Local pharmaceutical firms are expected to benefit from a move by Sadc to introduce duty-free access to raw and packaging materials for pharmaceutical products.
The Southern African Development Community (Sadc) Industrial Week (SIW) Declaration draft says the duty-free access will provide incentives for local manufacturing firms, establish pooled procurement on raw materials and medical equipment.
This, according to Sadc, is one way of advancing industrialisation agenda in the region and improve intra-regional trade, which stands at a partly 22 percent.
An official from Sadm Pharmaceuticals Limited Silizani Ndau said in an interview that if implemented, the move could help local firms reduce their cost of production as most of the raw and packaging materials, including capsule shales and powders for the medicines, are imported.
“It will bring down the cost of production because we import most of our raw materials. When we bring those here, what we buy locally are packaging materials like plastic bottles.
“Almost 80 percent of the production cost is imported. In the long- term, it can bring down the cost of pharmaceutical production as a result of reduced production costs,” he said.
On his part, Ministry of Industry, Trade and Tourism spokesperson Mayeso Msokera said the move will help facilitate availability of cheaper inputs for the local manufacturing sector which will make value-added products more competitive both on domestic and international markets.
He said Malawi is currently working towards establishing Special Economic Zones [SEZs] to facilitate investment in the sectors prioritised in the National Export Strategy and Sadc Industrialisation Strategy and Roadmap.
“The SEZs are, therefore, expected to facilitate duty-free movement of goods and allow the manufacturing companies access higher quality support infrastructure and favourable tax incentives, among other things.
“This will complement the already existing duty- free schemes in the country such as the Industrial Rebate Scheme [which exempts manufacturers from paying customs duties and excises on selected materials that they import to be used in the production of eligible goods] and the Export Processing Zones [which exempt enterprises registered as export producing firms of non-traditional exports from customs duty on equipment and raw materials and excise on purchases of raw material and packaging materials],” he said. Pool procurement, for example, will allow local manufacturers to reduce transaction costs per unit and contribute to lower production costs and competitive prices for value -added products.