State to review 5pc export incentive

ZimTrade chief executive Ms Sithembile Priscilla Pilime (right) stresses a point during last week’s Mid-Term review on the Ease of Doing Export Business using the Rapid Results Approach

ZimTrade chief executive Ms Sithembile Priscilla Pilime (right) stresses a point during last week’s Mid-Term review on the Ease of Doing Export Business using the Rapid Results Approach

Conrad Mwanawashe Business Reporter
Government will undertake a review of the five percent export incentive in favour of value addition with a proposal to increase the incentive up to 10 percent for exporting manufacturers.

This is contained in the ZimTrade’s Export Capacity Feedback Report Mid-Term Review under the Ease of Doing Business in Zimbabwe presented last week by thematic group leader Salie Khan.

Draft proposals for the review of the export incentive are being considered by the Reserve Bank of Zimbabwe and the Bankers Association of Zimbabwe.

Mr Khan said issues raised and proposals raised by manufactures and value added exporters are expected to get priority attention from monetary authorities.

Industry is in support of the remodelling of the incentives to target value addition and exporting manufacturers.

Already the Confederation of Zimbabwe Industries has proposed to advocate the incentives for manufactured exports.

“We will advocate 15-20 percent export incentive for manufactured or value added exports. Certainly we will be busy with that and come up with some sort of framework to say what it will mean for the country and what can industry generate,” CZI president Busisa Moyo said last week.

He was speaking at the 2017 Economic Outlook Symposium where manufacturers met to come up with ideas and recommendations to Government.

Respected economist and University of Zimbabwe Lecturer Professor Ashok Chakravarti told the symposium that the export incentive be reserved for the manufactured exports.

“There should be no export incentives for the traditional exports such as gold, platinum, tobacco, chrome, but there should be significant for manufactured exports and new exports. That would help a lot more than import control measures,” said Prof Chakravarti.

On the provision of a trade finance facility to promote value-added exports, the review under the Ease of Doing Business showed that there are already existing export finance schemes being offered by the RBZ which industry was not aware of.

Also Mr Khan said it was recommended that a list of exporting manufacturers submitted to ZESA regional commercial managers and City of Harare so that they could have uninterrupted power supply to exporters and improvement in supply of treated water to industry.

A consideration of downward revision in fixed water charges to exporters at next council session was mooted.

Other reforms mentioned included the minimum export income threshold percentage to be reviewed downward to accommodate those exporting below the minimum threshold of 30 percent in order to increase/enhance the export culture and allow SMEs to benefit from preferential income tax rates.

Tax rebates to be offered to those businesses that export over 85 percent of their production, exporting manufacturers to be accorded priority one listing at the RBZ when importing raw materials for export.

Currently this is not the case as banks have discretion on allocations which impedes production time-lines and affects export deadline conformity by manufacturers.

The issue of a Confirming House has been tabled to help reimburse SME exporters whose working capital thresholds cannot sustain extended credit terms beyond 30 days.

The confirming house will reimburse the exporter immediately and recover the full invoice value of the export up to 180 days.

Article Source: The Herald