Gov’t investigates fruit juice imports

Ms. Hannah Tetteh, Minister of Trade and Industry, says the Ministry is investigating the allegation that some fruit juice importers are engaging in under invoicing to evade tax.

Responding to a question at a meeting in Accra with editors of media houses she said the Trade Facilitation department of the Ministry is currently dealing with the issue to ensure that the right thing is done.

“We will get the average values of destination inspection companies to help inform properly on the issue, and if there is a case to be made, in terms of non-payment of appropriate duties, the matter will be referred to the Tariff Board.”

She assured, “my attention has been drawn to the issue, and it is something that the Ministry is taking very seriously. We are going into the matter.”

B&FT recently reported that there is a growing strong suspicion among the business community that some importers of finished and unfinished fruit-juices and soya milk are engaging in underhand dealings, thereby robbing the nation of needed revenue.

It is being alleged that some of the importers of fruit-juices and soy milk are engaging in under-invoicing and, as a result, are not paying the right amount of duty and VAT by presenting to the import authorities with invoices having significantly lower cost-prices than they actually pay.

Consequently, the Ministry of Trade and Industry and Ghana Revenue Authority are expected to investigate the matter to ensure true value and volumes are declared by the importers to avoid the unfortunate situation of under-invoicing which goes against the state.

Looking at the figures, importers of finished products are subject to 20% duty and 15% import VAT on the products they bring.

Importers of finished products also obviously add on their margin after an ex-factory price from the manufacturer which includes the manufacturer’s margin as well as 20% duty and 15% VAT.

When adding up the above importation costs, the cost of the juice concentrates -- of which every variant is an internationally traded commodity with very visible and well known prices -- and the cost of TetraPak packaging (sold mainly by one company at publicly known prices), it becomes difficult to explain how finished imported juices are sold far cheaper than the locally manufactured ones. Especially as the cost of transportation is so high to bring imported products from far-away countries and regions

This is not to call for a ban on imported juices, but a close look at the operations of importers will reveal unacceptable practices that are ruining the Ghanaian economy.

Unfortunately, apart from loss of much-needed revenue to the state, businesses of local manufacturers are bearing the brunt of this criminal act since it makes their products uncompetitive as well as causing several times more job-losses than they add.

It is instructive to note that the fruit concentrates made from oranges, mangoes and pineapple, and soya milk from soya beans grown in the north are in abundance, and could create several thousands of jobs if utilized by local manufacturers.

Besides, creating jobs at the manufacturing level, within the value chain, thousands of farmers will be assured of guaranteed market for their produce, and also a regular income stream.

Local manufacturers’ businesses are being threatened and their continued is being curtailed due to the unfair and underhanded dealings of competitors that import similar finished products or semi-processed materials to re-sell in Ghana.

What makes the matter quite frightening is the threat to the manufacturing sector, and its ability to worsen the rising unemployment levels. The underhanded dealings of some of the fruit-juice importers give them an unfair advantage over local manufacturers in the market place by way of pricing.

Tellingly, manufacturing has lagged behind all sectors and general GDP growth rates -- even registering a couple of negative growth rates over the last five-year period.

Growth rate of manufacturing: 2007: -1.2%; 2008: 3.7%; 2009: -1.3%; 2010: 7.6%; 2011: 13% -- that means manufacturing output contracted in two of the last five years.

Average growth rate per annum of manufacturing between 2007 and 2011 was 4.4%, compared with 8.2% for overall GDP. The share of manufacturing in GDP has declined consistently from 10.2% in 2006 to 6.7% in 2011. Even the relatively new oil sector has beaten manufacturing, accounting for 6.8% of GDP in 2011.

In the first quarter of 2012, however, manufacturing output grew, according to provisional figures, by 22.6% year-on-year.