80 No. 37261 GOVERNMENT GAZETTE, 24 JANUARY 2014 10.2.4 Postal Sector Although Postal is still regulated, it is less so relative to other sectors in the ICT environment. The only major restrictions are in respect of participating in the reserved market, which is the exclusive domain of SAPO. It has a 25-year licence. The following investment trends characterise the Postal sector in SA: There is strong competition in this sector, but investors need a certain minimum infrastructure to support delivery. It is difficult for new entrants to compete on price or service. The high market concentration makes it difficult for new entrants to enter the market. There are a significant number of transnational companies operating in the sector. However, due to the lax regulatory environment, the exact number, and the size of their business activities are not known. Despite BBBEE being a legislated policy, there are no figures to illustrate the level of compliance in the sector, particularly in the unreserved market where everyone operates. There is a poor regulatory environment (monitoring and enforcement) which presents huge risks for potential investors. The inconsistency in the number of operators in the unreserved markets seems to suggest the prevalence of illegal operators. 10.2.5 E-Commerce and IT South African companies are competing at a global level with regard to the pre-payment, revenue management and fraud prevention systems. The IT market is expected to increase from US$9,3 billion to over US$13 billion in 2014. However the industry falls behind online retail developments of the developed market. It is experiencing slow growth compared with other BRICS countries, at approximately 1,5%. E-commerce continues to grow, with Africa and Middle East projected to have a 22% increase in Business-to-Consumer (B2C) commerce by 2016. South Africa is projected to show slower growth than its peer BRICS countries. So e-commerce remains at a rather nascent stage in South Africa, with uptake limited to certain sectors of society. Current impediments, if not urgently addressed, will stagnate any future development in this sector. 10.2.6 Electronics Manufacturing The electronics industry revenues in South Africa amounted to R57,5 billion in 2002. South Africa's contribution to the world output in the electronics sector is insignificant, amounting to no more than 1%. The 'rest of the world', referred to in the same figure includes Brazil, other South American countries, Russia, Africa (excluding South Africa) and the Middle East. Manufacturing is a capital intensive business. Mass volume products are required to sustain the industry. During the discussions on Broadcasting Digital Migration, manufacturers lamented the need to implement market stimulants such as government seed orders and subsidies to further revitalize the industry. Other than the dti's limited incentives, no other support mechanisms exist especially for emerging firms. Lessons from Brazil, China and the US have demonstrated the importance of a sizeable domestic market if the local electronic industry is to be sustainable. Many industry players have found it difficult to penetrate foreign markets due to protectionist industrial policies. 10.2.7 Incentive schemes and packages While South Africa has introduced various incentive packages to boost investment, only a few are relevant and/or specific to the ICT environment. 76 This gazette is also available free online at www.gpwonline.co.za