Clothing and Textiles Competitiveness Programme (CTCP)

Production Incentive Programme (PIP)Presented by: EUKERIA CHIWARA – Account Manager CTCP

17th MAY 2013

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THE PARTICIPATING SECTOR

The PIP is an incentive offered to:• Clothing manufacturers;• Textiles manufacturers;• Footwear manufacturers;• Leather goods manufacturers and• Leather processors (Specifically for Leather

Goods and Footwear industries); • Related Cut, Make and Trim (CMT) operators;

• And related Designers. - (The Sector)

NOTE: The Production Incentive specifically excludes any Leather and Leather Goods manufactured for the automotive sector.

OBJECTIVE

• aimed at creating sustainable capabilities and employment in The Sector;

• The main objective of the PIP is to assist The Sector in upgrading processes, products, people and to re-position it so it competes effectively against other low cost producing countries.

BUDGET ALLOCATION

• Annual Programme, running from 1 April 2010 to 31 March 2016.

Applications cut off date – 31 Jan each year

FY2010/11 400,000,000 FY2011/12 600,000,000 FY2012/13 750,000,000 FY2013/14 682,425,000 FY2014/15 723,369,600 FY2015/16 855,642,600 Totals 4,011,437,200

Budget Year Allocation

Budget allocations

BENEFIT CEILING - GRANT

• Benefit Ceiling = 7.5% of a company’s Manufacturing Value Addition (MVA) for the year ending March 2014 .

• The MVA will be calculated as follows:

MVA = Sales (Goods manufactured locally by the

company only)Less

Material Input Costs (Used in the manufacturing process).

THE PRODUCTION INCENTIVE (PIP)

The Benefit Ceiling utilisation;

• Applicants can either use the full benefit for the Upgrade Grant Facility or up to 50% of their benefit for the Interest Subsidy Facility or a combination of both.

THE PRODUCTION INCENTIVE (PIP)

UPGRADE GRANT FACILITY

• The Upgrade Grant is available to provide financial support to the Sector to assist it in attaining higher levels of competitiveness.

DETAILED PROGRAMME DESCRIPTION

UPGRADE GRANT FACILITY

• The Upgrade Grant can partly be used in conjunction with the CIP.

• Beneficiaries have the option of using it towards funding their own contribution towards CIP. (Please refer to the CIP guidelines for details).

• Companies that have existing loans from any financial institution to fund expenditure for purposes that would have qualified under the Upgrade Grant facility will be able to utilise their Upgrade Grant to settle or partially settle these loans.

• Other IDC Facilities

DETAILED PROGRAMME DESCRIPTION

INTEREST SUBSIDY FACILITY FOR WORKING CAPITAL

• An Interest Subsidy equal to the ruling prime interest rate will be made available to participating companies.

• The Interest Subsidy may not exceed 50% of the Benefit Ceiling.

MANDATORY CONDITIONS

• The applicant must be a registered legal entity in South Africa.

• The operations of the company applying must be classifiable as manufacturer (SIC code 3) in terms of the ‘Standard Industrial Classification of all Economic Activities’ or a designer.

• The applicant must be a taxpayer in good standing and must, in this regard, provide a valid tax clearance certificate before the grant is disbursed.

MANDATORY CONDITIONS

• The Applicant should be bargaining council compliant.

• The applicant must comply with all relevant environmental regulations, applicable to its operations.

• Should the company have any pending litigation against it, the outcome of which may have a material impact on the company’s financial position, then this needs to be brought to the attention of the CTCP Desk at time of application.

APPLICATION PROCESS

• In order to access the PIP, companies need to apply to the CTCP Desk at the IDC by;

Properly completing a Benefit Ceiling Application Form 1 FY2013/14, Redemption Application Form 2, Monitoring & Evaluation Questionnaire Form 3 and Employment Data Form 4, ensuring that contents of the forms are not amended.

Submitting all documentation as required per the documentation checklist on the Form 1 whilst ensuring that the relevant boxes are ticked as information is provided.

Emailed and / or incomplete applications will ultimately be rejected.

ASSESSMENT & APPROVAL PROCESS

YES YES YES YES

NO

YES

NO NO

NO

YES YES

YES

STAGE 1: ORIGINAL APPLICATIONS

Original applications received through IDC Records Dept.

