Treasury clarifies local production, content thresholds for valves and actuators
The Valve and Actuator Manufacturers Cluster of South Africa (Vamcosa), which operates under the auspices of the South African Capital Equipment Export Council (Saceec), last week announced that the National Treasury had published an updated instruction note stipulating the minimum threshold for local production and content for valve products and actuators.
The updated note provides clarity on certain topics, such as how local content should be calculated and what constituted local content. It also provides some protection for major suppliers, such as foundries, forge shops, steel and stainless steel suppliers.
Providing clarification on what the 70% local content comprises, the note includes the use of locally produced and certified castings, forging and fabrication, as well as verifiable manufacturing activities, such as machining, drilling, coating, assembly and testing.
“The first instruction note came out in 2014. It had many loopholes in it and did not stipulate how the 70% local content should be adhered to,” says Vamcosa member Mark Wilson.
He adds that Vamcosa, together with the Department of Trade and Industry, worked to change the instruction note, which was issued last month.
Saceec CEO Eric Bruggman adds that, there is no penalty for State-owned companies that do not procure enough local content.
“Currently, 20% is local and 80% is imported and we are hoping to change that,” he notes.
The updated instruction note stipulates that, the averaging out of local content either across any number of valves and gearboxes and actuator combinations, as well as locally made and imported valves or other items, is not permitted.
Each valve, manual actuator or pneumatic actuator is subject to the minimum 70% local- content threshold.
In addition, the valve type list has been updated to include the alternative names of valves.
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