH X X XBi-monthly meetings of DG Forum X X XEscalated Input into ESEID & Outcome 4 X X XAppoint specialist staff X X XOffice Space for IGCH X XMap out process and SLAs with Government departments X X Institutionalise IDCH X X XSOPs & training of staff X X XDevelop call centre hotline X XMarket services of IDCH X X XMonitoring & Evaluation X X X

Investment Climate and Policy AdvocacyBenchmarking of service levels &surveys X X XAutomation of some government services into single window X XProcurement of IT Platform X XRole out of IT Platform X XDevelop One Stop Shop Model and Strategy X XRole out and implement One Stop Shop X X XMarketing of One Stop Shop Services X X XSupport the marketing of Special Economic Zones (SEZ's) X X XMonitoring & Evaluation X X X

YEAR 1 YEAR 2 YEAR 3

PLAN OF ACTION

Investment Promotion and Facilitation Service Offerings

Investment Recruitment • Promotion of investment opportunities • Marketing of investment projects • Guidance with plant/site locations – Industrial Development Zones &

Special Economic Zones • Packaged Investment projects • Input into policy formulation Investment Information • Information on the local economy and various investment opportunities

within SA sectors and industries. • Information on incentive packages • Information on regulatory and legal environment • Publications viz, investment opportunities, SA Fact Sheet and Investors

Handbook • Information of South Africa’s trade and investment policy. • Information on government policy in strategic sectors

Investment Promotion Facilitations Service Offerings

Facilitation • Facilitation of investment missions, including travel itineraries • Introduction of investors to key stakeholders in private and public

sectors • Introduction of investors to potential joint venture partners and black

economic partnerships • Facilitation of finance and incentives • Assistance with applications, company registration, EIA, etc • Recommendations: Immigration Act – Business & Corporate Permit

applications • Fast Tracking regulatory, zoning, licensing & municipal connections for

investors • Logistical support for relocation Aftercare • Aftercare Forums , Workshops & investor surveys • Aftercare Meetings & Site visits to retain & expand investments

44

South Africa’s Current Global Footprint

Europe: Brussels,

Geneva, London,

Milan, Moscow,

Stockholm, The

Hague, Berlin,

Madrid, Munich,

Paris, Bern & Vienna

Asia: Beijing, Hong

Kong, Seoul,

Shanghai, Tokyo,

Bangkok, Jakarta,

Kuala Lumpur,

Mumbai, New Delhi &

Singapore

North America:

Chicago, New York,

Washington &

Toronto

Australia:

Canberra

INVESTING IN SOUTH AFRICA Coega IDZ East London IDZ Richards Bay IDZ OR Tambo International Airport (licensed) Dube trade Port IDZ Saldanha Bay IDZ

Contact:

Letta Kaseke

Assistant Director: Investment Information

Tel: +27 12 394 5935

Email: Lkaseke@thedti.gov.za

REASONS TO INVEST IN SOUTH AFRICA – WORLD COMPETITIVENESS RANKINGS 2015

# 1 - Strength of auditing and reporting standards

#1 – Regulation of securities exchange

#2 – Protection of minority shareholders’ interests

#3 – Efficacy of corporate boards

#3 – Financing through local equity market

#6 – Availability of financial services

#6 – Soundness of Banks

#10 - Strength of investor protection

#11 – Quality of air transport infrastructure

#56 Overall ranking out of 144 countries and #1 in Ease of doing business among BRICS countries in 2015

Top Investors

Trade and Investment South Africa (TISA) is the National investment promotion agency of South Africa offering a one-stop-shop approach to investing in South

Africa

2014 UNCTAD winner for excellence in promoting Foreign Direct investment (FDI) projects to advance sustainable development

South Africa was ranked third in the world for investment in clean energy, according to Climatscope 2014 report released by Bloomberg New Energy finance

SA was voted overall winner for Africa by the Financial Times for the best destination for 2013 and 2014

In May 2013, AIM award for facilitating the second-best investment project (pharmaceutical sector)

2014 – Winner at AIM for sustainable development

46

Thank You