Pirates to capture coatings sector

Deryck Spence, Executive Director – SAPMA.

Deryck Spence, Executive Director – SAPMA

When you view present day South Africa objectively there are not too many things going right. Our country is no longer dreaming or planning for success, rather we seem quite content to accept failure.

One is left with the impression that at the moment, the state of our economy is the least of Government’s concern. Should we be proud of the likes of SAA, Eskom, the railways, hospitals, the education system (with 30% pass rates), SABC, SABS, free tertiary education, the poor performance of our municipalities, the new Mining Charter, being relegated to junk status, and uncontrolled crime?

Just recently, SAPMA was advised that the Government, through recommendations made by the seemingly omnipotent National Economic Development & Labour Council (NEDLAC), decided to negotiate for the abolishment of Chapter 39 import duties, specifically for resins from Egypt and the East African community.

This decision was made with the endorsement of NEDLAC, without the slightest consultation with the coatings industry or SAPMA. Or without any thought of conducting a business impact study to see how this move would affect the nine local manufacturers, who were not consulted either.

When we put the manufacturers’ case to the DTI, we were told that the DTI was not allowed to consult with industry, under instruction from NEDLAC.

We were then advised by the Director General of the DTI that the negotiations for import duty abolishment were ‛too far gone’ and that the DTI could now not pull out of the negotiations.

Now it must be remembered, that just four years ago Egyptian products were dumped in South Africa. The imports proved to be under specification compared with samples provided, leading to the payment of millions of rand in compensation. To make matters worse, Egypt, as a member of OPEC, enjoys cheap prices for solvents, labour costs that are significantly lower than in South Africa, and the Egyptian Government provides $2.4 billion in export subsidies, allowing their exporters to land their product in South Africa at a price below our manufacturing cost. And now it will also be import duty free.

So, when local companies close because they cannot compete against these pirates, the cry will come, ‛What about our jobs’?” Indeed, what about these job losses at a time when unemployment is rampant in our country? Perhaps the all-powerful NEDLAC can provide an answer.