Friday, August 28, 2015

July producer inflation dips

The annual producer price inflation (PPI) dipped to 10.6 % in July from 23.1% recorded in June, driven mainly by strong appreciation of the cedi, the Ghana Statistical Service has announced. 

The sharp fall represent a 12.5 percentage point decrease in producer inflation relative to the rate recorded in June 2015.  

“We had declines in all the sub-sectors but the key driver was the strong appreciation of the cedi last month,” said Government Statistician, Philomena Nyarko at a media conference in Accra to announce the monthly producer price index.

She explained that the cedi rallied strongly last month after slumping 25 percent in the first half of the year but has since lost all the gains. Lower gold prices in July also contributed to the fall in the index.

The manufacturing sub-sector recorded the highest year-on-year producer price inflation rate of 13.5%, followed by the utilities sub-sector with 7.3%. The mining and quarrying sub-sector recorded the lowest year-on-year inflation rate of 1.5%. 

From July 2014, the producer price inflation began an upward trend to record 48.6 percent in August 2014. However, the rate consistently declined to 19.2 % in March 2015. 

It inched up to record 19.5 % in April, 2015 and then declined again to 18.8 percent in May 2015. It, however, increased in June 2015 to record 23.1 percent. In July 2015, the rate declined again to 10.6 %.

The monthly changes in the producer price index indicated that manufacturing recorded the highest inflation rate of 3.1 percent, followed by the utilities sub-sector with 0.1%. The mining and quarrying sub-sector recorded the lowest producer inflation rate of -18.3 %.

Manufacturing sector
During the month of July 2015, nine out of the 16 major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 13.5%. 

Manufacture of textiles recorded the highest inflation rate of 49.0 % while the manufacture of motor vehicles, trailers and semi-trailers recorded the lowest producer price inflation rate of -11.9%.

Petroleum price index

The inflation rate in the petroleum sub-sector was 77.3 % in July 2014 and thereafter fluctuated until November, 2014 when it recorded a rate of 61.1 %.

Subsequently, the rate steadily declined to record -8.7 % in March 2015 and -9.6 % in May 2015 as a result of base drift effect and the decrease in ex-refinery prices of petroleum products.

The rate, however, increased in June 2015 to record -0.01 percent as a result of the increase in petroleum prices but decreased to -6.4 % in July 2015.

ICC-Ghana advocates new guide on customs valuation

The International Chamber of Commerce-Ghana (ICC-Ghana) and the World Customs Organisation (WCO) have released a new guide on customs valuation and promote revenue package, the ICC-Ghana office has said. 
The guide seeks to underline the closer cooperation and coordination between customs and tax authorities which are key factors for further progress in enhancing international trade.

The chairman of ICC-Ghana, Alhaji Asoma Banda who presented the documents on behalf of ICC said: “The document is the results of the collaboration between ICC and the WCO as a new guide on customs valuation as part of the WCO revenue package. It also focuses on the use of transfer pricing information to examine international transactions to government.

He observed that international businesses face major difficulties due to discrepancies regarding the valuation of goods and diverging customs and tax rules regulating transactions between related parties, hence the introduction of this timely guidelines. 

A statement copied to the B&FT proposed seven innovative and pragmatic solutions based on convergence to secure, clarify and simplify transfer pricing and customs valuation rules.

“As the world business organisation, the ICC confirms that multinational companies, from all sectors and in every part of the world, face difficulties with respect to the valuation of goods. 

“These difficulties arise because transactions between related parties are subject to both customs and fiscal examinations and are thereby bound by differing rules and contradictory interests. 

“ICC believes these examinations should yield the same value and that a resolution to the problem is in the interests of all concerned,” the statement said.

The statement added: “Tax and customs administrations, even within one country and sometimes within the same government department, have different approaches: tax administration focuses on intra- group sales’ prices that may be perceived as higher than they should be; whereas customs authorities control imported goods for which prices may be perceived as lower than the market price. 

“While both administrations seek to achieve the same goal, which are arm’s length pricing, revenue interests in the transaction still remain at odds with each other. 

 Tax and customs administrations often set rules independently for the same transaction/good. Tax authorities seek conformity with the Organisation for Economic Co- operation and revenue generation.” 

