WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO WT/TPR/M/231/Add.1 
22 July 2010 
 (10-3958) 
Trade Policy Review Body 
9 and 11 June 2010 Original:   English/ 
 anglais/  inglés 
 
TRADE POLICY REVIEW 
MALAWI 
Record of the Meeting
 
Addendum  
Chairperson:  H.E. Mr. Bozkurt Aran (Turkey) 
 This document contains the advance writte n questions, and replies provided by Malawi.1 
__________________________________________________________________________________  
Organe d'examen des politiques commerciales 
9 et 11 juin 2010 
 
EXAMEN DES POLITIQUES COMMERCIALES 
MALAWI 
Compte rendu de la réunion
 
Addendum  
Président:  S.E. M. Bozkurt Aran (Turquie) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses fournies par le Malawi.
1 
__________________________________________________________________________________ 
 
Órgano de Examen de las Políticas Comerciales 
9 y 11 de junio de 2010  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
MALAWI 
Acta de la reunión
 
Addendum  
Presidente:  Excmo. Sr. Bozkurt Aran (Turquía) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Malawi.1 
                                                      
1 In English only./En anglais seulement./En inglés solamente.   
    WT/TPR/M/231/Add.1 
 Page 3 
 
 
 ADVANCE WRITTEN QUESTIONS BY MEMBERS 
AND REPLIES PROVIDED BY MALAWI 
 
QUESTIONS FROM CANADA 
 
Report by the Government of Malawi (WT/TPR/G/231) 
 Part II. Economic Environment:  (3) Sectoral Performance;  (vi) Services: paragraph 49, 
page 12:  
The Government Report states that "Malawi h as potential for growth in the services sector...". 
 1. Could Malawi expand on which services sub-sect ors have been identified as having potential 
for growth?  Response 
 
The services sectors have contributed 35% - 45% to GDP in the past decade.
2  I n  v i e w  o f  t h i s  
contribution, government has started putting in pl ace policies that will promote growth of these 
sectors.  The Malawi Growth and Development Strate gy identifies Tourism Sector as one of the high 
growth sectors along with mining and integrated cotton industry.  However, through Malawi's 
participation in the SADC and COMESA trade in service liberalization programmes in construction, 
communication, finance, energy, tourism and trans portation were identified as high growth potential 
sectors and have been earmarked as priority sectors.  Although, the MDGS emphasizes on infrastructure development in energy, water, construction, 
energy and transportation sectors, the services pr ovided in these sectors contribute immensely to the 
GDP and the development of the economy.  It is e xpected that with good infrastructure development 
in these sectors, the services provided will be more  efficient and competitive and hence contribute to 
the development of other real sectors in the economy.  In view of this, the country has put in place sector  policies and strategic plans to ensure that these 
developmental goals are met.  For instance, the t ourism sector has specific policies to ensure that 
services provided in the sector are of high quality and that infrastructure available is of international 
standards as well as enhancement of human resources,  expansion of institutional capacity.  In the 
tourism development plan most elements relate to  infrastructure, eco tourism, cultural tourism and 
promotion of domestic tourism.   Report by the Secretariat (WT/TPR/S/231)  SUMMARY:  paragraph 16, page ix:  
The Secretariat report notes that "The Government is  keen to promote more projects with a direct 
impact on economic growth and infrastructure devel opment…As part of this process, attention should 
be given to the future development of the servi ces sector, in particular tourism, and the necessary 
investment in human capital to enable growth in services".  This is in line with the Government's 
statements regarding potential for growth in the services sector.  
2. Could Malawi explain the specific plans for th e services sector and growth in this area, and 
specifically address the services sub-sectors indicated by the Secretariat? 
 
                                                     
 
2 See Annual Economic Reports for the past years, Ministry of Economic Planning and Development. WT/TPR/M/231/Add.1 
Page 4  
 
 Response 
 
Refer to response in 1. 
 
Part III. Trade Policies and Practices by Measure:  (1) Measures Directly Affecting Imports; 
(i) Registration, documentation, and cust oms procedures; paragraph 1, page 15. 
 
The Secretariat Report states that "under the Customs and Excise Act, and the Control of Goods Act 
of 1987, any person or entity (including non-nati onals) can import goods for commercial purposes.  
Foreigners require trading licences, for which they n eed to have either a business resident permit that 
indicates trading as an activity or a permanent resident permit". 
 
3. What requirements does a foreigner have to fulfil in order to receive a "business resident 
permit"?  
Response  
Any person carrying out a business requires a Trading licence.  However a foreigner has to fulfill the 
following in order to obtain a business resident permit in accordance with the Immigration Act; 
• Covering or  application letter; 
• Two BRP Forms duly completed; 
• Incorporation Registration Certificate (Photocopy) ; 
• Bank Statements for the past three months; 
• Business profile/business plan; 
• Police clearance certificate from the country of origin/ country of residence for the 
previous five (5) years; 
• Two passport size photos; 
• Capital of not less than US$50,000 including capital assets; and 
• A processing fee of K10,000. 
 
4. Does a foreigner or foreign entity require a ph ysical presence in Malawi in order to acquire a 
trading licence and import goods for commercial purposes? 
 
Response  
Yes, a foreigner or foreign entity requires a physical  presence in Malawi in order to acquire a trading 
licence and import goods for commercial purposes.  The law requires that some of the director(s) of 
the entity be in the country to fulfil some of the requirements as stipulated in the Immigration Act. 
 
III. Trade Policies and Practices by Measure:  (1) Measures Directly Affecting Imports; (iii) Tariffs; (a) Applied MFN Tariffs; paragraph 12, page 18. 
 The Secretariat report refers to the great differentials  in tariff rates and points to the fact that similar 
goods are taxed at significantly different rates, ther eby increasing the complexity of the tariff structure 
and thus increasing the risk of misclassification and tax evasion.   
  WT/TPR/M/231/Add.1 
 Page 5 
 
 
 Part III. Trade Policies and Practices by Measure:  (1) Measures Directly Affecting Imports; 
(iii) Tariffs; (c) Tariff exemptions and co ncessions; paragraphs 16-18, page 20-21. 
 
Furthermore, the Secretariat report states that "m any industries and products benefit from duty and tax 
(VAT and excise) concessions in the form of suspensions, rebates, remi ssions, and refunds."  It is not 
however clear what the criteria are for these concessions or how they are administered. 
 In the document WT/TPR/M/96/Add.1 from the 2002 Trade Policy Review of Malawi 
(page 6, question 1) Malawi stated that the "Government recognizes that the wide spread use of 
exemptions in its trade regime could be subject to abuse.  In this regard the Government has already 
set up a Committee to develop criteria that  qualifies goods.  This work is expected to be completed by 
July 2002.  The aim is to rationalize the entire tariff book to remove inconsistencies in tariff 
applications and to avoid cases where same goods are treated differently."  5. Could Malawi provide an update on the progress in this Committee in response to the 
expressed goals outlined above of rationalizing the entire tariff book to remove inconsistencies and 
avoiding cases where same goods are treated differently? 
 
Response  
The inconsistencies and different tr eatment on goods in the tariffs w as due to Malawi being a member 
of several regional economic trade blocks such as COMESA and SADC.  In this years' Budget 
Statement, the Minister of Finance has rationali zed the tariffs by removing duties on raw materials 
and capital goods on some tariff headings, making intermediate goods dutiable at 10% and finished 
goods at 25%.  This tariff structure is equal to the COMESA and SADC Customs Union common 
external tariff rates.  Full list of ch anges is attached for ease of reference. 
 
In addition to the above, Government has in the p ast two Budgets, deleted some Customs  Procedure 
Codes (CPCs) and made provisions in the main tariff .  For example, in this years' Budget Statement 
(2010/11), Government has deleted the follo wing CPCs:  4000.401and 4071.401;4000.402 and 
4071.402; 4000.425 and 4071.425;  4000.481 and 4071.481.  The following CPCs have been amended by deleting building materials:  4000. 422 and 4071.422;  4000.442 and 4071.442.  The 
policy being applied is to  gradually phase out as many entries in the CPCs and place them in the main 
tariff to bring transparency and remove exempti ons and  inconsistencies in tariff applications. 
 
6. Has the Committee addressed the issue of wi despread, discretionary use of concessions and 
examined the effects this has had on the trading environment?  
Response 
 
The Public Finance Management Act was amended in September 2006 by repealing of Section 38 
where the Minister of Finance's powers to waive taxes were removed.  This amendment removed 
discretionary use of concessions and it was done af ter noticing that there were unfair disparities 
among investors.  The Malawi Customs Tariffs is continuously being reviewed to remove 
inconsistencies and differential treatment of the same goods by rationalizing and harmonizing the 
tariff rates between COMSA, SADC and MFN as done this year. 
 
7. To what extent, if any, will Malawi's memb ership in COMESA, and the subsequent alignment 
of Malawi's national tariffs with the COMESA Common External Tariff (CET), affect Malawi's 
current situation in which there remains inconsiste ncies in tariff applications and discretionary duty 
and tax concessions? 
 
