ILLICIT REBAR IMPORT PARALYSES LOCAL ECONOMY
Industry analysts alert that unlawful import activities are costing the nation billions of birr in customs duties. Stakeholders on their end back the claim and are in outcry over the illegally imported rebar which is punching down on the country’s economy in addition to pushing local manufacturers out of business.
As local manufacturers alarmed during the emergency meeting of the Ethiopian Association of Metal and Engineering Industries (EABMEI) on Friday, November 3, their businesses are being negatively impacted by rebar that is being illegally imported.
Some of the attendees at the conference, according to sources close to Capital cited their involvement in the manufacturing of rebar and galvanized iron sheets with over 50,000 employees. At the meeting, they voiced their outrage at the illicit behavior that is now the subject of legal proceedings. They claimed that a number of people are importing large quantities of the specified metal goods while only paying little customs duties.
Some of the participants, citing sources, declared, "We are going to shut down our factories," while others, including international investors, lamented, “We are unable to fulfill our obligations under bank loans.”
According to experts, a sizable quantity of rebar, primarily from Iran, Oman, and Egypt, is now available in Djibouti. "These consignments imported through franco valuta are documented with very small amount of invoice, while the majority of rebar with the cover of customs document are being imported in a huge amount but are produced in the stated countries," they added.
As experts depicted, "Even in cases where the invoice is extremely small, the Ethiopian Customs Commission typically determines the duty based on international price, a benchmark that the commission subscribes to calculate
goods real value."
Industry experts told Capital, "However, based on our most recent observations, some people are importing enormous amounts of rebar and other metals, but the levy imposed on the good is almost zero, which contributes to craze the market and pressure manufacturers and legal importers."
"The declaration is only helping the cargo to seem legally imported,” they pin pointed.
For example, according to the declaration submitted for the import of 120,000,000 kg, or 120,000 tons, of rebar, the total duty is 745 birr per ton, or 89.4 million birr. The 120,000 metric ton of rebar, according to the declaration copy that Capital received and issued for the consignee Bekri Abdi Reshid, is worth little more than USD 1.9 million in total, but specialists claim that there is no rebar pricing of this scale anywhere in the world. However, according to experts, the customs commission should compute the duty in accordance with the international rate that it charges others. They said, "The importer is supposed to pay over 4.1 billion birr if the duty is properly paid." According to one of the several customs declarations that Capital was able to get showed an importer called Ezedin Mahmoud Hassen who imported 300,000 metric tons of rebar with a single statement for only USD six million, but it was actually worth over USD 261 million.
According to the customs record, the importer was required to pay a customs charge of 276 million birr, or 920 birr for every ton of rebar. Experts contended that the importer, who is not well-known as a businessman in Ethiopia, should really pay a charge exceeding 10 billion birr. According to Ezedin Mahmoud's business license paperwork, he is an Australian, and holds a license with a capital of two million birr, obtained around a month before the shipment was purchased. Industry analysts noted that in addition to this significant import, businessmen need to be well-known throughout the nation, as he presents a fresh image in the industry and "creates suspicion there is some huge power in the underground besides this illegal activity."
On the other hand, Capital has also seen a customs declaration that was filed for a well-known import and export company. The paper states that the company paid customs duty of 34,576 birr per ton of rebar. One of the rebar industry pundits said, "This figure shows how the illegal imported rebar is affecting the country revenue, manufacturers, and those who are doing their business properly." According to the document's observation, Capital acquired a firm that claimed to have lawfully imported a shipment of around 343 metric tons of rebar for a total customs charge of almost 12 million birr. An importer told Capital, "The illegal business is damaging not only the industry or the government revenue but other importers who are trading properly." Two million metric tons of all kinds of metal goods are needed annually in the nation; the share of rebar is one million ton. Experts claim that the number of illicit imports is so great that it will completely eliminate the business of local producers.