High export tax choking timber industry- ZNAS

Sun, 15 Jan 2017 11:03:26 +0000

By Bennie Mundando

HIGH duty imposed on timber, whose price is already high will suffocate the timber industry in Zambia as many boards will not encourage trans-boundary business of the commodity within the region and outside, the Zambia National Association for Sawmillers (ZNAS) has protested to the Ministry of Finance.

In a letter dated 13th January, 2017 to the Ministry of Finance budget chief analyst signed by ZNAS president, William Bwalya, the association indicated that  it was disappointed that despite writing to the ministry in 2016 over prohibitive duty on timber, the situation was not rectified in the 2017 national budget.

Mr. Bwalya said as a result of high duty on timber, the commodity would be overpriced and make it less competitive on the international market, thereby making investments in the sector less.

“We wish to bring to your attention that together with the Timber Producers Association of Zambia (TPAZ) we came to your office last August, 2016 and expressed our concern on the pricing of export timber from Zambia and the duty imposed on the commodity to be high, hence the high cost of timber boards from Zambia may not encourage trans-boundary business of timber within the region and outside.

“The tax regime makes Zambian timber to be overpriced and therefore, not competitive, hence the reason why most timber traders opt to export logs (unprocessed and semi processed) to gain competitive advantage,” he said.

He noted that ZNAS members had been disadvantaged because they had already quoted overseas buyers of timber before the budget and that such members had received letters of credit to export basing upon the tariffs ruling then.

Based on that, he said, ZNAS members risked losing credibility if they failed to meet those order commitments due to the high tariffs arguing that its members required an exemption from the new rates since they concluded their deals way before the new tariffs were effected.

“We understand that tariffs are an important source of government revenue and goods and services do not flow completely freely. Governments all over the world put up barriers to trade for various reasons and in this case to stimulate value addition in forestry in the local industry.

“However, it is clear that there was little research done by our experts to know the true value of timber at the international market before introducing the new tariffs. The potential benefit of further reducing the tariff are significant with reference to job and wealth creation in the rural areas where timber is being harvested from,” he said.