The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), an umbrella body for private sector players in the country, has challenged the government to review the tax regime to boost exports and grow the economy.
This came out during the opening of the 34th Malawi International Trade Fair at the Trade Fair Grounds in Blantyre Thursday.
MCCCI President Wisely Phiri said productivity has been low and the economy has been growing by less than three percent annually, way below the six percent threshold for achieving the aspiration of attaining a lower-middle income status by the year 2030 as stipulated in the Malawi 2063 10-year Implementation Plan (MIP-1).
He said, for example, the manufacturing sector has been affected by macroeconomic imbalances as evidenced by scarcity of foreign exchange, high inflation and rising interest rates.
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“The private sector is subjected to higher costs of production due to a number of factors, including high taxes, high cost of capital, unreliable and costly energy supply, and higher landing costs due to poor transport network and infrastructure and inconsistent regulatory framework.
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“All these factors have contributed to a further decline of production leading to an influx of cheap goods from foreign countries,” Phiri said.
He added that the current tax regime is a deterrent to potential investors, citing the additional 10 percent corporate income tax for profits above K10 billion and 20 percent withholding tax for new entrants in the industry arena.
President Lazarus Chakwera extended an invitation to private sector players for a discussion on possible remedies.
“These issues are better dealt with in private forums rather than in public meetings such as this one,” Chakwera said.
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Minister of Trade Sosten Gwengwe said there is, indeed, the need for continuous engagement between the government and the private sector towards improving the operating environment.
“One expects the private sector to be lobbying for such kinds of things but it goes down to the government to look at such kinds of concerns and see how best to compromise so that business flourishes but also, at the same time, the government collects something for other essential services.
“What MCCCI has said has been noted and we will continue engagement in various private and public forums. Key is to avoid suppressing the private sector. Consultation is always the best route but you can never have a country with no taxes. So, there will always be taxes even when the private sector may not want taxes,” Gwengwe said.
The trade fair is being held under the theme ‘Boosting Malawi’s Export Capacity through Enhanced Production’.
