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A recent World Bank report recommended that South Africa consider increasing the 15% corporate income tax incentive in all special economic zones (SEZs), which presents an important opportunity to consider how to strengthen the country's investment competitiveness.
Ms Sonja Boshoff, Chairperson of the Select Committee on Economic Development and Trade, said that contributions that encourage informed, evidence-based discussions to improve South Africa's investment climate are most welcomed.
“While the recommendation requires careful consideration by the Government, it should form part of the broader national conversation to ensure that our Special Economic Zones remain globally competitive, well-governed and capable of delivering meaningful economic outcomes,” the Chairperson said.
“South Africa is competing for investment in an increasingly competitive global economy. Investors are attracted not only by tax incentives but also by policy certainty, efficient regulatory processes, reliable infrastructure, energy security, effective logistics, skilled labor and institutions that inspire confidence. Strengthening our SEZ program therefore requires a holistic approach that addresses all the factors influencing investment decisions.”
The Select Committee has consistently stressed that the success of Special Economic Zones should be measured not by the incentives they offer, but by the investments they attract, the industries they develop, the exports they generate and, most importantly, the sustainable employment opportunities they create for South Africans.
Through its monitoring work, the Committee found that while some SEZs are performing exceptionally well, others need stronger governance, better implementation and greater accountability to realize their full potential. “This reinforces the importance of regularly evaluating whether existing policy instruments are achieving their intended objectives and identifying reforms that could strengthen South Africa's competitiveness.”
Ms. Boshoff said the World Bank's recommendations should encourage broader thinking about how our Special Economic Zones can become platforms for innovation and policy experimentation. He said, “International experience shows that the world's most successful SEZs are characterized not only by competitive tax regimes, but also efficient governance, streamlined regulation, fast approvals and business-friendly operating environments that support investment, industrial growth and employment.”
“In that context, Parliament should remain open to carefully designed pilot initiatives that assess whether reducing unnecessary regulatory barriers within selected SEZs could further enhance South Africa’s competitiveness.” The Chairperson said such initiatives should be evidence-based, transparent and subject to strong parliamentary oversight, while maintaining constitutional protections, fair labor standards and responsible governance. “Where reforms clearly attract investment and expand employment opportunities, lessons learned can help inform future policy development.”
Ms Boshoff said the Select Committee on Economic Growth and Trade will continue to monitor the performance of South Africa's Special Economic Zones and support policy discussions that are evidence-based, fiscally responsible and focused on attracting investment, strengthening industrialization and creating sustainable employment opportunities for South Africans.
Issued by: Parliamentary Communications Services on behalf of Ms Sonja Boshoff, Chair of the Select Committee on Economic Growth and Trade.