South African Finance Minister Tito Mboweni delivers the 2019 Budget Speech ©GCIS
The South African Minister of Finance, Tito Mboweni, recently announced his budget proposals for the country. In response, the president of the National Association of Automobile Manufacturers of South Africa (NAAMSA), Andrew Kirkby, has offered his support.
NAAMSA endorses the budget proposals outlined by Minister Mboweni and the government’s commitment to revitalising the South African economy. The minister outlined the ways in which he plans to remove constraints and inhibitors to growth by working with the private sector to boost levels of investment.
“In this regard, the Minister had correctly recognised the need for policy certainty as a means of boosting business confidence,” reads a statement released by NAAMSA. Minister Mboweni confirmed that he has set aside R300 billion for investment, of which R40 billion will be invested in the automotive industry over the next five years.
NAAMSA agrees with the Treasury’s approach to the budget
NAAMSA [supports] the fundamental approach in the budget, namely, to achieve a higher rate of economic growth, to improve tax collections, to provide for reasonable increases in expenditure, to stabilise and reduce debt, to restructure State-Owned Enterprises and to review and manage public sector compensation,” reads the statement.
All-in-all, the 2019 budget contained no major tax surprises – excise duty and fuel taxes were also increased at a rate below inflation. NAAMSA also notes the importance of the introduction of the broad-based carbon tax (effective from 1 June 2019) that will yield an extra R1.8 billion for the South African economy.
“The provisional allocation for the restructuring of South Africa’s electricity utility and the significant increase in the contingency reserve to address fiscal support from other State Owned Enterprises represented an important and welcome feature [of the budget],” says the NAAMSA statement.
The new budget is sensible
“The decision not to adjust income tax brackets for inflation would yield an additional estimated R12.8 billion in personal income tax and is likely to have a modestly negative impact on consumers’ disposable income,” says NAAMSA.
The association also notes the proposal to align the tax treatment for customs and excise duty purposes for imported and locally-manufactured vehicles. “Overall, the Budget proposals were pragmatic and sensible with a distinct growth enhancement focus,” says NAAMSA.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex specialises in producing components for the catalytic converter industry, as well as metal components and assemblies for the various vehicles. Formex aims to become one of the foremost suppliers for the South African automotive industry by 2035, aligning itself with the South African Automotive Masterplan (SAAM) which takes effect in 2020.
Formex is a Level 2 B-BBEE supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).