The catalyst for this phenomenal growth has been the government's Motor Industry Development Programme (MIDP). Introduced in 1995, the programme is due to run, with gradual phasing out, until 2012.
The MIDP has boosted exports by enabling local auto manufacturers to include total export values as part of their local content total, then allowing them to import the same value of goods duty-free. This has allowed auto makers to concentrate on manufacturing certain vehicles or components for export, while importing other models.
The MIDP also grants a production-asset allowance to vehicle manufacturers that invest in new plants and equipment, giving them 20% of their capital expenditure back, in the form of import-duty credits, over a period of five years.
