Times Of Swaziland: PROTECT IMPORTED MOTOR VEHICLE INDUSTRY–SARFED

PROTECT IMPORTED MOTOR VEHICLE INDUSTRY–SARFED
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BY ASHMOND NZIMA on 13/10/2021 07:59:00


MBABANE – It can be strategic that government reduced the tariff measures as a
way to boost local trade through increased volumes of imports, especially
vehicles.
Southern African Research Foundation for Economic Development (SARFED) has made
the call.  This is because the COVID-19 pandemic has significantly affected the
trade sector at all levels of Eswatini. SARFED Regional Co-ordinator George
Choongwa said the country was still faced with potential exogenous trade-related
threats.  As of the year 2020/21, SACU receipts declined from E8.35 billion in
2020/21 to E6.38 billion in 2021/22, forcing the country to operate within the
constrained fiscal space.
“Countries like Eswatini have the chance to remain sustainable and competitive
through favorable industrial development policies which were robust and driven
by both indo and exogenous factors that influenced the economic performance in
both short and long-term basis." According to the national budget speech for
2020/21,  it was noted that the  levy on imported vehicles was projected to grow
around 100 per cent, from E9.9 million to E20 million. While this could have a
boost on national revenue, SARFED felt it was also expected that this initiative
 might not be sustainable in the long-run considering the trade constraints
brought by the continued spread of COVID-19 on a global trade perspective.
However, the local motor vehicle industry, according to Choongwa was likely to
remain less capacitated, leaving the Matsapha industrial area to operate below
capacity as most car dealers might opt for alternative trade ventures if not
relocate to other competitive regional markets like Zimbabwe, Malawi and Zambia
due to their fully land-linked. at the same time these countries have  a huge
consumer population as compared to Eswatini.
Disadvantage
The impact of 100 percentage hike on imported motor vehicles, according the
foundation, is therefore, like to disadvantage the economy in several ways. They
include increase in unemployment due to labour lay off and shutdown of business
operations; and a rise in unfair wage bill for non and semi-skilled local labour
force that worked for the importing firms, among other things. There also fears
of reduction in government revenue in the long-run.
“Other sectors that needed urgent tariff review include the food and
agriculture sector since the country mainly depended on imports from South
Africa,” said SARFED. Choongwa recommends the formation of a local association
to protect the imported motor vehicle industry. “Government can authorise the
formation of local association to manage the  imported motor vehicle industry as
a means of ensuring that there was no market failure and exploitation of local
consumers and the entire supply value chain.