 WT/TPR/M/231/Add.1 
Page 6  
 
 Response 
 
The alignment of the Malawi National Tariffs Order with the COMESA CET will have a positive 
effect as it will further remove the remaining inc onsistencies, however, where the national MFN rate 
is higher than the COMESA CET there shall be reve nue loss.  With respect to discretionary duty and 
Tax concessions refer to response on question 6. 
 
QUESTIONS FROM THE UNITED STATES 
 
Questions based on the Secretariat's Report (WT/TPR/S/231) 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
Registration, documentation, and customs procedures 
 
• Page 15, Para 2:  With regard to the use of cust oms brokers, what are the criteria for the licensing 
of customs brokers?  Is this open to anyone who meets the requirements?  Also, are other firms 
able to apply for the exemption to using customs brokers?  
 Response  
 
Applicants for registration as Customs Brokers are required to submit an application to the Commissioner General with Form C25 attached.  The C25 form captures general information about 
the applicant.  
The application form is to be  accompanied by the following:- 
Certificate of registration from the Registrar of Companies Names of shareholders 
Tax clearance certificate from the Malawi Revenue Authority (MRA) Tax Payer Identification Number(TPIN) No application fee.  
The following are elig ible for registration 
Those with a physical place for transaction of business 
Those with an Agency bond (US$3000) Those with a Temporary Store Those that pass both oral and written interviews Those who have not been dismissed from Malawi Revenue Authority on fraud related cases except in 
cases where two years have elapsed from the date of dismissal 
Those who have not been convicted of an o ffence under any tax law except in cases where seven 
years have elapsed.  Firms may apply for registration as either privat e or general Customs Clearing Agents.  Private 
customs agents clear their own goods without going to a customs broker.  The facility is therefore 
open to all eligible persons.  
 
Customs Clearance 
 
• Page 16, Para 7 and corresponding footnote:  Please clarify how the reference prices that are 
maintained in the database are obtained.  How of ten are the prices in this  database updated?  Are 
they previously accepted (by Malawi Customs)  transaction values of identical or similar 
merchandise that has been exported to Malawi at or about the same time as the goods being  WT/TPR/M/231/Add.1 
 Page 7 
 
 
 valued, or are they derived in some other way,  such as by reviewing prices of comparable goods 
on the Internet?  If the latter, in what manner does Malawi plan to ensure its compliance with the 
World Customs Organization's published guidelines on the use of a national valuation database as 
a risk assessment tool? 
 
Response 
 The price reference data is primarily obtained from previously accepted declarations which were 
assessed under the transaction value method of Cust oms Valuation.  However, where information 
from previously accepted declarations is not availabl e, the price reference data is obtained from other 
sources as follows:  Price lists obtained from suppliers Quotation and proforma invoices received from suppliers Internet prices and catalogues 
 
Price reference data is updated after 90 days from th e date of being captured.  The old information is 
however archived automatically.  The previously accepted declarations referred to in  No.1 are declarations which were accepted under 
the transaction value method of valuation.  Declar ations which are assessed under transaction value 
method for identical or similar goods are not an acceptable as a source of price reference data. 
Similarly, declarations that were accepted unde r any other method of valuation other than the 
transaction value method of valuation are not an acceptable source of price reference data. 
 
In order to comply with WCO guidelines on the us e of the National Valuation Database, the price 
reference data is used for measurement of the accuracy of the declared values.  The data is not used as 
substitute to declared values or as minimum values.   Where the declared value is excessively lower 
than the reference data, the importer is asked to furnish the Customs Office with further information 
to support the declared value.  If the importer fails  to provide further information, the use of the 
transaction value method is rejected and secondary met hods of valuation used with the consent of the 
importer. 
 
Sanitary and Phytosanitary Requirements 
 
• Page 26, Para 38:  We appreciate the information on the basis for Malawi's SPS measures.  We 
note that Malawi has only notified the Committee of one measure - G/SPS/N/MWI/1 in 2001 
regarding requirements for poultry and poultry pro ducts.  We would encourage Malawi to notify 
all sanitary and Phytosanitary measures, including those based on the international standards of 
the Codex, the OIE, and the IPPC as well as t hose not based on the standards of these three 
organizations.  The opportunity for trading part ners to comment on such measures can provide 
important and useful information in assisting Ma lawi's regulatory authorities in the development 
of science-based SPS. 
 
• What is the scientific basis for Malawi not pe rmitting the imports of GM products and hormone 
treated meats?   
 Response  
Currently Malawi does not have capacity to test  for GM products and hormones as such the import 
restrictions are based on exclusion principle.  In  which case Malawi will only be importing what it can 
verify. WT/TPR/M/231/Add.1 
Page 8  
 
 State-owned Enterprises and Privatization 
 
• Pages 34-35, Paras 72-73:  What factors led the government to change its course on privatization 
and shift to an emphasis on pu blic/private partnerships? 
 Response  
It must be recognized that the programme, having b een in existence for over a decade, had taken care 
of nearly all enterprises that were scheduled for privatization through divestiture.  The programme 
started in 1996 and by 2008, approximately 75 out of  the original 100 enterprises had been divested 
using different methods of privatization.  Most  of the entities that are remaining relate to 
infrastructure and utilities.  Privatization through traditional divestiture approach would be totally 
inappropriate for infrastructure related enterpri ses.  These being natural monopolies in essence would 
require strong regulation and therefore often lend  themselves better to public private partnership 
(PPPs-such as Build Operate and Transfer (BOT ) and concessions) approach.  PPPs do not involve 
transfer of ownership but rather through a legally enforceable contr act, the private sector operator is 
allowed to invest and provide a regulated service in return of which the operato r charges user fees or 
gets unitary payments from the Government or a combination of both. 
 
Intellectual Property Rights 
 
Copyright  
• Page 36, Para 77:  Malawi indicates that its new IP policy is awaiting approval by the Cabinet. 
Please indicate when Malawi anticipates this pr ocess to be completed, as well as when Members 
will be able to obtain a copy of the new IP policy. 
 
Response 
 The IP Policy was been developed through an extens ive consultative process.  A task team headed by 
Department of Science and Technology (DST) in th e Ministry of Education Science and Technology. 
It is difficult to give the actual timeframe for the cabinet approval but it will be made available once it 
has been approved.   Enforcement 
 
• Can Malawi please describe more specifically th e IPR enforcement responsibilities of each of the 
institutions identified in paragraph 81?  What  area of IPR enforcement does each institution 
cover?  For each institution, how many people are responsible for IPR enforcement issues?   
 
Response  
The specific responsibilities for each of th e institutions identified are as follows; 
 
Ministry of Justice and Constitutional Affairs  
 
The Ministry of Justice through the Director of Public Prosecution (DPP) in principle handles all 
criminal prosecutions in Malawi therefore any crimin al matters in the field of IP is handled by the 
DPP through his chambers.  The Registrar Genera l's Department (RGD) is an administrator of 
industrial property laws and not an enforcement agency.  IP rights being private in nature are enforced 
by the owners of the rights through either the DPP if the violation is criminal or normal civil 
procedures if the issue is civil in nature.  Eff ectively the Ministry of Justice does the following;  WT/TPR/M/231/Add.1 
 Page 9 
 
 
 - Is responsible for the administration of industr ial property (patents, trademarks, registered 
 designs, etc). 
- Proposes formulation and review of policy on pa tents, trademarks, designs, genetic resources 
 and traditional knowledge. 
- Covers injunctions, damages including recovery of profits, destruction or other disposal of 
 infringing goods and materials/ implements  for their production and any other remedies. 
- There are a few officers respons ible for IPR Enforcement. 
 
Ministry of Youth, Sports and Culture 
 - Administers copyright and related rights through the Copyright Society of Malawi. 
- Enforces through deterred fines, imprisonment, compensation to victims of the offence and 
 entry into premises to inspect fo r alleged counterfeit and pirated goods. 
- Five (5) people are responsible  for IPR enforcement issues. 
 
Malawi Revenue Authority (Customs Department) 
 - Is responsible for seizure and suspension of release of counterfeit and pirated goods into 
 domestic market. 
- Controlling the borders for illegal entr ies of counterfeit and pirated goods. 
- The number of people responsible for enfo rcement issues is not clearly defined. 
 
Malawi Police Service 
 
- Assigned with combating counterfe it and piracy in Malawi through. 
- Enforcing applicable laws. 
- Control the borders for illegal entries of counterfeit and pirated goods. 
- Enforces through raids of premises suspected to be stocking the a lleged counterfeit and 
pirated goods, arrests. 
- The number of officers responsible for IP R Enforcement is not clearly defined. 
 
