By Oliver Kazunga
The Zanu PF government has increased the list of goods under Statutory Instrument 64 of 2016 among a raft of measures it claims are aimed at protecting local industry and stimulating domestic production and exports.
The new measures will take effect at the beginning of next month. SI 64/2016 was promulgated in June this year and removes several goods from the Open General Import Licence (OGIL).
Presenting the 2017 national budget yesterday, Finance and Economic Development Minister Patrick Chinamasa said the measures, which include increasing customs duty on certain products, were short term steps towards revitalising production.
“It is, thus, proposed to amend bilateral rules of origin on flour, to the effect that the preferential treatment is granted to flour milled from wheat grown in the country of export. It is, further, proposed that wheat flour be removed from the Open General Import Licence,” said the minister.
So far, over 40 products are listed on SI 64/2016.
Minister Chinamasa said despite threats to the viability of the milling industry, the sector continues to receive new investment.
“Blue Ribbon Foods has been revived by a new investor, which has increased the level of capacity utilisation and competition, resulting in prices of flour declining from $32 to $27 per 50 kilogrammes.
“Such investments need to be nurtured, in order to enhance value addition and linkages with the agro-processing and packaging industry,” he said.
As part of efforts to boost domestic production and value addition against declining exports, the Government has also supported industry through prioritisation of critical raw material imports and levelling the playing field.
As such, Minister Chinamasa noted that the local textile manufacturers were operating at capacity utilisation levels of between 30-35 percent with the growth of the sector being hampered by competition from imported fabrics.
“Manufacturers of blankets have particularly been negatively affected by imports of semi-finished blankets, whose process of manufacture involves minimal value addition of cutting and trimming.
“I, therefore, propose to increase customs duty on selected fabric, in order to level the playing field for the local industry,” he said.
“Clothing and furniture manufacturers will, however, continue to access fabrics duty free, under the clothing manufacturers rebate.
“Furthermore, it is proposed to avail additional raw materials under a rebate of duty on selected fabrics. It is also proposed to remove luggage ware that includes bags and suitcases from the OGIL. The above measures take effect from 1 January 2017.”
For a number of years, Minister Chinamasa said, manufacturers of uniforms have provided income for small enterprises that operate as cooperatives and thus school uniforms were being removed from the OGIL to promote local production.
He also said the printing industry has begun to make inroads into production as a result of support measures that have been put in place by the Government.
“However, imports of printed and packaging material continue to increase, hence the need to support the industry through reduction in the cost of production.
“It is, therefore, proposed to increase the list of raw materials that are used in the printing and packaging industry that are eligible for importation under the manufacturers’ rebate,” he said.
Minister Chinamasa said customs duty on sanitary wear will be suspended to enable the less-privileged to access affordable products while allowing local companies ample time to invest.
“Following the entry of new local sanitary wear manufacturers, the suspension of duty was lifted and substituted by modest duty rates of 15-20 percent.
“Whereas local companies have potential to grow and meet local demand, the industry still faces challenges such as high cost of raw materials and loyalty of consumers to international brands,” he said.
Minister Chinamasa said the measures to support the resuscitation of industry must be complemented by manufacturers playing their part by guaranteeing quality of goods as well as competitiveness of prices.
Since the liberalisation of the economy in February 2009, the local manufacturing sector has faced stiff competition from imported products.
The imports were mainly coming from the neighbouring South Africa, China, and Brazil.
As a result of the promulgation of SI 64/2016, industry capacity utilisation has improved from 34 percent in 2015 to 47,4 percent this year, the Confederation of Zimbabwe Industries reported recently. The Chronicle