Chinese firms offered SEZs deal to produce locally

The government is seeking to reverse the lopsided trade with China by having Chinese companies set up local production facilities in the country.

This has seen the government move to create special economic zones across the country targeting Chinese manufactures, which the government expects to lower the trade deficit between the two countries.

Transport and Infrastructure cabinet secretary James Macharia said the focus would be placed on textile and agro processing, with china keen to import food products.

“In the textile industry for example, there are some companies in China producing apparels and we are encouraging them to come and do the production here. We are working closely with China to set up the special economic zones,” Mr Macharia said during a meeting with Chinese government officials and investors.

Through the tax law amendment bill, the government is seeking to waive special economic zone developers and operators from capital gains tax and compensating tax to woo manufactures.

“This proposal will ensure that the tax incentives provided to SEZ developers and operators are not eroded through stealth taxes such as compensating tax,” consultancy firm PwC said its evaluation of the bill.

Kenya’s imports from china soared to Sh390 billion in 2017 from Sh167 billion in 2012, necessitating the move to lower the import expense burden.

Kenya mainly imports electronics, textiles, household goods, heavy machinery and phones.

Chinese Ambassador to Kenya Liu Xianfa said his government was keen to do away with double taxation to speed up setting up of local processing plants.

“We will speed up negotiations and measures that will stimulate bilateral investment as well as the process to put in place agreements to foster better policy environment for the bilateral economic and trade cooperation,” he said.

Eldoret businessman David Langat in 2017 partnered China based Guangdong New South Group to set up the $2 billion (Sh207 billion) Africa Economic Zones Limited through a joint venture with.