Maluti-A-Phofung Special Economic Zone Objectives

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The main objective of Maluti-A-Phofung Special Economic Zone is to establish manufacture opportunities and create regional and international trade environment with added value chain, and to create a prosperous trade city and functional trade ecosystem. Invest in our park & enjoy these lucrative incentives:

Corporate Income Tax

Reduction in corporate income tax from 28% to 15%
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Building Allowance

10% Allowance on Buildings & Improvements to buildings
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12I Tax Allowance

Support for capital investment and training
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Employment Tax Incentives

This tax allowance is also available to business outside the SEZ
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Customs Control Area

This incentive allows for tax and VAT relief for investors importing and exporting goods
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Primary Sectors

Maluti-A-Phofung Special Economic Zone aims to simulate social and economical benefits as well as regional development,
and is focused on the following sectors:

Automative Sector

1st and 2nd tier supplier | Warehousing Vehicle distribution Centre | Yellow plant

Agro-processing Sector

Bio-Fuels | Forestry and Wood | Dairy Products, Meats, Vegetables, Fruits | Wool, Hides, Hives

Logistics Sector

Logistics Service Providers | Warehousing facilities Distributions Centres | Cross-Docking Facilities

General Processing Sector

Light Industries | Assemble/Fabrication Electrical/Electric | Garments, textiles

ICT Sector

Call Centres | Software Engineering & programming Computer and Mobile Phone | Data Centre

Pharmaceuticals Sector

Generics & cosmetics | Natural Remedies Medical accessories | Latex based material

The Area

Read more about the local attractions
and everything the area has to offer.

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Corporate Video

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Read more about the local attractions
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News & Events


SA Special Economic Zones will benefit from Investment Roadshow

Officials who participated in this week’s Special Economic Zones (SEZs) Investment Roadshow to China have expressed confidence that the country’s SEZs will attract foreign direct investments as a result of the interest stimulated by the trip amongst the potential Chinese investors.   The roadshow to Shanghai, which ended yesterday, was organised by the Department of Trade and Industry (the dti) and was led by the Deputy Minister of Trade and Industry, Mr Bulelani Magwanishe. 

The purpose of the roadshow was to attract Chinese investors to the country’s Special Economic Zones. The South African delegation attended a seminar with more than 100 Chinese businesspeople on Monday and visited a science and technology special economic zone in Shanghai yesterday. 

According to the Chief Executive Officer of the Free State Development Corporation, Mr Ikhraam Osman, the trip succeeded in whetting the appetite of the Chinese businesspeople and created interest amongst them to invest in the country’s SEZs.

“The trip presented officials from our SEZs with a golden opportunity to interact directly with the Chinese companies and present to them the value-propositions of our Special Economic Zones. I came here to market the Maluti-A-Phofung SEZ and there is a logistics company that showed interest in investing in the SEZ. This was the first contact and it means we need to have follow-up meetings to exchange more technical information that will assist them to make a decision about investing in our SEZ,” says Osman.

The Project Executive for the North West-based Platinum Valley SEZ, Mr Davis Sadike says the trip was successful as it enabled him to understand the success that the Chinese SEZ model has managed to achieve in boosting the country’s development and economic growth.

“The interaction with the Chinese companies gave us a better understanding of their needs when it comes to investment in foreign projects.  We managed to share specific information of our SEZ with two companies who are operating in the renewable energy and locomotives sectors. A good foundation has been laid for us to explore future discussions with these companies and others that we met,” said Sadike.

The Manager in the CEO of the East London Industrial Development Zone’s office, Ms Ayanda Ramncwana said it was critical for the dti to undertake initiatives like the roadshow in order to market the SEZs internationally as part of efforts to attract investments.

“The trip was beneficial as it provided the SEZs with international exposure that they require to woo investors. It confirmed that there is potential in trying to attract investments from China in the various sectors that we are interested in as South Africans. It also showed that synergies that we can forge with the Chinese institutions such as the Bank of China would go a long way in assisting us reach out to investors successfully with a bit of local assistance and support,” added Ramncwana.