Malawi Bureau of Standards (MBS) 
 - Assigned with preventing smuggling of c ounterfeit and pirated goods through. 
- Introduction of a hologram to distinguish  genuine goods from counterfeited goods. 
- Compliance with set standards for products resulting from IP. 
- The number of officers responsible for IP R Enforcement is not clearly defined. 
 
Ministry of Industry and Trade 
 - Administers trade related aspects of IP includi ng the World Trade Organization's  Agreement 
on Trade Related aspects of Intellectual Property Rights (TRIPS). 
- Enforces through cooperation with other instituti ons such as Registrar General Offices and 
 Ministry of Youth, Sports and Culture through the Copyright Society of Malawi. 
- There are two officers responsible for IPR enforcement. 
 
• Does Malawi have any examples of successful IP R enforcement activities such as a raid or a 
successful prosecution? 
 WT/TPR/M/231/Add.1 
Page 10  
 
 Responses 
 
There have been several raids into premises deem ed to be stocking suspected counterfeit and pirated 
goods.   Several individuals have been take n to court to answer charges related to counterfeiting and piracy 
with fines being handed to alleged offenders. 
 
Patents  
On pages 36-37:  
• Para 77 refers to a new Plant Breeder's Rights B ill introduced in 2006, and the footnote 55 states 
that the bill follows the provisions of the SADC Plant Variety Protection Act and the International 
Union for the Protection of New Varieties of Pl ants (UPOV Convention).  Has this bill been 
reviewed by the UPOV office whether it is in conformity with the UPOV convention?  Does 
Malawi plan to become a member of UPOV? 
 
Response 
 
The Malawi's Draft Bill has not been officially reviewed by UPOV mainly because it has never come 
out as an official document for other institutions to use.  At the moment Malawi does not plan, in her 
own right, to become a member of UPOV but its draft Bill was made in such a way that it is in line with the SADC Plant Variety Protection Bill whic h in turn complies with the UPOV Convention. 
Probably the SADC one is the one which may have been reviewed by UPOV. 
 
• Para 77 refers to 1958 Patents Ac t and 1958 Trade Marks Act.  Is it correct that Malawi is a 
member of African Regional Intellectual Property Organization (ARIPO) and bound by the 
Harare Protocol (1982, 1999) for inventions a nd industrial designs protection and the Banjul 
Protocol (1993) for trademark protection?  Does Malawi have legislation or regulations 
implementing Protocols? 
 Response  
Malawi is a founding member of ARIPO and party to  both protocols and implementation of protocols 
is done through either amendment of the Act of Par liament or passing regulations enabled by the Act. 
 
Select Agricultural Products 
 
• Page 42, Paragraph 20 states that tobacco sales have been subject to minimum prices since 2007/8 
and these prices are set based on understandings be tween the Government, the Tobacco Control 
Commission, and the tobacco buyers.  What steps does the government of Malawi plan to take to 
address reports of debt bondage, including of child ren, on tobacco plantations, in which tenants 
must pay rent and buy supplies (e.g., fertilizer and seed) at a greater cost than the amount of 
money received from tobacco sales? 
 Response  
Malawi operates a tobacco tenancy system on some of its estates.  This was very pronounced before 
liberalization of the agriculture sector in the WB-IM F led structural adjustment programmes.  Before 
1990, burley tobacco production was confined to th e estate sub-sector only and its liberalisation was 
undertaken with the aim of increasing smallholder fa rmer incomes.  This would eventually reduce
  WT/TPR/M/231/Add.1 
 Page 11 
 
 
 their poverty and improve their food security status.  In order to do that, the government abolished the 
Special Crops Act to deregulate the sector.  Since that time burley tobacco production has been grown 
and continues to be grown by both the smallholder and estates.   Before liberalisation, most smallholder farmers who looked at tobacco as a source of income and 
could not grow it by themselves worked as tenants on estates.  In view of that there were too many 
people available to supply labour in the form of te nants to estates than those who demanded it (the 
estate owners/landlords).  The estates then took advantage of the situation (oversupply) and 
manipulated the system creating unfair payment syst ems for their tenants.  The Landlords offered 
lower prices to the tenant's tobacco grown on the Landlord's land using the Landlord's inputs and 
depending on the Landlord for their livelihood needs.  This, indeed, brought about debit bondage to 
most tenants because income from his/her tobacco sold to the Landlord failed to cover the production 
and living costs.  This perpetuated poverty am ong smallholder farmers who worked as tenants on 
various estates.  
The first step that the Malawi Government took to reduce the impact of this problem was to liberalize 
the tobacco sector particularly burley tobacco grow ing.  Liberalization of burley tobacco growing 
released excess labour from estates into smallholde r sub sector leaving estates with insufficient labour 
and fewer choices to make.  This somehow has empow ered tenants to negotiate for better terms.  
 With burley tobacco grown on the smallholder estates, its production levels have increased 
tremendously in Malawi.  Currently burley tobacco production on smallholder ga rdens is estimated at 
around 209,000 metric tons according to 2009/10 agri cultural production estimates.  This to a certain 
extent has improved income levels of th e tobacco growing smallholder farmers.  
 The second step the Government of Malawi has taken to overcome the problem of  debt bondage and 
unfair payment system for tenants has been to introduce contract farming to assist smallholder farmers 
that have challenges in accessing inputs to produ ce the crop.  By obtaining credit inputs through 
contract tobacco growing, the smallholder farmer s also have guaranteed market for their crop.  
 Another form of contract farming that has been  introduced is contract marketing between the 
smallholder farmers and tobacco buyers such Li mbe Leaf and Alliance 1 companies among others.  
While in contract growing farmers are helped to  access inputs for producing the crop and market, in 
contract marketing farmers mobilize their own production inputs but enter into sell and buy relationship with these buyers.  In either case, ther e is a mutual agreement between the farmer and the 
buyer on the price that the farmer's tobacco fetches.   
The Government of Malawi has formulated a contr act farming strategy framework to provide guiding 
principles in various subsectors including tobacco in the operation of farming contracts.  These 
guidelines are fully
 articulated in the contract farming policy.  With these strategies, we now have 
fewer smallholder farmers subjected  to tenancy.  The small populati on of smallholder farmers who are 
still tenants now and face some ups and downs are like ly to be helped when most of these strategies 
and policies are fully implemented.  Otherwise a majo rity of farmers now are not tenants but are using 
own pieces of land to access inputs, produce and market their tobacco.  
 
The fourth step is the implementation of the par ticipatory minimum price policy.  The most serious 
challenge that Malawi faces is high transportation cost of inputs as well as outputs.  It has been 
estimated that transport cost contribute about 60% to the agricultural commodity price in Malawi.  The effect of high production costs becomes very evident when world agriculture commodity prices 
collapse.  In such scenarios usually the production cost  plus price trails behind the import parity price. 
The presence of fewer buyers has put competition to a minimum in various subsectors in the 
agriculture sector leading to buyers offering explo itative prices even in situation of vibrant boarder WT/TPR/M/231/Add.1 
Page 12  
 
 prices.  In order to empower farmers to negotiate for a better price, not only when the boarder price 
collapses but also when boarder prices are vibrant,  a minimum price based on the cost of production is 
set in a consensus manner by involving all stakehol ders in the sub sectors.  The minimum price policy 
is not enforced and nobody has ever been imprisoned for violating it.  
 
Questions based on the Report by Malawi (WT/TPR/G/231) 
 I. ECONOMIC ENVIRONMENT 
 
Agriculture 
 
• Page 8, Para 24:  Could Malawi please provide  further detail on how it has gone about "(b) 
changing the pricing and marketing policies letti ng market access forces of supply and demand 
play freely."  What follow-up initiatives does Malawi have planne d in this regard? 
 
Response 
 
In the pre-liberalization era, Malawi implemented price and marketing policies particularly in the 
smallholder subsector.  The Agricultural Develo pment and Marketing Corporation (ADMARC) was 
the main tool used to implemen t these policies.  ADMARC was granted monopoly powers to manage 
the smallholder agricultural markets.  It used to buy farmer's produce at guara nteed farm gate prices 
and resell to consumers a greater proportion of whom  were producers.  In Malawi, a majority of the 
smallholder farmers were and con tinue to be net buyers of food.  ADMARC was also the sole 
operator of input markets in the smallholde r sub sector.  ADMARC had a strong network of 
permanent and seasonal rural and urban markets for executing these functions.  ADMARC, therefore, provided readily available markets to the smallholder farmers.  
In order to ensure food security and build fa rmer's capacity economically across the country, 
ADMARC implemented pan territorial and pan seasonal pricing and marketing policies for 
agricultural commodities.  When the monopoly po wers of ADMARC were abolished during the 
World Bank (WB)-International Monetary Fund (IMT) led structural adjustment programmes (SAPs), 
agricultural markets for all commodities except those of maize were fully liberalised.  Maize markets 
were not fully liberalized because of the sens itivity of the product as a food security crop. 
 
