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Trade,industry and competition miniister Ebrahim Patel. Picture: FREDDY MAVUNDA/BUSINESS DAY
Trade, industry & competition minister Ebrahim Patel has highlighted the negative consequences of inefficient rail and ports systems, especially for new and emerging businesses (“Patel bemoans failed SOEs hobbling black industrialists”, March 18).
A form of nontariff barrier (defined as any obstacle or impediment to trade that is not an import or export duty), under- or nonperforming rail networks and ports impose delays, increase the costs of goods, materials and components, inhibit services and serve as a macro cap on a country’s economic growth potential.
Another aspect of the country’s trade infrastructure and policy space that Patel and his colleagues should consider is that of government support (subsidies, higher duties on imports and other forms of protection or support).
The latest examples of such support are the various localisation master plans. The substantive downside risk of these is that uncompetitive players and industries are protected from market forces, costs are artificially driven higher, and competitive imports are discouraged (to the detriment of the consumer and local businesses).
A wider risk to localisation lies with the fiscus. Should the rail and ports problems highlighted by the minister persist, all the localisation plans and other forms of subsidies in the world will not paper over said problems. All manufacturers, farmers, construction companies, importers, exporters and so on are saddled with higher costs that result from unreliable and dysfunctional ports and rail.
Subsidies will at best help keep some (of the bigger) players afloat, but in truth the deeper issues that inhibit market entry of new participants will remain unaddressed. In a couple of years’ time all that will be done is for new, larger localisation and subsidy plans to be introduced — if government can even afford to do so given the country’s current low-growth trajectory.
Chris Hattingh Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: Master plans drive up costs
Trade, industry & competition minister Ebrahim Patel has highlighted the negative consequences of inefficient rail and ports systems, especially for new and emerging businesses (“Patel bemoans failed SOEs hobbling black industrialists”, March 18).
A form of nontariff barrier (defined as any obstacle or impediment to trade that is not an import or export duty), under- or nonperforming rail networks and ports impose delays, increase the costs of goods, materials and components, inhibit services and serve as a macro cap on a country’s economic growth potential.
Another aspect of the country’s trade infrastructure and policy space that Patel and his colleagues should consider is that of government support (subsidies, higher duties on imports and other forms of protection or support).
The latest examples of such support are the various localisation master plans. The substantive downside risk of these is that uncompetitive players and industries are protected from market forces, costs are artificially driven higher, and competitive imports are discouraged (to the detriment of the consumer and local businesses).
A wider risk to localisation lies with the fiscus. Should the rail and ports problems highlighted by the minister persist, all the localisation plans and other forms of subsidies in the world will not paper over said problems. All manufacturers, farmers, construction companies, importers, exporters and so on are saddled with higher costs that result from unreliable and dysfunctional ports and rail.
Subsidies will at best help keep some (of the bigger) players afloat, but in truth the deeper issues that inhibit market entry of new participants will remain unaddressed. In a couple of years’ time all that will be done is for new, larger localisation and subsidy plans to be introduced — if government can even afford to do so given the country’s current low-growth trajectory.
Chris Hattingh
Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Patel bemoans failed SOEs hobbling black industrialists
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