Draft Report of the
BRICS Business Council
Manufacturing Industry / Sector Working Group
2013 / 2014
1 1.) Introduction
The BRICS Business Council was launched at the Fifth BRICS Heads of State
Summit with South Africa as its inaugural chair. The Council resolved to establish
working groups to pursue the promotion of trade and industry, business
cooperation, technology transfer and development, including the pursuit of
business opportunities in third countries and multilateral business. The role of the
working groups would be to advise the council and promote overall business
cooperation within the BRICS Business Council Framework.
2.) Scope of the Report
Whereas a number of working groups would be established in different sectors
under the BRICS Business Council, this report pertains particularly to the work of
the Manufacturing Industry / Sector Working Group. It reports on progress made
in the first four meetings of the Working Group held on the following dates:
Meeting 1: 15 January
Meeting 2: 19 February
Meeting 3: 20 March
Meeting 4: 22 April
Two additional meetings have been scheduled for the following dates:
Meeting 5: 21 May
Meeting 6: 18 June
3.) Participation
The Manufacturing Industry / Sector Working Group was established with Mr
Mike Arnold, Group Managing Director of Consol Glass and Chairperson of the
Manufacturing Circle of South Africa, as its inaugural chairperson. The remainder
of the Working Group is listed in “Annexure A: Working Group Participants”
4.) Approach
The Manufacturing Industry / Sector Working Group accepted the proposal to
adopt the BRICS Business Council Terms of Reference, and as such accepted
as its key objective to try accelerate the practical interaction on a business to
business level with the purpose to try and grow manufacturing and related
industries, and so create more jobs. It was therefore not only important to identify
manufacturing sectors or categories and products in in terms of which we would
2 like to promote investment, trade and cooperation, but also the tariff and non-tariff
barriers that needed to be addressed, along with the requisite proposals to
ameliorate these barriers to the mutual benefit of member countries
5.) Priorities
In summary, the working group identified four overarching priorities to deal with in
order to give expression to the BRICS Business Council Terms of Reference:
i)
Identifying Projects, Sectors and/or Products for Cooperation,
Technology/Expertise Exchange, Trade and Investment
Members agreed that in order to accelerate practical business interaction, it was
important for all members to proactively promote the identification of projects,
sectors and/or products in terms of which cooperation, technological or expertise
exchange, trade and investment opportunities could be pursued.
ii)
Information Exchange on Regulatory Requirements and
Incentives
Members agreed that in order to promote the exchanges identified under the
previous paragraph, it was important to develop a platform to facilitate information
exchange between the BRICS member markets on their regulatory requirements
and incentives allocated to the identified manufacturing and related activities.
iii)
Identifying and Communicating Bottlenecks
Tariff and non-tariff barriers with respect to identified projects, sectors and/or
products should be identified and communicated to member governments and
their policy makers
iv)
Leveraging Complementarities
Complimentarities, differing technology layers, differing levels of industrialisation
and market efficiencies should be explored to improve export capabilities and
allocate value chains and industries accordingly across BRICS markets.
3 6.) Implementation Methods
In order to deliver on the identified priorities, the Working Group decided upon the
following implementation methods:
i)
Templates to Identify Projects, Sectors and Products for
Cooperation, Trade and Investment Opportunities
The Working Group resolved that templates should be developed through which
participants could express their interest in projects, sectors and products for
cooperation, trade and investment. The templates had to allow for:
- an indication of the nature of the cooperation proposed,
- the identification of the specific project, sector and/or product in terms of
which the cooperation was proposed
- the degree of industrialisation (labour, capital and knowledge intensiveness)
that the proposed cooperation entailed
- the nature of the desired partnership proposed (whether company-tocompany or otherwise)
- whether the intent was bilateral, multilateral or third party cooperation
- whether development expertise would be offered or sought; and,
- whether any bottlenecks were experienced or anticipated
The templates would be distributed to members of the working group. Members
would then be responsible to call for expressions of interest to be registered
through their completion and return to the Working Group secretariat
ii)
Involving the Broader Business Community
While key companies in each market were represented within the Working Group,
they represented only a beginning through which to commence the acceleration
of business interaction. Activity would have to be branched out progressively by
drawing in more companies and sectors. Business confederations, chambers of
commerce and industry, industry federations and industry development
organisations would all play a key role in this regard. Members were therefore
encouraged to use these structures in their respective markets to appeal to the
broader business community to register expressions of interest in cooperation
through completing and submitting the above-mention templates. All completed
templates would then, as an initial step, be distributed by the secretariat to all
members, who on their part would then take responsibility for their distribution in
their own markets.
