East African governments have phased out suspended duty on cement, wrong-footing new and old investors in the sector.
Industry players on Thursday met parliamentarians to gripe about the measures taken by Treasury last June, flouting a tripartite agreement hammered out by the East African Community, cement manufacturers and governments four years back.
East Africa Cement Producers’ Association (EAPCA), the industry lobby, first raised the red flag in July during consultations with the then newly created Industrialisation ministry.
Besides a common external tariff (CET) negotiated at 25 per cent, cement makers were allowed suspended duty, to be reduced five per cent every year and end in 2011. It was reduced from 20 per cent to zero in the last Budget instead of the anticipated 15 per cent — a state of affairs they want reversed.
All three EAC countries had agreed to implement the measures to allow local cement manufacturers to become internationally competitive by the end of the “infancy” period. The House Finance Committee, according to one of the three manufacturers, promised to take up the matter with Parliament during the passing of the Finance Bill 2008, normally done around October.
Cement companies say the abrupt removal of the duty may cause a flood of imports, especially as the Chinese demand probably decelerates after conclusion of the building material-guzzling Olympics 2008.
“Despite good intentions of the government, the removal of the suspended duty without detailed consultation can lead to unregulated imports and have critical impact on industry,” says a document prepared by the association.