The new First Automobile Works (FAW) South Africa vehicle assembly plant in the Eastern Cape will boost the country’s efforts to achieve growth of 5 per cent by 2019.
“We have set a growth target of 5 per cent by the year 2019. We view this occasion [the launch of the plant] as a key contribution towards attaining that goal.
“Growth is also possible if we, as government, actively support our partners in the private sector to create a positive environment for business to thrive,” said President Jacob Zuma at the launch of the R600-million truck assembly production plant in Port Elizabeth.
Located in Zone 2 of the Coega Industrial Development Zone (IDZ), the production plant is funded jointly by China FAW Group Corporation and the China-Africa Development Fund. It is one of the largest investments in South Africa by a Chinese company.
President Zuma stressed that the economy was a top priority for the new administration.
“We have decided to place the economy on the centre stage because we believe that sustainable economic growth is possible if we seek meaningful partnerships locally and worldwide,” he said.
FAW SA has been in the South African market for 20 years, providing passenger and commercial vehicles.
According to President Zuma, the company’s decision to be in the Coega IDZ was a welcome vote of confidence in the Eastern Cape province.
He said the R600-million investment would create much-needed jobs and improve the lives of many people in the area.
“This investment also augurs well for South Africa’s position within the global automotive manufacturing network and proves once again that we have an attractive operating environment to host global multinational companies.”
He was hopeful that the production plant would realise and even surpass its target of producing 5 000 trucks in the first phase, as well as other passenger and light vehicles.
Growing the automotive sector
The President added that government wanted to develop and grow the automotive sector in the country.
“Over the last 20 years, we have employed the Motor Industry Development Programme, and more recently the Automotive Production Development Programme, as the focal industrial policy instruments to transform our automotive industry,” he said.
The aim was to transform the industry from a small assembly base to a globally competitive one, producing vehicles for both domestic and international markets.
The President said government’s intention was to create an environment that would enable the domestic industry to significantly grow production volumes.
The country’s Vision 2020 strategy for the industry refers to the doubling of local vehicle production and broadening and deepening of component manufacture by the year 2020.
The President also announced that the preparatory work towards establishing an investment support programme for the medium and heavy commercial vehicles sector had been completed.
He said the instrument would help government position South Africa as a destination of choice for the assembly of medium and heavy commercial vehicles.
Investing in Africa
President Zuma added that FAW had chosen the right continent in which to invest in at this point in world economic history.
He said the African continent was home to some of the fastest growing economies in the world and there remained great potential for further growth, particularly in the transport of goods as trade volumes increase.
“The entire African continent is also embarking on an intensive infrastructure development aimed at also encouraging intra- Africa trade through improved connectivity.
“The Regional Economic Communities, namely the Southern African Development Community, Common Market for East and Southern Africa and the East African Community, are in negotiations to achieve a Free Trade Area (FTA).
“The project will bring together 26 countries with a combined population of 600 million and an overall GDP of approximately US $2 trillion (approximately R200 trillion),” the President noted.
The FTA would present significant opportunities and the right climate for doing business.
President Zuma said in order to make the country globally competitive, South Africa would have to focus on ensuring a secure supply of energy. The focus over the next five years would be on building a sustainable energy mix that includes coal, solar, wind, nuclear and shale gas.
The President expects to see an increase in inter-country trade and also initiatives to help landlocked countries access harbours.
“Also envisaged is the creation of much needed direct routes between capitals of the continent and to promote the economic and social integration of Africa.
“The increase in trade will contribute towards a growing demand for heavy commercial vehicles, thus expanding markets for FAW and other companies in this sector,” he said.
In line with the National Development Plan (NDP) and the New Growth Path (NGP), government is investing heavily in local and continental infrastructure development in the medium to long term.
Trade and Industry Minister Rob Davies said hundreds of jobs would result from FAW operations in the Eastern Cape.
“We are welcoming phase one today, which will see the production of up to 5 000 trucks in this plant, creating 400 jobs. The second phase, which is envisaged to manufacture 30 000 passenger vehicles, can increase jobs to 1 000.
“We know that we can multiply those jobs if and when we start attracting the component manufactures to come here and be part of the programme as well,” he said.
Minister Davies added that the unveiling of the Chinese vehicle manufacturing plant in South Africa was the result of a journey his department took to engage the Eastern Cape Provincial government and the Coega Development Corporation to get a Chinese motor manufacturer to operate in South Africa.
Chinese Ambassador to South Africa, Tian Xuejun, said in the 16 years since the establishment of diplomatic ties between South Africa and China, the relationship between the two countries had developed rapidly.
“We’ve both yielded abundant cooperation outcomes which benefited our people magnificently.
“Chinese companies recognise the development potential of South Africa, value the infrastructure and investment services and lay emphasis on listing the country as one of the top priorities in its expansion of the global market and the African market in particular.”
He said strengthening strategic partnerships with Africa was an established policy of the Chinese government.
FAW South Africa would work hard to ensure economic and social benefit from its operations by integrating with the local communities and performing its social responsibilities.
“I am also convinced that the South African government, especially at the local level of this province, will continue to care and support the follow-up development of this plant, and provide guidance in accordance with laws and regulations necessary to guarantee [this] production and operation,” he added.