How paper is costing EA firms

June 2, 2009

, NAIROBI, Kenya, Jun 2 – The East African private sector under the umbrella organisation, East African Business Council (EABC) is asking their respective governments to reduce import duty on paper and its products to cater for the current shortfall in the market.

The proposal contained in a pre-budget presentation by EABC to East African Community Partner States ahead of the June budget reading is as a result of the collapse of Pan Paper Mill which was the main supplier of paper in the region.

Pan Paper, the biggest paper mill in the region suspended operations in February this year, putting a strain on the region’s paper supplies.

Now manufacturers and paper converters from the region who used to source their inputs from the paper mill wish to be allowed to import the same inputs at 10 percent instead of 25 percent until the factory reopens.

 “This will allow them to remain competitive,” Mr Adrian Njau, the Trade Economist at EABC, said.

“The paper converters cannot get any more supplies and therefore there are no local supplies of this type of paper.”

The tax proposals were developed by EABC Trade and Industry Committee with representatives from each of the five Partner States chaired by Vimal Shah the Chief Executive Officer of BIDCO Oil Refineries

Cement manufacturers, on the other hand, are calling for increase in tariff on imported cement to protect local industries from unfair competition posed by cheap and subsided imports.

“Removal of sensitive status by reducing import duty from 40 percent to 25 percent has negatively affected the local cement producers,” Mr Njau said.

“We want governments to reinstate the sensitive status by increasing import duty from 25 percent to 35 percent.”

The group further agreed that the applicable duty rates reduce by five percent annually from 55 percent in 2005 to 35 percent in 2009 to accord appropriate protection to the existing cement manufacturing capacity in the region.

“This will perhaps attract potential investors in cement factories in the region, create employment and increase capacity utilization and expansion of local cement producers,” Mr Njau said.

Other tax proposals include increase of import duty from 10 percent to 25 percent on road tractors for semi-trailers, reduction of duty rate on unprinted aluminium foil from 10 percent to zero.

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