N8/1/1
12^th February, 2009

NAAMSA MEDIA RELEASE ON THE 2009 2010 NATIONAL BUDGET

Commenting on the budget proposals announced today by the Minister of Finance, Mr Trevor Manuel, in Parliament – the President of the National Association of Automobile Manufacturers of South Africa (NAAMSA) – Mr David Powels said that NAAMSA shared the Minister’s realistic assessment of the unprecedented challenges confronting South Africa – specifically – the current domestic economic slowdown compounded by the severe global financial and economic crisis. The budget proposals represented a courageous and decisive strategic response aimed at promoting economic stability in the context of a deteriorating international environment.

NAAMSA commended the Minister on announcing an expansionary budget aimed at providing support to the South African economy over the short to medium term. In this regard, government’s expenditure priorities would appropriately target infrastructure expansion and upgrading to enhance South Africa’s future economic growth capacity, substantial increases in funding for a broad range of social support priorities, including, education, training, skills development and crime combating initiatives as well as additional allocations for industrial and enterprise development programmes and measures to promote electricity savings and energy efficiency technology.

Despite reduced revenue projections, the Minister had announced further substantial increases in funding for a broad range of social programmes to provide relief for the needy sectors of society whilst, at the same time, granting personal income tax relief to the extent of R13,6 billion. This should assist in improving the financial position of gainfully employed persons, thereby boosting consumer demand.

In the absence of details of specific relief measures, the automotive sector – retail, auto parts and vehicle production - would continue to engage with the NEDLAC social partners and government to formulate a strategic response to the crisis facing the automotive industry as a result of the collapse in international automotive markets. The response would involve employment stabilisation measures and assistance to ease the severe cash flow and liquidity difficulties facing franchise dealers and automotive parts manufacturing companies.

NAAMSA welcomed the announcement that R870 million would be allocated, over the next three years, for the Automotive Production and Development Programme and it was assumed that this funding would be earmarked for the investment allowance part of the programme. The industry had also noted the Minister’s stated intent to adjust excise duties on motor vehicles to take account of carbon emissions. The adjustments would take effect from March, 2010 and the proposals would need to be evaluated to determine the impact on specific models as well as corresponding pricing implications. NAAMSA would engage National Treasury on the matter.

Overall, the budget proposals represented an appropriate approach to the challenges facing South Africa by boosting spending and stimulating demand. The Minister had nevertheless maintained a firm focus on the long term growth, development and transformation of the South African economy without compromising the imperative of fiscal discipline.

NAAMSA OFFICES: PRETORIA
12TH FEBRUARY, 2009