Pre-shipment inspection to push prices upwards

Pre-shipment inspection to push prices upwards
Mike-Bimha

Minister of Industry Mike Bimha

A STATUTORY Instrument (SI) compelling Zimbabwean importers to present their goods for a pre-shipment inspection, at a cost of between US$250 and US$7 500, is likely to result in the upward adjustment of prices once it comes into effect on March 1.
Importers would be required to pay inspection fees to a specialist French company called Bureau Veritas, appointed by the Ministry of Industry and Commerce to carry out the consignment-based conformity assessment with effect from next month.
Economists predicted this week that this additional cost would be passed onto the final consumer in the form of a price increase.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer, Christopher Mugaga, said with rampant smuggling of goods at the country’s ports of entry, it would be difficult to compel importers to present their goods for inspection without creating excuses for them to evade payment of duty.
And for those who will conform to the new requirement, the cost of inspection would be passed onto the consumer.
The inspection has been introduced to prevent the importation of substandard goods into Zimbabwe.
But it would add to import duties already rated among the world’s highest, making life for consumers already battling to find money for the most basic commodities even more difficult.
Kingston Khanyile, chief executive officer at Mtilikwe Financial Services, said while the SI is meant to mitigate dumping of substandard goods, the costs arising from this exercise will simply be passed onto the final consumer.
“It’s a commendable move by government. The cost is minimal and there will be a marginal increase of prices but that will not stop the demand for imports,” he said.
SI 132 of 2015, gazetted on December 18 last year, says in some instances, the Minister of Industry and Commerce would use his discretion on whether to exempt some imports or not.
The SI has caused anxiety in industry, which feels that there have not been enough consultations on the policy.
Meetings were held with several lobby groups to discuss the effects of the SI, with some saying they feared that goods in transit could be subjected to the new fees, in violation of existing trade protocols.
Analysts said additional fees on imports could also trigger high levels of smuggling as thousands of people who have lost their jobs in the past 16 years have turned to cross border trading, where they import anything, including substandard goods to make ends meet.
“Now that businesses have to pay to be inspected this is going to increase bribes and corruption thereby making business in the country uncompetitive. This is also going to increase prices on a consumer who is already hard- pressed,” said economic commentator, Luxon Zembe.
On the list of goods subject to pre-shipment inspection are food and agricultural products that include oils, fats, dairy products, fertiliser, meat and meat products, yeast, biscuits, fruits and vegetables and cereals.
The list also includes building products, timber and timber products, electrical goods, body care and health products, clothing and textiles, engineering equipment, automotive and transportation and toys. What that means is that a greater number of goods that the country imports are now subject to pre-shipment inspection.
“Compliance of goods to applicable international standards shall be demonstrated with conformity documents issued by accredited/competent entities and/or testing,” Veritas said in its notice.
“(On vehicles), it is recommended to have the steering wheel on the right hand side…however, vehicles with steering wheels on the left hand side will not be rejected. Genetically Modified Organisms are prohibited in food/agricultural products. The fees, which are net of any taxes, cover the documentary verification and physical inspections of the goods plus price valuation,” Veritas added.
The new system comes on the heels of a recent government directive which ordered a catalogue of 40 imported basic food commodities that constitute the bulk of the consumer basket to be included among those that pay for Value Added Tax. –Shame Makoshori
and Idah Mhetu
newsdesk@fingaz.co.zw

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  • gutter poet

    Pre-shipment inspection is an international practice and in the mid-90s Zimbabwe used to do this too. I have to go along with Kingstone Kanyile that the add-on-cost to the FOB/FCA price is minimal, in fact marginal. When the system gets itself in the groove the savings to same consumer are immense as he will pay for what he asks for not the nonsense prevailing at the moment where substandard products are everywhere. A case in point is the millions spent by Hwange on that mining equipment which no one can use and the Ministry of Transport snow ploughs and so on. If the system is observed to the letter the companies and government will get massive savings as they can stop supplier companies from overcharging for substandard products..I say, this has come in a tad too late but must accept it is ‘better late’ than never! Many serious focused companies can not wait for March 1. I think the Fingaz should do a follow up write-up on the nightmare that was met by customers who were ripped off by international suppliers of which sadly our Chinese friends were the biggest. Suddenly after supplying shoddy products these suppliers were no longer conversant in English..Zim customers lost fortunes to these criminals and going to the Chinese embassy for recourse was not only time consuming but unproductive…And hey, don’t they say, prevention is better than cure? Our government is known the world over as King Blunder-bus. This pre-shipment story is one they have got right. They should go one up and STOP importation of some useless luxury items or load them good with PUNITIVE duties. In addition the country has been a magnet for petty criminals who pretend to be businessman when all they are doing is siphoning the scarce US dollars with their blacker than night businesses. These businesses have no paper trail at all helping same avoid paying taxes. Now with this pre-shipment inspection, visibility of these rogue enterprises is made better. This is one sure way of directing scarce resources into those areas which are honest and essential. The Finance Minister should also move one up and give customs REAL authority to carry out spot audits on warehouses in the country to see whether companies are adhering to the rules. This way those sticky fingered robber pirates who may have smuggled goods at ports of entry can be brought to book..This will also improve record keeping in companies as anyone who can not produce stamped documents of imported goods in their warehouses will be made to pay for their transgressions big time…Serious businesses can not wait for this system to come to life! By the way how much is the ceiling for this pre-shipment to kick in is it USD 5 000 or less?

    • God of War

      In my opinion sub standard goods are being brought in by cross border traders who will not be affected by this pre inspection nonsense. Yes, the FOB prices increases will be marginal but, i don’t see how the common people will benefit when they knowingly buy sub standard goods because they are cheaper. Your comment on increasing duty on luxury goods is misguided cz, to you ultra mel custard is a luxury but to me its a necessity because i need dessert after my dinner. Increasing duties is a short sighted solution which shows that the authorities are confused.

      • gutter poet

        “Sub standard goods are being brought in by cross border traders…” Like those earth tippers rotting at Hwange colliery and elsewhere, right? “Increasing duties shows that the authorities are confused…” …And of course most geniuses ‘need dessert after my dinner”…Phew!

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