Moving Matters
In order to qualify for the programme,
that the scheme’s main thrust should
project finalisation to local introduc-
truck and bus manufacturers must
be to support the wider adoption of
tion), the 180 day processing period of
assemble vehicles locally to a minimum
local assembly among vehicle import-
applications before start of production
defined extent, and component/bus
ers.
appears to be very short. In that short
body manufacturers must prove the
existence of a supply contract, and
reach a specified turnover percentage
target. Participation in the Scheme
is subject to prior approval of the
applicant’s business case by the DTI.
Readers should please understand that
From our perspective, it is important to
understand, first off, that this is not a
local content programme, but only an
incentive for new investment in vehicle
assembly or component manufacture
activities.
is available for detailed scrutiny on the
Internet (Google search “MHCV-AIS”).
Please note also that vehicle manufacturer applicants for benefits under this
scheme must carry out local assembly
to defined levels of knock-down, make
commitments have been made to overseas principals, in order to evaluate the
viability of their projects.
sions being made very late in the run-up
period before local production is due to
There are no additional
penalties for manufacturers and
importers who elect to continue
commence.
From perusal of the lengthy detail, it
also appears that qualification for the
importing vehicles in CBU
supplementary 5 and 10% grants will
condition.
exchange of substantial amounts of
be quite onerous, and require the
confidential information between the
application to the DTI not earlier than
manufacturer and the DTI.
180 days, and not later than 120
days, before commencement of subject
AIS incentives, long after fundamental
then lead to disruptive “go-no go” deci-
a very long document for the purpose
The unabridged MHCV-AIS document
to ensure that they qualify for MHCV-
Negative responses from the DTI could
this is only an extremely brief précis of
of discussion.
period, intending participants will need
The decision to invest in local assembly
It is not surprising that the process of
remains, therefore, completely volun-
developing new rules for medium and
tary, and can be made on economic
heavy vehicles, since the programme
grounds. The fact that both locally
was first mooted in 2010, has been
assembled and imported vehicles cur-
long and difficult, given the country’s
rently compete in the South African
unfortunate experience under the ear-
market also suggests that the present
lier Local Content Programme (LCP) for
level of import duties imposed on the
trucks and buses that was terminated
latter are not unduly punitive.
in 1994.
of which he is also president, was con-
Given that the gestation period for
That regime resulted in South Africa
tinuing to engage with the DTI on the
the introduction of new products is
having some of the most expensive
MHCV-AIS, he expressed the opinion
fairly long (usually up to 3 years from
trucks in the world!
vehicle production, and meet a minimum project investment threshold of
R30 million. In a subsequent comment,
Toyota South Africa Motors president
and CEO, Dr. Johan van Zyl, expressed
the view that increasing the level of
truck local content would not be easy,
and that local cab assembly is not a viable option. While noting that NAAMSA,
In developing the new programme, the practicalities
imposed by the relationship between the small South
African market (only around 1% of the global total),
and the overseas source plants providing critical components, have to be recognised. The truth is that the
“inconvenience” factor, which enters the picture when
any source plant’s production processes are unduly interfered with by a relatively small number of export vehicles,
can add considerable cost to the finished product.
In our view, the MHCV-AIS, as mooted by the DTI on
July 1st, is still some distance away from the finished
product, and we are not surprised that discussions with
NAAMSA are continuing.
october 2014 • logistics in action •
51