adminTHE Competition and Tariff Commission (CTC) says it is aware that a number of local companies’ competitiveness is being stifled by imported goods, which are presumed to be priced below their production costs.
In an interview on the sidelines of the commission’s awareness campaign in Bulawayo on Friday, CTC chairman Mr Dumisani Sibanda said the practice of “dumping” was having detrimental effects on the local industry’s viability.
He urged companies to report cases of suspected dumping so as to enable the commission to investigate if the goods are being sold in the country at a price that is lower than their objective variable cost of production.
CTC regards dumping as one of the unfair trade practices which distort trade and give an unfair advantage to those practicing them.
The commission therefore undertakes investigations involving dumping, subsidisation of imported products on the local market as well as surges in imports, which end up causing economic injury to the domestic industry.
“There can be a lot of dumping that’s taking place but in most cases, companies may not even be aware that they can approach us so that it is attended to. Dumping by its nature is very difficult to prove because you need to establish that the product is sold at a cost that is lower than the production,” said Mr Sibanda.
He said companies that have a tendency of under-pricing their products were mostly those that have capacity to absorb losses for some time with a view of unethically pushing their competitor(s) out of business.
Mr Sibanda noted that the country’s leading manufacturer and distributor of pharmaceutical and healthcare products, Datlabs recently approached CTC accusing its main South African competitor, Tiger Brands of under pricing its Ingram’s Camphor Cream posing unfair competition to its Camphacare product, which was introduced into the market two years ago.
Datlabs managing director Mr Todd Moyo was recently quoted by Sunday Business saying: “the biggest challenge we have been facing is that of the main competitor undercutting us on price yet in all the surrounding countries they are selling the product for more or less double the Zimbabwean price.”
Datlabs introduced its Camphacare cream after its licence for the manufacture of Ingram’s Camphor Cream was terminated by Tiger Brands.
The CTC chairman, however, acknowledged that the cost of doing business in the country was high but was quick to state that Government was in the process of rectifying the anomaly.
“Our cost drivers are just not competitive, these include our regulatory, water, power costs and inflexibility in labour laws and generally the economy has a rigid cost structure which leads to us not being competitive and Government is putting in place mechanisms to deal with it. The Business Competitiveness Commission is going to be dealing with that and the Ministry (of Industry and Commerce) is working on a legal framework to set up the Commission,” Mr Sibanda said.
He said as an interim measure to create a level playing field between local manufactured products and imports, the commission continues to advocate for upward review of duty on imported goods.
“We have been recommending tariffs which are quite stiff so that the goods that come in have a premium, which kind of create a level playing field with local producers. So as an interim measure, tariffs are helping to protect local industry but once the Competitiveness Commission is put in place and Government implements the statutes to deal with the cost of doing business, companies should have a lower cost base, which will enable them to compete.”
He further said there was a need for Government to pursue the option of “internal devaluation” so as to protect industry from demise and ensuring that it regains its export competitiveness.
CTC is a Statutory body established under the Competition Act (Chapter 14:28 with a mandate to implement Zimbabwe’s competition policy and execution of the country’s trade tariffs policy.
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derick.khumalo