Emailed confirmation sent to client

STAGE 2: BASIC ASSESSMENTS

Application assessed by CTCP Desk to ensure that all required information has been provided.

Incomplete Applications returned to Client.

STAGE 3: DUE DILIGENCE

CTCP desk to communicate in advance with regards to the Due Diligence that is to be carried out at the clients

business premises.

STAGE 4: PREPARATION OF SUBMISSION REPORT

CTCP Desk to communicate to client with regards to

application submission cut off times to be presented at the monthly Projects Approval

Panel (PAP) meeting

STAGE 5: PAP MEETING

Application submitted to Project Approval Panel

meeting.

Application Declined. End of process.

STAGE 6 : LEGAL AGREEMENTS

Signed legal agreements to be returned

back to the IDC within 7 working days.

STAGE 7: CLAIM PROCESSING

Signed claim form on the company’s letterhead and

supporting documentation to be provided to the CTCP desk

INDICATIVE TIMELINES

STAGE 1: 2 WORKING DAYS

STAGE 2: 5 WORKING DAYS

STAGE 3 & 4: 5 WEEKS

STAGE 5: 2 WORKING DAYS

STAGE 6: 7 WORKING DAYS

STAGE 7: 2 WEEKS

Application Resubmitted after further information required by

PAP

REDEMPTION PROCESS

• Applicants wishing to access their approved funds have to submit a completed redemption application form 2 at the time of application.

• The redemption application must be accompanied by a proper description of the historical or planned qualifying interventions of the applicant.

• Redemption claims in the form of invoices on upgrading expenditure may be submitted to the CTCP desk for reimbursement of approved upgrade expenditure already incurred or for payment of approved upgrade expenditure to be effected.

VALIDITY OF BENEFIT CEILING

• The claims must be paid out within a period of twenty four (24) months from the approval date, otherwise the funds expire. Any benefit remaining on the Client’s account with IDC after the termination date will be cancelled.

• Upgrade Grants made by the programme will be made exclusive of Value-Added Tax (VAT).

DISBURSEMENTS

• Payments shall be made directly into the bank account of the approved receiver, whether it be the applicant (on reimbursement of expenditure already effected) or a supplier of goods or services to be expended. The name of the account holder must be the same as that of the approved receiver.

• On adjudication of an Interest Subsidy, the CTCP desk will pay the amount of the Interest Subsidy directly into the applicant’s account.

EXCLUSIONS AND LIMITATIONS

• Eligible projects that would have demonstrated economic viability and sustainability will be financially supported only if the upgrading investment costs could be linked directly to productivity and competitiveness improvement activities in a company.

• The following are examples of costs that do NOT qualify under the Upgrade Grant:

– Normal operating costs will not be considered for support.

– Staff costs will not be considered for support.

– Upgrading of vehicles will not be considered for support.

THE CTCP DESK

• The CTCP Desk has been established at the IDC to administer the CTCP.

• The CTCP Desk resides within the Development Funds Department (DFD) of the IDC.

• The DFD was established in 2001 to manage ring-fenced funds within IDC.

The members of the CTCP Desk are:

Mr Joy Balepile - Programme Manager

Ms Eukeria Chiwara - Pre - Account Manager

Mr Khothatso Khoapa – Pre - Account Manager

Mr Nduma Maluleka - Pre - Account Manager

Mr Kagiso Matswalela – Pre - Account Manager

Mr Patrick Matlhola - Pre - Account Manager

Ms. Phemelo Koloti - Post Account Manager

Mr. Makweng Nkoana – Post Account Manager

Ms. Zandile Nyangane – Post Account Manager / Admin.

Ms Gillian Venter - Administrator

Thank You

The Industrial Development Corporation19 Fredman Drive, SandownPO Box 784055, Sandton, 2146South AfricaTelephone (011) 269 3000Facsimile (011) 269 2116E-mail callcentre@idc.co.za

Ms. Eukeria Chiwara - Account Manager:Tel: +2711 269 3424 +2711 269 3000Fax: +2711 269 3126Email: eukeriac@idc.co.za