Nyanza Textiles to lay off 1000
Jul 06, 2008
SOUTHERN Range Nyanza Ltd, the local textile manufacturer, is stuck with products worth over sh2b due to cheap imports, a top official disclosed last week.
By Ibrahim Kasita
SOUTHERN Range Nyanza Ltd, the local textile manufacturer, is stuck with products worth over sh2b due to cheap imports, a top official disclosed last week.
The firm manufactures bed sheets, dress materials, and local kitenge prints.
It also makes shorts, security shirts and pants, blouses, skirts, Henley shirts, school uniforms, army uniforms and caps.
Nikhil Vaidya, the managing director, explained that under-declaration of imported products had also cost the Government tax revenue.
“Dumping of goods has destroyed our morale because we cannot effectively compete with the prices of dumped goods,†he lamented.
“The prices of dumped textiles are always much lower than locally-produced textiles yet the cost of production is high.â€
Vaidya said if the importation of inferior textile materials persisted, the firm would close, rendering over 1,000 people jobless.
“We have already informed the textile national trade union about the impending retrenchment,†he disclosed.
“The factory is not functioning at its full potential and we are no longer buying cotton from the farmers.â€
Ajay Rai, the group marketing manager, explained that the situation had impacted on the income for the farmers.
“We have invested a lot and we need a level-playing ground for us to compete so that we get return on our investment,†he appealed.
“Let those importing under-declared goods be handled seriously because they are depriving the country of revenues which would help in funding public infrastructure.â€
Rai said there would also be loss of indirect employment because logistic suppliers and other textile industries would become redundant.
Last week, the Uganda Revenue Authority (URA) disclosed that 80% of under-declared imports belong to Chinese firms.
“They (Chinese) have got used to the system and exploit the loopholes to evade taxes.
“The system is not weak but they take advantage of the loopholes,†a top URA official told reporters.
The tax agency warned that under-declaration of imports, especially by foreigner investors, would cause a revenue shortfall of about sh1.6b annually.
A Chinese firm, East African Textile Industries, under-declared textiles worth sh122m.
The firm imported bed sheets but declared them as raw materials.
Out of 206 bales, 112 bales were fully finished bed sheets but the investor paid only sh8.7m as Value Added Tax.
But on verification, sh82m was found to have been evaded.
Charges have been preferred against the investor who will now be required to pay all the sh122m, the URA sources said.
Experts have argued that the trade ministry should be pressurised to formulate a textile policy, while stakeholders should form a national apparel and textile federation, which would serve as an advocacy body and guide on matters of production, investment and policy.
They also call for a mechanism where the dumping rate can be reduced by 5% per annum be instituted so that local manufacturers have room for growth.
They added that ailing textile mills needed to be aided to contribute to national growth and create jobs for our graduates.
They insisted that such facilities were crucial in helping attain the Millennium Development Goals, especially poverty reduction. The revival of the textile industry is not easy but it can be achieved.
SOUTHERN Range Nyanza Ltd, the local textile manufacturer, is stuck with products worth over sh2b due to cheap imports, a top official disclosed last week.
The firm manufactures bed sheets, dress materials, and local kitenge prints.
It also makes shorts, security shirts and pants, blouses, skirts, Henley shirts, school uniforms, army uniforms and caps.
Nikhil Vaidya, the managing director, explained that under-declaration of imported products had also cost the Government tax revenue.
“Dumping of goods has destroyed our morale because we cannot effectively compete with the prices of dumped goods,†he lamented.
“The prices of dumped textiles are always much lower than locally-produced textiles yet the cost of production is high.â€
Vaidya said if the importation of inferior textile materials persisted, the firm would close, rendering over 1,000 people jobless.
“We have already informed the textile national trade union about the impending retrenchment,†he disclosed.
“The factory is not functioning at its full potential and we are no longer buying cotton from the farmers.â€
Ajay Rai, the group marketing manager, explained that the situation had impacted on the income for the farmers.
“We have invested a lot and we need a level-playing ground for us to compete so that we get return on our investment,†he appealed.
“Let those importing under-declared goods be handled seriously because they are depriving the country of revenues which would help in funding public infrastructure.â€
Rai said there would also be loss of indirect employment because logistic suppliers and other textile industries would become redundant.
Last week, the Uganda Revenue Authority (URA) disclosed that 80% of under-declared imports belong to Chinese firms.
“They (Chinese) have got used to the system and exploit the loopholes to evade taxes.
“The system is not weak but they take advantage of the loopholes,†a top URA official told reporters.
The tax agency warned that under-declaration of imports, especially by foreigner investors, would cause a revenue shortfall of about sh1.6b annually.
A Chinese firm, East African Textile Industries, under-declared textiles worth sh122m.
The firm imported bed sheets but declared them as raw materials.
Out of 206 bales, 112 bales were fully finished bed sheets but the investor paid only sh8.7m as Value Added Tax.
But on verification, sh82m was found to have been evaded.
Charges have been preferred against the investor who will now be required to pay all the sh122m, the URA sources said.
Experts have argued that the trade ministry should be pressurised to formulate a textile policy, while stakeholders should form a national apparel and textile federation, which would serve as an advocacy body and guide on matters of production, investment and policy.
They also call for a mechanism where the dumping rate can be reduced by 5% per annum be instituted so that local manufacturers have room for growth.
They added that ailing textile mills needed to be aided to contribute to national growth and create jobs for our graduates.
They insisted that such facilities were crucial in helping attain the Millennium Development Goals, especially poverty reduction. The revival of the textile industry is not easy but it can be achieved.