CEPS crippling jobs, businesses

Accra - Thousands of Ghanaian youth working in the country's fledgling manufacturing industry could join the unemployed heap if threats by some of the companies in that sector to shut down operations in protest of recent high tariffs slapped on them by the Customs Excise and Preventive Service (CEPS) aren carried out.

Chronicle can reveal that some of the affected industries which include companies operating in the paper, pharmaceutical, luggage, polythene and electrical and electronic industries have been receiving since November, last year, a steady stream of letters from their foreign banks threatening to cut off credit lines if the goods are not cleared and payments made.

Most of the investors who are already smarting under a vicious cycle of high interest rates, inflation, and a foreign currency crunch among other hydra-headed problems are also waiting on the wings to re-locate to either Nigeria or the Ivory Coast immediately the political climate there stabilises, Chronicle has learnt..

For example in the electronic and electrical industry whose work basically involves the assembling of electronic products, Chronicle has learnt that a hike in duties from a concessionary rate of 10 per cent to a shattering 25 per cent in May, this year, is drawing them to the brink of insolvency and possible collapse.

The apparent upward adjustment in tariff Chronicle has learnt, runs contrary to Article 478 (section 37) of the Ghana Investment Promotion Centre Act under which these companies who bring in Semi-Knocked Down and Completly Knocked Down products are granted tax exemptions rate or are zero rated. The catch here is that goods brought in that state inures to the nation in terms of transfer of technology when they are assembled locally.

As a result of this unpopular directive which has been described as "a disturbing trend" by investment analysts goods worth over a million dollars shipped into the country by multinational companies like Crown Star and Mitsui (both companies are classified under the GIPC Act as pioneer industries and are granted tax concessions) respectively have been locked up at the ports since November last year effectively running their factories almost aground.

Already the jobs of over 400 workers in this particular industry are on the line as the affected companies are closing down their factories due to what they term as "rising production costs and the insensitivity and high-handed tactics adopted by CEPS."

Some of the manufacturers have since March this year sent letters to the Ghana Employers Association (GEA), the Association of Ghana Industries (AGI) and the Ministry of Employment and Social Welfare informing them of the planned closure of their factories.

Sources told the Chronicle that factory workers at the electrical and electronic division of the Mitsui Group have been placed on a 3- month notice to put themselves in readiness to be laid off until the impasse over the tariff is settled with CEPS.

A letter addressed to the workers stated that: "The company was established under the Investment Code 1985 (PNDC L116) which spelt out the package incentives and benefits to be enjoyed as a foreign investor. It is obvious that without the imported raw materials the factory cannot run. Also continuous operation will depend on its viability. Already, the products are facing unfavourable competition from imported finished goods as well as smuggled goods. Imposition of any percentage rate of import duty will raise our production cost thus rendering out product uncompetitive on the market. Management hereby regrets to notify workers that four months hence if the impasse with Customs is not resolved the company will be forced to close down and the workers shall be declared redundant."

CEPS however claim that most of the work done by these affected industries products presented by these companies as SKD's and CKD's do not conform to the appropriate definition of SKD's and CKD's and for which they have to be taxed.

Although several attempts have been made to resolve this crisis including interventions from the office of the Vice President, the Ghana Investment Promotions Centre (GIPC) and the Ministry of Trade sources in the industry told the Chronicle that "CEPS has continually and unilaterally stood in the way of a solution."

Similarly two reports sent to the Commissioner of CEPS, Nii Okine Adjei by a special committee appointed by the CEPS Board and the other appointed by Nii Okine to inspect the goods at the ports a fortnight ago have been shelved even though some of the affected companies have expressed hope that it would be released soon.

Confirming the story to the Chronicle last Wednesday the General Manager of the company, Mr. A. Okuley said about eighty of the one hundred and eighty strong staff in the factory have already been asked to go home until the goods at the ports had been cleared.

Okuley revealed to the Chronicle that several letters sent to CEPS calling for a meeting between CEPS and the affected manufacturers to resolve the crisis have gone unreplied and unheeded.

At Crown Star sources told the Chronicle that about 70 of the 140 factory workers have been axed already while the rest have been retained to safeguard the big investment the company has put into their training.

However CEPS officials when contacted told the Chronicle last Thursday that it withdrew the 10 per cent concessionary duty and imposed the 25 per cent tariff on the instructions of the Vice- President who said that it (CEPS) had no authority to grant the 10 per cent concession since the law had not defined their class of goods as qualifying for the concession.

According to Mr. Stanley .O. Boye-Quaye, Principal Collector who spoke to the Chronicle even though CEPS inherited this particular problem from previous administrations it allowed the manufacturers to enjoy the facility until the Vice President's directive.

He said the affected companies could be referred to as industrialists and not as manufacturers since they were not transferring any substantial technical knowledge to Ghanaians as Article 478 section 37 GIPC Act demands.

"We are using the terms industry and manufacturing to mean the same thing. So far as a manufacturing process is done repeatedly as if it constitutes an industrial process does not necessarily constitute manufacturing," he stated.

On the issue of goods of some of the manufacturers locked up at the port he said CEPS had given them the option to move their goods to bonded warehouses so that their goods do not attract demurrages, fines etc. in order to mitigate the hardships.

Another option given to them by CEPS Boye-Quaye said was that they could move their goods and reschedule duty with the first three months interest free.