Pretoria: Trade and Industry Minister, Rob Davies, has approved the newly revised guidelines for the Automotive Investment Scheme (AIS) as well as the People-carrier Automotive Investment Scheme (P-AIS).
The department held a series of consultative engagements with stakeholders in the automotive sector which led to the revision of the guidelines.
“During these sessions, the department received feedback indicating that many companies were looking at business maintenance and stability strategies as opposed to investment growth due to the levels of investment amongst automotive suppliers, especially as the economic crisis post-2009 placed a strain on companies’ expansion plans,” Minister Davies said on Wednesday.
The amended AIS guidelines provide clarity on the non-taxability of the grant as well as on the eligibility of tooling companies to apply for the same benefits as component manufacturers under the scheme.
In June 2010, the department approved the guidelines of the AIS which are aimed at growing and developing the sector.
The intention of the AIS is to grow and develop the automotive sector through investment in new and replacement models as well as the manufacturing of automotive components of which the objective is to increase plant production volumes, sustain employment and strengthen the automotive value chain.
“Empowerment is now included as part of the economic benefit criteria and a clearer description of research and development requirements has been provided. The guidelines also make provision for increased support for component manufacturers with the grant increasing to between 25% and 35% of the value of qualifying investment in productive assets approved by the dti,” added Davies.
The amended guidelines also provide relaxed and more inclusive requirements for strengthening the supply chain criteria, the introduction of support towards enterprise level competitiveness improvement costs for component manufacturers, and accelerated grant disbursements for component manufactures on a 40:30:30 split are also new provisions included in the guidelines.
The AIS has been administered by the dti from July 2009. As of March 2014, 195 projects were approved with the total incentive value of R6.2 billion – of which R4.8 billion were Original Equipment Manufacturers (OEMs) and 177 for Component Manufacturers (CMs) valued at R1.3 billion.
A total of 46 373 jobs were sustained and 9 850 created as a result of the investments by the approved companies and the incentive disbursed.
The P-AIS is a sub-component of the Automotive Incentive Scheme (AIS) and provides a cash grant of between 20% and 35% of the value of qualifying investment in productive assets approved by the dti.
It is designed to stimulate a growth path for the people-carrier vehicles industry through investment in new and/or replacement models and components that will result in new employment, the retention of current employment and/or strengthen the automotive vehicles value chain.
On Wednesday, the department said that the P-AIS guidelines have been amended to ensure they are aligned with the revised AIS guidelines, specifically on conditions applicable to competitiveness improvements, administrative requirements and increased grant support applicable to component manufacturers and tool making companies.
“The P-AIS has to date approved two applications, both of which were Original Equipment Manufacturers (OEMs). The total incentive approved is R26.1 million and a total of 191 jobs have been created in this sector,” said the department.
SOURCE: SOUTH AFRICAN OFFICIAL NEWS