The South African government has set aside an additional R3,6-billion for the Department of Trade and Industry (DTI) to partly support the second version of its Industrial Policy Action Plan, or Ipap2, which will run from April 1, 2010, through to March 31, 2013 - details on the much discussed industrial-policy intervention will be unveiled by Trade and Industry Minister Dr Rob Davies on Thursday.

In his inaugural Budget address to Parliament, Finance Minister Pravin Gordhan said that the additional allocation would be used primarily to support investment and production in the automotive components and clothing and textile industries.

In the ‘Estimates of National Expenditure 2010', released together with the 2010 Budget, it emerged that the new allocation comprised R1,75-billion for the new Clothing and Textile Production Incentive, between 2010/11 and 2012/13, and a R2,6-billion allocation to the Automotive Production and Development Programme (APDP), over the same period.

The Clothing and Textile Production Incentive would be allocated R400-million in 2010/11, R600-million in 2011/12 and R750-million in R750-million in 2012/13, while the APDP would receive R747-million in the upcoming fiscal period, R916,8-billion in 2011/12, and just over R1-billion in 2012/13.

The overall allocation for industrial incentives, meanwhile, would be R2,8-billion in 2010/11, R3,3-billion in 2011/12 and RR3,7-billion in 2012/13.

This would be divided across the automotive and clothing schemes, as well as: the Business Process Outsourcing Incentive, the Small and Medium Enterprise Development Programme, the Film and Television Production Incentive, the Small and Medium Manufacturing Development Programme, the Staple Food Fortification Programme, Industrial Development Zones, the Enterprises Investment Programme, as well as some other far smaller schemes.

The implication that the DTI will need to seek off-Budget resources for the balance of the Ipap2 proposals, including for the plan's aspiration to kick-start so-called "green industries", as outlined in President Jacob Zuma's February 11, 2010, State of the Nation address.

In addition, there is little clarity about what specific support measures could be put in place for other so-called high-impact sectors such as capital and transport goods, chemicals, forest products and the creation of industrialisation opportunities around the R846-billion, three-year public infrastructure programme.

In fact, Gordhan hinted to the fact that part of the financial fillip could come from the "well capitalised" Industrial Development Corporation (IDC), which he said would continue to play a role in implementing Ipap2.

However, unlike the municipal-level-focused Development Bank of Southern Africa, which received a R15,2-billion guarantee to enable it to extend capital to poorer municipalities for infrastructure projects, the IDC received no new support from the national Treasury.

Despite the uncertainty surrounding the financial resources for Ipap2, Gordhan gave prominence to the issue of industrial policy in his speech identifying it as one of seven components of the country's so-called "new growth path".

These elements included:

• A concerted effort to reduce joblessness among young people.

• Support for labour-intensive industries through industrial policy interventions, skills development, public employment programmes and a rural development strategy.

• Sustaining high levels of public and private investment and raising our savings level.

• Improving the performance and effectiveness of the State, especially the provision of quality education and training at all levels.

• Reforms to increase inclusion and participation in the labour market, alongside efforts to improve competition in product markets.

• Keeping inflation low, striving for a stable and competitive exchange rate, and providing a buffer against global volatility.

• Raising productivity and competitiveness, opening up the economy to investment and trade opportunities that can boost exports.

"Turning an economy around and achieving the kind of transformation required to draw in the millions of unemployed people into the economy is not an easy task.

It will take time and forward looking policies that are effectively implemented," Gordhan averred, adding that the proposed Ipap2 was key to making the economy more labour absorbing and dynamic.