Monday, May 29, 2023
BusinessGov’t permits foreign-owned manufacturers to supply to local market

Gov’t permits foreign-owned manufacturers to supply to local market

NEWSBut they are required to pay taxes to import inputs and forgo incentives

Foreign-owned manufacturers operating in Ethiopia can supply their products to the local market if they are willing to forgo the incentives they enjoyed as a licensed exporter, the Ministry of Industry said.

The departure from the law, which dictates foreign-owned producers to only supply their products to the international market, is intended to help the country substitute its growing imports, which are valued at USD 14 billion dollars in the last fiscal year.

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“If producers want to sell their products to local suppliers, they are also required to pay taxes when they import inputs from abroad, and will not get duty free privileges as an exporter,” officials told The Reporter.

It is a measure taken as the government shifts to substitute imports from export promotion, especially in the textile sector, as foreign-owned companies struggle to stay afloat, after Ethiopia lost duty free access to the US market. The global apparel market is also seeing stiff competition after being hit by the coronavirus pandemic, which has slowed productivity of factories across the world.

Admitting more emphasis is given to import substitution, Shisema Gebreselassie, State Minister for Infrastructure and Resources at the Ministry of Industry, says the new measure is under implementation and attention is being given not to harm local producers, while it allows foreigners supply to the domestic market.

Factories operating inside industrial parks supplied USD 122 million worth of products to the local market in the last nine months. The lion’s share of the products are military supplies, particularly outfits and shoes for the army, which used to be supplied by foreign companies in the last two years.

“Import substitution is a key to satisfy the local need. In the textile sector alone, it will help us satisfy 80 percent of consumer demands, which rely on imports,” said Sandokan Debebe, chief executive officer of Industrial Parks Development Corporation (IPDC).

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