In 2002, the government reported some revers als in the economic performance linked to full 
liberalisation of agricultural markets that mostly centred on price liberalisation of agricultural produce 
and removal of the fertilizer and seed subsidies.  Fa ilure of government to intervene in periods of 
bumper crop yields led to smallholder farmers losing out because the producer (farm gate) prices 
often collapsed.  This led to negative effects accr uing to the poor in Malawi.  One of these negative 
effects was the perpetual shortage of food up to 2003/04 that left most farmers vulnerable. 
 
Inadequate support given to the price band policy for maize made the situation worse.  Reduced 
competition as a result of fewer buyers operating in the smallholder markets was the other factor.  The presence of many government and market failures at farm gate meant many buyers exited the 
smallholder markets.  This further negatively impa cted on the farm gate prices and net incomes of 
farmers. The government then introduced a minimu m price policy for maize in the food sub sector.  
The minimum price policy was not applied to other food commodities.  In the cash crop sub sector, minimum price was not used as well.  But of late the Government saw it necessary to extend the minimum price policy to tobacco, cotton, groundnu ts and soya beans among other strategic crops 
because buyers were taking advantage of farmers due to a few of them operating in the sub sector.  
The main reason government introduced minimum pr ice and came in for some key crops such as 
tobacco, cotton, groundnuts and soya beans was, therefore, to empower farmers.  The minimum price  WT/TPR/M/231/Add.1 
 Page 13 
 
 
 information is meant to enable smallholder farmers negotiate with buyers on the appropriate price that 
takes into account the cost of production.  Most world economies do not totally operate on free forces of supply and demand.  In one way or 
another, governments regulate their markets to ensure sustainable production and growth of these 
economies.  Colman and Young (1989) reports that  the EU and USA countries implement policies 
that help their farmers in situation when world market prices collapse due to excess production or 
deficiencies in their agriculture markets make  their farmers uncompetitive.  Deficient payment 
policies are implemented when the import parity pri ce is lower than the cost plus price they would 
have charged.  They also implement interven tion buying policies when prices collapse due to 
generally excess production in world markets. 
 Unlike deficiency payment and intervention buying policies implemented in the developed world, the 
minimum price policy does not protect the farmer; it  only empowers the farmer to negotiate with the 
buyer.  To further strengthen the farmer to negotiate, the Malawi Government will strengthen 
implementation of contract farming policies, new ag riculture policy, market based risk management 
strategies (Market oriented buffer systems, micro weather insurance, macro weather insurance and 
warehousing receipt system) and strengthened risk management strategies at production levels using 
irrigation.  It is believed this will build th e farmers capacity to understand the market. 
 
Manufacturing 
 
• Page 10, Para 34:  Has the government co mpleted work on the Malawi Cotton Sector 
Implementation Strategy?  If so, and if the strategy is public, please provide a copy.  
 
Response 
 
The strategy development is on going.  The govern ment intends to pass new legislation on Cotton 
development and once passed new regulations will be put in place.  The thrust is to promote a 
framework starting from production of Cotton to manufacture of garments and to export the finished products.  
Services 
 
• Page 15, Para 70 states that "plans are at an a dvanced stage to interconnect the power system in 
Malawi to that of the Southern African Power Pool  (SAPP) Grid to allow Malawi to participate in 
power trade in the region."  Could Malawi  please provide an update on these plans?  
 
Response 
 
Currently plans are at an advanced  stage to get connected to the S outhern African Power Pool (SAPP) 
Grid through the following routes:  
Malawi - Mozambique interconnector 
Malawi - Zambia interconnector Malawi - Tanzania interconnector  Malawi-Mozambique Interconnector:  A bill to endo rse the World Bank credit facility for the Malawi 
component of the project was not discussed and passed by the Parliament as is required by the Law in 
Malawi and this has now been referred back to the Committee to reconsider the wheeling agreement 
and come up with a solution.  On the other ha nd negotiations between Ma lawi and Mozambique 
Governments to facilitate impl ementation of the interconnector project are in progress.  WT/TPR/M/231/Add.1 
Page 14  
 
 III. TRADE DEVELOPMENTS AND POLICY 
 Domestic Laws and Regulations Governing Trade 
 
• Page 17, Para 79:  What is the current status  of the BESTAP program? Are there any early or 
preliminary outcomes of this project that can be shared? 
Response 
 
BESTAP is made up of four main components: 
 
Strengthening Private Property Rights, Institutions and Business Facilitation 
 
A key part of this component was the establishm ent and support of a commercial court in Blantyre, 
which started to operate in May 2007.  Specifica lly the intervention taken was to reduce the number 
of days taken to resolve commercial disputes.  Ther e has already been eviden ce that the average time 
taken to deal with a commercial dispute has falle n dramatically.  Another important part of BESTAP 
will be to address the current back-log of economic  laws, many of which are antiquated and need 
updating.  It is hoped that this will reduce the re gulatory burden on business and improve efficiency 
within government. 
 The project also seeks to improve land and prope rty registration at the Ministry of Lands and 
Registrar Generals office respectively.  These system s will be computerised and streamlined, so as to 
speed up registration and transfer.  This should reduce business cost and strengthen property rights. 
 Strengthening Private Sector Development Support Institutions and Services  
A key part of this component is to set up a ‘One -Stop-Shop' Investment and Trade Centre to allow 
businesses to deal with several license s and procedures at one location.  It is hoped that this will allow 
regulatory authorities to work in partnership to streamline their procedures. 
 
Another aspect of this component will be to de velop a framework for Public-Private Partnership 
Agreements (PPPAs), so as to allow joint projects in  areas such as infrastructure development.  The 
program also includes funding for cap acity building within the Ministry  of Industry and Trade.  The 
quarterly Public-Private Dialogue (PPD) forum has met seven times since it was created.  Its success 
has been marked by the continued presence of gove rnment Ministers and senior delegates from the 
private sector, who have engaged actively in di scussions over constraints to the private sector. 
 
Promoting Access to Finance and Productivity Enhancement  
Within the BESTAP framework, MoIT has set up a Business Growth Scheme (BUGS) in order to 
build capacity within SMEs.  The scheme is open to  any private business entity, providing work to 
Malawi nationals within Malawi BUGS consist of a team of busin ess advisors supporting SMEs with 
matching grants for training.  The BUGS support st arts with a detailed standard business diagnostic 
and offer direct mentoring and general business consulting to he lp businesses identify key business 
growth constraints, opportunities available, identif y possible solutions, and, develop and implement 
an agreed business growth plan w ithin each interested firm.  
 Where more specialised help is required to support a plan for growth by a particular firm, BUGS 
provide 50% matching grants of up to a maximum of US$50,000 to part-fund the use of outside expert specialist help.    WT/TPR/M/231/Add.1 
 Page 15 
 
 
 There is also a focus on HIV/AIDS mitigation, where by the Scheme also offer financial assistance to 
those enterprises that seek to u se services of an outside specialis t to conduct on-site voluntary 
HIV/AIDS counselling and testing.  This is aims at fighting the spread of HIV and reducing on the 
impact of the disease on a firm's productivity and its  personnel, and, to also eliminate the related 
stigma at the workplace.  
 
Plans to merge the Malawi Savings Bank (MSB) an d Malawi Rural Finance Company (MRFC) so as 
to give access to finance for those individuals wh o might want to expand their businesses, however, 
this did not materialised and hence a restructuring process is underway to divert/ streamline funds that 
were meant for this sub-component. 
 
Capacity Building and Implementation Support 
 
This final component relates to capacity building within the Project implementation Unit (PIU) and 
Ministry of Industry and Trade.  This is in the fo rm of training and procurement of office equipment. 
 
Planned activities included:  organising consultative workshops for stakeholders to review the laws 
that were being drafted;  developing drafting instructions guidelines for line Ministries under the 
Ministry of Justice (MoJ);  commencement of computerisation work at the Registrar Generals Department (RGD) by the Norway Registers w ho were awarded the cont ract;  and finalising 
recruitment process for the computerisation consultancies under and the Lands Registry.  
Additionally, Malawi Investment Promotion Agency  (MIPA) planned to fina lise and submit Terms of 
Reference (ToRs) for Investor Tracking System unde r Malawi Investment and Trade Centre (MITC); 
organizing the 7
th Public- Private Dialogue (PPD) forum under the Malawi Confederation of 
Chambers and Commerce and Industry (MCCC I); recommendations from the Doing Business 
Support Mission by the Ministry of Industry and Trade; and reviewing the drafted BESTAP Project 
restructuring paper under the Project Implementation Unit (PIU). 
 
Progress to date 
 
Fourteen (14) Bills So far have been drafted by the Legislative Draftsperson under the MoJ; One 
Judge has been appointed to the Lilongwe Registry  of the HC-CD;  the RGD successfully recruited 
Norway Registers Development (NRD) to design a nd computerise the registry.  They have since 
submitted their inception report and they were desi gning technical infrastructure of the automated 
registry platform.  The Ministry of Lands on th e other hand were advancing recruitment process of 
consultants to design and automate their registration system.  
The Ministry of Industry and Trade continued following up on recommendation from the Doing 
Business Reform mission that was conducted last qua rter;  the Privatisation Commission were in the 
process negotiating with a Senior PPP Advisor and;  they have since received No objections to 
implement training plans for the PC staff and othe r senior government officials.  In addition, the 
MCCCI managed to hold the 7
th PPD forum which was attended by  a considerable number of high 
delegations.  
 
