Aluminum Companies Dying Slowly
An unfair tax system coupled with unethical business practices by some players is killing local aluminum companies in the country and could lead to the loss of 6,000 jobs. Consequently members of the Metal Building and Construction Sector of the Association of Ghana Industries (AGI) have called on government to re-consider the tariffs structure of all imported aluminum products into the country. This, according to them will ensure that importers do not evade the necessary duties due the state while also allowing for a level playing field. The Association, led by its Vice President, Mr. James Asare-Adjei, at a crucial meeting in Tema, said there is a price war between large scale aluminum manufacturing companies and small scale aluminum traders as a result of the 5% concessionary duty enjoyed by industry players under the harmonized Code 98.08, which many importers of finished Aluminium products are not qualified for, but have capitalized on the code, and are not paying the right revenue to the state. The harmonized code allows manufacturers of corrugated roofing sheets get a concession of 5% duty and aluminum ingots attract 10% duty. while, traders who import any aluminum products for sale rather than for production of roofing sheets pay 20% duty. Traders importing all other finished aluminum products including roofing sheets attract 20% duty. But if the imported products are seen as a raw material for the manufacture of corrugated roofing sheets, it also gets a concessionary duty of the same 5%. “Because of this harmonized code we have realized that importers are bringing into the country all manner of finished aluminum goods not for the manufacture of corrugated roofing sheets, and yet are being granted the concessionary rate of 5% in contravention of the harmonized Code 98.08, which they then sell far below market prices. This is actually throwing us out of business because people are not buying our products again due to price variation,” he explained. Mr. Asare-Adjei said that members of the Metal Building and Construction Association are not afraid of competition in the industry because of the high quality of their products; ‘but the competition must be decent and fair so that there must be no cause for complain’, he said. “What is happening now is unfair and unhealthy competition because large scale aluminum manufacturing companies pay so much in taxes, huge electricity tariffs, workers salaries, VAT, including other overhead expenses and sell the commodity at a regulated price with high quality materials. While the small scale operators and their Chinese collaborators do not pay any of these expenses, yet they manage to enjoy the 5% concessionary duty rate in the name of the harmonized Code, which enables them to sell the commodity far below the market price. They thus are able to evade taxes to the detriment of the large scale manufacturing companies in the country, who pay taxes. “As a result our customers have ceased buying from us, due to huge price differences,” Asare-Adjei lamented. He said because these traders bring in sub-standard roofing materials and are also able to maneuver their way at the harbour and pay less duties, they sell the commodity at a very cheap price just to discourage people from buying from local industries. The Managing Director of Aluworks Limited , Mr.Ernest Kwasi Okoh said the price differential is so high, in some instances as much as US$ 800.00 per ton and so attractive that customers no longer care about quality which is the hallmark of large Scale Aluminum Manufacturing Companies which constitutes the Association of the Metal Building and Construction Companies in Ghana. He added that the Ghana Standards Board specifications debars the importation of aluminum sheets of less than 0.40mm, but these Small Scale operators and their Chinese counterparts flout the law with impunity. Mr. V.L. Ravi, General Manager of Ghana Aluminum Products Limited (GHANAL) suggested that all importers of roofing materials should be made to pay correct import duties and VAT as a means to allow a level playing field prevail in the industry. According to Mr. Ravi, while they are still struggling hard to fight the menace of unfair global competition, this illegal activity of small scale operators have also emerged in the industry, thereby collapsing their businesses. “This illegal practice has created unhealthy and unfair competition among industry players and has subsequently brought production low, and sales also plummeting thus making the laying off of workers imminent,” he told B&FT.