Maravi

Address high cost of doing business, Zam Tells govt

Address high cost of doing business, Zam Tells govt
By Kabanda Chulu in Kitwe
Tue 23 Mar. 2010, 04:01 CAT

ZAMBIA Association of Manufacturers (ZAM) has challenged the government to urgently address the high cost of doing business so that local industries are not jeopardised through the flooding of cheaper imported products under the free trade regional integration markets.

And ZAM chief executive officer Roseta Mwape has advised the government to reinstate the 25 per cent duty that has been reduced on imported finished products under the common external tariff (CET) for the COMESA Customs Union.

But commerce and trade minister Felix Mutati said the government is ready for continuous dialogue with all stakeholders to address their concerns.

In an interview last week, ZAM vice president for the northern region Eugene Appel said the coming of CK regional markets would result in mass production of goods that would see Zambian producers disadvantaged due to the high cost of borrowing that hindered their capacity to expand.

“Producers exporting into Zambia borrow funds at lower interest rates in their countries hence whatever they produce will be cheaper so our goods will not compete favourably and this will negatively affect local industries,” Appel said. “So government should urgently address the high cost of doing business in the country otherwise benefits of regional integrations will by-pass us just because we cannot borrow to invest and expand since interest rates are too high.”

He said the Citizens Economic Empowerment Commission’s financing to Kechas General Dealers for iron sheet manufacturing was a good initiative that would result in a positive impact on the economy.

“But this financing facility should be done on a large scale and we need to see such financing being available to many projects because it shows that economic development is possible when funds are readily available,” Appel said.

He said it was encouraging to see the government talking about joint ventures with foreign investors especially those from the Asian block.

“But this has not materialised into actual and meaningful partnership because certain mechanisms are not in place hence government should ensure that guidelines are there and should be implemented,” said Appel.

Mwape said ZAM would like the government through the Ministry of Commerce, Trade and Industry to consult widely on all products manufactured in the country so that the manufacturing sector was not disadvantaged following the launch of the Common Market for Eastern and Southern Africa (COMESA) Customs Union.

She said Zambia had a low manufacturing base that needed to be revamped to facilitate and promote competitive industries on the local market.

“In addition, promotion of value addition to primary goods and transfer of appropriate technology is instrumental to increased productivity and competitiveness especially with the advent of the COMESA Customs Union and the Economic Partnership Agreements (EPAs),” Mwape said.

“But the removal of duties on products has affected the performance of local manufacturers and we implore government to reinstate the 25 per cent duty on finished products for those that have been reduced under the CET for the Customs Union.”

She said COMESA was offering a large market that Zambia lacked as a country, but that there was need to identify products that could be sold under the Customs Union.

“There is need for an aggressive programme on export facilitation since currently there is a lot of red tape bureaucracy in exporting and this has led to most products being manufactured to be consumed locally with very few exports and with the coming of the Customs Union under COMESA and the planned SADC Customs Union, the onus is on us to identify products that we can sell since value addition is key to diversification from raw copper,” Mwape said.

She further said there was need for deliberate policies to promote partnerships that could be split between local and foreign investors.

Mwape proposed that the government should put in place deliberate policies to promote partnerships that would encourage more local shareholding than foreign ownership.

“The main problem we have in the manufacturing sector is that there is no direct policy that spells out how the sector should operate and how market access for industries whether locally or abroad should be addressed hence the need to have deliberate policies to promote partnerships which should be split 70 and 30 per cent for the local and foreign investor respectively,” said Mwape.

“We are calling on government to seal the existing loopholes in the current policy so as to protect the local industries and that majority shareholding should be by local Zambian companies.”

But Mutati said the government was addressing various concerns from many stakeholders and continuous dialogue was important.

He said it was important for stakeholders to engage the government on national issues and challenges facing the people.

“We cannot be left behind on economic issues about world trade because if we do not participate we are going to sink as a country but we are addressing those issues so that we can also enter into trade agreements that will benefit us as a country,” said Mutati.

Labels: CEEC, FELIX MUTATI, ROSETA MWAPE, ZAM

posted by MrK @ 2:37 PM