By CONRAD ONYANGO
East African Packaging Industries(EAPI),a regional manufacturer of paper sacks has petitioned the government to consider scrapping off a 25 percent import duty, charged on the products , citing grave effects on local sector’s competitiveness.
The largest manufacturer in east Africa on its complaint letter to Kenya Association of Manufacturers(KAM) said the tax regime is outdated and invalid considering competing firms in countries outside the EAC market are exempted from the charges when they supply the materials into the country.
The company has been forced to import Extensible Sack KRaft (ESK), a packaging solution used to manufacture paper sacks and finished cement sacks from Egypt after Pan African paper Mills(PAPM) and Tanzania’s Mufindi Paper Mills shut down their processing divisions.
ESK materials are used to make multi-wall paper sacks for tea producers and blenders, cement, grain millers and coffee exporters. According to EAPI Managing Director, Cor Roest, finished cement sacks from Egypt are able to enter kenyan market duty free under Comesa, what risks edging out local sector players out of the market.
“This has resulted in a bizzare situation where imported cement sacks are now artificially cheaper than domestically manufactured ones. So what is the basis for continuing this duty regime,” querried Roest.
“Our government is making us artificially uncompetitive compared to suppliers from Egypt,” he lamented.
The manufacturer proposes the government to either consider slapping the duty on imported cement sacks or scrap off the duty on ESK to save a backlash of tea exports to Egypt.
“Either way, the current situation is clearly unfair and a kick in the teeth to kenyan manufacturing. All we seek is a level playing field against our competitors,” said Roest.
Tea accounts for 96 percent of kenya’s trade with Egypt with a total of Sh 21.4 billion worth of goods exported to the north African state last year.