The BUGS under component three continued sh owing progress and had allocated about MK34.3 
million by March 2010 with a total of 279 diagnosti cs undertaken.  The design and development of 
the BUGS website is at an advance stage.  Currently  the designer is testing the functionality of the 
website.  Meanwhile, the designer is working on the MoIT website. 
 
The restructuring paper is still under review whils t waiting for the signing of an agreement between 
the European Commission (EC) and the Governme nt of Malawi over the US$3.7 million EC part 
funding.  Meanwhile, the Mid-term review for the project will be conducted after the restructuring 
process is finalised.  WT/TPR/M/231/Add.1 
Page 16  
 
 Another recent and notable aspect was the resigni ng of the Project Procurement Specialist and the 
Financial Management Specialist, none the l ess, recruitment to replace them is underway. 
 Disbursements from the grant amounted to USD1, 437, 483.22 in the quarter under review bringing 
the total amount disbursed to USD8, 348, 229.08 as of 31 March 2010.  This represents a 55.89% 
disbursement rate.  Expenditures for the last qua rter amounted to USD1, 066, 449.00 against the 
planned USD1, 187, 060.00.  Total project expenditu re stands currently at US$7, 149, 603.91 as of 
31 March 2010. 
 
Regional Trade Arrangements 
 
• Page 18, Para 86:  Does Malawi plan in the fu ture to liberalize beyond the 70 percent of SADC 
trade that currently enjoys re duced or tariff-free treatment? 
 
Response 
 
Malawi is committed to implem ent her tariff reduction commitments beyond the 70% under the 
SADC Protocol on Trade.  In this regard, Govern ment will start implementing further tariff reductions 
as soon as practicable in the 2010/11 financial year.  Preparation of offers to SADC is underway and 
once this process is finalized, tariffs will be cut on some of the products. 
 
UNITED STATES FOLLOW UP QUESTION 
 
As a member of the WTO, Malawi is obliged to base its regulatory decisions on science and, as such, 
should avail itself of the international standards and scientific opinions on biotechnology plants and 
hormone-treated beef.  There is substantial science supporting the safety of both types of products and 
the United States therefore believes that import rest rictions on these products of the type Malawi is 
imposing are not appropriate.  In light of this, what steps will Malawi take so that it can lift its ban? 
 Response  
It is true that Malawi as a member of the WTO is obliged to base its regulatory decisions on science 
and as such should avail itself of the internationa l standards and scientific opinion on biotechnology 
plants and hormone treated beef.  On a positive not e Malawi as a country has just developed the legal 
framework governing such products .  The major shortfall is the human and infrastructural capacity 
and as such is appealing to donors and cooperating partners to provide  the country with technical and 
financial assistance to address the capacity issues.  
QUESTIONS FROM THE EU 
 
REPORT BY MALAWI (WT/TPR/G/231)  II. ECONOMIC ENVIRONMENT (3) SECTORAL PERFORMANCE 
(i) Agriculture 
 Page 9, paragraph 25  
The report by Malawi refers to difficulties with marketing and distribution of agricultural produce 
despite reforms undertaken. 
  WT/TPR/M/231/Add.1 
 Page 17 
 
 
 1. Could Malawi elaborate how marketing and di stribution of food products are regulated in 
Malawi?  
Response 
 Both private and public organisati ons are responsible for the marketing and distribution of food 
products in Malawi.  Public organisations in volved include ADMARC and National Food Reserve 
Agency (NFRA).  Although ADMARC and NFRA as public organisations participate in the marketing and distribution of f ood products, there are no restrictions for the private sector 
organisations to enter and exit marketing and distri bution of food.  In fact emphasis of ADMARC and 
NFRA is at farm gate and some retailing of  unprocessed commodities in the lean period.  
 Several policies are used to regulate marketing a nd distribution of food products in Malawi.  Among 
them SPS related policies and measures that reflect the World Trade Organisation SPS Measures and Agreement (for food safety and plant and animal health), the joint FAO/WHO Codex Alimentarius 
Commission (Codex) for food safety, the FAO Inte rnational Plant Protection Convention (IPPC) for 
plant health and the WHO for Animal Health to facilitate Malawi's agricultural trade with other 
countries worldwide by guaranteeing compatibility a nd providing transparency in market transactions 
and ensure low risk of human and plant and animal  disease transmission to our buyers among others.  
 2. Can a Foreign Service provider invest in th ese sectors, and if so, under which conditions and 
limitations?  
 
Response 
 
Foreign Service providers can invest in food mark eting and distribution sectors in Malawi without 
restrictions and any other problems.  Currently, the Malawi Government through the Ministry of 
Agriculture and Food Security (MoAFS) implements the Agriculture Sector Wide Approach.  As a 
priority investment framework, it mostly focuses on food security and risk management, 
commercialisation, agro-processing and market development and sustainable agriculture land and water management.  These key sector investment ar eas are supported by comprehensive research and 
technology dissemination, institutional and capacity  development including cross cutting issues of 
HIV and AIDS prevention and mitigation.  The design of this programme is in such a way that various 
levels of the value chain adequately support each othe r.  This ensures that the investor does not have 
problems in accessing services for facilitating investment undertakings.   Various policies would also enable  a Foreign Service provider to op erate in Malawi including the new 
land policy, new agriculture policy, food and nutrition security, farming contract policy, cotton policy, 
SPS policies, fertilizer policy, tobacco policy and agricultural marketing policy among others.  These 
provide specific guidelines with regard to conditions  and limitations for entering exiting business in 
Malawi.  
(ii) Manufacturing 
 
Page 10, paragraph 32 
 
The report by Malawi points out that major constraints for manufacturing sector include high transportation costs and inadequate water and energy supply in rural areas. 
 
3. Could Malawi elaborate how water distribu tion and electricity services are regulated in 
Malawi?  WT/TPR/M/231/Add.1 
Page 18  
 
 Response 
 
The Government of Malawi (GoM) established the Malawi Energy Regulatory Authority (MERA) to 
regulate electricity supply services in the countr y in terms of quality, availability/accessibility, 
affordability and safety. 
 
MERA regulates technical issues related to equipm ent standards that are internationally accepted, 
technical competency of staff of operators (electri city services providers), safety of installations as 
well as ensuring that electricity services are availa ble countrywide notwithstanding the fact that 
electricity penetration levels are low.  In addition,  MERA regulates prices/tariffs for electricity supply 
by approving tariffs that are cost reflective a nd also ensuring a fair return on investment.  
 There is currently no regulatory authority for Wa ter.  Currently there is a Water Works Act which 
combines corporate maters (under which water board s were created) and regulatory issues of water 
supply.  This restricts the distribution of wate r supply to water boards.  A water resources board 
regulates upstream activities of water, however, pl ans are underway to extend MERAs mandate to 
include regulation of Water.  Foreign investment is  allowed through the existing water boards.  Since 
last November a Netherlands company has been work ing with Lilongwe and Blantyre Water boards to 
expand the water system as well as  improve  the water way.  4. Can a Foreign Service provider invest in th ese sectors, and if so, under which conditions and 
limitations?  
 
Response 
 
Conditions 
Yes they can.  All electricity service providers are re quired to obtain a license in order to operate in 
their chosen segment of the electricity supply chain, i.e. a license is required for electricity generation, 
electricity transmission and electricity distribution.  However, operators are not allowed to have more 
than one license, i.e. if one has applied and obtai ned an electricity generation license, they cannot 
obtain a license to operate in the transmission a nd distribution segments.  This condition does not 
apply when an investor ventures into rural electrific ation involving stand alone or mini grids that are 
not connected to the national grid. 
 