4 iii)
BRICS Portal for Manufacturing Industry / Sectors and Related
Activities
While it was initially proposed that a purposely designed portal should be
developed to carry industry / sector-related information for manufacturing and
related activities, it became apparent that a complementary effort was already
under way by the Fudan University of China at www.brics-info.org. Members
agreed that the administrators should be approached with the idea for purposely
added section for manufacturing and related activities. Should they accede,
information on bottlenecks and the completed templates would be forwarded to
them, for them to generate content for such a manufacturing and related activities
section. Members by themselves and through the structures of organised
business in their respective markets would then promote the use of the portal.
iv)
Proposals to the BRICS Business Council
Finally, information gleaned from the templates and otherwise would be used to
make proposals to the BRICS Business Council for forwarding to the Heads of
State Summit on how to better facilitate the acceleration of practical business
cooperation and exchange
7.) Progress
While work is under way, the Working Group can at present report the following
progress
i)
Expression of Interest in Projects, Sectors and Products for
Cooperation, Trade and Investment Opportunities
To date the working group has received a total of 58 completed expressions of
interest for projects, sectors and products for cooperation, trade and investment
promotion. 35 of these were from India, 17 from South Africa and six from the
Russian State Owned Company and Russian representative on the Working
Group, Rostec. Efforts by Brazil and China are still under way.
The expressions of interest run the gamut of manufacturing categories and
extends to certain services such as trade publications, financial services, IT
consulting and business process outsourcing. The expressions of interests
(completed templates) are indexed at “Annexure B: Index of Expressions of
Interest in Projects, Sectors and Products for Cooperation, Trade and Investment
Opportunities” and will all soon be downloadable from
www.manufacturingcircle.co.za.
5 ii)
Involving the Broader Business Community
Member country delegations have to differing degrees leveraged their broader
business communities to advertise the call for expressions of interest for
cooperation, trade and investment. Efforts in India and South Africa were broad
ranging and involved reporting in the popular media, working through organised
business and drawing in companies that are otherwise not represented in the
working group. Brazil and China have committed to submitting expressions of
interest going forward. Russian expressions of interest have so far only originated
from Rostec.
All expressions of interest received by 15 April has been circulated to all member
countries, whose representatives are responsible for circulating them and
promoting attention is afforded to these documents.
iii)
BRICS Portal for Manufacturing Industry / Sectors and Related
Activities
All collected expressions of interest along with other information will in the next
few days be sent to the administrators of the www.brics-info.org website, along
with a request that a manufacturing and related activities section be added to the
website, and that the provided content be used to populate it. In the interim, all
template will be posted on www.manufacturingcircle.co.za and will be advertised
via country representatives and business organisations.
8.) Bottlenecks
Numerous tariff and non-tariff barriers are reported, both in the expressions of
interests, as well as in overarching submissions from the Indian pharmaceutical
industry (Annexure C: Policy and Regulatory Challenges) and from South African
manufacturing (Annexure D: BRICS Cooperation – A proposal by the South
African Manufacturing Circle). The majority of these challenges relate to
administrative burdens, time-lags for approvals and difficulties with government
procurement. The proposal is that the themes be isolated, and that a dedicated
discussion can be held in this regard between the member business communities
and member governments to arrive at clear actions that can be achieved with
relatively short turnaround times.
