SI 64 to remain in force for up to three years

Source: SI 64 to remain in force for up to three years | The Financial Gazette August 9, 2016

INDUSTRY and Commerce Minister, Mike Bimha, says the protection of local industries through Statutory Instrument 64 of 2016 will last between two to three years.

He also said government is currently mobilising funds to finance companies meant to benefit from the SI, which controls importation of 42 goods to assist the local companies producing those goods to recover from years of poor capacity utilisation.

The SI has, however, received condemnation mainly from cross-border traders while South Africa has also retaliated by requesting for a revision of numerous tariffs on goods Zimbabwe exports to that country.

Some of the products under the SI include coffee creamers, Camphor creams, white petroleum jellies and body creams, plastic pipes and fittings, bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits and vegetables, pizza base, yoghurts, flavoured milks, dairy juice blends, ice creams, cultured milk and cheese.
Bimha told journalists that the removal of goods from the Open General Import License regime was not a new phenomenon, but was a gradual process which started in 2014 and had so far helped revive various industries. Among some of the resuscitated companies is Cairns Foods.

While addressing a press conference following his meeting with his South African counterpart, Rob Davies, Bimha said: “We stressed to South Africa that we would like to continue to import raw materials from the; we will continue to import capital goods from them, but that we believe that we need to give breathing space to our manufacturing sector, to give them time to retool hence the measures that we have taken.
“These measures do not constitute a ban because where we see gaps in demand and supply we are allowing our business people to import, we still allow individuals to import items for individual consumption, we also have exemptions for our diplomats, exemptions for Zimbabweans returning to Zimbabwe and we also have exemptions for those goods associated with inheritance.”

Bimha added: “We also emphasised that these measures are time bound they are not there forever and the time will vary from one sector to another and that we have put together a monitoring and evaluation committee which will continuously assess the impact of these measures. We are looking at two to three years.”

He also indicated that there is also a process within the Southern African Development Community in which countries can apply for reduction or removal of taxes and duties for certain products.
To this end, South Africa has provided a priority list of 112 products for consideration on the phasing down of duty and taxes.

“There are a number of products which we have applied duty or surtax on and which are of concern to South Africa. So they have submitted a list of 112 products which they say they would want us to consider in terms of phasing down of duty as well as surtax.
“We have examined these products and our response to South Africa was that we would want to carry out consultations because some of these products will require input from the ministry of agriculture, some of these products really will also require input from other ministries and other institutions therefore we cannot as a ministry be in a position to respond out rightly,” the Minister said.

Bimha noted that consultations with other ministries and institutions were already in progress regarding the matter, and Zimbabwe would give South Africa an official position in a fortnight.

The SI has been criticised in some quarters, but government is adamant that the move would benefit Zimbabwe in the long term. Government contends that the SI would help restrict the use of “hard earned foreign currency to import trinkets” which were not beneficial to the economy.

Bimha said Government will mobilise fresh low cost funding to support selected critical areas of the manufacturing industry. He said the understanding is that while there is capacity within the domestic manufacturing industry to produce the bulk of products the country is importing, funding remains the biggest constraint.
“We are putting up a fund, that is an extension of Distressed and Marginalised Areas Fund and Zimbabwe Economic Trade Revival Facility and we are currently sourcing funds for these facilities which target to support critical sectors protected under the SI,” he said.
Bimha’s meeting with Rob Davies was a routine trade meeting and is a follow up to a technical meeting that was held by officials of the two countries a fortnight ago.  Bimha’s delegation included officials from the Ministry of Finance and Economic Development, the Reserve Bank of Zimbabwe, the Zimbabwe Revenue Authority, the Competition and Tariff Commission and the Ministry of Industry and Commerce.
The meeting also addressed the issue of pharmaceuticals from Zimbabwe which are required to be airlifted into South Africa while the reverse is not applicable to imports coming to Zimbabwe thereby making South Africa’s products competitive. FinX