The Association of Ghana Industries (AGI) and the Ghana Union of Traders Association (GUTA) are currently embroiled in a tango over the 50% Benchmark value on imports introduced by government in 2019.
Whereas the AGI is vehemently opposed to the policy which cardinal objective is to reduce the cost of doing business at the ports and increase compliance in terms of payment of duties and taxes, GUTA says the policy is a good one and should stay.
According to the Chief Executive Officer of AGI, Seth Twum Akwaboah, the blanket application of the reduction of benchmark values on all product lines in the country is crippling local industries who are struggling to compete with the over-incentivised imported goods.
The CEO of AGI, who was speaking on Eye on Port explained that the reduced benchmark values of imports combined with major incentives provided for exporting industries overseas has made it very easy for foreign goods to be priced cheaper than the local ones.
“Some of the exports that come into the country enjoy export rebates from their respective countries. Some countries make it a deliberate policy to aggressively export, so when they do, they take out duties and give them concessions, so the goods are shipped into our market at very low prices. So, if you apply further reductions by half, then you are collapsing your local industries,” Mr. Akwaboah explained.
Mr. Twum-Akwaboah said as a matter of urgency, some preferential treatment is supposed to be given to local manufacturing industries to support their growth, and one of the effective ways is by eliminating the 50% discounts on benchmark values of products invested in by local industries.
He stated that such policy directions are commonplace in the development of industries abroad and these initiatives are worth emulating by the government.
But the President of GUTA, Dr. Joseph Obeng, on the same program said the reduction on benchmark values has been very beneficial to traders, arguing that it has culminated in the reduction in the cost of importation and by extension, the cost of trading in Ghana.
He said it has also improved compliance levels at the ports, by reducing the incidence of under-invoicing leading to increased levels of government revenues.
“Government is having its worth. From the time this benchmark value policy was introduced, they have exceeded their revenue targets,” the GUTA President expressed.
Dr. Obeng argued that the appeal of the AGI for the scrapping of the benchmark value reduction on imports is a futile approach and would not solve the challenges they are grappling with.
He accused local industries of not pricing competitively leading to traders opting for imported products of relative quality where they are guaranteed reasonable prices.
“Instead of benchmarking their prices with FOB prices of their offshore competitors, they benchmark their prices against importers which is very bad,” Dr. Obeng asserted.
The President of GUTA said Ghanaian industries must only invest in the manufacturing of goods that Ghana has potential in, else they may continue to fail if they persist in producing goods, they do not have capacity for.
He advised that local industries should redirect their energies into advocating for better credit facilities, cost of utilities and improved technology among others which would inure to drastic reduction in cost of production, enabling them win over the local market and beyond.
While the CEO of AGI, Seth Twum Akwaboah acknowledged other factors contributing to the stunted growth of local industries, he remained resolute that the selective application of benchmark values on imports will boost the nation’s industrialisation drive.
He intimated that being heavily reliant on imports as a country is unhealthy, and it is only by industrialization that Ghana’s economy would grow.
He said a flourishing local industrial sector will create jobs, grow the GDP, generate foreign exchange, and retain value in the country’s raw materials.