6 9.) Proposals to the BRICS Business Council
The Manufacturing Industry / Sector Working Group wishes to make the following
proposals to the BRICS Business Council:
i)
That member governments are appraised of the Manufacturing /
Sector Working Group’s efforts to promote company and industry level
acceleration of business exchange and cooperation through the
templates for expressions of interest on project, sector or product
basis. This should not only be done through public support and
advertising of the initiative, but by government industrial policy and
development officials themselves making use of the expressions of
interests to seek opportunities for their home markets in line with their
industrial policies; or, conversely, that they may use it to better shape
such policies
ii)
Where there are specific products for which there are opportunities to
competitively “localize” sourcing within BRICS, rather than from
outside BRICS, that these opportunities be identified at the hand of the
expressions of interests lodged with and published by the Working
Group Secretariat
iii)
That themes be extracted from the tariff, regulatory and other
bottlenecks reported by working group members be identified, and that
a dedicated, action oriented discussion is held in this regard between
the member business communities and relevant government officials.
The idea would be to meat on a regular (say six monthly basis), based
on agreed areas of action, to see that regulations are adjusted where
possible to smooth and favour inter-BRICS trade, investment and
cooperation.
7 Annexure: Working Group Participants
Brazil:
1.) Erasto Almeida
Policy and Regulatory Affairs Manager
Corporate Affairs
Vale
2.) Stephanie Schmitt
Portal da Indústria, Brasileira
Russia:
1.) Dimitri Rudkin
Department of International cooperation
ROSTEC (State Corporation Russion Technologies)
2.) Serguye Derevslavski
Chief of the Department of International Co-operation
ROSTEC (State Corporation Russion Technologies)
3.) Dmitry Shugaev
Deputy General Director
ROSTEC (State Corporation Russion Technologies)
4.) Alphiya Pavkina
President of the Chamber of Commerce and Industry
Khanty-Mansiysk Autonomous Okrug
India
1.) Ranjan Chakravarty
Head: Transformation and Business Consulting
Ranbaxy Laboratories Ltd.
2.) Tuhin Mukherjee
Managing Director
Essel Mining and Industries Ltd. Aditya Birla Group
3.) Naveen Kapur
8 President, International Business Division
Apollo International Ltd.
China:
1.) Hu Rui
President
Sinoma International Engineering
2.) Wang Wei
Chairperson
Sinoma International Engineering
3.) Wu Pu
Director, President’s Office
Sinoma International Engineering
4.) Mo Lingyi
Translator
Sinoma International Engineering
South Africa:
1.) Mr Mike Arnold
BRICS Business Council Manufacturing Working Group Chairperson
CEO: Consol Glass South Africa
2.) Stavros Nicolaou
BRICS Business Council South African Delegate for Manufacturing
Senior Executive: Strategic Trade Development
Aspen Pharmacare
3.) Andile Ngcaba
Chairman: Dimension Data
Middle-East and Africa
4.) Dan Simelane
Chief Executive Officer
ARM Copper and Copper Exploration
5.) Khanyisile Kweyama
Executive Director
Ango American
9 6.) Sipho Tsotsi
Managing Director
Sikhuliso Resources
7.) Davide Carderelli
Former CEO
Nike, South Africa
8.) Coenraad Bezuidenhout
Manufacturing Industry/Sector Working Group Secretariat and Manufacturing
Circle Executive Director
10 Annexure B: Index of Expressions of Interest in Projects, Sectors
and Products for Cooperation, Trade and Investment
Opportunities
From Russia:
RussiaBRICSTemplate001_Rostec.pdf
- Air traffic control systems
RussiaBRICSTemplate002_Rostec.pdf
- Multi-functional mobile ports
RussiaBRICSTemplate003_Rostec.pdf
- Raw materials and infrastructure
RussiaBRICSTemplate004_Rostec.pdf
- Complex automated security systems
RussiaBRICSTemplate005_Rostec.pdf
- Helicopters, helicopter engineering, helicopter maintenance centres
RussiaBRICSTemplate006_Rostec.pdf
Gas turbine engines & power generation equipment
From India:
