Gov`t urged to scrap import taxes on materials for textile industry
The Vice President of the Association of Garment and Textile Manufactures (AGTM), Alhaji John Dauda Abdullah, has called on the government to consider scrapping import taxes imposed on raw materials the industry uses for manufacturing its products in the country.
According to Alhaji Abdullah, the scrapping of the import taxes would help the industry to have a competitive price advantage over the imported finished garments and textiles being brought in to the country.
The textile industry in the country has for over a long period suffered from the importation of cheap textiles.
Mr. Alhaji Abdullah estimated that the activities of smugglers cost the country an annual loss of GH¢60 million in accruable tax revenue. He made this observation during an exclusive interview with The Chronicle in Accra.
The Vice President of AGTM believes his proposal would help in protecting the industry against the challenges of smuggled and the imitation of Ghanaian fabric designs by neighbouring and foreign countries such as China, Nigeria and Togo, which has contributed to an emerging intense competition in the industry.
The industry expert, who is also the Chief Executive Officer (CEO) of Wadata Fashion, also applauded the government's initiative of giving the contracts of the Free School Uniforms (FSU) project to the local textiles and garments industry, in the wake of the new industrial revolution the new administration of the National Democratic Congress (NDC) government seeks to inject into the Ghanaian economy.
“Raw materials used by the industry are very expensive because of the over imposed tariffs of customs duty. Some industry players come in to our markets and lobby for contracts, and end up producing the finished products in Togo and China, because the competitive prices in the country is much more expensive, due to the taxes imposed on the row materials,” he emphasised.
The CEO of Wadata Fashion also explained that one yard of Sprintex wax print was GH¢4.50, while the finished products thus cost twice the price of the material, adding, “When comparing the imported finished products from China to the Ghanaian made clothes, it is half the price of what is being produced in the country.”
He further called on textile and garments manufactures in the country, to embark on the production of uniform or working materials to help in easing the intense competition, which seeks to be taking away business from the Ghanaian textile industry.
Alhaji Dauda Abdullah further appealed to institutional bodies in the country such as the Armed Forces, Ghana Police Service, Immigration, financial and telecommunication players, to lease out contracts for the manufacturing of ready-made security uniforms to the local textile industry, so as to revive the declining status of the industry in the country.
Meanwhile, the tax revenue loss, which the sector is losing due to investments both foreign and local, is no longer perceived as profitable. The influx of cheap China made textiles, most of which find their way into the country through smuggling, has made the textile industry, which was one of the countries largest employers of labour in the 1970s, now gasping for breath in an economy where it was once a major contributor to Gross Domestic Product (GDP).
The number of textile and garment manufactures operating in Ghana shrunk from 14 in 1975 to five in 2009, according to an official document from the Ministry to Trade and Industry (MOTI).