As a result of this meeting Permanent Secretary, Ministry of Trade and Industry, government of Kenya wrote a letter to Commissioner General, Kenya Revenue advising that the following three categories be closed at the rate of 35 percent duty.
THE CATEGORIES ARE:
(1) Rice documented to be already in the high seas. (2) Rice already at the port, and (3) Rice whose documents have already been lodged with the customs.
The information has been received by Reap and Muhammad Anwar Mianoor, Vice-Chairman, Reap has advised all the Reap members to inform their importers of rice in Kenya for co-ordination accordingly.
According to a source having reliable information, the increase in customs duty on rice by EACU applies to all imports of rice into the ACU and not just Pakistani rice. About under-invoicing, one rice exporter admitted that they do indulge in this practice but do so at the request of Kenyan importers.
In order to avoid paying duty, they requested Pakistani exporters to quote lower value. The difference in the actual market value and the under-invoiced value though is remitted, but not through legal channels, he said.
Kenya is one of the largest buyers of rice from Pakistan and out of about 250,000 mt per annum, 80 percent or 200,000 mt is bought from Pakistan. Even with the customs duty at 35 percent, a substantial quantity of this was under-invoiced by Pakistani exporters but with the raise of duty to 75 percent, this practice is likely to become even more widespread.
Rice exporters believe that the Kenyan Revenue Authority is powerless to stop this practice, as it involves the connivance of both, the Pakistan exporter and Kenyan importer. A look into November and December 2004 export statistics of rice into Kenya shows that some exporters have invoiced rice to their Kenyan importers at levels far below that of prevailing market price.
The source said that there have been sales by exporters invoiced at $175 CFR and a substantial tonnage at $190 CFR by prominent exporters. At the same time and for the same quality there were exporters who do not indulge in this practice and they were invoicing their customers the true market value at $270-275 CFR and even as high as $280 CFR.
He said that one particular exporter, in a seven day period shipped out the same qualities at prices ranging from a low of $180 CFR to a high of $275 CFR. This only reflects the respective customer''s own honesty, as there are buyers in Kenya who do not want to get involved in any sort of under-invoicing.
Pakistani rice exporters appear to be hostage in the hands of Kenyan rice importers and face a ''no-win'' situation in dealing with the scourge of under-invoicing. Kenyan importers could turn to India and Vietnam, our main competitors, in case they do not oblige Kenyan importers of rice. On the other hand, cognisant with this practice by some of the exporters in connivance with some Kenyan importers, the Kenyan government, instead of agreeing to a free trade agreement with Pakistan, may well consider applying an anti-dumping duty on Pakistani rice imports.