IndiaBRICSTemplate001_ExhibitionsIndia.pdf
- Trade / Automotive publications
IndiaBRICSTemplate002_NewDelhiIoM.pdf
- Educating future global leaders
IndiaBRICSTemplate003_NirmalSeeds.pdf
- Agriculture: Seeds and bioproducts
IndiaBRICSTemplate004_BharatPetro.pdf
- Oil & Gas Upstream
IndiaBRICSTemplate005_AIL.pdf
- Agro-processing
IndiaBRICSTemplate006_AIL.pdf
- Heavy commercial vehicles and construction equipment
IndiaBRICSTemplate007_AIL.pdf
- Infrastructure and industrial projects
IndiaBRICSTemplate008_AIL.pdf
- Tyres
IndiaBRICSTemplate009_GodrejEngineering.pdf
- Machines, equipment and subsystems
IndiaBRICSTemplate010_EMMVEEPVSolar.pdf
- PVSolar
IndiaBRICSTemplate011_Walchandnagar.pdf
- Nuclear, thermal, biomass, sugar, steel & cement plant equipment
11 - Industrial and marine gearboxes
IndiaBRICSTemplate012_ACMECleantech.pdf
- Passive infrastructure for telecoms, solar
- Lithium-ion based energy storage
IndiaBRICSTemplate013_GlobalWind.pdf
- Wind turbines
IndiaBRICSTemplate014_HindustanPower.pdf
- Coal mine, PV, solar, solar pumps
IndiaBRICSTemplate015_GAIL.pdf
- Oil & gas upstream
IndiaBRICSTemplate016_Hinduja.pdf
- Auto manufacturing, bus/truck, auto/industrial lubricants, financial services and
investment banking
IndiaBRICSTemplate017_TechnoAgri.pdf
- Agriculture, seed and seed potato mine tubes
IndiaBRICSTemplate018_BombayDyeing.pdf
- Bed linned
IndiaBRICSTemplate019_Larsen&Toubro.pdf
- Low and medium voltage switchgear
- IT Services, infrastructure, management and counseling
- Construction
- Heavy engineering (Defence, process equipment)
IndiaBRICSTemplate020_Telematics4U.pdf
- ICT & Telematics
IndiaBRICSTemplate021_CrownMining.pdf
Lead & Zinc
IndiaBRICSTemplate022_JSGroup.pdf
- Mining, metallurgical, power & water technologies
- Rail & metro
IndiaBRICSTemplate023_GreatEasternEnergy.pdf
- Natural gas, hydrocarbon, methane gas
IndiaBRICSTemplate024_AvantGarde.pdf
- Co-generation
IndiaBRICSTemplate025_AvantGarde.pdf
- Co-generation
IndiaBRICSTemplate026_ProcessPumps.pdf
- Speciality pumps
IndiaBRICSTemplate027_ThreeAcesLogistics.pdf
- International logistics
IndiaBRICSTemplate028_UniversalEnterprises.pdf
- Cleantech, biotech, packaging, alternative energy, waste management, agroproducts, horticulture
IndiaBRICSTemplate029_AnjaniTechnoplast.pdf
12 - Protable structures, bullet proof jackets, lightweight structures, bullet proof
helmets, antiriot equipment
IndiaBRICSTemplate030_SchokhiIndustrials.pdf
- IT imports and sales
- Commodities, power, infrastructure, BPO
- Angel / Seed fund
IndiaBRICSTemplate031_Sunbeam.pdf
- Food processing
IndiaBRICSTemplate032_Thermax.pdf
- Industrial heating, cooling, waste, heat recovery, airpolution etc
IndiaBRICSTemplate033_IndiaOil.pdf
- Hydrocarbon exploration and production
IndiaBRICSTemplate034_Petronet.pdf
- LNG
IndiaBRICSTemplate035_Sunetra.pdf
- Upstream oil and gas
- Industrial gas based power projects
From South Africa
RSABRICSTemplate001_Sandoz.pdf
- Pharmaceutical
RSABRICSTemplate002_SAPPI.pdf
- Containerboard for packaging
RSABRICSTemplate003_SAPPI.pdf
- Dissolving wood pulp for clothing
RSABRICSTemplate004_Tellumat.pdf
- Renewable energy, electricity metering, railway infrastructure technology
RSABRICSTemplate005_AmathubaEngineering.pdf
- Conveyor solutions
RSABRICSTemplate006_Clotex.pdf
- Clothing manufacturing
RSABRICSTemplate007_CMTI.pdf
- Gold and platinum, multi-track remote controlled mining machine
RSABRICSTemplate008_CMTI.pdf
- Electric locomotive
RSABRICSTemplate009_Endispan.pdf
- Mining supply services
RSABRICSTemplate010_MTech.pdf
- Copper rod, turned copper wire, polymers/compounds, tapes and yarns, coated
steelwire, optical fibre imports
RSABRICSTemplate011_TrizEngineering.pdf
13 - Commercial vehicles, vehicle adaptation, lightweight design, improved
performance
RSABRICSTemplate012_VAMCOSA.pdf
- Valves and actuators
RSABRICSTemplate013_PFG.pdf
- Flat and patterned glass
RSABRICSTemplate014_Hulamin.pdf
- Aluminum products
RSABRICSTemplate015_Jewellery.pdf
- Jewellery
RSABRICSTemplate016_Polyform.pdf
