KAM rejects State plan to save Panpaper

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By Benson Kathuri

The Kenya Association of Manufacturers (KAM) is opposed to a Government plan to raise duty on imported paper to save cash strapped Panpaper Mills.

Higher import duty from the current 25 per cent to 35 per cent would reduce the amount of paper imported and shield Pan Paper from unfair competition.

However, KAM argued that raising duty on graded paper imports would lead to higher prices of consumer goods by between five and seven per cent.

“Should the Government consider tariff increase as an option in its bailout plan for the country’s largest paper manufacturer, the prices of goods packed in paper bags and corrugated cartons definitely go up,” said Mohan Krishnaswami, chairman of Panpaper.

“One of the bailout proposals in the public domain is causing intense discomfort among paper converters – the proposal to increase tariffs of paper products by 10 per cent. The move would affect almost all consumer goods including maize, sugar, cooking fats and oils, soaps, detergents and cement. Paper converters argue that a 10 per cent tariff increase on imported paper up from the current 25 per cent is an unfair and biased measure that will push up consumer prices, and further erode their competitiveness.

KAM Chief Executive Officer Betty Maina said it was a wrong move at the time at a time when consumers are hard hit by high inflation and economic recession. She said the sector had lost 7,000 direct jobs over the last three years, due to the 25 per cent duty under the EAC Common External Tariff. EAC partner states adopted a maximum 25 per cent import duty on all finished products entering the Customs Union.

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