Temporary rebate on the import duties


SAPMA temporary rebate on import duties for production component of paints and coatings industry

 

The South African coatings industry has provisionally been granted a temporary rebate on the import duties for titanium dioxide, a vital component of paint and coatings production which is not available from local suppliers and therefore significantly increases local manufacturing costs.

The proposed concession follows urgent appeals to the government’s International Trade Administration Commission (ITAC) by SAPMA members, spearheaded by Kansai Plascon, and has now been published in the Government Gazette of January 31 this year.

In stating its motivation for a temporary rebate on import duties, ITAC says titanium dioxide is a vital raw material in the manufacturing of coatings or paint products in the South African Customs Union (“SACU”). It also serves as a vital raw material across many other manufacturing industries with the paint industry one of the biggest users as it uses the raw material as the base of most paint colours. There is currently no SACU manufacturer of titanium dioxide because the last local manufacturer, Huntsman, closed its local plant in 2016.

Since then all titanium dioxide requirements – other than those imported from Europe for which a free trade agreement is in place – have had to be imported at a 10% customs duty. “The duty currently serves to unnecessarily increase the cost of importing titanium dioxide and consequently the cost and prices of manufactured end-products, including paint,” ITAC states in the Government Gazette.

ITAC adds that given the escalating prices of titanium dioxide on the global market, it is imperative that the rebate is created to reduce the cost burden on manufacturers in the paints and coatings industry.

ITAC also acknowledges in the Government Gazette that local coating manufacturers are facing significant import competition of paint from other countries and that the current 10% import duty on titanium dioxide, therefore, creates a cost and price disadvantage for locally manufactured paints and coatings.

It adds that there is a potential local manufacturer of titanium dioxide, Nyanza Light Metals, and support for this effort is acknowledged. The creation of a rebate facility will be an equitable solution for all parties while Nyanza Light Metals continues with its work for construction of a South African titanium dioxide plant.

ITAC has now, as is customary in Government Gazette announcements, allowed a month for comments or objections to the proposed rebate – the extent of which also still has to be finalised.

Commenting on the likelihood of a rebate of the customs duty, SAPMA executive director, Deryck Spence, said: “This is good news for a wide section of the South African economy. The coatings industry, along with a host of other industries that has titanium dioxide as essential raw material would become more competitive with the import duty removed. Included here are producers of automotive products, adhesives, paper, cosmetics, pharmaceuticals, even sunscreen and toothpaste manufacturers. It is most gratifying that the government has heeded the well-structured plea of our members – with Kansai Plascon to the fore – and generally instils confidence in government’s positive future response to other measures that are still shackling the coatings sector.”

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