PUBLICATION OF THE MANUFACTURING COMPETITIVENESS ENHANCEMENT PROGRAMME (MCEP): PRODUCTION INCENTIVE GUIDELINES FOR PUBLIC COMMENT the dti

releases for public comment one of the key action programmes of the Industrial Policy Action Plan (IPAP) 2012/13 2014/15, the Manufacturing Competitiveness Enhancement Programme (MCEP): Production Incentive guidelines. The programme provides enhanced manufacturing support aimed at encouraging manufacturers to upgrade their production facilities in a manner that sustains employment and maximises valueaddition in the short to medium term. The MCEP will comprise three components: a Production Incentive (PI); working capital facility; and an interest make-up facility for firms accessing the distress fund at the Industrial Development Corporation (IDC). The PI is a grant programme and the largest component of the MCEP and will be managed by the dti. The pre-/post-shipment working facility and distressed fund make-up scheme are loan products and will be managed by the IDC. Production Incentive The PI will comprise five components. The calculation of MCEP credits for each firm will be based on between 7% and 10% of manufacturing value-added. Applicants can apply their credits to a combination of any of the following five sub-components of the MCEP: Capital Investment Grant: A cost-sharing grant towards investment in upgrading capital equipment and expansion of productive capacity. Cost sharing will be between 30 and 50% of the investment, with smaller firms receiving a larger percentage of their investment. Green Technology Upgrading Grant: A cost-sharing grant towards investment in technology and process that will make the production process greener, resulting in cleaner production and improved energy efficiency. Cost sharing will be between 30 and 50% of the investment, with smaller firms receiving a larger percentage of their investment. Enterprise-Level Competitiveness Improvement Grant: A cost-sharing grant towards investment in the adoption of world-class manufacturing practices such as lean production system (Toyota methodology), Six Sigma, the adoption and accreditation of conformity and quality standards such as ISO, the CE mark, improved packaging design, acquisition of IT software systems and project-specific skills upgrading etc. Cost sharing will be between 50 and 70% of project costs. Feasibility Studies Grant: A cost-sharing grant towards developing a bankable feasibility study for new manufacturing projects. Qualifying costs will include engineering design costs, EIA costs and other relevant consulting fees. Cost sharing will be between 50 and 70% of project costs. Cluster Initiatives Grant: A cost-sharing grant towards support for cluster initiatives to improve competitiveness, innovation and access to new markets. Examples of initiatives that can be funded include shared infrastructure such as a sector technology development centre, market research, international advertising and publicity costs etc.

Access will be subject to a defined minimum number of firms and cost sharing will be 80% of qualifying project costs. Working Capital Facility: A revolving 180-day, 6% fixed interest rate facility limited to the approved percentage of manufacturing value-added to be used for pre- and postshipment finance. Distressed Fund: A concessionary 6% fixed interest rate loan for applicants that meet the requirements of the MCEP and are accessing the IDCs Distress Fund, which is provided for enterprises adversely affected by the recession and the volatility of currency markets. Comments must be e-mailed to: RKekana@thedti.gov.za The guidelines are open for comment until Friday 20 April 2012.