An estimated 825 706 direct and 2,5-million indirect jobs could be created over the next ten years through the successful implementation of South Africa's now much-vaunted Industrial Policy Action Plan (Ipap), the second round of which would run from 2010/11 to 2012/13, Trade and Industry Minister Rob Davies said on Thursday.

The new plan, dubbed ‘Ipap2', which was tabled in the National Assembly on Thursday, could also facilitate significant industrial diversification.

Addressing Parliament, Davies said that Ipap2, represented a significant step forward in scaling up government's efforts to promote long-term industrialisation and industrial diversification beyond the current reliance on traditional commodities and nontradable services.

Its purpose was to expand production in value-added sectors with high employment and growth multipliers that competed in export markets, as well as competed in the domestic market against imports. Davies insisted that the promotion of value-added sectors would be fundamental in driving decent work opportunities.

South Africa needed to achieve a much higher level of local production in order to sustain the country's "new growth path", said Davies.

The new action plan rested on four cornerstones, including:
- the strengthening of coherence between macro- and micro-economic policies,
- industrial financing,
- leveraging procurement, and
- the development of trade policies.

Firstly, government intended to develop proposals to enhance access to concessional industrial financing for investment in Ipap2 priorities, and other productive sectors, on terms comparable to those of South Africa's major trading partners.

Increased investment in those sectors would generate a mix of import replacement and exports, which would help to lower the current account deficit and reduce balance of payment risks.

Secondly, government would revise procurement legislation, regulations and practices to enable the designation of large strategic and so-called fleet procurements in a range of sectors.

This would aim to sequentially increase competitive local procurement and supplier development opportunities, minimise leakages from the domestic economy, and support meaningful broad-based black economic-empowerment.

Thirdly, government would deploy its trade policies more strategically, which involved the ongoing development of tariff reform, the clampdown of customs fraud, and the review of trade valuation methodology to align with major trading partners.

Lastly, anticompetitive practices would be targeted, particularly where these concern immediate inputs to downstream labour-absorbing production as well as consumer goods to low-income households. This applied especially to products such as carbon and stainless steel, chemical polymers, fertilisers and aluminium, among others.

The crosscutting interventions outlined by Minister Davies would underpin focused interventions in three clusters of sectors.

THREE CLUSTER SECTORS

The first cluster of sectors, which would be new areas of focus of the industrial policy, included: metals fabrication, capital and transport equipment, green industries and energy-saving industries, and agroprocessing.

The second cluster included sectors that had been identified in the first Ipap but which government would now build on and broaden its interventions. These sectors included, automotives and components, medium and heavy vehicles; plastics, pharmaceuticals and chemicals; clothing, textiles, footwear and leather; bio-fuels; forestry, paper, pulp and furniture, cultural industries and tourism; and business process services.

The third cluster focused on long-term advanced capabilities, including nuclear, advanced materials, and aerospace.

It was anticipated that the Ipap would result in the creation of 825 706 direct jobs over the next ten years and more than two-million direct and indirect decent jobs over the next decade.

In fact, Davies stated that Ipap2's success would be measured by the number of jobs that were created over the next few years.

Ipap2 would result in the improvement of the trade balance, diversify and grow exports, and mitigate the balance-of-payment threat to sustainability of the public capex programme.

It would also facilitate the build-up of long-term industrial capabilities and increasing returns through investment, skills development, upward movement in value chains and support for commercialisation and the growth of domestic technologies.

Addressing the media Davies said that the Ipap2 responded to the demands of the new administration for increasingly higher impact industrial policy interventions.

Davies stated that, while Ipap2 was tabled today, it would only come into effect in April, when the next financial year commenced.

Ipap2 was referred to as a "living document", which outlined a range and combination of industrial policy interventions and instruments to address the critical challenges of the economy.

The action plan would from now on take the form of a three-year rolling action plan, which would be strengthened and refined on an annual basis.

Government's economic cluster would be monitored on the progress on Ipap2 and Davies stated that changes could be made to the action plan next year, should that be necessary.