Limitations 
The Government of Malawi operates a uniform tariff policy whereby all consumers pay the same 
tariff irrespective of their geographical location.  Th e exception to this limitation is when an investor 
(foreign or local) undertakes to invest in rural elec tricification through mini grids or stand alone 
supply systems that are not linked to the national grid.  
(vi) Services 
 Page 12, paragraph 49 
 Neither Malawi's nor the WTO Secretariat's report mention professional services. 
 5. Could Malawi elaborate how legal and architectural services are regulated in Malawi?   WT/TPR/M/231/Add.1 
 Page 19 
 
 
 Response 
 1. Legal Profession 
 The legal services are regulated using the Legal Edu cation and Legal Professions Act and currently all 
professionals are expected to be registered and licen sed by the Malawi Law Society.  Under the Act, 
legal practitioners are supposed to be  admitted into the Bar before they  start practising.  However, to 
apply for admission into bar, any indi vidual needs to meet the following: 
 
1. Is either a citizen of Malawi, or has resided continuously in Malawi for the period of not less 
than three months immediately before the date of  filing of his petition for admission under section 12; 
 2. Has a degree or diploma in law or legal; st udies from an educational institutional prescribed 
in writing by the Minister, or has been admitted to practice as a member of the Bar, Solicitor, 
Advocate, Legal Practioner, Law Agent, Writer to th e Signet or Attorney in any one of the countries 
specified in the First Schedule; and   3. Has presented himself/herself for and passed the Malawi Law Examinations (Bar Exams).  2. Architectural and Quantity Surveyors Profession  
The provision of architectural services is regulated  by the Architectural and Quantity Surveyors Act 
(1996) under a Council/Board establis hed under this Act.  All prac titioners, local and foreign, are 
supposed to be registered with the Council/Board.  For foreign practitioners, a valid work permit has 
to be obtained from the immigration department.  Just like in legal practice, partnerships and 
associations are allowed as long as they adhere to the provisions of the Companies Act.  6. Can a Foreign Service provider exercise the profession, and if so, under which conditions and 
limitations? Are partnerships  and associations allowed? 
 
Response 
 
Foreign Service provider can also practice as long as they meet the above stated requirements 
including obtaining a work permit from the immigration department.  
 
Partnerships and Associations are permitted as l ong as they are in line with the Companies Act 
provisions.  Memorandum of Unders tanding and Articles of Associati on are supposed to be deposited 
with the Registrar of Companies, just like any other company registering in Malawi.  However, 
individuals who will be practising from the co mpany mentioned should have fulfilled the 
requirements indicated above. 
 
(d) Transport 
 Page 15, paragraph 64 
 
As far as the civil aviation is concerned, the s ituation of Air Malawi is described as financially 
critical.   1. Is the Government willing to continue providing fi nancial support to Air Malawi? If yes, what 
are the estimated budgets foreseen by the Govern ment for this purpose over the coming years? 
 
  WT/TPR/M/231/Add.1 
Page 20  
 
 Response 
 
Currently the Malawi Government has engaged a c onsultant to review the Air Malawi and make 
proper recommendation.  It is this consultant  who would give proper guidance on whether to 
refinance, privatize or liquidate the airline.  
 
2. Has there been any interest expressed by private investors for this airline?  If yes, what has 
been the response of the Government? 
 
Response 
 
Yes there has been interest from the private i nvestors for this airline like COMAIR but the 
Government is still waiting for the report from th e consultant and decide on the way forward. 
 
Page 15, paragraph 65 
 Malawi reports on the construction of the Shire Zambezi Waterway and the Nsanje Inland Port. 
 3. Could Malawi confirm that this construction project is be ing financed in whole through 
private financing?  Response  
The Construction of Shire Zambezi Waterway and Nsanje World Inland Port is done both by 
Government and Private Partnership.  The Private se ctor has played a significant role including the 
construction of the port; donors in coordination with  COMESA and SADC have also showed their 
interest in the project.  This is due to the fina ncing of the feasibility study by African Development 
Bank.  4. What public-private partnership mechanism h as been chosen for granting the construction of 
this port to the construction company?  Response  
The Public Private Partnership agreement of Shir e Zambezi Waterway and Nsanje World Inland is on 
Build Operate and Transfer (BOT). 
 
Page 15, paragraph 66 
 
The report states Malawi's intention to reha bilitate, inter alia, the railway network. 
 
5. When will Malawi share its strategy fo r revamping the railway network with the 
Development Partners?  
 
Response 
 
Currently there is a Multimodal Transport study and Public Private Partnership (PPP) which is also 
looking at strategies on all modes of transport.  Th is strategy to revamp the railway network with 
Development Partners will be based on a recommendation from the study.  
 6. How does Malawi see the involvement of the De velopment Partners in the rehabilitation of its 
rail network?   WT/TPR/M/231/Add.1 
 Page 21 
 
 
 Response 
 
The Government of Malawi recognises that Devel opment Partners would play a key role in the 
rehabilitation of the rail network.  However no one has so far come up to finance the project.  
7. What is the state of discussion with the mining companies based in Mozambique regarding 
the development of a dedicated rail network through  Malawi to the Naccala port for transporting the 
coal from the Moatize mine? 
 
Response  
There has been general discussion with the mining companies based in Mozambique and negotiations 
are underway to connect the rail from Moatize to Naca la rail due to the developing Mining Industry in 
Mozambique.  8. When does Malawi plan to tackle the ques tion of re-negotiating the existing rail concession? 
 Response  
The review of the existing rail c oncession is underway and what is remaining is the review of 
Passenger Services Agreement (PSO) with the concessionaire. 
 9. How does Malawi intend to formalize its po litical willingness to cooperate with neighbouring 
countries, notably Mozambique and Zambia, in  developing regional transport corridors? 
 
Response  
The Political will is there and there has been a jo int agreements among the heads of state in all 
corridors. 
 
III. TRADE DEVELOPMENTS AND POLICY 
(6) REGIONAL TRADE ARRANGEMENTS 
 Page 17, paragraph 83  
10. Could Malawi elaborate on its plans and its appreciation of the prospects for future trade 
relations in the regional context? 
 
Response 
 Malawi is a founding member of both Southern  African Development Community (SADC) and 
Common Market for Eastern and Southern Africa (COMESA).  The country is participating in 
programmes of both RECs.  COM ESA launched its Customs Union in June 2009 and SADC will 
launch its CU sometime this year.  Realising that  a country cannot belong to two customs unions, the 
Government commissioned a number of studies, including one by United National Economic Commission for Africa (UNECA) to as certain the impact and implications of belonging to either CU. 
The recommendations of various studies are still bei ng considered by all the stakeholders at national 
level.  However, the tripartite negotiations for a grand FTA among COMESA, SADC and East 
African Community, launched in 2008, seems to provi de some solution to this problem of multiple 
membership.  Malawi will decide which REC to belong to after a thorough cost and benefit analysis 
and will continue to actively partic ipate in the tripartite negotiations. 
 WT/TPR/M/231/Add.1 
Page 22  
 
 11. How does Malawi see the relationship betw een the Economic Partnership Agreement under 
negotiation with the EU a nd its regional strategy? 
 
Response 
 
For any future Malawi – EU relationship, Malawi is  a member and continues to be a member of a 20-
year ACP-EU Cooperation Agreement (Cotonou Agreem ent).  The country has recently participated 
in the second revision of the Cotonou Agreement whic h is scheduled to be signed in Ouagadougou, 
Burkina Faso, in June this year.  
 Regarding the trade component of the Cotonou Agreement, Economic Pa rtnership Agreements 
(EPAs), Malawi is looking forward to a more deve lopmental oriented trad e and economic cooperation 
with the EU.  The country is still participating in  the ESA regional negotiations on EPA with the hope 
of concluding a more developmental full EPA.  Th e current interim EPA does not adequately address 
issues of concern to the country, including supply-side constraints. 
 It should be mentioned that there has been serious  misunderstanding on development aspects of the 
EPAs.  Both parties agree that EPAs are tools fo r development but clearly diverge on the practical 
approach of the same.  For the EC development is a process in-built in an EPA outcome i.e. a process 
driven by trade liberalization, regional integration,  more stringent trade and investment rules as they 
will lead to efficiency, attract investment and pr omote development in ACP countries.  Malawi argues 
that this viewpoint ignores the structural deficienci es and supply-side constraints that are predominant 
in LDCs like Malawi.  The country requires suppor t measures to address infrastructure, institutional 
and capacity factors that have restrained Malawi from taking advantage of the previous preferential 
trade arrangements. 
 Malawi's ability to trade in a way that will promot e development is constrained by crippling supply-
side constraints.  As a landlocked country, trans port costs are extremely high, accounting for up to 50-
60 per cent of total production costs.  Malawi also suffers from poor infrastructure, unreliable public utilities and production inefficiencies.  In addition,  exporters struggle to meet the sanitary and 
phytosanitary (SPS) measures required to expor t to many countries, particularly the EU. 
 
