Unrestricted import policy battles Golden Age of Business - AGI
Accra, Nov. 24, GNA - Association of Ghana Industries (AGI) says the Government's policy on unrestricted imports and the discretionary policy on withholding tax exemption is in conflict with the concept of Golden Age of Business.
Mr Prince Kofi Kludjeson, President of the AGI, who was speaking at the 44th Annual General Meeting of the Association on Wednesday, said those policies had had adverse effects, especially on the textile and manufacturing companies.
He said with the improvement in the macroeconomic indicators, the Manufacturing Sub-Sector should be growing above 10 per cent instead of the present 5.1 per cent.
"The lower rate is as result of the policies. Macroeconomic stability is not enough on its own, it must have a link with the micro sector for higher growth and to reduce poverty."
He said the amendment of the existing tax law aimed at increasing the tax revenue to support the national budget as well as improving the tax machinery affected the production cost and constrained the cash flow of industries thereby making them uncompetitive.
Mr Kludjeson said, notwithstanding the difficulties, the economic policies being pursued in the last three years had had substantial impact on certain areas of the economic activities that gave some industries hope.
"The stock market, for instance, sustained it robustness, indicating a growth in the listed equities; these developments underscored increasing opportunities for industries seeking equity financing."
He said the tax relief granted industries in the 2004 Budget injected some life into ailing companies as well as providing incentives to new ones.
These incentives he said included the reduction of corporate taxes from 32.5 per cent to 30 per cent with effect from next financial year, payment of 25 per cent corporate tax for newly listed companies on the Ghana Stock Exchange (GSE) for three years and five-year tax holiday for new companies into agro-processing.
Mr Kludjeson said the manufacturers in the textile and garment, food, beverages and plastics sectors were facing stiff competition from the influx of imported products through unapproved routes. "The rates of loss of jobs and even revenue to Government is alarming and calls for urgent and positive radical responses, not excluding temporary restriction of importation of these and other goods that threaten the survival of domestic industry and our capacity to engage in global competition" he said.
He called on the Government to put in place appropriate measures to protect manufacturing industries from any adverse effect of deregulating the petroleum sector next year.
He suggested that the issuance of specific tax certificates to companies that voluntarily paid their quota of taxes and exempt them from the Internal Revenue Service (IRS) withholding tax policy as a catalyst to strengthen industries.
Mr Kludjeson said allocation to the Venture Fund from the National Reconstruction Levy should be revised upwards to between 50 per cent and 70 per cent.
He urged the Government to enforce the directive on procurement by public agencies where preference would be given to local products and services with a price band of 12.5 per cent.
Mr Kwadwo Afram-Asiedu, Deputy Minister of Trade, Industry and President's Special Initiatives, said the Government would try every means to secure domestic market industrialisation and promote aggressive export orientation on the part of industry.
He said the Ghanaian market was small and there was every incentive to be outward oriented to take advantage of the economies of scale the global market offered.
"While Government is playing its part and the AGI is supporting, the greater part of the work in transforming industry and the economy of the country rests on the shoulders of the individual firms. The Deputy Minster said industries needed to face the challenges of globalisation and liberalisation of trade imposed on them.