The DTI's Manufacturing Competitiveness Enhancement Program

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Theo Meintjes' presentation on the DTI Production Incentives for manufacturing companies willing to improve their competitiveness at the Cap40.

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The DTI's Manufacturing Competitiveness Enhancement Program

  1. 1. Manufacturing competitiveness enhancement program • Cash grants on investment cost • Improve productivity & competitiveness • Retain jobs.
  2. 2. Main Qualifiers • Applicant company’s activities must include manufacturing or Engineering services or conformity assessment agency. • At least 1 financial year of trading history • BEE Level 4 or provide 2 year plan
  3. 3. How much? A cash grant varying between 30% and 80% of investment Cost. Tax Exempt, but not really.
  4. 4. Qualifying investment costs 1. Upgrading and expansion of equipment and buildings 2. Converting to Green technology & Energy saving 3. Improving competitiveness (soft issues) 4. Feasibility studies 5. Cluster initiatives
  5. 5. Also on offer • Pre- and post production working capital loans @ 6% p.a. from IDC
  6. 6. CLASSIFICATION Size of applicant according to BALANCE SHEET + ACC. DEPR. Grant % varies from component to component R0 – R5 million Highest % grant R5 – 30 million R30 – R200 million > R200 million Lowest % grant
  7. 7. MVA Limitation This is an overall limitation on the first 4 cost types • MVA = Manufactured sales less cost of materials used.
  8. 8. Example: MVA calculation Income Statement MVA Calculation Sales of manufactured goods 1 000 000 1 000 000 Sales of other goods and services 788 000 n/a Total sales 1 788 000 1 000 000 Raw materials & Packaging 600 000 600 000 Operating cost 231 000 n/a Administrative cost 97 000 n/a MVA 400 000 Limit according to size of applicant, e.g. R30m> <R5m= 25% R100 000
  9. 9. Size of applicant Expand Green Soft Feas. study Cluster MVA % R % % % % % % <5m 50 50 70 70 80 n/a >5 <30m 40 40 60 70 80 25 >30m <200m 30 30 60 50 80 20 >200m 30 30 50 50 80 10 MVA limit? Yes Yes Yes Yes No Summary of grant percentages
  10. 10. CONCLUSION • More generous than any program before. • Fewer entry level requirements and performance requirements than any program before. • The only exclusions are, no subsidies on 2nd hand assets, no vehicles and no leased buildings

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