DaimlerChrysler and other motor manufacturers have threatened to withdraw their local operations if the MIDP does not remain in place until its 2012 deadline.
DaimlerChrysler and other motor manufacturers have threatened to withdraw their local operations if the MIDP does not remain in place until its 2012 deadline.
The controversial Motor Industry Development Programme (MIDP) has come under increased scrutiny after it was found to be in contravention of certain World Trade Organisation (WTO) regulations.
The support programme is undergoing a major review, which also includes the possibility of an alternative, WTO-compliant, programme ahead of the 2012 deadline.
But car makers have remained guarded about the future of the programme, which discounts the cost of certain vehicle and component imports. Since its inception, the local operating environment has become tougher with the introduction of black economic empowerment requirements. Manufacturers also face increased competition from alternative South American and Eastern European-based manufacturing hubs not faced with South Africa’s geographical disadvantage.
DaimlerChrysler SA chairman Hansgeorg Niefer told that while the company has a long history in South Africa, it would be very difficult to continue producing vehicles without the MIDP. He also added that local tax and interest rated remained too high to remain competitive.
It is estimated that manufacturers have yielded benefits of up to R55 billion since the start of the programme. The national trade and industry department has stated that the automotive sector contributes about seven per cent to the country’s GDP.
Government and the departments of labour, and trade and industry, are currently reviewing the MIDP, and their findings should be released by mid-year.
