KENYA – The Kenya Association of Manufacturers (KAM) and its members in the paper value chain including paper millers, paper corrugators and converters, and end users met the Principal Secretary State Department for Industry to discuss key issues affecting the paper sector in the country.
During the meeting, deliberations were held on a number of issues including the revocation of the currently applied East African Community (EAC) Common External Tariff (CET) of 35%, advocating for a reduced tariff of 10% on bleached and unbleached paper not produced locally.
KAM lauded the government for its support to the manufacturing sector especially the introduction of the 4 band CET structure which enables differential treatment between raw materials, intermediate goods and finished goods
Further, Kenya’s policy permitting the export of waste paper was critically examined, acknowledging its contribution to a significant shortage of raw materials for local paper millers.
The Principal Secretary acknowledged the urgency of revisiting this policy to prioritize local manufacturers’ access to waste paper, underlining its necessity for bolstering domestic production and addressing material scarcity in the sector.
The discussions concluded with a consensus on several proactive measures: The government committed to supporting local manufacturing and reducing dependency on imports.
Additionally, there was an agreement to review the existing list of products subject to an export and investment promotion levy, a strategic decision aimed at bolstering the sector’s growth and sustainability.
This meeting marked a significant step towards addressing the longstanding issues affecting Kenya’s paper sector competitiveness.
Meanwhile, the introduction of two new tax measures contained in the Finance Act 2023, last year, sent shockwaves into the horticulture and tea industries after the new levy pushed up prices for imported Kraft paper, a critical raw material in the production of cartons.
The introduction of the 10 percent export and investment promotion levy and the decision by Kenya to raise duty on imported paper and paper products raised effective taxes on uncoated Kraft paper to 74 percent from 13 percent.
This made it costly for carton manufacturers to produce packaging materials for companies that export tea, fruits such as avocados and vegetables, a presentation to the National Assembly’s Finance Committee by the Kenya Association of Manufacturers (KAM) revealed.
This is higher than the taxes on Kraft paper going into Kenya’s neighbouring countries including Uganda where this paper does not attract any tax.
In Tanzania, where Kenya imports a lot of Kraft paper, the taxes are at 26.5 percent. With expensive packaging materials, some of Kenya’s exports such as tea, flowers, fruits and vegetables, have become expensive.
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