Company blames taxes for slow growth in ship building industry

Punitive taxes are stifling the growth of the ship building industry, a Mombasa based firm said and urged for review.

Southern Engineering Company Limited (SECO) said taxes levied on imported marine steel makes prices for vessels assembled in the country high because marine crafts are imported duty free.

“Kenya levies a 10 per cent import duty and 16 per cent value added tax on steel, one of key raw materials in ship building. One of the factors that buyers consider in determining the source of the vessel is the initial cost and not maintenance,” said general manager Omri Cohen.

He said as a result buyers of marine crafts prefer to import them whole to procuring services offered at their shipyard, even as demand for watercraft vessels continues to grow in the East African region.

“What importers of these crafts don’t know is that they get value when they have them mad because we offer after sales service with readily available spare parts,” he said.

While SECO provides sales management at the facility’s dry dock, Mr Cohen also noted that assembling of vessels locally facilitates transfer of technology and creates hundreds of jobs with huge economic spill over.

“However, as demand for vessels continues to grow, companies are now increasingly using our facility to build vessels for them. Last month, we delivered a 230 tonnes ferry to Uganda National Roads Authority and currently we are working on an 800 tonnes vessel,” Mr Cohen added.

To assemble the vessel at its yard, the SECO partnered with Damen Shipyards, a Netherlands based marine engineering company.

SOURCE: BUSINESS DAILY