Think tank urges import duty increase . . . Call for Govt to lure new players

Indepth Reporters
According to the National Economic Consultative Forum (NECF) position paper of Zimbabwe Motor Industry, the Government must revert to the pre-January 2009 import duty tariffs to save Willowvale Mazda.
Before January 2009, passenger vehicle imports attracted between 60 and 80 percent customs duty compared to the current levels of between 25 and 40 percent.

The duty regime meant that a person who imported a $5 000 vehicle before January 2009 paid an additional $4 000 as duty compared to just $2 000 currently.

“Fiscal authorities are urged to set duties at levels that recognise that the Zimbabwe motor industry is an infant industry and one emerging from the ravages of 11 years of economic decline,” said the NECF in a statement.

“Government must make it statutory that all motor vehicles from passenger to commercial vehicles and buses be imported CKD (completely knocked down) as before, except those considered as special or luxury.

“Any franchise holder who wants to continue doing business in Zimbabwe must invest in the necessary infrastructure to assemble locally or face heavy import duty tariffs.

“The industry must be given a window of six to 12 months in order to prepare the necessary jigging and tooling.”
However, critics do not believe WMMI is properly structured to operate competitively.

They contend that the Government should actually lure top franchise holders such as Toyota, Nissan and Mitsubishi to set up plants in the country with guaranteed business protection mechanisms and tax exemptions.

They say the new players should be given tax shields and encouraged to assemble low-cost vehicles to satisfy a wide market. Industry, analysts say, apart from foreign investment, WMMI must come up with credit purchasing facilities that will attract buyers.

Analysts contend that the Government must dangle attractive investment packages for the motoring industry.
“It (Government) should come up with a strategic plan to incentivise the industry like other countries do so that we have more investors coming in and more car assemblies opening up,” said a Harare-based investment analyst.

“Apart from fiscal policy support, the industry needs customer funding through financial institutions that has long tenure (36-60 months) at affordable interest rates (5-10 percent per annum).

“It also needs affordable working capital under similar terms as customer funding.”