Clothing sector rebate extension attracts investments

07 Dec, 2014 - 00:12 0 Views
Clothing sector rebate extension attracts  investments

The Sunday News

chinamasa

Minister Chinamasa

Roberta Katunga Acting Business Editor
GOVERNMENT’S extension of the clothing manufacturers rebate will allow players to compete effectively and level the playing field with imports amid revelations that the facility had assisted companies increase capacity utilisation, Sunday Business has learnt.Finance Minister Patrick Chinamasa recently proposed in the 2015 budget to extend the facility (CMR) by another 12 months as the rebate had attracted significant investment thereby creating additional employment in the clothing industry.

The clothing manufacturer’s rebate of duty on imported inputs like fabric and trims such as sewing thread, shoulder pads and fasteners was first granted in 2013 and extended for 12 months to 31 December 2014.

“These measures have assisted clothing manufacturers such as Archer Clothing (Pvt) Ltd, Paramount Export (Pvt) Ltd and Playtime Manufacturers to increase capacity utilisation and employment.

I, therefore, propose to extend the facility by a further 12 months and to also include all clothing manufacturers who are registered,” said Minister Chinamasa.

In an interview, Zimbabwe Clothing Manufacturers Association (ZCMA) chairman Mr Jeremy Youmans said as a sector they appreciated not only the extension of the rebate but having it available to clothing manufacturers who are registered with and compliant with the National Employment Council of the clothing industry.

“Previously, Zimra had only allocated it to 12 companies and as ZCMA we have been lobbying for the extension to all companies and we are very appreciative that this has been granted,” said Mr Youmans.

Mr Youmans said the facility was important to the sector for two fundamental reasons.

“There are two fundamental reasons for this. One is that paying duty on imported goods increases their cost. This cost has to be recovered in the price charged by the manufacturer.  So by removing this cost, the manufacturer is able to offer their goods at a lower price.

“Secondly, when a foreign manufacturer produces their garment, if it is for export, they are able to either not pay duty on the raw materials or get it refunded when they export the finished goods. If they are a member state of Sadc or Comesa, and they meet the rules of origin, the goods do not attract duty when they are imported,” he said.

He said in essence the rebate was an essential part of competing with imports. According to Mr Youmans, Paramount had grown 130 percent in the last two years and was now at 85 percent of capacity.

“This has also enabled 300 people to be employed at Archer Clothing since September and the capacity there is 800. It is hoped a near full capacity can be achieved by the end of next year,” he said.

Speaking on the general outlook of the budget, Mr Youmans said the Minister did not have a lot of room to move but the budget reflected a good consultation process.

He said they were not only happy about the CMR, but also the improved disposable incomes and ability to attract skills into the economy created by the widened tax bands, the indications of critical enhancements to the Labour Act and the export incentives.

“We hope that all of the measures are implemented and quickly.  It will then be down to us to maximise the effect of what has been given and realise it into employment creation and economic growth,” said Mr Youmans.

The textile and clothing industry at its peak used to employ at least 35 000 but the figure has since plunged to about 8 000 due to a number of problems bedevilling the industry. Players in the sector said they hoped measures put by Government would help the industry regain its lost status.

 

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