Somaliland government establishes local investor protection policy

[Xaaji Xunjuf]

Government establishes local investor protection policy

 

Finance minister will impose VAT on imported goods that are produced

 

Hargeisa, January 8, 2012 (Somalilandsun.com) - The government of Somaliland has started to impose a Value Added Tax (VAT) on imported goods that are locally produced. This was revealed to the Somaliland Sun by the Finance minister Hon. Mohamed Hashi Elmi. The FM said that the need to impose the VAT on these goods is to enable the government protect local investors.

“Somalilanders have invested millions of dollars of their hard earned money, to establish manufacturing industries that are facing unfair competition from imported goods of a similar quality or poor” said the minister.

The VAT is to be imposed initially on imported Soft drinks and detergent washing soaps, which are produced in the country by companies owned by Somalilanders. The imposition of this Tax will see an increase in the price of the imported commodities thus enhance consumer preference for local produce.

 

Hon. Hashi stressed the importance these local manufacturers have to the local economy especially as pertains to improved livelihoods that emanates from availability of job opportunities for the ever increasing numbers of graduating youths.

“By availing employment opportunities to our youth, the local investors also help reduce illegal migration-Tahriib, which has killed a lot of the country’s youth as well as contribution to brain drainage.

Various manufacturers set to benefit from the local investor protection policy include the Burao based Taydh (Detergent) manufacturing industry owned by the Indadheero Group of companies, the Hargeisa based Somaliland Beverage industries-SBI a soft drinks manufacturer through a Coca Cola franchise owned by tycoon Gelle Arab.

 

The most to benefit will be the almost now defunct Habi soft drinks manufacturer which was based in Hargeisa and run out of steam after failing to compete with imported soft drinks that were equally priced. Though rumours of disagreements between partners are attributed to the near collapse the hitherto non-existent local producer protection policy was and is still is a major hindrance.

This announcement by the finance ministry comes in the heels of recent threats by the Hargeisa based Ethiopian ambassador on a negative economic impact if the government does not reverse its decision to impose taxation at the Berbera port on Ethiopian bound transit goods.

[N.O.R.F]

I doubt this has been thought through. BOTH the prices of locally produced and the imported goods will increase. VAT is currently a hot topic in the SL business community. Businesses have been issued baseless VAT invoices resulting in high level meetings and disagreements. The minister hasn't come out of it smellig like roses.

[N.O.R.F]

Islaan ayaa Burco lagu xidhay for not paying an $80 VAT bill.

 

The way things are being done is haphazard to say the least. The whole government seems disjointed. No clear strategy for any ministry (planning maybe).

[Jacaylbaro]

This is the best commerce/economy related policy for the last 20 years ...... this will empower the local industries and create a market for them.

[Dr_Osman]

Protection of what? wheres Puntland boots and uniform? Your government looted Puntland property and now your militia who wearing dacas and macawis are wearing our boots and uniforms. Local investors I urge don't invest in Somaliland it's business suicide.

[N.O.R.F]

Oody, agreed. Rome wasn't built in a day. What has been surprising is the thought that they can do as the please in demanding payment without so much as a consultation paper, research or implementation procedure.

 

JB, the problem I have is with implementation.

[Jacaylbaro]

The tax increase already started sxb ... i just hope it continues like that.

[N.O.R.F]

^I know it has started but is it right? Why wasn't there a consulting period with businesses? Why was there no warning of an increase in VAT?

 

As a direct result, businesses are going out of business. Meetings have been held with the minister. Investment by diaspora Somalis has dropped.

 

Its not as simple as raising taxes. The overall picture needs to be looked at and people consulted before such decisions are made unilaterally.