Improved market access alone is unlikely to be en ough to substantially accelerate the growth and 
diversification of the country's exports to the EU  as limited supply capacity and competitiveness 
problems are the binding constraints to expansion a nd diversification of trad e in Malawi.  A wide 
range of supply-side constraints in the country has inhibited a strong supply-response to duty and 
quota free access to the EU market since the in troduction of trade preferences and recently EBA 
programme.  Therefore, unless these constraints ar e effectively addressed, the immediate response to 
EU's duty and quota free access under EPA s is likely to be bear no results. 
 Malawi has liberalised substantially over the p ast few decades but remains extremely incapacitated 
and the manufacturing sector was particularly hard hi t by the tariff reforms.  While Malawi has had 
preferential market access to the EU over the past 30 years, it has been unable to take advantage of 
this due to supply-side constraints and production inefficiencies inter alia.  This experience must inform the debate about EPAs:  unless Malawi addresses the factors hindering 
its ability to trade and export, theoretical market acce ss is of little use.  It should be noted if 30+ years 
of non-reciprocal free market access into the EU did not improve the economic situation of Malawi then how can a reciprocal trading arrangement  achieve anything better without addressing the 
hindering factors?  WT/TPR/M/231/Add.1 
 Page 23 
 
 
 V. MALAWI AND THE MULTILATERAL TRADING SYSTEM 
(2) IMPLICATIONS OF OTHER TRADING ARRANGEMENTS ON MALAWI (i) Economic Partnership Agreements 
 
Page 20, paragraph 102 
 The EU would like to clarify that, under the Econom ic Partnership Agreements, it has offered a duty 
free quota free access to all products from ACP count ries (African, Caribbean and Pacific States) 
since 1st January 2008 subject to transitional periods for rice and sugar.  The transition period for rice 
is now over while for sugar it will end on 30 September 2015.  This will indeed entail some erosion of 
the preferential treatment given to sugar from Malawi.  
 Response  
Agree with the correction the WTO Secretariat should amend the report accordingly 
 
REPORT BY THE SECRETARIAT (WT/TPR/S/231) 
 I. ECONOMIC ENVIRONMENT (4) DEVELOPMENTS IN TRADE (i) Composition of trade  
Page 6, paragraph 16 
 
The EU would like to propose the following amendements (in bold): 
 "Malawi's exports are highly concentrated, with agricultural products accounting for nearly 90% of 
merchandise exports.  Malawi's main goods e xports in 2003 were tobacco (both stemmed and 
unstemmed), sugar, tea, and clothing (Table AI.2).   However by 2008, the shares of sugar, tea, and 
clothing had declined sharply.  The decline in the shares of sugar and tea can partly be explained by 
the fall in international prices for these commodities in 2008.  Anothe r reason for the decline in sugar 
exports could be that EU preferential prices for sugar from Malawi declined in 2006 following the 
internal reform of the European sugar market organisation .  Unrestricted and duty-free access for 
sugar under the "Everything but Arms " initiative only entered into force on 1st October  2009 after a 
progressive liberalisation with quotas.  " 
 
Response 
 
Agree with the correction the WTO Secretariat should amend the report accordingly. 
 
II. TRADE AND INVESTMENT POLICY FRAMEWORK 
(4) INVESTMENT FRAMEWORK 
 
Page 13, paragraphs 21 - 28 
 
While it is correct that Malawi's laws provide for an open investment regime, in practice investors, 
and foreign investor in particular, continue to face a number of impediments.  For example, it remains 
difficult to obtain temporary employment permits a nd business residency permits, and there have been 
frequent reports of withdrawals of these permits on seemingly arbitrary grounds and without a due 
legal process.  Registering a business also involve s a lengthy procedure.  Requests for bribes to 
foreign investor remain frequent. 
 WT/TPR/M/231/Add.1 
Page 24  
 
 12. How does Malawi appreciate the impact of th ese practices on its ability to attract higher levels 
of foreign direct investment? 
 
Response  
Malawi has developed procedures governing the i ssuance of Temporary Employment Permit (TEP) 
and Business Resident Permit (BRP).  Any applican t (individual or Company) who fulfills conditions 
provided stipulated in the Immigration and Invest ment Act can be given a BRP and a TEP.  The 
Malawi government does not condone Corruption.  Anti Corruption laws are in place and hence 
corruption is not an impediment.  An Anti-Corrupt ion Bureau (ACB) was instituted to deal with 
corruption but it is limited due to capacity.  Howeve r addressing corruption is a problem since it is a 
clandestine activity.  During the period under re view Malawi has experi enced an increase in 
investment levels.  13. Could Malawi outline its efforts to address these and other regulatory and administrative 
obstacles to doing business? 
 
Response 
 
The main thrust behind the efforts that will a ddress the aforementioned regulatory bottlenecks is 
through the Business Environment Strengthening Technical Assistance Project (BESTAP) that is 
currently being implemented by Government and is housed in the Ministry of Industry and Trade.  
The major objective of the project is to reduce so me of identified constraints to business formation 
and expansion; increase the access to finance a nd productivity of SMEs; and realize some of the 
Millennium Development Goals.  Specifically the identified objectives will be achieved by implementing the four component of the project namely; 
 
 
 Strengthening Property Rights Ins titutions and Business Facilitation; 
 Strengthening Private Sector Support Institutions and Services; 
 Promoting Access to Finance and Productivity;  
 Capacity Building for ACB and Implementation Support; 
 Adoption of cooperate governance code. 
 Some of the initiatives that have so far being undertaken include;  National Investment Policy 
Review, and Review of Rules and Regulations affe cting investment.  The activities that are in the 
pipeline to improve the business environment ar e designing and development of a business and 
integrated business registration application form, establishing a one stop shop for trade and 
investment, design and specify title and deeds registration system.  It is hoped that once these activities are fully implemented the business environm ent in Malawi will improve and some of the 
challenges that are being encountered will be mitigated.  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(3) INTERNAL MEASURES 
(iv) Government procurement  Page 32, paragraph 68 - 70  
The report by the Secretariat makes no mention of the government directive of January 2010 "Buy 
Malawian" in public procurement.  The procuring entities have been instructed to apply a current 
domestic preference of 10% on all procurements where local products are in competition with 
imported products.   WT/TPR/M/231/Add.1 
 Page 25 
 
 
 14. Could Malawi report how many local comp anies have benefited from this directive? 
 
Response 
 
The ‘Buy Malawi' campaign directive was only started last year during the opening of the MALAWI Trade Fair with a view to encourage local i ndustrial production which s hould drive our national 
economy.  However, since this is a nationwide policy, consulta tions and strategies have to  be made and this is 
what currently we are doing.  On the part of G overnment, the Office of the Director of Public 
Procurement has just completed a sensitization program  for the public sector on how best to apply the 
policy.  The private sector shall also be sen sitized in the 2010/2011 financial year  so that the sector is able to 
contribute positively to the implementation of the directive. 
 
Therefore, at this stage, we have not yet started fully implementing the policy and collection of data is not possible.  The report neither mentions the audits of public en tities and parastatals.  A procurement audit will be 
carried out in 2011 for the ten largest spending entities.  
 
15. Could Malawi explain how audits are or ganized and prioritized by the Government? 
 
Response  
Procurement audits are carried out in two ways in  Malawi.  The nationwide public procurement audit 
is carried out for a wide sample of procuring entiti es (PEs) and the first of such audit was carried out 
in 2008.  The audit covered thirty (30) PEs and for procurem ents for financial years 2005/06 and 2006/07.  We 
are currently planning for procurement audits for 2007/08 and 2008/09 and, shou ld financial resources 
be available, this should be conduc ted by an independent audit firm during the 2010/11 financial year. 
 The second type of procurement audit are those carri ed out in all donor funded projects and programs, 
including various Sector Wide Approach (SWAp) programs.  These are carried out annually and are 
part and parcel of the financing agreements. 
 
National Audit Office of Malawi is an indepe ndent institution that carries out its functions 
independent of Government influence or direction.   As regards to how the audits are organized, NAO prepares the annual work plan, which is fashioned 
after the strategic plan.  The annual work-plan includes, among others; 
• Number of audits to be carried out in a particular year, 
• Types of audits; 
• Names of audit clients; 
• Staff involved in the audits; 
• Estimated cost of the audits. 
 The audit staff is grouped into sections according to their areas of specialization and other factors. 
Each section therefore prepares an audit pl an and execute the audits accordingly. WT/TPR/M/231/Add.1 
Page 26  
 
 The audits are prioritized basing on some factors such as; 
 
• Government priority areas according to the MGDS 
• Statutory requirements eg audit of parastatals, projects, Govt. consolidated 
accounts 
• Routine i.e. periodic review of controls, systems and records in Government 
entities  
• Risk.  The entities/areas most vulnerable to  irregular or illegal activities are given 
the first attention. 
• Public interest/demand (through Nati onal Assembly or Central Govt.). 
 16. How many audits have been carried out by th e Auditor General in the last two fiscal years? 
 
Response 
 During the fiscal year 2008/09 th e National Audit Office carried out 84 audits and more than 100 
audits were carried out in 2009/10.  17. What is the audit plan of the Nati onal Audit Office for the next fiscal year? 
 Response  
Some of NAOs plans in the current fiscal year are as follows:  
• Increase audit coverage from current 55-60% to about 80% 
• Increase capacity by;  
 - recruiting more staff  - train more staff  - acquire more resources  - controlling staff turnover 
• Carry out new audits;  
- audit of public debt 
- audit of revenue - audit of budget output - performance audit 
 
• Establish a strong and reliable ICT system  
• Carry out exchange visit programmes with sister Supreme Audit Institutions (SAI) 
• Develop performance audit function 
• Enhancement of the regularity audit methodology by emphasizing the use of the 
Regularity Audit Manual (RAM) includi ng quality control and assurance. 
 