The Acting Manager in the CEO of the Richards Bay Industrial Development Zone’s office, Ms Zodwa Zikalala also cherished the opportunity to present their projects to potential investors.

“We received good feedback from potential investors after our presentation. We have picked a few companies that we need to make follow-ups with. I was also impressed by the visit to the technology SEZ because our IDZ also has an innovation park,” said Zikalala.

To the Sector Specialist of the proposed Upington SEZ, Ms Babalwa Mbobo the roadshow provided proposed SEZs like Upington and Nkomazi with an opportunity to introduce themselves to the Chinese companies. 

“it was really beneficial to interact with all of those businesspeople that attended the session. Most of them were not aware that there is a predominantly solar energy SEZ planned for Upington. The incubation programme of the technology hub also impressed me because we are also planning to establish an incubator in our SEZ for the benefit of small businesses in the area,” added Mbobo.


Maluti-a-Phofung SEZ aims to bolster logistics efficiency along key trade routes

The R4.8-billion, 1 000 ha Maluti-a-Phofung special economic zone (SEZ) being built near Harrismith at the foothills of the northern Drakensberg mountains (also known as the Maluti mountains) will provide road and rail logistics and handling facilities for the Gauteng–Durban port corridor and link it to the Bloemfontein–Cape Town corridor.

The main industries the SEZ will serve are agriculture, agroprocessing, automotive and logistics, and will include container terminal and car terminal facilities.

The SEZ will function as a back-of-port operation to ease congestion at the Durban port and will provide South African customs functions and facilities for imported goods and export goods, including goods moving north into Southern African countries.

“The primary focus of the SEZ once it begins operating next year will be to act as a logistics hub to take advantage of its strategic location on the Durban–Reef corridor and as a link to the Bloemfontein–Cape Town corridor,” notes Department of Trade and Industry SEZ and economic transformation acting deputy director-general Alfred Tau.

It will also provide aggregated bulk rail logistics for agricultural produce between Bloemfontein and Harrismith, in the Free State, while bulk freight rail services will extend to Newcastle, in KwaZulu-Natal.

The SEZ will incorporate an intermodal rail and road facility, with specialist transfer infrastructure and associated storage facilities, including cold-chain storage facilities. There is more land available in the vicinity that could potentially accommodate expansion, if required, he says.

“Its existing road and rail links position the site ideally to service goods flowing to and from the Durban port and to bolster the existing logistics networks. The SEZ will relieve some of the pressure on the port by offering alternative storage, staging, packaging and agglomeration services.

“The confluence of major road and rail systems and its position above Van Reenen’s Pass also enable it to offer an intermodal transfer point that could relieve some of the road congestion on this route,” he explains.

Further, there has also been interest from light manufacturers of medical equipment, clothing and pharmaceuticals. The long-term objective of the SEZ is to use this initial interest to attract more value-adding activities and companies by offering a convenient processing hub for businesses looking to serve the domestic and international markets, notes Tau.

“It is envisaged that activities will include final assembly and customisation of imported products, and light manufacturing of products destined for the export market, as well as eventually including higher-value processing and manufacturing plants, such as starch production, pharmaceuticals and medical-equipment manufacturing plants,” he says.

The SEZ’s potential to realise large socio- economic benefits in a depressed region of the economy influenced the decision to develop it; however, the manner in which the zone develops over time will be determined by the level and nature of investor interest, adds Tau.

Agricultural Accelerator
The hub will draw in agricultural produce from the region and serve as a base for agroprocessing, food processing and light manufacturing, as well as for the consolidation and export of such goods, highlights Maluti-a-Phofung project director Mzwakhe Shoba.

He adds that the SEZ is currently focused on strengthening and leveraging rail and the north–south road corridor, with the eventual inclusion of the Harrismith aerodrome as an extension of the SEZ, mainly to move higher- value perishable food goods.

