Made in Mauritius: Local production quashed by imports

Local manufacturers are sending a heartfelt cry to authorities to support local production. Regrouped under the Association of Mauritian Manufacturers (AMM), they have sent a memorandum to the government in line with pre-budget consultations. The situation is critical they say. Local manufacturers are in a dire situation. On one side, the limited local market is becoming increasingly crowded and added to that, they have to face tough competition from outside. But those are not their only woes, they also have to swim against the tide of cheap imports flooding the market with the advent of open-market policies introduced in 2006. They claim they are not on a level-playing field with multinational corporations (MNC) which can benefit from economies of scale in their chosen base of operation and then export to Mauritius at marginal costs. The issues raised by the AMM are numerous and its members have proposed solutions to redress the situation and give a lifeline to local products. The “Made in Moris” brand needs some support. The Prime Minister recently said that his government believes in productive sectors and will relaunch local industrial production. “It is not sustainable for our country to continue to increase its trade deficit to over 25% of GDP. Our small island cannot afford to compete with major industries like Egypt, India. With the disappearance of tariff preferences, local products compete with major economies. We are also in direct competition with them to access project funding for development.” The AMM is asking for the reintroduction of 15% of equity duty on customs for local production. “In order to reach 25% of GDP by 2030, the manufacturing sector will have to take a growth rate of 7% to 8% per year. The AMM proposes a series of measure.”

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Despite the challenges, manufacturers are enthusiasts, who love their job, and they have heard the Vision 2030 of the PM which made them believe that manufacturing will be playing a leading role. To create a feel good factor, it is necessary for the next budget to create an environment which encourages risk-taking, releases the investments and gives visibility for ten years. Is it rational to expect local production to reach 25% of GDP and how to do so? This is a proactive goal that we want to adhere to because we believe manufacturing forms part of our country's DNA. In order to contribute to 25% of GDP, the sector has to grow at 7 to 8%. It cannot be business as usual as it takes a real ambitious industrial policy from the State. The 25% target cannot be achieved without attracting new investors and new skills in leading sectors to meet the world demand. Look at the medical equipment sector: it is already a great success and it is very promising. The AMM is asking for a revision of the free-trade policy. Would that not be in contradiction with WTO regulations? Our economy is in competition with major economies like Egypt, India, and Indonesia. We are also in direct competition with them to access financing for developmental projects. We excel by example in the index that measures the Freedom of Trade. Our country is already suffering the aftereffects of globalisation. The WTO did not ask for resetting custom tariffs in 2006. This list was drawn up during negotiations with the EU. We ask for this decision to be reviewed and a 15% EQUITY DUTY be introduced on the targeted list, to restore a "level playing field" with imports during a transition period. The equity duty will not be applied on products from SADC and COMESA. Would that not impact on prices? The equity duty will have little impact on prices because we are in a very low inflation phase and our market is fiercely competitive. It does not mean a corresponding increase of the sales price. You are asking for open protectionism. What do you mean by that? Our request is part of an overall strategy to invent a new model of re-industrialisation in small islands. We have strong arguments to present to the international community with respect to specificities such as geographic isolation, raw materials, and connectivity, among others. The open protectionism is to consider our vital interests, our jobs and the preservation of our industrial heritage which is the sum of all its know-how that make our country an African exception. What is the gist of the "Buy Mauritian Act" and what would it propose? If the State asks Mauritians to buy local products to support local employment, it must begin by setting an example in public procurement. It is not only about giving a preferential price to local products but to voluntarily and legally ensure that there is a minimum domestic content in supplies, 50% minimum. This covers a range of products and will also apply to the retail, hospitality, real estate projects. Tenders, through technical specifications, might target local productions such as freshness and traceability. The memorandum states that job creation within the local manufacturing sector is limited. How to ramp up those figures? The hiring potential in the manufacturing sector remains limited. Businesses are either in mature markets that allow limited job creation or they are on slowing markets and will do anything to streamline employment. That said, existing vacancies fail to attract the younger generation. There is also a mismatch between supply and demand. Can local products compete with imported ones in terms of quality and price? The sectors that have resisted to the 2006 massive liberalisation prove that local products can be competitive and of equal quality. This is the case of Mauritian products which are manufactured under international franchise. Probably 50% of the Mauritian shopping trolleys are filled with local products. Moreover, in an opinion poll, 90% of Mauritians say that they are aware of the ‘Made in Moris’ label and they trust local products.