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Thursday May 19, 2016

KZN gets R11 billion industrial park

After years of delays, the KwaZulu-Natal government has finally closed the deal on a R11.5 billion industrial park to grow the car manufacturing sector in the province.

According to officials, the site should be ready for development by the end of 2018 and fully operational by 2022.

Construction will span four phases at about R4.2 billion for each phase.

The Department of Economic Development and Tourism yesterday announced it had bought 1 000ha of "non-strategic" sugar cane land on the banks of the Illovo River on the South Coast at a cost of about R70 million to set up an automotive supplier park.

The MEC for the department, Mike Mabuyakhulu, said the site would attract component and car part manufacturers, among other support services, for companies such as Toyota, MAN Truck & Bus and Volvo Trucks.

The automotive supplier park was originally planned within the area of the multibillion-rand dig-out port on the former international airport site, but officials had to go back to the drawing board after the port plan was put on hold indefinitely due to problems with funding.

The sector, which is considered one of the most important contributors to the national economy, adds about 10% to the gross domestic product of the eThekwini metro and is the second highest contributor to the provincial GDP after agriculture.

It employs about 30 000 people in the city.

A government official who asked not to be named, but who has been close to the planning and negotiations process, said investors had been "breathing down the necks" of the government to get the development going so as to compete with manufacturers in Thailand and India.

The Mercury also understands that as the land was bought by the Dube Tradeport Company - which is already a declared Special Economic Zone (SEZ) - the status would be extended to the new development.

Johan van Zyl, former chief executive of Toyota in Durban who was a major driver behind the development, said yesterday’s announcement came after years of hard work.

"The fact that it will be in such close proximity to our plant, and to those of other manufacturers, means a huge reduction in logistics costs. Now we will be able to do what we call ‘milk runs’ to deliver parts for example, and it will be just down the road."

The park is 18km from the Toyota plant. The land was previously owned by the Illovo sugar group.

Van Zyl said the fact that it could be awarded SEZ status was also of huge benefit. While he was not entirely clear on what development Toyota would undertake at the site he said it would most probably include vehicle distribution and component manufacturers. "We will also encourage all our suppliers who are spread across the city to move to the supplier park now," he said.

Hamish Erskine, the acting chief executive of the Dube Tradeport, said the entity got the go-ahead from the provincial government to buy the land in November. "So far we have been very focused on acquiring the site."

Now the plan was to identify prospective investors and understand what they would need to make the move.

Musa Mbhele, the deputy city manager for economic development and planning, said the city was keen to attract new and international investors as well as those who already existed in the city.

"We will also play a critical role now to facilitate approvals. That is agricultural land, so there are certain approvals we are going to have to get, so we will fast track that," he said.

The Mercury

 
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