“The agricultural base [of the region] can benefit from a hub-and-spoke concept, where produce is collected for further processing or transportation at the hub,” says Tau.

Small farmers and niche farmers near the railways will benefit from the SEZ, as it will enable them to easily move their goods, he notes, adding that the produce will be sorted and consolidated in the SEZ, while buyers can use the customs offices to quickly obtain all the relevant permits for export.

“The SEZ will now incorporate the Harrismith Logistics Hub concept, to make Harrismith a central accumulation point for agricultural produce to be transported by rail, into its plans,” states Tau.

Further, the hub will also have a fresh produce park, which will include a Halaal food park, abattoirs and organic produce companies.

The establishment of light processing activities that draw on the raw agricultural materials available in KwaZulu-Natal will also be incentivised to develop higher-value processing and production in the SEZ as the development and growth of the zone progresses, he notes.

“The agglomeration of several value chains will provide an opportunity for local entrepreneurs to integrate into these emerging value chains and expand their businesses,” states Tau.

Rail logistics is central to the Maluti-a-Phofung hub’s capabilities. Improving and using the railway network through the hub will also provide long-term funding for the maintenance and expansion of the network in KwaZulu-Natal, the Free State and Gauteng. State-owned railway operator Transnet is consequently a key partner in the Maluti-a-Phofung SEZ project, says Shoba.

The project is a key test-bed for government’s road-to-rail initiatives aimed at reducing costs of road freight and reinvigorating the rail industry.

He says the narrow-gauge rail lines criss- crossing the Free State and KwaZulu-Natal are mainly underused, and the hub will aim to provide its services and rail logistics to broader industries in these provinces, including the clothing and textile industries near the Newcastle area.

“Transnet Freight Rail has played a major role by considering the rail use potential and scoping the requirements for the intermodal facility; it will continue to be one of the key stakeholders in the zone development. Now that the decision to designate [the zone as an SEZ] has been approved by Cabinet, the process of engaging with Transnet and co-designing the required facilities is expected to intensify,” says Tau.

The industrial development zone model has proven highly successful in South Africa, but the cost of logistics in the country hampers the competitiveness of industries. Therefore, the Maluti-a-Phofung SEZ aims to reduce logistics costs and enable companies to gain efficiencies, grow and expand and, in so doing, help develop the economies of the provinces, says Shoba.

The aim is to have three freight trains a day between Durban and Johannesburg initially and to offer the 24-hour rail services as a complementary addition to the road network.

Incentives and Services
The Maluti-a-Phofung SEZ will provide all the relevant services for companies in the SEZ, including databases of local suppliers and black-owned businesses in the area that can form part of supply chains.

“The zone has been registered as an SEZ so that broader incentives can be offered to participants outside of export-orientated industries, which the IDZ regulations incentivise,” says Shoba.

Under the current SEZ Act No 16 of 2014, companies located within the South African Revenue Service customs-controlled area of the SEZ are potentially eligible for a preferential 15% corporate tax rate for ten years, as well as a building allowance tax relief, employment tax relief for employees earning below R60 000 a year, and the 12i tax allowance for the development of greenfield operations.

The Maluti-a-Phofung municipality has incorporated the project into its planning scenarios, with prospective investors having shown a keen interest to hire and train people from the local community.

“The SEZ will contribute to the development of the region by catalysing skills development and creating opportunities to integrate small enterprises into various industry value chains. This will create opportunities for entrepreneurs and labour in the area,” says Tau.

The recent designation of the hub as an SEZ will lead to the skills audit and the design of specific training interventions being revised to ensure that the local community can benefit directly from the development, he adds.

The Maluti-a-Phofung SEZ is expected to develop over 20 to 30 years, with an expected 29 000 employment opportunities emerging over a ten-year period, if all elements of the plan received sufficient business interest and opportunities are realised.

