Online Reporter
Sunday Mail Reporter
THE Competition and Tariff Commission (CTC), which is presently investigating the impact of increased imports of fibreboards and doors on the local industry, has also proposed a 40 percent import duty on toothpaste.
The latest move by the commission, contained in a recent Government Gazette, is meant to protect the domestic industry from unfair competition following a complaint lodged by Merken Investments Private Limited.
CTC, however, proposed a gradual reduction of import duty from an initial 40 percent in the first year of implementation to 38 percent the following year, as well as 36 percent and ultimately 34 percent in the fourth and final year of implementation, respectively.
The commission discovered that total imports of toothpaste into Zimbabwe grew by 124 percent between 2021 and 2023, with volumes rising from 1 222 083kg to 2 740 571kg.
High levels of imports still continue.
“During the same period, the domestic industry experienced serious injury, with production volumes, market share, capacity utilisation and profitability declining sharply during this period.
Market share by volume declined from 2,04 percent in 2020 to 0,98 percent in 2023 and capacity utilisation averaging only 3,39 percent,” reads the report.
“Financial analyses showed suppressed profitability due to persistent price undercutting by imports priced 30 percent to 40 percent below Merken’s ex-factory prices, leading to severe constraints on investment and growth.
“The commission found a causal link between the increased imports and the serious injury suffered by the domestic industry. Other potential factors, including currency volatility and electricity supply challenges, were examined and found not to have materially contributed to the injury.
The investigation confirmed that the surge in imports was attributed to unforeseen developments including temporary tariff suspensions, the Covid-19 pandemic, depreciation of the South African rand and expanded export production capacity abroad.”
CTC proposed a 40 percent import duty from non-exempt countries as a safeguard measure that would be rolled out in four phases over four years.
The commission is similarly probing the impact of imported doors following a complaint raised by Manica Boards Private Limited.
“Based on a preliminary review of the application and supporting evidence, the commission has made a preliminary determination that the surge in imports has adversely affected the domestic industry, giving rise to serious injury to the Zimbabwean industry, with a causal link to these imports,” reads the report.
“The application has been submitted by Manica Boards and Doors (Private) Limited. The applicant is one of five major domestic producers of doors, constituting more than 80 percent of Zimbabwe’s local production capacity of the like or directly competitive product. Other known domestic producers include Ynohtna Adnetat Investments, Wood Technology (Private) Limited, Chubb Security, BoardEx Zimbabwe, Maczac (Private) Limited, MT Hwai, Vetas (Private) Limited and PG Timbers.”
The doors under investigation are those used for all interior openings in homes, offices and public buildings.
“The doors are made of a paper honeycomb core with a timber frame, covered on both sides with either medium-density fibreboard (MDF) or deep-moulded MDF skins. The imported door cover is MDF for doors and deep-moulded MDF for deep-moulded doors,” the report indicated.
“The applicant further submitted that the Zimbabwean product is structurally and functionally equivalent to the imported doors, as it exhibits comparable physical characteristics, end uses and consumer perceptions, hence considered like or directly competitive with the product under consideration (PUC).”
Key performance indicators of the domestic industry have shown a sharp decline, including production levels, as manufacturers struggle to maintain operations at optimal levels.
Others include a loss of market presence, as imports displace locally manufactured doors; deterioration in financial performance, including increased losses and reduced return on investment, thus justifying initiation of a safeguard investigation.
The commission will be assessing the full extent of injury and determine the way forward.
Tinaye Agere