THE Confederation of Zimbabwe Industries (CZI) has called on government to reward firms investing in strategic industries with temporary protection through high tariffs for a period of up to five years.
In its 2023 national budget submission, the industry lobby group said it was concerned that a number of players, who had invested heavily in manufacturing at a time when others had not demonstrated such interest, continued to face viability challenges in the face of fierce competition from imports.
“For example, CAFCA is the only firm in the business of manufacturing electrical cables and conductors in Zimbabwe but is facing viability challenges due to the coming in of imported products, including those that do not meet safety standards,” CZI said.
“Trade Kings invested in the manufacturing of washing powder in the country at a time when its competitors had actually closed their plants in Zimbabwe to supply from outside the country. However, the firm is also facing viability challenges due to imported and smuggled products.”
CZI said there were two companies that produced polyethylene terephthalate plastic strapping in Zimbabwe; one is at 60% capacity and the other at 10% capacity.
However, the organisation said, there was competition from imports for a product that is produced from recycled Chibuku and water bottles locally before the capacity to produce locally is fully utilised.
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“Duty should be removed on items that are used in the manufacturing of final products, for example LED (light-emitting diode) light bulb components have duties of 5 to 40% on different items, yet the finished LED bulb has zero duty. Put tight controls at ports of entry to curb smuggling of finished goods,” it said.
CZI said value-added tax on imports should not be increased on raw materials, especially where no local capacity exists to produce them.
“There should be no introduction of new taxes for formal businesses as a way of increasing tax revenues. Instead, the focus should be on how to formalise the informal sector to widen revenue collection.
It said the rebate on duty for special economic zone operators should be extended to capital goods, construction material. On machinery, it should include vehicles, forklifts, and specialised motor vehicles, the industry lobby group said.
CZI said there was a need to lessen the tax burden by avoiding multiplication of permits and licences.
Finance minister Mthuli Ncube will present the budget next month at a time when the country’s economy is facing major headwinds that include currency volatility, high inflation, liquidity constraints, policy inconsistency and rolling power cuts.
According to the budget strategy paper, Ncube is expected to table a $3,4 trillion budget for next year with nearly half of the revenue going towards employment costs and pension.
The budget will be nearly double the $1,9 trillion expenditure for 2021.
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