East London - The automobile sector has a significant role to play in ensuring that South Africa achieves a higher economic growth rate, says President Thabo Mbeki.

"With its 7.5 percent contribution to the country's Gross Domestic Product (GDP) in 2006, it is self-evident that this sector will play a significant role in ensuring that South Africa achieves the higher rate of economic growth we need," Mr Mbeki said.

He was speaking on Thursday at the opening of DaimlerChrsysler South Africa's new plant, for the production of the luxurious Mercedes Benz W 204 C-Class series, in East London in the Eastern Cape.

The President commended DaimlerChrysler for investing in one of the country's important economic nodes, which is famous for its manufacture of top class vehicles.

"Today's event also signifies the important partnership that exists between business and government, and the role that business is playing in the economic development of our country.

"We are glad that DaimlerChrysler understands and is committed to this partnership and plays a critical role in the social and economic life of our country," he said.

Mr Mbeki added that DaimlerChrysler had been part of the process of ensuring that East London became a major manufacturing industry, especially through increased investment and skills development.

Government had formally taken the decision that in terms of its industrial policy, it must encourage and support the automobile sector as one of the leaders in the process of radical expansion of the manufacturing sector.

The President also confirmed that government was keenly interested, - as the automobile sector was - to resolve all matters that related to the Motor Industry Development Programme (MIDP) as quickly as possible.

One of the objectives of the review of the MIDP had been to evaluate the performance of the industry against the MIDP's stated objectives such as making vehicles more affordable; growing exports; rationalising production platforms and stabilising and growing employment.

At the same time, the review also aims to ensure that the automotive industry remains globally competitive and is integrated into the global value chain, President Mbeki explained.

He however emphasised that government and the automotive industry must together ensure that they did not expose themselves to any challenges in terms of World Trade Organisation (WTO) rules and agreements.

"Our government will therefore honour its obligation consistently to engage all our relevant social partners to produce an agreement that meets our common desire to ensure the further and rapid expansion of the automobile sector.

The President added that the economic restructuring that was currently taking place in South Africa through the introduction of the National Industrial Policy Framework (NIPF) sought to respond to various economic and industrial policy imperatives.

He explained that part of the vision of the NIPF was to have an industrialisation trajectory that was responsive to:

* intensifying South Africa's industrialisation process and movement towards a knowledgeable economy;
* providing domestic manufacturers of the capital goods that our growing economy needs and will continue to demand;
* promoting more labour-absorbing industrial sectors, with an emphasis on tradable labour-absorbing goods and services and economic linkages that catalyse employment creation and
* promoting a broader based industrialisation path that is characterised by greater levels of participation of disadvantaged people and marginalised regions in the industrial economy.

"It also seeks to address a weakness that exists in our economy, which among other things, has resulted in the current balance of payments deficit," the President said. - BuaNews