UNMIK ON AIR

14 April, 2003

RUBBER FACTORY IN TROUBLE

(Hysni Recica)

Hello and welcome to UNMIK on air with Sputnik Kilambi and Martin Redi

The rubber and tire-making factory near Prizren, IGK Balkans, was on a roll the last time we reported – dubbed as one of the most positive developments in the region, the socially owned factory was a promise of better times to come and touted as a model for economic progress.

But dark clouds have set in since then - 550 workers have been laid off recently and will now have to manage with 50 euros per month as opposed to around 220 Euros per month. With only around 120 workers remaining, who will also be replaced, the factory is no longer the bustling, noisy place it was not so long ago – the machines are still there, but the overall impression one gets is that IGK Balkans is more in a slump rather than a roll.

Muhamed Shala is the director manager of the factory; he puts the blame on the current legal infrastructure….

Muhamed Shala: Obstacles come from outside “Balkan”, and they mainly have to do with the taxes, customs, and excise on raw material, and the unfair competition faced by local producers.

The factory was a major exporter of rubber goods even until after the war, it has several awards to its credit, but exports have fallen sharply because of cheaper goods available in the market. If one kg of Mazut costs 20 cents, after paying customs, taxes and excise the price mounts to 55 to 60 cents, calculates Shala, while dismissed workers are confused and do not know what is going on.

Rexhep Bytyqi, the father of three children, worked as a cleaner in IGK “Balkans” for 8 years, his salary the main source of income for his family. Now he has to manage with 60 Euros social assistance.

Rexhep Bytyqi:

Hysni: How are things now?

-You don’t want to know, it is going to get privatized or I don’t know.

-Hysni: You are not working now, are you?

-No

-Why?

-There is no work.

Hysni: Do you hope to get back to “Balkan”

-For now there is no hope…

Veli Gashi was playing chess in a tiny shop in his village of Studencan when we caught up with him. Veli worked in the rubber factory for 17 years, but even after the war he was not reinstated

Veli Gashi: I used to work as a rubber technician. I do not work any longer. After the war, I was told to wait until there was more work, I went back two more times, but the answer was there is no work, stay at home.

Hysni: Are you or are you not a worker of “Balkans”?

-I am, if it opens, if not, I will stay here.

-Are you getting any money from them?

-None whatsoever.

Another Rexhep Bytyci, the same name, the same fate it seems. He too was laid off two weeks ago after working in IGK “Balkans” since 1974.

Rexhep Bytyci 2:

Balkan was not only beneficial for workers, but for the whole of Suhareka municipality.

Hysni: Do you work anywhere else? Do you have children?

-I have children. We are all unemployed.

Hysni: Do you have other sources of income?

No.

According to the factory director Mohamet Shala, under UNMIK’s regulation on excise 2000/19, they should not have to pay excise on Mazut since they produce mainly for export. There are other ways to collect revenue, he insists.

Muhamed Shala: If because of excise we stop production this year, we will no longer be able have 700 workers getting salaries here. There will be no taxes paid, no VAT, no other contributions, it means the side effects will be big and very damaging for the budget.

An excise tax on Mazut is totally absurd echoes Muhamed Mustafa, the head of RINVEST, the Institute for Development Research.

Muhamed Mustafa: Excise as a fiscal instrument is usually applied to specific goods like luxury items; alcohol, valuable things, sometimes fuel for cars. But when it strikes production, and the competitive abilities of an enterprise, it is detrimental and illogical.

Why is this happening here in Kosovo when it doesn’t in other countries, he asks.

Muhamed Mustafa: ‘Balkan’ cannot be competitive in the world market, though, even after the war, they exported goods to Italy, and other countries. With the imposition of excise, the Mazut will be more expensive and the factory cannot be competitive, so it is not a surprise they have dismissed a great number of workers. The same thing happened with the brick factory.

Suhareka’s municipal administrator, Punya Paudel says he is quite concerned about the impact on laid off workers and their families. He adds moreover, that excise money due to be paid back to the company is often delayed.

Punya Paudel: If they had that money, they could bring in some more materials and process; It is quite difficult for them to get it reimbursed after they export goods to other countries. There are some delays. I would like to suggest there should be some facility for the import of raw material; they should be charged lower than what is charged for the import of finished goods.

And adds Riinvests Muhamed Mustafa, it is high time the tax policy was reviewed in order to stimulate production and investments and create jobs.

Muhamed Mustafa: If this tax policy continues, instead of encouraging investors, we will discourage them since Kosovo is not the only place where investors can invest. We have examples when Kosovan private investors are investing in Bulgaria or Macedonia, since the tax policy there is more suitable. This is an alarm bell for UNMIK, for the Government and for those who draft economic policies.

Strong words there from economics expert Muhamed Mustafa – let’s hope the right ears are listening. The laid off workers of IGK Balkans certainly hope the message gets across.

That does it for this edition of UNMIK ON AIR. Thank you for listening.