Kigali Special Economic Zone investors want new maintenance fees revised

Investments in the Kigali Special Economic Zone could be suffocated if the newly-introduced maintenance fee is not revised urgently, investors have warned.Investors in the zone have been ordered to pay Rwf1,500 per square metre of land space per year beginning with this month as maintenance fees, according to a directive seen by The New Times.On average, one will have to pay Rwf15 million for every 10,000 square metre of land space per year as maintenance fee which translates to about $62 per day (about Rwf30,000).The fee is part of the budget that will be used in repairing damaged optic fibre cables, cleaning and fixing damaged roads, security, water and sewerage treatment, and electricity among others, according to Jeanne Isabella Gasana, the managing director Kigali Special Economic Zone, phase one.Investors call for a reviewHowever, investors have warned that if the fee is not scrapped, it will affect business, including commodity prices, profitability and sustainability of the manufacturing industry.The majority of the investors who opened up to this paper on condition of anonymity, yesterday, described the fee as “another form of tax.”“Given the taxes we are already paying and the cost of production that is threatening manufacturing sector, imposing another fee is going to do more harm than good,” one of the investors said.“We are calling upon authorities to liaise with stakeholders and resolve this problem. Why should someone be forced to pay fees to maintain his property?” The investor cited value added tax, income tax, pay as you earn, withholding tax, customs duty, among the taxes they pay.Mary John, the chief executive of Sahasra Electronics Rwanda Limited, a firm completing construction of a LED lights factory in the zone, called upon government to find other alternatives of maintaining the zone that will not directly impact on the economic sustainability of investors.She said apart from the new maintenance fee, they were already spending a lot on electricity, security, water, which authorities say they want to maintain on behalf of the investors.“I hope the issue will be resolved very soon because it adds to the cost of production which is already high.”Ministry defend the feesGasana, the manager of Kigali Special Economic Zone, said the fee was arrived at following a study conducted by experts on the maintenance and consequences that come with non-maintained infrastructure.She said as a private company managing the zone, it’s their responsibility to make sure that all the infrastructure in the zone is well maintained and protected.“We did not just come up with a figure. We have looked at many viable factors, including the capital flow for all the occupants. We are trying to create a conducive investment climate for these people; it’s a contribution that they should embrace,” Gasana said.She added that as part of incentive to investors, occupants are given opportunity to pay 30 per cent down payment when buying land with a two year grace period.“We are also working closely with Rwanda Development Board and Parliament to see how we can come up with more incentives that will encourage production on large scale.”Alex Ruzibukira, the board chair of Special Economic Zone, and director-general of industry and SMEs department at the Ministry of Trade and Industry, said the fees are in line with international standards of any special economic zone in the world.“We are aware of this fee and it’s in line with international standards, investors should embrace this fee because it’s part of our efforts to ensure that modern infrastructure in this economic zone is created for them to benefit,” Ruzibukira said.“The fee is not definitive, it can be negotiated if at all it is deemed high but bearing in mind that as the country gets more diversified investors, mechanisms to protect their property and create modern infrastructure for them remains paramount.”Kigali Special Economic Zone is a merger of two projects, namely; Kigali Free Trade Zone and Kigali Industrial Park.With cost of Rwf20,000 per square metre, the zone sits on 276 hectares of land, and is expected to boost and help diversify economic activity, create jobs, and increase investments in the country.

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Kigali Special Economic Zone investors want new maintenance fees revised