ICC therefore recommends a focus on how these principles can be more closely aligned and made acceptable to both government authorities and the private sector. 

ICC-Ghana is spearheading an educational campaign aimed at collaborating with all affiliated government, ministries and department and agencies to highlight the various principles adopted by international bodies to ensure the implementation of this customs valuation at the country’s borders.

Currently ICC boost of a ready work with intergovernmental organisations such as the Organisation of Economic Co-operation and Development (OECD) and the World Customs Organisation (WCO) on this highly complex and contentious area within the global tax and customs world. 

 The campaign has become necessary at the time when the Customs Division of the Ghana Revenue Authority (GRA) has been given the green light to take full responsibility for valuation, classification and risk management functions at the country’s ports beginning September 1, 2015, under what has been termed as a National Single Window.

This means that from September 1, 2015, the Customs Division shall begin the processing of the Customs Classification and Valuation Report (CCVR) which shall replace the destination inspection report also known as the Final Classification and Valuation Report (FCVR).

This development which will be in conformity with the global best practice in the international trade protocols seeks to promote trade facilitation among nations for economic growth and prosperity.

ICC Ghana sincerely hopes that governments will take on board the recommendations proposed in the WCO guide as increased coherence between customs and tax rules will not only help reduce legal uncertainty, trade costs and the risk of penalties, but will also lower the risk of double taxation, and enhance cross-border trade and investment. It is in the interest of all concerned that tax and customs examinations result in the same value determination.

AGOA offers tremendous opportunities

The 10-year expansion of the African Growth and Opportunity Act (AGOA) by the U.S. Congress offers tremendous opportunities for Ghanaian entrepreneurs seeking to export Ghana-made products to the United States, Arun Kumar, Director General of the U.S and Foreign Commercial Service has said.
“We look forward to seeing Ghana capitalize on this opportunity and develop an effective AGOA strategy that would lead to long-term employment and opportunities for millions of Ghanaians and further increase trade between the United States and Ghana. 

“I wanted to see for myself how Ghana is taking advantage of AGOA, and the impact AGOA is having on local communities,” said Kumar at a media interaction in Accra. 

AGOA has recently been renewed for the next 10-years by the U.S. Congress. The U.S government enacted AGOA in May 2000 to give preferential market access for over 6,000 products from 39 sub-Saharan Africa nations with liberal access to the U.S. market.

As of June 2015, AGOA eligible countries have exported nearly US$480 billion worth of goods to the U.S under AGOA. 

By providing duty-free access to the U.S. market, AGOA has succeeded in helping eligible nations grow, diversify their exports to the United States, and create employment and inclusive economic growth. 

Under AGOA, eligible countries can export products, including value-added manufactured items such as textiles, to the U.S duty-free.

AGOA is the U.S government’s signature trade initiative with sub-Saharan Africa. In 2012, eligible countries exported nearly US$35billion worth of products to the United States under AGOA and its related general system of preference provisions.

Mr. Kumar emphasized U.S government’s pledged to promote growth by encouraging business partnership among the two countries.

 “Trade is not a one-way street.  We want to see Ghana prosperous in order to encourage more American companies to find Ghanaian partners and do business in your beautiful country.”

He said the U.S bilateral trade has been steadily rising over the last decade.  “In 2014 our trade of goods was close to US$1.5 billion or 220 percent higher than what we traded back in 2004.”
Available data from the American Chamber of Commerce in Accra, shows that over the last 10-years members have invested close to US$13 billion in Ghana, paid US$800 million in taxes, and dedicated close to US$500 million on various social programmes.

“One could see the direct correlation here between this U.S. investment and the growth of U.S.-Ghana trade in the same period, as well as the positive footprint American companies have in Ghana when it comes to hiring and training the local labor force.  

“I am here to ensure you on behalf of President Obama that we are committed to promoting U.S.-Ghana trade and investment, and I must emphasize the need for continuous progress in decision making when it comes to some of Ghana’s infrastructure projects that hold the potential for boosting trade and improving the everyday lives of ordinary Ghanaians. 

“In my short time in Ghana I have come to recognize these opportunities as well as some of the challenges American companies face in the market. As Ghana has significant infrastructure, energy, health care, and fiscal challenges,” he observed.