Foreign arms suppliers had defied sceptics on government's industrial participation programme, delivering nearly $2,1bn worth of industrial investment and sales credits, parliament's trade and industry committee heard.

The investment projects have created 7000 direct jobs in SA since 2000, more than half the 12000 expected jobs to flow from the overall arms suppliers' commitments totalling $13bn in sales and investments by 2012.

Trade and industry deputy director-general Lionel October said progress was strictly monitored by the department which had collected audited statements, invoices, bills of lading and bank statements for the auditor-general.

The South African "success" flew in the face of an international trend that did not favour industrial-participation programmes.

The US was on the verge of banning offsets, the World Bank had advised against them and the World Trade Organisation was under pressure to rule against them because of the cost-raising factor. Once a bidder knew a country they wanted to sell their wares to demanded offsets, they usually included them in the tender, inflating the price.

But October told the committee that a European study had found that the cost raising of such deals was only between 3% and 5%.

He said the performance of the winners of the bids had been more than satisfactory. This excluded the defence offset programme which was struggling to meet its targets.

October said investment credits of more than 677m, sales credits of more than $1bn and local sales of about 457m had been generated by more than 125 projects.

BAE Systems-SAAB had achieved more than 100% of its first investment target in April of $300m and 95% of its first $2bn sales target.

Agusta had achieved more than 100% of both its April 2003 investment target of $32,7m and its sales target of $9,9m, while Thales had achieved 93% of its April 2003 target of $278,4m.

Thyssen had achieved more than 100% of its $56,6m target and would be assessed on its 147m investment target in April next year.

Boeing had, through projects in the aerospace industry, fulfilled its industrial participation three years ahead of schedule.

Airbus, one of the suppliers to South African Airways, was still in the early stages of fulfilling its obligations, having implemented six projects so far.

However, Democratic Alliance trade and industry spokesman Enyinna Nkem-Abonto said he was suspicious of the apparent success of the programme.

It was unclear, he said, whether the investments "facilitated" by the suppliers would not have come to SA anyway.

If international experience was anything to go by, the suppliers would have inflated their prices by about 10% to take their offset obligations into account.

With acknowledgements to Linda Ensor and the Business Day.