In what it believes to be an ‘oversight’, Cape Town-based fastener supplier Fastenright is appealing for the removal of the customs duty that was implemented on stainless steel fasteners on April 1. The duty was imposed as part of protection measures for the local fastener manufacturing industry through the implementation of a hot-rolled coil safeguard duty, which was approved by Trade and Industry Minister Dr Rob Davies last month.
The International Trade Administration Commission of South Africa (ITAC) reviewed the customs duty imposed on a number of downstream steel industry products following requests from a number of domestic fastener manufacturers to increase the customs duty applicable to stainless steel fasteners to their respective World Trade Organisation-bound rates of 15% and 30%.
Fastenright MD Rainer Lutz pointed out that there are no local manufacturers that can produce stainless steel fasteners in the range of sizes, standard of quality or volumes required by customers. Fastenright, in common with many fastener suppliers, imports its stainless steel fasteners from approved suppliers mainly from Asia and Europe, with material excellence certificates confirming quality.
Fastenright’s products are used by a range of manufacturing industries including boat building, construction and security.
“These products always used to be, and should continue to be, duty-free but all stainless steel fastener importers in South Africa, are now casualties of what seems to be oversight in applying this customs duty to stainless steel fasteners..”
In his opinion, Lutz believes that for the very few local stainless steel fastener manufacturers, the customs duty offers little protection or incentive as they cannot compete on availability, quality or price with wellestablished and respected international manufacturers. Lutz fears that more unscrupulous suppliers may attempt to import goods under the wrong tariff heading – giving them an unfair advantage.
“Removing the duty will level the playing field and cost savings will inevitably and ultimately be passed on to end-users and exporters.”
To support its application to ITAC, Fastenright has submitted proof of its research confirming that there are no viable stainless steel bolt and nut manufacturers in South Africa.
The company submitted typical enquiries for stainless steel fasteners to several local manufacturers, all of which were unable to supply the products, claiming that they are not part of their product range.
In response to Fastenright’s enquiry, the South African Fasteners Manufacturers Association has confirmed that all the stainless steel fasteners that the company is importing are not made by any South African manufacturers, except for screw studs and screw studding of stainless steel, more commonly known as threaded rods, which Fastenright acknowledges must be subjected to the customs duty to protect local manufacturers.
“If our application to ITAC is unsuccessful, we will be forced to significantly increase our selling prices as we cannot absorb the newly imposed import duties” said Lutz.
“All suppliers are facing the same predicament, which will have an unnecessary inflationary effect on the entire South African stainless steel industry, affecting many other products that depend on using stainless steel fasteners for assembly and production.”
Exporters of products which include its fasteners will also not be able to increase their selling prices to recover these higher duties, as this would put them in an uncompetitive situation. Stifling growth Lutz notes that local demand for stainless steel fasteners has been growing, as customers realise the advantages of the product over other inferior materials. Imposing a hefty and unnecessary customs duty will stunt the growth of the industry, believes Lutz.
“A superior, robust product offering, our commitment to customer service and stockholding capacity that guarantees availability, is the reason for Fastenright’s steady market growth over the past seven years. We added a third warehouse to our operations in October last year to ensure adequate stockholding” explained Lutz, adding that the company can source any fastener in any material, due to its positive relationships with its suppliers.
Fastenright has steadily increased its range of security fasteners over the past few years and can source almost any kind of tamper-proof fixings.
“We are constantly extending our product range beyond the normal bolts and nuts including special products for the solar and maritime industry which are also in stock. “The implementation of the customs duty on stainless steel fasteners is an unnecessary obstacle, stifling the growth of an essential commodity” he concluded.
ITAC urged to remove increased duty on stainless steel fasteners The South African financial services sector is undergoing major changes as the industry prepares for the introduction of the Financial Services Board’s Retail Distribution Review (RDR). However, many consumers – the primary intended beneficiaries of the regulatory overhaul – remain largely unaware of what RDR is and how it will impact them once implemented.
The Financial Services Board (FSB) noted in its most recent status update that consumer education will be essential for RDR to achieve its objectives. Lizl Budhram, Head of Advice at Old Mutual Personal Finance, explains: “For consumers, the greatest change triggered by RDR will be the clear demarcation of fees for financial products and financial advice. Currently, when a financial adviser offers a customer a product, the premium includes commission that covers the financial advice. In future financial advice will become a separate commodity entirely, and be charged as such. A consumer will be able to select the financial service they want.”
According to Budhram, consumers will ultimately be offered a greater choice in terms of the value they receive from financial advisers and the fees they should pay for services. This choice improves transparency, empowers the consumer and strengthens the relationship with their financial adviser.