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Industry challenges government on incentives

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KATANDULA—We need
significant incentives

Newly elected president of the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Lekani Katandula has urged the government to put clear incentives for investors to spur economic activity.

In an interview on Monday, Katandula said there are a lot of uncertainties on incentives, a development which frustrates the private sector.

He said, in the past year, the private sector has demonstrated willingness and ability to make significant investments in the country’s key sectors such as energy, witnessed by solar farms planted by private sector players.

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“If I look at the power sector as an example, we have some regulations that say if you invest more than $30 million then a committee comprising the governor of the Reserve Bank of Malawi, the MRA [Malawi Revenue Authority] and a few others could assess how much tax, incentive to give you which could be variable depending on how they assess the entire project.

“That is not a fantastic way of attracting investment. When investors are coming in, they do not want that kind of uncertainty. It is a lot better to say ‘if you meet the following conditions these are the incentives that you will access’,” Katandula said.

Meanwhile, Katandula has said the business outlook remains murky, considering the ongoing Russia- Ukraine war and increase in global fuel and fertiliser prices.

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“Despite the impact of global trends, we have seen the start of the tobacco selling season. We hope to see sustained supplies of tobacco to the market and better realisation of forex,” Katundula said.

In a separate interview, spokesperson in the Ministry of Trade and Industry Mayeso Msokera said the government is always open to suggestions from the private sector.

“We already have outlined incentives for different types of investments in the Tax Incentives in Malawi handbook but if they would want further or specific incentives, they can always reach out to the ministry or the Malawi Investment and Trade Centre with such propositions,” Msokera said.

According to the Tax Incentives handbook specific customs and excise tax incentives in Malawi cover 10 sectors including construction, energy, tourism, agriculture, transport, mining, education, health, manufacturing and export processing.

For example, for the electricity generation and distribution sector, the handbook says: “Duty free importation but VAT payable at 16.5 percent on electricity generation equipment such as fuses, transformers, sling, ring main unit, insulators, galle chain equipment, conductors, surge arrestors, column duplex, and AAC/PVC and electricity supply meters”.

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