Date: 30/06/2004
Source: Department of Trade and Industry
Title: M Mpahlwa: Launch of Film Industry Incentives
SPEECH BY MINISTER OF TRADE AND INDUSTRY, MR MANDISA MPAHLWA AT THE LAUNCH OF THE FILM INDUSTRY INCENTIVES, 30 June 2004
INTRODUCTION
South Africa is blessed with a wonderful climate, breathtaking landscapes and a myriad of talent, spurred largely by our intriguing cultural diversity. We have come a long way since attaining our democracy a decade ago. Our economy is restructured and experiencing positive growth. Crime has been stabilised, and the society has been deracialised. I am proud to be part of a country that is flourishing with potential and opportunities, waiting to be tapped into and unleashed.
The film industry presents the ability to fully exploit our human and geographic potential hence it counts amongst the priority sectors that are receiving attention from the dti. South Africa has a world-class physical and legal infrastructure, which is critical for the film industry. We also boast outstanding production and post-production facilities, as well as a strong skills base. The cost of film production in South Africa is 30-40% cheaper than the United States of America and 20% less than Australia.
Despite our many competitive advantages, development of this industry has been stunted due to our Apartheid legacy.
THE NATURE OF THE SOUTH AFRICAN FILM INDUSTRY
Although the South African film industry has a long history, the industry had until 1994 largely been characterised by an inward-looking and culturally exclusive production structure. The opening up of the political, economic and cultural systems availed new challenges and opportunities for the industry.
An increasing number of feature film, television and documentary productions and commercials have been produced in South Africa since 1994, which had had a positive impact in the local industry. Room for expansion exists as to date the benefits of local production has been restricted to improving certain technical skills only and attracting some investment into the sector.
The total value of the South African entertainment industry is about R7.7billion, comprising film and television production, broadcast, cinema and interactive industries. Of this, the local production industry accounts for approximately R1.4billion.
The South African film industry is clustered around two locations, which are Cape Town and Johannesburg. There are around 150 registered producers in South Africa. The South African film industry has been characterised by increasing consolidation driven by the need to generate economies of scale, and consequently, approximately 15 production companies produce over 90% of all feature films and television productions.
Given the growth potential of the film industry in South Africa, the National Film and Video Foundation (NFVF) was established in order to increase the local content quotas for television, which had a positive impact on the growth of the local film industry. During the year 2003, 24 films were produced in South Africa of which NFVF invested in 16. However, the growth of the sector is dependent on inward investment as well as the development of local content as a tradable commodity, and it is in these areas that the dti hopes to make a contribution.
THE DEVELOPMENT OF INCENTIVES FOR THE INDUSTRY
The role of the dti is to facilitate access to sustainable economic activities, which includes the development and promotion of priority sectors in order to contribute to economic growth, employment and equity. The department therefore has several instruments at its disposal to exercise its role, amongst which are legislation, regulation and financial support.
In recognition of the huge impact that the feature film industry has, not just within the sector, but also on a range of supplier industries, particularly the labour intensive services industry, the dti will be launching a package of support measures covering production cost, training and an internship programme, and export marketing support.
A skills audit conducted in 2002 indicated that, although many entry-level film schools, colleges, and technikons exist; intermediate and advanced skills shortages remain. The shortage of training in the intermediate and advanced skills threatened the future of the sustainability of the industry. Hence government identified the need to support the industry, given the challenges of poverty and unemployment particularly amongst the youth. The skills development component of the incentive package aims to address the intermediate and advanced skills shortages, focusing on short intensive courses over periods no longer than two weeks.
The main product being launched today however, is the Film and Television Production Rebate for the production of both foreign and local large budget films made in South Africa or under co-production agreements. The offset's eligibility requirements are designed to maximise benefits for the South African film industry including the development of South African projects with "high-end" production values.
For a company to be eligible for the offset, it must be a South African resident company or non-South African resident company with a South African business registration that is operating with a permanent establishment in South Africa-both when it lodges the income tax return and when the rebate is due to be credited.
In establishing the offset, the dti recognises the economic, employment and skills development opportunities large budget film productions provide for South Africans working in the film industry. The offset is designed to ensure that South Africa becomes competitive in attracting, among others, large budget films, thereby increasing the number of films produced in the country under co-production treaties and providing increased opportunities for South African casts, crew, post production companies and other service providers linked to the film industry.
The Film Incentive launched today contributes to advancing the dti's goals of growth, employment and equity. The incentive will enable the development and expansion of our domestic film industry and industries along the value chain. Jobs will be created for the unemployed, as the industry's contribution will have economic spill offs to other sectors such as the tourism and hospitality industries. If successful, this incentive should lead to the development of local content films with international appeal, thus ensuring a sustainable film industry.
CONCLUSION
South Africa has a rich talent pool and the dti recognises the importance of capacity development to ensure that the South African film industry and broadcast players are globally competitive. The skills of new comers and those already operating in the industry have to be enhanced in order to develop the film and television industry. Training will thus be provided in areas such as camera management, video production, web design, post-production, new media, film finance, and entertainment law.
The export market support that has been specifically tailored for this sector will contribute significantly to making South Africa a preferred destination of choice for international film development as well as enhance the competitiveness of locally produced films on the global market. The launch of the Film and Television Production Rebate today, complements existing support measures to the industry, such as the Income Tax Act, No 58 of 1962 under section 24F, which enables investment into individual film productions by local high net-worth individuals.
The critical driver to the growth of the film industry has been the inclusion of culturally distinct content and the development of niche markets worldwide. A number of other countries such as India, the UK, Spain, Australia, Canada and New Zealand have emerged as major movie producers. Through this incentive package, we as government, hope to secure South Africa's place as a major international movie.