- Suspended slabs and housing
RSABRICSTemplate017_Aspen.pdf
- Infant milk formula and nutritional products
14 Annexure C: Policy and Regulatory Challenges – Pharmaceuticals
(India)
Task force The group of Indian generic companies operating in BRICS countries are willing to form a working group to interact with respective Departments of Health and Trade & Industry on regular basis. Indian High Commission is willing to assist in facilitating such interactive meetings as a mechanism to foster cooperation and dynamic exchange of information. Brazil Too stringent procedures in Brazil, result in delays in customs clearance at destination increasing the overall lead time. 1. Expedite Anvisa document verification etc. at airport/port and Receita Federal clearance to expedite custom clearance at the airport/port. 2. Expedite issue of Import License or waive of the same for import samples/standards in new product development dossiers. 3. Time taken by ANVISA for new product dossier evaluation is very long (3 years +). 4. Procedural complications and delay in Visa issue for travel to Brazil. Russian Federation 1. Innovator/Original and Generics have similar or the same registration requirements 2. Current Law on Circulation of Medicinal products requires Generic Companies to submit their own Pre-­‐Clinical report. 3. Requirement to conduct local Clinical Trial / Bio-­‐Equivalence (CT/BE) in spite of having conducted these in accredited laboratories worldwide. 15 4. Reference-­‐standards of active substances from Pharmacopeia are required instead of working standards leading to significant increase in regulatory costs/delays. 5. No regulatory channel for sharing information on deficiencies in new/variation application by MOH, thus leading to frequent rejections of dossier and subsequent resubmissions. 6. Immediate availability of Information about stage of approval is required. 7. Country of Origin (CoO) as an information benchmark in price application should not be a condition, since the cost of operations & product specifications are different in Russia than in CoO. 8. Facilitate easier and simpler mode for obtaining Work Permits for foreigners to work in Representative office. 9. Long term visa (5 years or longer) should be considered for visitors on business purpose on reciprocal basis. China 1. Facilitate approval of internationally accepted combination dosage form 2. Joint regulatory cell between SFDA & DCGI to pre-­‐view & qualify dossiers for China filing (improve speed and confidence from both side) 3. Common dossier review standards at CDE (Central Drug Evaluation) for local manufacturing and imported drugs. Defined timeline for completion of review and result. South Africa 1. Regulatory approvals 16 a. Excessive time taken for Regulatory approvals from Medicines Control Council (MCC) of South Africa for a new generic product registration, (3 – 4 years). 2. Capacity Building Collaboration in capacity building to augment Government’s efforts to harness skill set in South African Health Care Professionals (HCPs). 3. Mutual Recognition of Pharmacy Degrees Mutual recognition of respective pharmacy degree issued by the two countries is vital for development of this sector. 4. Work Permit for skilled personnel Quicker grant of work permit for skilled personnel will help Indian investments in South Africa generic pharmaceutical industry work better. 5. Regulatory Harmonisation Harmonization of regulatory requirements in the South African Development Community SADC would facilitate quicker availability of essential medications. 17 Annexure D: BRICS Cooperation – A proposal by the South
African Manufacturing Circle
