Athi River-based Hela Clothing Limited. [PHOTO: MUMBI KINYUA/STANDARD]
Kenyans can now buy brand new clothes for as low as Sh50 from the Export Processing Zones that were recently allowed to sell their products locally.
This means that Kenyans can buy top global brands such as Calvin Klein, Victoria Secrets and other licensed brands owned by US clothing conglomerate Phillips-Van Heusen Corporation at lower prices.
Companies that operate at EPZ are exempt from paying taxes meaning their clothes will come at a fraction of what they cost in the open market.
This was announced by Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed who added that 20 per cent of EPZ products would be sold in the local market.
“We have taken a position that up to 20 per cent of goods and apparels manufactured by our EPZ companies can be accessed by Kenyans at affordable prices but for the same quality exported to other countries like the US,” Adan said.
Not so rosy Valentine for flower firms
According to the CS, Kenyans will have access to brand new items from Wednesday to Friday next week at the Kenyatta International Convention Centre. The prices will range between Sh 50 and Sh 600. Some of the items cost as much as Sh5,000 in international markets.
“We will make it clear where Kenyans can access the items after the exhibition in due course and we also expect that at some stage, some outlets will be opened in the country by small and medium sized enterprises,” the CS said.
The CS was speaking during a tour of the Athi River-based Hela Clothing Limited which was subcontracted by Phillips-Van Heusen to manufacture some of its brands.
Mr Mohamed said that the move to allow EPZ firms to sell in the local market was one way of reducing the amount second-hand clothes in the local market.
“We want to focus on ways of building this sector and to create the domestic market,” he added.
The announcement comes months after the Government said that EPZ companies would be exempted from Value Added Tax (VAT) if they sold locally.
“Garments and leather footwear manufactured in EPZs are exempt from VAT when sold in the local market from June 9, 2016,” Henry Rotich, the Treasury CS said in the 2016-17 budget statement.
Last year, the Government introduced a duty of Sh40 per kilogramme of second-hand clothes giving the EPZ manufacturers a competitive edge over other manufacturers operating outside the zones.
On African Growth and Opportunity Act (AGOA), he said “we haven’t got the indication yet that there will be any change of policy direction but if there is need we will renegotiate the deal.”
Agoa was extended by a decade and expires in 2025. Within that period, Kenya expects to protect and grow its share of US markets from the 0.4 per cent to increase exports by $1 billion (102.9 billion) in the next three years.
“We have seen significant growth in exports to the US and today we stand at about $400 million (Sh41.6 billion) and we want that number to get to $1 billion (Sh102.9 billion) in the next two to three years,” Mr Mohamed said.