Issued by: Department of Trade and Industry
30 June 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
Source: Department of Trade and Industry
Title: M Mpahlwa: Launch of Film Industry Incentives
SPEECH BY MINISTER OF TRADE AND INDUSTRY, MR MANDISA MPAHLWA AT THE LAUNCH OF THE FILM INDUSTRY INCENTIVES, 30 June 2004
INTRODUCTION
South Africa is blessed with a wonderful climate, breathtaking landscapes and a myriad of talent, spurred largely by our intriguing cultural diversity. We have come a long way since attaining our democracy a decade ago. Our economy is restructured and experiencing positive growth. Crime has been stabilised, and the society has been deracialised. I am proud to be part of a country that is flourishing with potential and opportunities, waiting to be tapped into and unleashed.
The film industry presents the ability to fully exploit our human and geographic potential hence it counts amongst the priority sectors that are receiving attention from the dti. South Africa has a world-class physical and legal infrastructure, which is critical for the film industry. We also boast outstanding production and post-production facilities, as well as a strong skills base. The cost of film production in South Africa is 30-40% cheaper than the United States of America and 20% less than Australia.
Despite our many competitive advantages, development of this industry has been stunted due to our Apartheid legacy.
THE NATURE OF THE SOUTH AFRICAN FILM INDUSTRY
Although the South African film industry has a long history, the industry had until 1994 largely been characterised by an inward-looking and culturally exclusive production structure. The opening up of the political, economic and cultural systems availed new challenges and opportunities for the industry.
An increasing number of feature film, television and documentary productions and commercials have been produced in South Africa since 1994, which had had a positive impact in the local industry. Room for expansion exists as to date the benefits of local production has been restricted to improving certain technical skills only and attracting some investment into the sector.
The total value of the South African entertainment industry is about R7.7billion, comprising film and television production, broadcast, cinema and interactive industries. Of this, the local production industry accounts for approximately R1.4billion.
The South African film industry is clustered around two locations, which are Cape Town and Johannesburg. There are around 150 registered producers in South Africa. The South African film industry has been characterised by increasing consolidation driven by the need to generate economies of scale, and consequently, approximately 15 production companies produce over 90% of all feature films and television productions.
Given the growth potential of the film industry in South Africa, the National Film and Video Foundation (NFVF) was established in order to increase the local content quotas for television, which had a positive impact on the growth of the local film industry. During the year 2003, 24 films were produced in South Africa of which NFVF invested in 16. However, the growth of the sector is dependent on inward investment as well as the development of local content as a tradable commodity, and it is in these areas that the dti hopes to make a contribution.
THE DEVELOPMENT OF INCENTIVES FOR THE INDUSTRY
The role of the dti is to facilitate access to sustainable economic activities, which includes the development and promotion of priority sectors in order to contribute to economic growth, employment and equity. The department therefore has several instruments at its disposal to exercise its role, amongst which are legislation, regulation and financial support.
In recognition of the huge impact that the feature film industry has, not just within the sector, but also on a range of supplier industries, particularly the labour intensive services industry, the dti will be launching a package of support measures covering production cost, training and an internship programme, and export marketing support.
A skills audit conducted in 2002 indicated that, although many entry-level film schools, colleges, and technikons exist; intermediate and advanced skills shortages remain. The shortage of training in the intermediate and advanced skills threatened the future of the sustainability of the industry. Hence government identified the need to support the industry, given the challenges of poverty and unemployment particularly amongst the youth. The skills development component of the incentive package aims to address the intermediate and advanced skills shortages, focusing on short intensive courses over periods no longer than two weeks.
The main product being launched today however, is the Film and Television Production Rebate for the production of both foreign and local large budget films made in South Africa or under co-production agreements. The offset's eligibility requirements are designed to maximise benefits for the South African film industry including the development of South African projects with "high-end" production values.
For a company to be eligible for the offset, it must be a South African resident company or non-South African resident company with a South African business registration that is operating with a permanent establishment in South Africa-both when it lodges the income tax return and when the rebate is due to be credited.
In establishing the offset, the dti recognises the economic, employment and skills development opportunities large budget film productions provide for South Africans working in the film industry. The offset is designed to ensure that South Africa becomes competitive in attracting, among others, large budget films, thereby increasing the number of films produced in the country under co-production treaties and providing increased opportunities for South African casts, crew, post production companies and other service providers linked to the film industry.
The Film Incentive launched today contributes to advancing the dti's goals of growth, employment and equity. The incentive will enable the development and expansion of our domestic film industry and industries along the value chain. Jobs will be created for the unemployed, as the industry's contribution will have economic spill offs to other sectors such as the tourism and hospitality industries. If successful, this incentive should lead to the development of local content films with international appeal, thus ensuring a sustainable film industry.
CONCLUSION
South Africa has a rich talent pool and the dti recognises the importance of capacity development to ensure that the South African film industry and broadcast players are globally competitive. The skills of new comers and those already operating in the industry have to be enhanced in order to develop the film and television industry. Training will thus be provided in areas such as camera management, video production, web design, post-production, new media, film finance, and entertainment law.
The export market support that has been specifically tailored for this sector will contribute significantly to making South Africa a preferred destination of choice for international film development as well as enhance the competitiveness of locally produced films on the global market. The launch of the Film and Television Production Rebate today, complements existing support measures to the industry, such as the Income Tax Act, No 58 of 1962 under section 24F, which enables investment into individual film productions by local high net-worth individuals.
The critical driver to the growth of the film industry has been the inclusion of culturally distinct content and the development of niche markets worldwide. A number of other countries such as India, the UK, Spain, Australia, Canada and New Zealand have emerged as major movie producers. Through this incentive package, we as government, hope to secure South Africa's place as a major international movie.
Issued by: Department of Trade and Industry
30 June 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
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