“The SEZ aims to improve business infrastructure for the benefit of all industries in the region. Currently, the interest that has emerged from investors does not compete with any existing business interests and the SEZ intends to host new industries that will use people from the Maluti-a-Phofung community, sustainably aiding the development of the region and its people,” he concludes. 


Free State municipality gets Special Economic Zone

Johannesburg – President Jacob Zuma will on Tuesday launch the 1038-hectare Special Economic Zone (SEZ) at the cash-strapped Maluti-A-Phofung Local Municipality in Harrismith, eastern Free State.

Zuma will be joined by the Minister of Trade and Industry (DTI) Dr Rob Davies and his deputy, Gratitude Magwanishe, the Premier of the Free State Ace Magashule and several provincial MECs.

Magashule said in a statement that the SEZ would create opportunities for manufacturing as well as a regional and international trade environment with added value chain within the Maluti-A-Phofung Municipality.

Magashule said:"The social and economic benefits, as well as regional development, will be key and will be enhanced by creating a prosperous trade city and functional trade ecosystem, which will enable the beneficiation of mineral and natural resources and attract foreign direct investment".

He added: "The priority sectors for the Maluti-A-Phofung SEZ are automotive, agro-processing, logistics, ICT, pharmaceuticals and general processing".

Davies said the launch of the Maluti-A-Phofung was another significant milestone in the implementation of the department’s SEZ Programme, which is aimed at accelerating economic growth and development in designated regions of the country. "The Industrial Policy Action Plan identifies SEZs as key contributors to economic development. They are growth engines towards government's strategic objectives of industrialisation, regional development and employment creation," Davies said.

"The SEZ programme has entered a full implementation phase. This is one of the critical instruments that the dti is using to accelerate industrialisation in the country."

Read also: Take more SEZs to the cities - World Bank

Maluti-A-Phofung Municipality, which includes areas such as Harrismith and Qwaqwa, recently threw a "homecoming" concert for former SABC chief operating officer, Hlaudi Motsoeneng, in Phuthaditjhaba.

Qwaqwa residents have in recent times gone for periods without water, relying on water tanks deliveries in the area. The tankers then stopped delivering water claiming they were owed payments by municipality.

The SEZ programme is one of the critical instruments which the dti is using to accelerate industrialisation in the country has attracted billions of rand to South Africa.

A number of incentives and benefits are available to ensure SEZs growth, revenue generation, creation of jobs, attraction of foreign direct investment and international competitiveness. These include a preferential 15 percent corporate tax, building allowance, and customs controlled area.



New Special Economic Zone sparks investment

Although agriculture and mining remain the mainstays of the provincial economy, diversification and expansion through initiatives such as Special Economic Zones (SEZs) are key to the future of the centrally located province.

Sectors prioritised at the Maluti-A-Phofung SEZ (which is located on South Africa’s busiest highway, the N3) include logistics, ICT, automotive, pharmaceuticals, manufacturing and agri-processing. The 1 000 ha site will have four zones: agri-processing, light industrial, heavy industrial and a container terminal.

The reference to agri-processing points to a broader trend in economic planning in South Africa – the desire to create value-added goods out of raw materials. This applies to agriculture (in which the Free State enjoys great riches) and minerals.

Five agri-parks are planned in each of the Free State’s district municipalities which will boost production so that more produce is available for beneficiation. Within these parks, support for rural smallholders will be available in terms of equipment hire from a central source, storage facilities, packaging of produce and getting products to market. The use of small towns such as Cornelia, Tweeling, Excelsior and Tweespruit as hubs under the Comprehensive Rural Development Programme (CRDP) should boost the rural economy and provide opportunities for investors.

The idea of clustering developments is also behind the N8 Corridor concept which covers Bloemfontein, Botshabelo and Thaba Nchu. Within this are several projects including the ICC Precinct (hotel and convention centre in Bloemfontein), Bio-Medical Park, Airport Node (logistics and supply chain, warehouses, residential apartments, hospitals, schools, hotels and new shopping malls), and tourism infrastructure for the Naval Hill Development.

