Kamayoyo urges study of China’s FDI strategy

Kamayoyo urges study of China’s FDI strategy
By Ernest Chanda
Mon 27 Dec. 2010, 04:00 CAT

ECONOMIST Kelvin Kamayoyo says that the increase in Zambia’s export of raw materials to China exposes the country’s weak trade policy. Kamayoyo yesterday said Zambia’s trade policy instruments such as export tax and incentives were relaxed.

“Zambia’s upsurge US$2 billion export values to China mostly driven by raw materials, especially minerals relative to US$200 million imports exposes Zambia’s weak trade policy instruments implication and further poses a threat to our wasting asset's sustainability. This extraordinary international trade imbalance between China and Zambia is alarming especially because Zambia’s trade policy instruments, for example export tax and incentives, tariff rate quotas appear to be relaxed,” he said.

Kamayoyo said that Zambia should invest resources in carefully studying and understanding China’s Foreign Direct Investment (FDI) strategy.

He said Chinese investment was isolated from Zambia’s real economy, apart from taxation remittances.

And Kamayoyo said Zambia had every right to impose trade restrictions in the mining sector in order to address fiscal challenges, among others.

He said the current situation was not yielding results because the country was allowing raw materials to be exported cheaply.

“In absence of binding commitments at multilateral level, Zambia has every right to impose trade restrictions in the mining sector in order to address fiscal challenges, environmental impact of the raw materials, alarming exploitation and elongate the lifespan of the wasting asset, copper,” said Kamayoyo.

“Notably, the prevailing situation is not yielding the desired results because Zambia is allowing raw materials to be exported cheaply if not at zero tariff and in turn import the finished products at exploitative prices.”