To: Technical Cooperation Division, Trade and Economic Cooperation Bureau, Ministry of Economy, Trade and Industry Business strengthening of Asia Industry infrastructure in 2016 Investigation on design support of automobile industry system in South Africa Feb.1, 2017 GENDAI Advanced Studies Research Organization Table of Contents Intoroduction・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・1 Ⅰ.Present situation of the economy and automobile industry in South Africa 1．Present situation of the economy in South Africa・・・・・・・・・・・・・・・・・・・・・・・ 2 ２．Present situation of the automobile industry in South Africa （１）Background situation of the automobile industry in South Africa・・・・・・・・・・・・4 (２）Profile of the structure of automobile industry in South Africa・・・・・・・・・・・・・5 （３）Business trends inautomobile makers・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・17 （４）Global position of the South African automobile industry･･･････････・・・・・・・・・19 Ⅱ.Verification of direction of automobile industry policy in South Africa １． Review of the framework for designing systems concerning the automobile Industry in South Africa （１）Achievements and problems of the APDP・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 24 （２）Details of 2015FY proposal・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 27 ２．Verification of legal consistency of automobile industry policy in South Africa （１）Summary of relevant WTO agreements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・30 （２）Concept of examining the consistency with WTO rules・・・・・・・・・・・・・・・・・・・33 （３）Examination of the consistency of policy options with WTO rules･･・・・・・・・・・・34 ３．Feasibility study of regional economic communities and economic partnership agreements centeringon South Afica （１）Status of regional economic communities and agreements of South Africa・・・・・49 （２）Challenges of the economic communities and economic patnerships・・・・・・・・・・50 （３）Feasibility of an EPA between South Africa and Japan・・・・・・・・・・・・・・・・・・・52 Ⅲ.Analysis of impacts from Automotive Industry policy in South Africa １．Overview of policy simulation analysis （１）Objectives abd details of policy simulation・・・・・・・・・・・・・・・・・・・・･・・・・・・ 55 （２）Creation of SAM, Database for CGE Model ・・・・・・・・・・・・・・・・・・・・・・・・・・57 （３）Overview of CGE Model・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・62 （４）Overview diagram of policy simulation with CGE Model and flow of policy assesment・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・68 ２．Simulation analysis of automotive industry policy in South Africa （１）Analysis of economic ripple effect of automobile industry in South Africa・・・・・70 （２）Analysis of policy evaluation simulation of current APDP scheme・・・・・・・・・・・73 （３）Analysis of policy simulation for additional or alternative support measures for The PI and VAA policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・77 （４）Analysis of simulation for additional or alternative support measures for th AIS・・85 （５）Analysis of simulation for human resource development measures and promotion measures to encourage use of alternative domestic goods・・・・・・・・89 ３．Assesment of effects of post-APDPautomobile industries and measures （１）Evaluation of effects of existing industry policy toward post-APDP・・・・・・・・・92 （２）Simulation for effects of the post-APDPautomobile industry policies ・・・・・・・・94 Ⅳ.Proposal （１）Basic ideas in the proposals・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・100 （２）Particular proposals・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 103 Introduction South Africa has been struggling with its beleaguered economy caused by the slump in export of mineral resources having been a tractive force to drive the economy of South Africa, due to a drop in resource prices resulting from sluggish global demand for the resources, as seen in such a low real GDP growth rate as 1 to 2% as well as a higher inflation rate caused by the depreciation of rand and a high unemployment rate staying at 25%. For South Africa to break through the said difficult circumstances, it is necessary to shift from the resource-dependent economic structure susceptible to external environment to the economic structure emphasizing the manufacturing industry which is more spontaneous and can yield great effects on creation of job opportunities. Further promotion, particularly, of the automobile industry deemed as an integrated industry having an extremely broad base is a key factor to the development of the South African economy and society. In light of the awareness of these issues, the “FY2015 Asia Industrial infrastructure Improvement, Etc. Project: South Africa Automobile Industry System Design Support Research” (hereinafter referred to as “Previous Research”) analyzed the present situation of and outlook for the economy/market in South Africa and the Sub-Saharan region, the automobile industry policies in South Africa and the key competitive countries, organized the issues for reviewing the automobile industry policies for Post 2020 and submitted a systematic analysis of the present situation to the South African government as well as made suggestions