Another important pillar of the economy of the Free State, the chemicals and fuels hub at Sasolburg, is modernising and expanding. International fuel, gas and chemicals company Sasol regularly invests in new technologies and in expanding production of its various products.

The Provincial Government of the Free State has hosted two events targeting foreign investors, called the Free State Global Investors Trade Bridge. In November 2016 the first Free State/Madeira Flower Festival took place in Parys. This is a first step in creating links to export markets in floriculture and horticulture.

A new water pipeline from the Xhariep Dam is being built to serve the Xhariep District and the Mangaung Metro. A steady and reliable water source is an important component in attracting investment.

Five major national highways intersect the centrally located province, which is also well served by rail and air links. The Bram Fischer International Airport in the provincial capital city of Bloemfontein is the site of a multi-phase industrial and commercial development. Two leading universities (the University of the Free State and the Central University of Technology) have several campuses across the province.

Game-changing development

A potentially game-changing development in the local economy is the building of a R200-million helium extraction plant to exploit a natural gas and helium field near the towns of Virginia, Welkom and Theunissen. With proven reserves of 25-billion cubic feet, the rights to the field are owned by Renergen and they will be worked by Afrox, a subsidiary of the Linde Group of Germany.

Another emerging sector is solar energy. The Xhariep, Lejweleputswa and Mangaung regions have among the best direct solar radiation kWh/m² in the country. Rezoning for solar farms has already taken place in Theunissen, Bloemfontein, Fauresmith and Hoopstad.

The Free State shares borders with six other provinces, in addition to the Mountain Kingdom of Lesotho. A summer-rainfall region with a mean annual rainfall of 532 mm, the Free State’s climate, soil types and topography vary greatly within the province, with plains in the west and mountains in the east. The western and southern areas are semi-desert, with some Karoo vegetation occurring in the south.

The Free State produces significant proportions of South Africa’s wheat (30%), sunflowers (45%) and maize (45%). As such, it is ranked third in contribution to national GDP in agriculture.

Municipalities in the Free State

The Free State has one metropolitan municipality (Mangaung), four district municipalities and 19 local municipalities.

Mangaung Metropolitan Municipality

Mangaung Metropolitan Municipality is a Category A municipality which governs Bloemfontein, Botshabelo and Thaba Nchu. The sixth-largest city in the country, the Mangaung municipal area covers more than 6 263 km² and has a population of about 850 000 people. The languages spoken in the area are mainly Sesotho, Afrikaans, English and Setswana.

Bloemfontein, which is responsible for about 25% of provincial GDP, is at the centre of a development node known as the N8 Corridor which is intended to boost development along the road from Lesotho to Kimberley and Upington in the North West province. Several projects are under way in and around the provincial capital, including an Airport Node (logistics, supply chain, flats, shopping malls), Naval Hill (projected new hotel in the nature reserve), expansion of Hamilton Business Park.

The city’s Fresh Produce Market is an important cog in the distribution of agricultural produce in the region while it is connected to all other centres by good rail and road links. There is a marshalling yard, a petroleum depot and two airports (one military). The national Supreme Court of Appeal is located in Bloemfontein and the National Museum has superb rock art exhibits.

Xhariep District Municipality

Towns: Trompsberg, Koffiefontein, Zastron, Philipollis, Edenburg, Fauresmith, Smithfield, Wepener.

The southernmost region of the Free State is a largely dry area with open grasslands predominating, although it is also home to the Gariep Dam, South Africa’s largest dam. Crops are produced in the northern parts of the district whereas sheep farming predominates in the south. Trompsberg has the second-biggest sheep-shearing barn in the country.

