Tanzania discounts report on EPZ faults

News 

Sunday, March 16, 2014 

BY KENAN KALAGHO, EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

IN THE ZONE: An OECD report claims losses of $700 million.

DAR ES SALAAM, Tanzania - Dr. Aldehelm Meru, the Director General of the Tanzania Export Processing Zones Authority (EPZA), has discounted a report that criticises Tanzania’s export zone policy.
Commenting on the Organization for Economic Co-operation and Development (OECD) report titled ‘Investment Review of Tanzania’ he said it lacked facts and was entirely based on personal views.
The report described Tanzania’s EPZs as the largest loss makers. The authors claim some $701 million had gone down the drain since EPZs were started in 2002.
The report also claimed that the zones had not lived up to expectations due to the government offering tax incentives to new enterprises. The authors say this has cost the government millions in tax revenue.
However, Dr Meru said, “A large number of our competitors offer similar incentives including tax holidays, if we resolve to abandon tax exemptions, Tanzania will not be competitive.”
He named the countries that offer such incentives as the Phillipines, Ethiopia, Kenya, Burundi, Malaysia, Namibia, China, Rwanda and Nigeria where new investors were being offered similar incentives.
“Only 1% of the total FDI comes to Africa, of which 99% goes to South Africa Nigeria and Egypt, the rest of the countries fight for the remaining 1%. This justifies a need for being competitive,” he said.
He said despite issuance of tax exemptions to new investors, the government still benefits throuigh job creation and technology, all crucial for economic growth. “We are very open on tax incentives as we offer a 10 years tax incentives and 30% tax after the 10 years, while other countries like Kenya have a 10 years and 25% tax for the next 10 years and Rwanda offers tax holiday for the entire life of the company,” Dr Meru said.