Industries asked to respond positively to incentives in the Budget

The Association of Ghana Industries on Monday asked industrialists to respond positively to the various incentives announced in the 2007 Budget to boost their contribution to the manufacturing sector.


Government last Thursday announced the abolition of the Reconstruction Levy, a cut on duty of imported raw materials to five per cent and removal of taxes on packaging materials for drug manufacturing companies, reduction in excise duties as well as withholding tax among others.



Speaking at the launch of the Sixth Industrial Week Celebration of AGI on Monday, Mr. Tony Oteng-Gyasi, the President of AGI, said members must respond to the government initiative through increased productivity in the manufacturing sector, saying this was necessary to enable the Association make more demand on government to improve the business environment further.


He said development could not be possible without industrialization and pledged the continuous assistance of the AGI to assist in accelerating the country’s economic growth.


Mr Alan Kyeremanten, Minister of Trade, Industry, Private Sector Development and President’s Special Initiatives, who launched the week, said growth in the manufacturing sector must be accelerated four-fold from the current growth rate of four per cent to 16 per cent annually to enable the country attain the middle income status by 2015.



He said industrialization was the main driving force for economic growth and explained why the government made such generous concessions in the 2007 budget to enhance the capacity of the companies to boost production.



Mr. Kyeremanten said government would continue to work with other stakeholders to ensure that factors militating against increased productivity in the industrial sector were removed. He cited the 470 million dollar allocation for resolving the current energy crisis that had hit the country.



Similar efforts are being made in the areas of provision of land banks, industrialised plant and machinery and promoting of raw materials as well as research and development to give the sector the necessary upliftment.



Mr. Asare Akuffo, Managing Director of HFC Bank, who spoke on the influx of foreign banks in the country, said a competitive banking industry was necessary to ensure that banks were effective forces for financial intermediation.



He said the aggressive attitude of the new foreign banks had made some medium sized banks to focus more on customer care.


However, Mr. Akuffo said there was no evidence to suggest that the new foreign banks were ready to compete on price hence the high interest rates still persisted in the industry, adding that the improved lending rate was due more to macro-economic stability noticed in, especially, the falling rate of Treasury Bills and the regulatory changes by Bank of Ghana, such as the abolition of the secondary reserve requirements.



Despite these changes, Mr Akuffo said, high investment cost in deploying technology, high levels of lending risks and lack of credit information had combined to stall the benefits of a more competitive banking environment.



This notwithstanding, he said, Banks were offering borrowing rates below the base rate to good customers, who were ready to share information on their businesses with their banks. He asked the Ghanaian industrialists to seek increase equity participation in their companies to avoid reliance solely on banks for their capitalization.


The Industrial Week is being marked on the theme: Industrial Growth and Challenges of Poverty Reduction.”GNA