URA rejects Fine Spinners’ request for tax exemption on its imports

URA rejects Fine Spinners’ request for tax exemption on its imports

Uganda Revenue Authority (URA) has rejected Fine Spinners Limited, a textile and garments factory based in Bugolobi, request for tax exemption on imports.

The company originally was supposed to manufacture garments in Uganda meant for exportation. Instead, it duped Ugandans.
Today, Fine Spinners’ is exposed as a sham organization which has duped Uganda government through lies of mass production in Uganda, yet most of (if not all) material is imported from Kenya.

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Following its launch in 2014, Fine Spinners Limited Managing Director Mr. Jaswinder Bedi said the new factory, located at the former premises of Tristar Apparel that was exporting textiles to the US under the Africa Growth Opportunity Act (Agoa), was to contact more than 30,000 small holder farmers to supply cotton to the new textile factory.

He added that the factory was to employ more than 1,500 workers to revamp the Agoa market.

“Since we started our operations a couple of months ago, we have been recruiting 50 workers per week. As of now, we have 622 well-trained employees at the factory and we intend to recruit up to 2,000 employees by the end of the year,” Mr. Bedi told Daily Monitor in May 2015.

Fine Spinners first phase of the $40m (about Shs120 billion) was promoting government’s policy of adding value to agricultural produce for export.

It was also expected to directly employ more than 3,000 Ugandans at the processing plant. This meant raw cotton from eastern and western Uganda would be processed here (in Bugolobi) into finished products before being exported.

According to Mr. Bedi, Fine Spinners was meant to manufacture finished products and 90 per cent was to be exported to USA under Agoa, the European Union under Economic Partnership Agreements, the East Africa Community and COMESA.

Then, he (Bedi) said the company was looking to export to Russia, Canada, Australia, India and possibly China where Uganda’s goods are sold duty-free.

While addressing the Northern Corridor Projects meeting in May 2015, President Yoweri Museveni hailed Mr. Bedi for helping Uganda revamp the cotton sector. The President urged Ugandans to take the opportunity to fight poverty.

If he only knew that Fine Spinners was and is a sham textile factory.
The textile company is today exposed as a fake factory which instead of exporting locally (Ugandan) manufactured garments is actually importing from Kenya.

Fine Spinners came in Uganda with a blanket covering themselves as multi- billion investors and giants in exportation who were going to improve Uganda’s export image, taking over from Agoa.
It’s well known how Uganda has been giving various grants to investors in a bid to promote industrialization, among which is Fine Spinners.
Uganda’s return benefit would be having a full established processing factory in Uganda.
But rather annoyingly, all fabric used by Fine Spinners is imported to Uganda from Kenya, a country where Uganda’s milk is not allowed to enter to protect the local farmer. How ironical.

In fact, our investigative team raided the textile factory and there was no sign of cotton processing but just a handful of girls on tailoring machines.

Fine Spinners’ Face Masks lies

The government of Uganda through the Ministry of Health approved distribution of free face masks to 33 million Ugandans worth over Shs70 billion to counter COVID- 19.
Several entities were tasked with manufacturing masks including Fine Spinners basing on the BUBU Policy and Reservation Guidelines in force in Uganda.

The essence of BUBU and the Reservation Guidelines is to promote local production in manufacturing, in addition to Uganda ceasing the opportunity to create additional employment opportunities over and above value addition to local raw materials like cotton lint, for purposes of textiles where only 10% of the 150,000 bales of cotton produced annually is locally processed in garments and textiles yet Uganda imports textiles worth more than US$ 200 million annually.

However in a twist of events, it has emerged from a letter dated 25.06.2020 by URA to the Finance Manager of Fine Spinners Limited signed by Assistant Commissioner Trade, Irene Muliika, that Fine Spinners Limited requested to be allowed to import un taxed garments from Kenya.
This is in sharp contradiction to the textile factory’s promise of using 100% Uganda raw materials.
Fortunately, URA rejected the request.

Since the leaked URA letter, there have been various unanswered questions with many wondering if the Covid-19 face masks supplied by Fine Spinners are in fact wholly made in Uganda, and not in Kenya where the owners seem to have special attachment relative to Uganda.

Infact Mr. Bedi- the Managing Director of Fine Spinners Limited- is the Chairman of the Kenya Exports Promotion Council. It’s no wonder, he continues to push for Kenyan interests in Uganda.

Fine Spinners importation of fabric from Kenya to make face masks makes Kenya an indirect beneficiary of part of the billions that where meant to be here and boost local production. It must be noted that the biggest cost on a mask is the fabric used which has been imported from Kenya.

“Value addition can only be achieved by Uganda when cotton grown from here is processed from here into fabric and thereafter garments are made from here and not imported or the material to make masks being imported as seen in URA ‘s letter rejecting Fine Spinners on continuing with the same,” an insider told this website.

At a time when the economy is on standstill, one wonders why Fine Spinners continues and wants to be tax free on garments.
The insider wondered: “Can we presume that ready made masks are being imported in the country in form of garments to make up numbers for what is being made from Bugolobi and from imported fabric?”

Noting that COVID-19 has distorted the economy in Uganda immensely, resulting into massive job losses, it is completely outrageous for Fine Spinners to continue masquerading to be locally making garments while importing them largely from Kenya contrary to the Reservation Guidelines by PPDA that require beneficiaries of BUBU to demonstrate that what is supplied is indeed made in Uganda, to benefit Ugandans in form of employment, taxes and others.

While all this goes on, many innocent Ugandans are stuck with tones of rolls of fabric in Kiyembe and across Uganda which would have been bought from them at these difficult moments.
Thousands of Uganda’s tailors are going without food and are out of work while government mafias are colluding with such quack investors.

Workers Woes

Under the Uganda Investment Code Act that enables licensing of foreign investors, all investors are obliged to abide by the laws of Uganda. These include the country’s Labor Laws.

This means that Fine Spinners workers should ordinarily be unionized by the Uganda Garments Textile and Allied Workers Union (UGTLAWU).
However, pleas by the said Union’s leadership with the directors of Fine Spinners for the factory to join have fallen on deaf ears for five years.
The directors have continued to refuse recognition of the Union which would allow employees access to collective bargaining as a means to ensuring that their welfare is addressed.
As a consequence, virtually all staff members are on casual terms! This means that such workers do actually not have any social security contributions made for them and in addition, no PAYE is payable to URA since such would be based on a permanent pay roll kept for permanent workers.

This is partially why, there are incessant strikes at Fine Spinners.
Over and above, this means majority of the employees go without NSSF savings but are instead treated as casuals yet Uganda has in different ways supported their employer.

“NSSF and other workers’ bodies need to check Fine Spinners. Workers are entitled benefits,” another insider told us.

A very bitter Philip Sekimpi, the Chairman of Uganda Tailors Association (UTA) was short of words when contacted by our reporter for a comment.
“What can I say? Even a kid can see the pain we are in without jobs but everyone looks on when Mr. Bedi and his Fine Spinners is depriving Ugandans.
I’m really glad finally some one in URA has done a good job to stop this racket,” he regrettably said.

The question is which mafia is benefitting from Fine Spinners and for how are public funds going to be swindled through scam industries?

Fine Spinners was unavailable for comment. Watch this space!

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