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2,000 cement industry jobs under threat

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By Taonga Sabola:

About 2,000 workers in cement manufacturing companies risk losing their jobs as firms struggle to compete with cheap imports, an investigation by The Daily Times has revealed.

The investigations also revealed that management of the country’s three cement producers—Lafarge, Shayona and Cement Products—have on several occasions met officials in the ministries of Trade and Finance to consider invoking anti-dumping regulations, with no success.

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A snap survey in Lilongwe, Mchinji and Mzuzu revealed that the market is flooded with imported cement brands such as Dangote and PPC.

In a letter to Treasury dated January 28 2019, which have seen, the three cement manufacturers argue that cement imported into Malawi includes heavily subsidised freight charges, considering the location of the cement manufacturers in Zambia.

“We request the stakeholders to look into a strong case of dumping and countersurveilance,” reads part of the letter signed by Lafarge Cement Malawi Chief Executive Officer Albert Sigei, Central Products Limited Managing Director Akbar Gaffar and Shayona Cement Corporation Limited Finance Director, Rajesh Patel.

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Dumping is defined as a situation in which the export price is lower than its selling price in the exporting country.

Where it is demonstrated that the dumped imports are causing injury to an importing country within the World Trade Organisation (WTO) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, the importing country can impose anti-dumping measures to provide relief to domestic industries injured by the imports.

The cement producers also questioned why local tax authorities are not charging fair dutiable transport rate at the borders from manufacturing points.

“For example, any goods that come from Zimbabwe or Beira, Value Added Tax is charged at $100 per tonne regardless of the invoice freight rate, while cement coming from Ndola in Zambia, which is of longer distance, is only charged at $20 per tonne,” reads the letter in part.

The local producers also wondered why Malawian importers who buy from third party suppliers rather than manufacturers are selling the product below their own costs when all expenses are factored in.

The manufacturers also expressed concern over lack of reciprocal cement import/export tax regimes between Malawi and neighbouring trading partners.

They argue that, when Malawi wishes to export cement into Mozambique, there is a 20 percent special duty that is imposed while Mozambican exporters do not suffer similar duties.

“All the above points have led to a scenario of unfair competition and lack of level playing field being experienced by local manufacturers versus imports whereby we are unable to compete.

“Being large local investors in the Malawi market, we feel that deliberate policies must be set up by our government to protect our infant industries to grow to a level whereby we can achieve resilience and contribute to enhancing the contribution of the manufacturing sector to the local economy. The current situation poses a serious threat to the sustainability of our industry,” reads the letter.

Statistics from the Reserve Bank of Malawi indicate that Malawi needs about $230 million to cater for the country’s import demands every month.

Industry, Trade and Tourism Principal Secretary, Ken Ndala, said on Tuesday Capital Hill was talking to the producers to ascertain their productive capacities to meet growing demand for the product.

“They have to assure us that they are going to meet the demand was because we don’t want to go back to the situation where cement was scarce in the country,” Ndala said.

He added that the government would like to see cement producers producing cement not importing it.

“On the issue of dumping, the laws are there but, for us to effectively apply them, there is need to collect more information as, as government, we are doing it and I think you will be able to see the outcome soon,” Ndala said.

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