Pricier clothes to hit SA

Johannesburg - The decision to raise the import duty on certain clothing products by between 5% and 25% will push up consumer prices and encourage more illegal imports rather than protecting the industry, critics have said.

Import duty of 45% as against the original 40% has been levied on clothing items like jackets, trousers, dresses, shirts, blouses, underwear, T-shirts, jerseys, socks, baby clothes and track suits since Friday. On certain socks, the rate has been hiked from 20% to 45%.

Clothing trade union Sactwu, which applied for the increase in May, welcomed the decision by the International Trade Administration Commission (Itac) because it gave the struggling industry greater protection.

Sactwu said this would help lower imports and create room for manufacturers to restructure and ensure the industry's long-term sustainability.

Since January nearly 10 000 jobs have been lost in the clothing, shoe, textile and leather industries and 23 companies have been forced to shut down.

About 58 000 people are employed in the clothing industry at present, considerably fewer than the approximately 150 000 a decade ago, according to the Itac report.

More harm than good

However, retailers say the higher import duty will do nothing to make local manufacturers more competitive. It will merely be another cost in the value chain, part of it presumably being carried over to the consumer, said Michael Lawrence, CEO of the National Clothing Retail Federation of South Africa (NCRF).

"South Africa has some of the highest import duties in the world. The industry enjoys massive protection and we still can't be competitive. What the increase does is to add another 5% incentive to illegal imports," Lawrence said.

According to research by the South Africa Revenue Service (Sars), about half of South Africa's clothing imports are illegal.

Tax evasion occurs through imports not being declared at all, entering excessively low false prices on invoices or by reshipping products' origin from, say, China to Europe because import duties there are lower.

Though "considerably more work" is being done now to try to track down illegal imports, it's still not nearly enough, said Sactwu researcher Etienne Vlok.

A dedicated task team has been appointed by Sars, apparently with funding of about R20m, to track down illegal importing. Several raids have also been carried out recently, and 400 tonnes of illegal imports have been seized in Durban.

- Sake24.com

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