Diamonds, gravel and clay are mined at Koffiefontein. Jagersfontein is one of the first places where diamonds were found, and it has its own version of the Big Hole to prove it. The town of Bethulie is a good stopping-over place for tourists wanting to experience the water sports available on the Gariep Dam.

The Gariep Dam

The dam is also the site of small hydro-power and aquaculture projects which are intended to create employment and tackle food security. The nearby Tussen die Riviere Nature Reserve and the Mynhardt Game Reserve have a variety of wildlife in spectacular settings. Jacobsdal’s Landzicht winery has proved itself as a worthy producer of wine. San rock paintings and Anglo-Boer War sites are plentiful.

Fauresmith hosts an annual horse endurance race and Smithfield is the venue for a “Chill” festival every winter, the “Bibber Fees”. The steel bridge over the Caledon River at Wepener is a national monument.

Lejweleputswa District Municipality

Towns: Welkom, Virginia, Boshof, Christiana, Bultfontein, Bothaville

Mining is the most important economic activity in this area, also known as the Free State Goldfields, but it is also the most important maize-growing area in South Africa. A large natural gas field has been discovered on what used to be gold turf. Bothaville is the self-proclaimed Mielie Capital of South Africa but it is a name that is apt. The town hosts the annual NAMPO maize festival and the headquarters of Grain SA.

Mining town Welkom is the major urban centre in the district. The town of Virginia is the site of a jewellery school and it is intended that this will form the nucleus of a jewellery beneficiation hub and an IT hub.

The area has tourist assets such as a holiday resort on the Allemanskraal Dam, the Goldfields Wine Cellar in Theunissen and the Willem Pretorius Game Reserve but there is potential for growth in the heritage sector.

Fezile Dabi District Municipality

Towns: Sasolburg, Parys, Kroonstad, Frankfort, Heilbron, Viljoenskroon

The chemical complex at Sasolburg is the economic driver in the district, which shares a border with Gauteng province along the Vaal River. The town of Heilbron is another important industrial centre and Frankfort does important agricultural processing work. Kroonstad is the district’s second-largest town and has a number of engineering works and a railway junction. A new kraft paper factory has been planned for Frankfort.

A good proportion of South Africa’s grain crop is sourced from this district and when the vast fields of sunflowers and cosmos flowers are in bloom, a marvellous vista is created. The Vaal River presents opportunities for yachting, rafting and resort-based enterprises. Parys is a charming town and Vredefort is home to a World Heritage Site – the Vredefort Dome where a meteor crashed to earth.

Fezile Dabi District Municipality is the biggest contributor towards the provincial GDP, contributing approximately 35%. The Fezile Dabi area is mostly dominated by the industrial power of Sasol, with the manufacturing of refined petroleum, coke and chemical products adding largely to its GDP.

The establishment of ChemCity, a wholly owned subsidiary of Sasol, has also added a business incubator that allows SMMEs to feed off and diversify from the opportunities that prevail due to the energy consortium operating in the area.

Thabo Mofutsanyana District Municipality

Towns: Phuthaditjhaba, Bethlehem, Tweespruit, Ladybrand, Clarens, Harrismith, Vrede, Ficksburg

Tourism and fruit farming are the two principal economic activities of this area which is characterised by beautiful landscapes: the Maluti and the Drakensberg mountain ranges, wetlands in the north, well-watered river valleys and the plains of the north and west. The most famous asset is the Golden Gate National Park.

Industrial activity is undertaken at Harrismith and Phuthaditjhaba, where the Free State Development Corporation is promoting investment. The Maluti-a-Phofung Special Economic Zone (SEZ) at Harrismith is a multi-modal transport and logistics hub.

The Maluthi-A-Phofung SEZ is strategically located along important transport corridors

The commercial centre of the district is Bethlehem while Clarens and Ficksburg have become famous for their artists and cherries respectively. Marquard produces 90% of South Africa’s cherries. The north of the district has many sunflower seed farms.

The Basuto cultural village in Qwa Qwa offers beautifully made crafts, and rock paintings.