India fairs ‘hurt local trade’

2009-10-02 00:00

INDIAN “trade fairs” have not only devastated the local economy in recent years, but also accommodated foreign exhibitors trading illegally.

This is the view of the South African Traders’ Association (Sata), which says that these events have led to the closure of several Indian clothing stores in Pietermaritzburg over the past 12 months.

Sata told The Witness that foreign exhibitors at many of these events effectively trade illegally.

The association said that traditionally trade fairs, as the name suggests, are exhibitions that promote trade among businesses and improve economic ties between South Africa and the countries hosting the fairs. However, what is happening now is that in many cases, the exhibitors enter the country with only an exhibitor’s visa or visitor’s visa and not a valid business permit.

Under South African law, no foreigner is allowed to conduct trade without a valid business permit. To obtain such a permit, one would have to lodge R2,5 million with the government.

Sata, which has waged a six-year battle against illegal “Indian trade fairs”, is engaging with various would-be host venues, asking them to check whether the exhibitors have the required legal permits allowing them to sell directly to the public.

The association believes that the fairs result in a loss to the KZN economy of more than R150 million annually, as the proceeds are taken out of the country, and not spent locally.

“This is not about sour grapes. These events are raping the local economy. Four Pietermaritzburg businesses have closed down since Diwali last year. They are basically gated flea-markets that are illegal. No sustainable jobs are created as a result of these India trade fairs. It is just a medium for these guys to get sales. They do not contribute anything, in terms of taxes or spending in the local economy,” a representative of Sata told The Witness.

The association has also brought up consumer rights, noting that local shoppers have little or no recourse to return goods or obtain refunds.

Pietermaritzburg and Durban will be abuzz with shopping activity in the build-up to the Hindu festival of Diwali, which takes place later this month.

However, established local Indian clothing shops will have their work cut out fighting off the destructive impact of unfair competition.

Sata recommends that a licence should be made mandatory before permission is granted for a trade fair.

The association added: “The organiser of the fair must be registered with the SA Revenue Service (SARS) and submit a tax clearance certificate and an application, at least three months before the event, to the department of Trade and Industry, SARS and Home Affairs. All potential exhibitors must be vetted by SARS first. All foreign potential exhibitors must be vetted by the department of Home Affairs. Goods owned and to be exhibited by foreign nationals should be clearly marked as ‘for exhibition only’ and repatriated to the country of origin once the fair is over.”

Sata, which is consulting officials from DTI, SARS and Home Affairs to regulate these events, is optimistic that it has made progress in recent weeks to ensure that if a trade fair is held, then foreign stallholders will be able to showcase their products, but there will be no sale of goods.

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