Illegal imports cost the country and the clothing, textile, leather and footware sector billions of rands each year - highlighting the need for improved customs enforcement and raising suggestions around the reassessment of import duties.
Experts and manufacturers in the sector have warned that illegal imports are “crippling” local manufacturers who must pay high tariffs on yarn and fabric that can’t be locally sourced, while illegal importers continue to get away with under-declaration.
Industrial Development Corporation Chemicals and Textiles divisional executive, Shakeel Meer, said major challenges facing the sector included illegal imports coupled with competition from low wage countries and those following unsustainable production and labour practices.
“An area for improvement is in the enforcement of appropriate import duties. Some businesses are importing and selling clothing and textiles without paying the duties as required. Not only are they benefiting from illegal activities, but they are also putting businesses which are manufacturing and creating jobs locally at risk,” Meer said.
Increased competition from international retailers with global supply chains as well as protectionism and local industry support in competitor countries were also challenges, Meer said.
Benchmarking and Manufacturing Analysts chairman Justin Barnes said it was difficult to quantify the problem exactly but billions of rands worth of illegal imports passed through customs every year, “crippling” local businesses.
He said import tariffs – currently 15% on yarn, 22% on fabrics, 30% on home textiles and 45% on apparel – were sufficient, but the problem lay with enforcement of duties.
“The mass of goods coming in is hugely undeclared. Middle men try and trade with big retailers but a lot of it goes into the big local Chinese malls. This puts a major constraint on the industry because the playing field is quite uneven,” Barnes said.
Sheraton Textiles CEO Nick Steen said it was high time import tariffs were reassessed to consider removing duty on certain types of yarn and fabrics that manufactures simply could not source locally.
“Where we are not making things efficiently locally we should not have duty. Weavers are paying a 15% tariff on yarn but only 22% on fabrics so they might as well bring fabric in. We don't make all yarns It was important to balance the interests of businesses in the value chain, he added.
“The tariffs need to be re-examined - are they helping the industry and what is the impact ultimately on employment?”
