Tariff cuts boost exporters

Gareth Wilson

CARGO export tariffs have been slashed by up to 43% in an attempt by the government to boost the export of manufactured goods and increase international trade, authorities have announced.

South African Ports Regulator, the responsibilities of which include overseeing the pricing structure of the ports, has announced that from April 1 all container export tariffs would be cut by 43.2%, container imports by 14.3%, and vehicle export tariffs by 21.1%.

The national price cuts form part of the government’s national manufacturing growth strategy to reduce charges, which are among the highest in the world.

Transnet National Ports Authority (TNPA)originally applied to the regulator last year for an average 5.4% tariff increase for the year from April 1 2013 to March 31 2014.

But the regulator has announced that it declined the 5.4% tariff increase and additional individual tariff increases, deciding instead that tariffs should drop.

This comes after President Jacob Zuma announced last year that manufactured goods would receive rebates to ease the cost of doing business in South Africa. This includes the automotive sector that had previously complained about prohibitive port charges.

Following Zuma’s announcement, Transnet said it planned a R1-billion discount for exporters of motor vehicles during the current tariff year. This has now been officially implemented.

Major vehicle exporter VWSA’s communications general manager Matt Gennrich said the tariff reduction was widely welcomed as it would increase the country’s competitiveness.

“This helps secure the current export orders and will definitely assist all car manufacturers that export,” Gennrich said.

He was unable to put a monetary value on the savings.

SA Exporters Club provincial chairman Quintin Levey said: “Our port charges have been seen as one of the highest in the world, and this initiative, together with the large investments in the Eastern Cape by Transnet, has shown that they [the government and Transnet] are supporting the needs of exporters in the Eastern Cape.”

Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said the reduction in tariffs was “very beneficial to business in the Eastern Cape” and would assist with profitability and sustainability of some businesses.

“This is good news and will, hopefully, assist with increasing investment interaction.

“We are working very hard as businesses to have a competitive edge in global market and this move definitely assists us with this,” Hustler said.

Business Unity South Africa also welcomed the new tariff structure and called for similar action to be extended to agriculture and agro- processing.

Trade and Industry director-general Lionel October said the reductions would be a “major, major boost” for exporters. He also believed the benefits should be extended to agriculture and agro-processing.

Because of concerns about South Africa’s ports in general and its high tariffs, Zuma has announced a seven-year roll-out plan, through which Transnet has been given a R300-billion infrastructure cash injection aimed at increasing investment into the country.

Of this money, R9-billion was allocated to both Nelson Mandela Bay ports. The reduction of tariffs is also part of the long-term plan to increase the country’s international competitiveness and trade.

Last year, the regulator granted TNPA a 2.76% tariff increase after they applied for an 18.06% increase for services and facilities offered.

The proposal for the new tariff was first heard last month during a briefing by TNPA to the parliamentary trade and industry portfolio committee.

Transnet chief executive Brian Molefe said the shift in the tariffs was part of the government’s economic policy and the National Development Plan.

He highlighted that the TNPA overall port tariff revenue would not be hindered as adjustments in other sectors were going to make up for the price cut.

Molefe added that the mining sector had benefited from the previous tariff structure that was weighted in favour of raw material exports, resulting in the manufacturing and agricultural sectors having to make up the cost.

Despite being given a week to respond, Transnet official Lunga Ngcobo had by late yesterday failed to explain how the new tariffs would affect the organisation.

Of allocated funds, Port Elizabeth Transnet Port Authority has set aside R184-million for the upgrade and repair of two slipways in order to increase capacity and allow more vessels to be simultaneously repaired.

In addition to this, the authority is also currently embarking on a R41-million road and railway upgrade project. This is aimed at enhancing safety on the multi-purpose quay and also boosting the export and import of commodities through the Port Elizabeth Harbour.

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