with regard to the South African automobile industry policies for Post 2020 and subsequent years. The “FY2016 Asia Industrial infrastructure Improvement, Etc. Project: South Africa Automobile Industry System Design Support Research” (hereinafter referred to as “This Research”) first interviewed with some South African government officials and automobile professionals and confirmed support systems particularly requiring the South African automobile industry to review and improve in and after 2020, based on the understanding of the situations of the South African economy and automobile industry and the progress of the review of the automobile industry policies in and after the “Previous Research.” And the validity of the confirmed support systems was assessed from both the viewpoints, i.e. one of them was a legal viewpoint of whether they were legally consistent with the WTO rules and the other was a viewpoint of a quantitative analysis of how implementation of a new support system would cause advantageous and disadvantageous effects. 1 I. Present situation of the economy and automobile industry in South Africa 1. Present situation of the economy in South Africa South Africa grew at a high real GDP rate of over 5% for three years in a row in 2005 through 2007, owing to increased export of mineral resources to meet increasing global demand for the resources and increased investment in mining development in conjunction with the increased export of mineral products as well as increased consumption mostly by the black middle class (black middle) resulting from black employment opportunities created by the enforcement of the 2004 Black Economic Empowerment (BEE) act (that requires all business organizations engaged in business in South Africa to preferentially promote black employees to the management executive positions and manager-level positions and purchase or procure materials and products from black-owned business organizations). But the global economic crisis caused by Lehman Brothers' collapse in 2008 to 2009 led to a real GDP growth rate flagging at 3.2% in 2008 and negative 1.5% in 2009. The growth rate recovered to over 3.0% because of resource export recovery, increased consumer spending and capital investment in 2010 to 2011. But the GDP growth rate dropped again in 2012. It fell to 2% in 2012 to 2013 and further down to 1% in 2014 to 2015. The depletion of the effects of the BEE act creating job opportunities, declining natural resource prices caused by a decrease in global resource demand have given a negative impact on the nation’s driving factor - the export of mineral resources, and both the trade account and the current account are still in chronic deficit. And, these poor economic fundamentals and the global financial instability have exacerbated the depreciation of rand, causing the high inflation rate of 6% or over. Increase in the policy rate for inflation control depressed consumer spending and further aggravated the sluggish economy, slipping into a vicious circle. The inflation rate became stable at over 4% owing to low oil prices but the consumer spending did not recover steadily in 2015. Along with growing uncertainty of the economic future, investment mind-set of business organizations remains demotivated and a budget deficit continues, and also the government expenditure growth significantly dropped. The unemployment rate is still staying at a high level of 25 %. IMF’s economic forecast released in October 2016 also showed that South Africa’s real GDP grow rate would further decrease to 0.1% in 2016 and 0.8% in 2017 and would stay at an annual average of approximately 2.0% in 2018 through 2020. As cited above, the South African economy may remain in a slump for the next several years. To make a great economic leap forward, the critical mission is to cast off the current resource-dependent economic structure and shift to an economic structure making account more of the manufacturing industry which is more spontaneous and can yield great effects on creation of job opportunities. From that perspective, the growth of the automobile industry with an extremely broad base can become a touchstone for the development of the South African economy and society since it makes up 7.5% of the GDP of South Africa and employs 114,000 people. 2 ■Figure I-1-1 South Africa’s macroeconomic indicators 2006 2007 2008 2009 2010 2011 2012 2013 2014年 2015年 Population mil. 47.92 48.60 49.30 50.02 50.77 51.55 52.36 53.19 54.06 54.96 Nominal GDP ZAR bn. 1,839 2,110 2,369 2,508 2,748 3,024 3,254 3,534 3,549 3,813 Real GDP （2010 Price） ZAR bn. 2,491 2,625 2,709 2,667 2,748 2,838 2,901 2,969 3,017 3,055 yoy ％ 5.6 5.4 3.2 ▲1.5 3.0 3.3 2.2 2.3 1.6 1.3 Personal Consumption ZAR bn. 1,486 1,583 1,602 1,560 1,622 1,705 1,768 1,804 1,816 1,848 yoy ％ 8.8 6.5 1.2 ▲2.6 3.9 5.1 3.7 2.0 0.7 1.7 Government Consumption ZAR bn. 469 488 516 540 556 571 591 614 625 627 yoy ％ 4.9 4.0 5.8 4.6 3.0 2.8 3.5 3.8 1.8 0.2 Gross Fixed Capital Formation ZAR bn. 460 523 590 551 529 559 573 613 623 638 yoy ％ 12.1 13.8 12.8 ▲6.7 ▲3.9 5.5 2.6 7.0 1.5 2.5 Export ZAR bn.