Manufacturers in South Africa recognize that leveraging the BRICS partnership could yield significant positive outcomes. The BRICS business council is not only a significant opportunity to promote fair trade in manufactured goods with BRICS counterparts, but also to promote our mutual competitiveness through technology transfer and investment in each other’s markets. In addition, there is also interest from South African manufacturers to have their existing distribution networks into Africa leveraged by supplementing it with complementary manufactured products from BRICS counterparts through company-­‐level trade exchange agreements and otherwise. It is with this approach in mind that the following points for discussion are being tabled for consideration PROPOSAL FOR DISCUSSION POINTS BY SOUTH AFRICAN MANUFACTURING 1.) South Africa has a significant raw material endowment from which our BRICS counterparts are already benefitting. At the hand of this it is proposed that: 1.1)
it is explored which beneficiated products produced by South African manufacturers could be exported to our BRICS counterparts under favourable terms (eg duty free access for stainless steel exports in return for importing chrome ore from South Africa – see annexure 1 for an example of discrepancies in tariff barriers); 1.2)
a proposal is made to Chinese counterparts in particular to target an amount for purchases of South African manufactured goods, of which a list could be proposed by the Manufacturing Circle; and, 1.3)
exploring targets for a percentage of the local beneficiation of all raw materials exported to member countries from another member. 2.) Active efforts must be made to target improvements in the collective competitiveness of manufacturing in BRICS countries by identifying, particularly, opportunities for: 2.1)
process technology transfer and joint R&D projects with government support to enhance manufacturing operations and other processes common to these nations; 2.2)
Collaboration on joint R&D projects to develop new products and technologies in targeted fields (such as green energy, agriculture, clothing, etc) that would lead to world class manufacturing facilities being established in the BRICS member countries that would compete as a collective against other global suppliers; and, 2.3)
investment by BRICS counterparts in established manufacturing concerns in each other’s markets. 18 3.) Fair trade is the cornerstone on which the BRICS partnership will grow its economic significance to member countries. In this regard, manufacturers propose discussion on: 3.1)
a process to identify regulatory hindrances to fair competition in each other’s markets and action steps required to address them (extending particularly to clearances required from statutory bodies such as customs and standards authorities and medical control councils) ; and, 3.2)
a process to identify and pursue trade reciprocity in terms of manufactured exports (see Examples 1 and 2). 4.) With the goal of improving trade facilitation between the BRICS counterparts, South African manufacturing would also support discussion in the following areas: 4.1)
improved access to Export Credit Agencies of BRICS counterparts for South African businesses seeking support to access financing for technology transfer and projects, while at the same time replicating the models of the most successful Export Credit Agencies of BRICS Counterparts in South Africa; and, 4.2)
the establishment of a BRICS business information exchange platform to better understand incentive structures and market opportunities in the member countries. 19 Example 1: Discrepancies in tariff barriers with respect to Stainless Steel Brazil Russia India China South Africa Brazil Russia India China South Africa Hot-­‐Rolled Import Duties Cold-­‐Rolled 14% 10% 5% 4% 0% 14% 10% 5% 10% 0% Anti-­‐Dumping South Africa excluded from current investigations 33.3% on Nickel containing 19.9%-­‐39.92% None 20 Example 2: Aluminum Rolling Industry 1.
Examples of import duties in countries with several rolling mills Brazil Russia India China EU USA Korea Duty(%) 20 20 5 6 7.5 6 8 2.
Examples of import duties in countries with only one rolling mill Croatia South Africa Serbia Czech Rep Slovenia Duty(%) 10 0 10 6.6 10 Conclusion: BRIC countries have a high level of protection for their capital intensive and strategic aluminium rolling industry 21 22