August 15, 2013

Biscuit Factories on the Verge Of Closure Over High Costs

Biscuit factories are on the verge of closing business citing high operational costs. They attribute the problem on the heavy taxation on imported raw materials such as wheat and high competition from cheap imported products from Asian countries.  Some of the affected companies include Uganda Biscuits Company and Britannia Allied Industries.

Information from Uganda Manufacturer’s Association shows Britannia is at the verge of collapse, while Uganda Biscuits Company is limping. Ram Shahade, the manager Uganda Biscuits acknowledges the fact that they are struggling to survive. Shahade says cheap imported biscuits from India, Malaysia, Pakistan and China are forcing them out of competition.

He says the cost of producing a carton of biscuits local doubles the price of imported biscuits.  Shahade says wheat; the primary raw material for their produce is twice expensive compared to the Asian market. A carton of wheat flour costs between 60-80 thousand shillings in Uganda. Shahade believes the only way the government can protect local producers and small scale industries is to allow them import raw materials without taxes;

Godfrey Ssali, the Policy and Advocacy Officer Uganda Manufacturers’ Association says the problem is real. Ssali says the manufacturers of biscuits have been struggling with this problem for some time and may soon be forced out of business. He attributes the problem to poor taxation policy. Ssali says instead of classifying goods according to whether they are available locally, the taxation policy must change to ensure that imported luxurious goods are taxed more to protect locally manufactured products.

He says biscuits, cosmetics and many other goods sold in supermarkets across the country are luxuries, which should attract heavy taxes so as to protect the local manufacturers. Ssali proposes a tax of up to 500 percent. He says the problem is even worse with the commencement of Common Market for Eastern Africa.

He wants the government to act immediately to save the situation. Elinathan Matsiko, an official from the Domestic Tax Department of Uganda Revenue Authority says they have noted the concern of the local manufacturers. Matsiko says they will forward the complaints to the Ministry of Finance for Appropriate actions.

He however says even if the ministry is to act; the new policy can only be effected in 2014/2015 financial year because the budget planning process for this financial year is complete.

He appeals for calm from the traders as the issue is sorted out at policy level. He says most of the tax policies across the East African region are discussed and agreed upon at the regional level, which may slow the process.

1 thought on “Biscuit Factories on the Verge Of Closure Over High Costs

  1. M7 always talks about industrialization but without a policy in place Uganda will be dependant on imports and hence never a 1st world in all our life times. These cheap understand goods should be taxed heavily to deter India,China and Pakistan use Uganda as a dumping ground for sub-standard goods. India’s only submarine just exploded killing its sailors luckily enough it was a diesel these people don’t have standards for us people who have traveled there is more filth than Kisenyi ever watched “SLUM DOG MILLIONAIRE” thats the real life there guys!

Comments are closed.

Enable Notifications    Ok No thanks