As the Motor Industry Development Programme (MIDP) is set to be reviewed this year, makers of catalytic converters in South Africa will be entering 2006 with some apprehension.

The MIDP was introduced in 1995 with the aim of improving the industry's international competitiveness.

It rewards vehicle and component exporters on a diminishing import benefit scale that will run until 2012.

But this year the extent and end date of the benefits are to be reviewed and there are concerns that some catalytic converter manufacturers could opt to invest in new plants in Eastern Europe and the Far East, in the hope of more attractive incentives.

All of South Africa's major catalytic converter manufacturers belong to overseas parent firms and could be endangered if they are not encouraged to expand and invest in their operations domestically.

Joe Armstrong, chairman of the Catalytic Converter Interest Group, told the Herald: "There is a window of opportunity for the catalytic converter industry to maintain and grow export earnings if it is encouraged to invest in the next generation of converter technology which includes diesel particulate filters."

According to Mr Armstrong, the industry needs investment of over R2 billion to keep hold of its share of the world market.

He believes the industry is likely to come under increasing pressure if the South African government continues to reduce MIDP benefits.


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