21 March 2001
It is a great pleasure and a privilege for me to be part of the formal opening of the New East London Harbour Car Terminal, a project that demonstrates both government's and the private sector's commitment to the development of South Africa's infrastructure. Government is implementing an economic development trajectory which stimulates the growth of the industrial sector in a manner which is sustainable and ensures the growth of high wage, high productivity jobs. The success of this strategy rests on the ability of government and the private sector to work in concert to realise the strengths of our natural and human resource endowments.
As you may know, government has committed itself to implementing an economic programme which focuses on reducing the cost of doing business to boost the competitiveness of the productive sector. In the transport sector in particular, this entails supporting productive activity by providing infrastructure in the most cost-effective and efficient manner. If South Africa is to become a global player in the trade arena, our transport infrastructure has to be restructured with this particular objective in mind.
The high cost structures and inefficiencies within the transport system currently pose an obstacle to the economy's international competitiveness. To redress this problem, government is embarking on a managed liberalisation of state-owned enterprises in the transport sector. This approach envisages broadening private sector participation in entities such as Portnet and Spoornet, in tandem with the establishment of an appropriate and transparent regulatory framework.
Within the transport sector, ports play a critical role in promoting South Africa's export competitiveness and hence their effective restructuring is a priority. A commercial ports policy will be released for stakeholder comment by the end of April. The policy sets out the broad framework within which the ports system will be restructured. Its thrust is the separation of port operations from the port landlord function, allowing the former to be operated privately, while the latter function will remain within state hands. A regulator will be established to prevent the abuse of monopoly power by any of the players. This clear delineation of functions will ensure a sharper focus on the specific activities, and as such, will ensure higher levels of efficiencies.
Today's launch of the East London Harbour Car Terminal is located within the broader strategy of government for the restructuring of the transport sector and ports in particular. The official opening of this R80-million car terminal and recently completed R42-million container terminal extension is both a celebration of success and the opening of the doors for new opportunities to practically every business in this part of the Eastern Cape.
The car terminal was built because of the success of an Eastern Cape-based motor manufacturer in penetrating world markets, demonstrating how cooperation between the private sector and government underpins the development of this economy. The automobile industry is key to the development of South Africa's manufacturing capacity.
It is therefore a cause for celebration that the East London operation of DaimlerChrysler South Africa earlier this month announced greatly increased production plans for its East London plant after a record-breaking 2000 in which its turnover increased year-on-year by 30 per cent. Moreover, in the same year - in sharp contrast to the rest of the world - Chrysler product sales improved by 270 per cent.
The growth in C-Class exports will push production of this model in East London to a target of about 37 000 units, with Mitsubishi Colt output predicted at about 14 000. The company expects exports of the Colt - at present limited to Africa - to grow thanks to the success and logistics set up for the C-Class into more international markets.
The building itself is a success story. Those of you who live in this beautiful city may remember it was erected during a period of heavy rains but was nonetheless completed on time and within the set budget. In line with government policy, Portnet used the contract to empower the previously disadvantaged. The main R60-million construction contract for the vehicle terminal and access bridge was awarded by Portnet to a Fikile/Stocks joint venture. The quality of the building's finishes and workmanship is proof that such joint ventures work.
Another success was the empowerment and training of local people. In their tender document, Portnet required the contractor to employ as many people as possible from the immediate East London area. Ultimately, Stocks employed 180 local people, who were trained in various construction activities such as bricklaying, plastering and carpentry. A successful all-women team was created to make the 860 pre-cast panels for the terminal façade.
As a consequence of the hard work of all involved in this project, a range of opportunities have been created by the combination of the DaimlerChrysler export order and the investment by Portnet in East London. This complex has the potential to expand throughput by more than threefold to 180 000 vehicles a year. A further eight floors on the current Omega site will increase throughput to 400 000 vehicles per annum.
Looking across the river to the container port, we see another success story - and more opportunities. The R42 million expansion of the port's container facilities on the East Bank is already bearing fruit. I am told that container volumes through the port rose from less than 20 000 in 1999 to almost 28 000 units in 2000. This year's budget is 51 000 standard containers.
The shipping companies have responded to this increase by introducing a direct service from the Far East as well as a direct service from and to Europe. In doing so they have opened a range of opportunities for both the agricultural sector and manufacturers based in this region. For agricultural exports, this development has reduced transit significantly.
This growth in volumes has prompted Portnet to consider plans to extend the existing container terminal. A second container terminal for the west bank of the Buffalo River is currently at the design stage. It will serve the East London Industrial Development Zone. The IDZ in itself will create a host of investment, employment and joint venture opportunities.
This investment in the port of East London has unlocked immense opportunities for the development of business in the Eastern Cape and Buffalo city. We will continue investing as long as there is a business case to be made.
Judging by the successes to date, I am sure that I am going to be a regular visitor to your city to celebrate with you the development of the IDZ, the expansion of the harbour and the announcement of even more export successes.
I thank you.