IV. TRADE POLICIES BY SECTOR 
(3) FINANCIAL SERVICES  Page 46, paragraph 45 
 The report by the Secretariat refers to the new umbr ella financial Services Bill, as well as to a number 
of other subsidiary financial sector bills.  18. Could Malawi describe in some  detail the content of these bills and the expected timeframe of 
their entry into force?   WT/TPR/M/231/Add.1 
 Page 27 
 
 
 Response 
 
The Financial Services Bill generally covers issues on licensing of financial institutions, objectives of 
supervision, corporate governance, scope of regulatio n/supervisory, consolidat ed supervision powers, 
enforcement powers, winding up/liquidation process, a ppeals mechanism, just to mention but a few. 
 
Financial Bills enacted so far are;  Anti M oney Laundering, Banking, Credit Reference, and 
Insurance.  Between May and October, 2010, we  expect to have the following Bills passed by 
Parliament; Securities, Microfinance, Financial Services, and Pensions.  
Banking 
 
Page 47, paragraph 48 
 
According to the Secretariat's report, Malawi has no framework for mergers and acquisitions in 
banking.  On the other hand, we understand that the Competition and Fair Trading Commission has 
been conducting investigations on mergers and acquisitions and other competition issues.  
 19. Could Malawi provide information on the relevant legal fra mework in the area of competition 
and in particular about any plans for reviewi ng, amending or adapting the competition related 
legislation in near future?  
 
Response 
 
The Reserve Bank of Malawi (RBM) has devel oped Guidelines on Mergers and Acquisitions on 
banks.  Their implementation is awaiting the enactment of the Financial Services Bill as all issues 
pertaining to licensing are included in that Bill.  Both the Banking Act and the Financial Services Bill 
(FSB) require that any merger or acquisition or fi nancial restructuring between banks or by a bank, 
should be approved by the RBM.  So the legal basis for handling mergers and ac quisitions of banks is 
in place (and will be completed after enacting the FSB).  
Page 47, paragraph 49 
 
20. The Secretariat's report points out that a p ilot project on mobile banking has been conducted 
recently.  Could Malawi inform about the outcome of the pilot project and whether the new legislation currently under review will facilitate the development of mobile payment services? 
 
Response 
 The pilot project has not been evaluated because its commencement delayed.  Specific guidelines on 
electronic banking products and services were developed by the RBM.  A separate Payment Systems Bill was also finalised and is awaiting enactment by Parliament.  This is the law that will govern all 
mobile banking products and providers.  
 
We expect to have the Bill enacted by Parliament in October, 2010.  
 
Page 47, paragraph 50 
 
Malawi has taken full commitments in banking se rvices including on mode 1 and on branching. 
However, as the Secretariat's report points out, bank s are required to incorporate and direct branches 
are not allowed.  Malawi in its report refers to a government review of trade related legislation, in 
particular as regards services.   WT/TPR/M/231/Add.1 
Page 28  
 
 21. While prudential reasons for regulating banking services, including branching, are justifiable, 
does Malawi intend to amend the banking regulation in order to ensure the compatibility with its 
commitments in the WTO?  
Response 
 Our banking regulations are consistent with standards set by the Basel Committee on Banking 
Supervision – a world supervisory setting committee on all issues pertaining to supervision of banks. 
 After application of Basle I that is based on Ca pital, Asset quality, Management, Equity, and 
Liquidity (CAMEL), plus liquidity risk, Malawi is working on adoption of Basle II.  Basle II 
incorporates all the values of Basle I, and incor porates further risk consideration including Capital, 
Market, Liquidity, and Interest risks in the supervision.  (b) Insurance 
 
Page 48, paragraph 52 and 55 
 
The Secretariat's report refers to the new Insura nce Act and Securities Act, both of which are to 
replace the outdated current regulation.   
22. Could Malawi describe in some details the c ontent of these bills and the expected timeframe 
of their entry into force?  
Response 
 Please note that the Insurance Bill was passed by Parliament in the November 2009 sitting and was 
assented to by the President, His Excellency Ngwazi Professor Bingu wa Mutharika on 8
th January 
2010.   The principal objective of the Act is to "make provi sion for the enhancement of the safety, soundness 
and prudential management of insu rers and other persons involved  in the insurance industry in 
Malawi with the aim of protecting the interests of  insurance policyholders and ensuring the highest 
standard of conduct of business of insurance companies, brokers and agents".  The Act repeals the Insurance act of  1957 which needless to say was arch aic.  The bill is in tune with 
current trends and practices in the industry whic h were not covered in the old Act.  The Act 
recognizes peripheral market players such as loss assesso rs and adjustors.  The Act deals with issues 
relating to Licensing requirements, registration criteria, suspension or revocation of licenses for insurance entities that include general and life insure rs, medical schemes, brokers, agents, agents for 
brokers, loss assessors/adjustors and claims settling agents.  The Act addresses matters on collection of premiums  by brokers, matters relating to investments, 
loans and ownership.  The Act also deals with issu es relating to winding up of insurance companies.  
 The Act Empowers the Registrar of Financial Service Institutions to be the Regulator of the insurance 
industry. 
 
The Securities Bill proposes to repeal the Capital Ma rket Development Act and in its place introduces 
new legislation to comprehensively codify the law that regulates the securities and capital markets and 
the conduct of securities business in Malawi.  The Bill makes detailed provision for the licensing of 
brokers, dealers, investment advisors, portfolio  managers and securities representatives, securities  WT/TPR/M/231/Add.1 
 Page 29 
 
 
 market intermediaries, operators of collective inv estment schemes and for registration of securities. 
The Bill further establishes a Compensation Fund whose principal purpose will be to compensate 
persons who suffer monetary loss occasioned by any de fault of licensed brokers, dealers or investment 
advisors in the course of, or in conn ection with any dealing in securities. 
 
The legislation is more comprehensive than the Ca pital Market Development Act, which it repeals. 
The Registrar of Financial Institutions will ensure that there is discipline by all players in the 
securities market, and that trading in securities is done in an orderly and transparent manner.  The 
Registrar of Financial Institutions will, amongst othe rs, have authority to regulate the issuance and 
trading in securities and will require issuers to give  investors sufficient information of themselves and 
their businesses in order to allow the investors to ma ke informed decisions whether to invest in the 
securities or not.  This Bill proposes appropriate pena lties for persons or institutions th at will contravene the provisions 
of this Bill.  The enactment of the legislation pr oposed by the Bill is an important step towards 
modernizing our financial markets in order to conform with international standards. 
 Regarding time frame for the Bill to be passed, it should be noted that issues of law-making are 
beyond the Reserve Bank's mandate as the Government machinery including the Legislature is involved.  The Securities Bill is on the agenda of th e current sitting of Parliament such that there is 
chance that it may be considered soon. 
 
(4) TELECOMMUNICATIONS 
(ii) Selected issues  Page 49, paragraph 59 and 60 
 The Secretariat's report indicates that telecommunica tion services in Malawi are relatively expensive. 
It also states that Malawi's mobile telephone pene tration remains among the lowest in Africa, although 
competition has been introduced in the telecommunication market.   23. Could Malawi share its views on the reas ons for the high prices of telecommunications 
services and the low penetration rate of mobile telephone, and elaborate how the new National ICT 
Policy aims to tackle those two issues?  
Response 
 
Malawi is a land locked country so cost of e quipment is very high due to high transport and 
importation costs.  These translate to high tariff as operators are trying to recoup their investment. 
 There has been an oligopoly tendency by the two mo bile operators.  Since th ey were licenced almost 
at the same time and they have operated together fo r over ten years, and they tend to move together in 
terms of price fixing.  Competition has been ther e but not on the pricing front.  If a third operator 
would come, it is hoped that the pricing impact will play a very vital role for his penetration.  
 Access to fibre optic (connection to submarine cabl es) has just been done recently and the effects of 
lower costs associated with fibre optic have not yet started to be felt.  The country is still relying on 
satellite connectivity which is very expensive.   WT/TPR/M/231/Add.1 
Page 30  
 
 (5) TRANSPORT 
(i) Institutional and legal framework  Page 50, paragraph 64  
The Secretariat's report indicates that Malawi trans port policy has been reviewed recently and changes 
are being implemented.   24. Could Malawi describe in some detail th e content of these changes and the expected 
timeframe of their entry into force? 
 
Response 
 
The review only incorporated the cross-cutting issu es like gender, and HIV and AIDS, technology and 
also environment.  
 
Page 51, paragraph 69 
 
As regards civil aviation, the WTO Secretariat's report indicates that the Aviation Act of 1970 (as 
amended) is outdated according to the Malawi authorities.  
25. Could Malawi outline its plans as regards th e updating of the civil aviation legislation? 
 
Response  
There are plans to review all transport sector Acts  but due to limitations of funds, the Ministry is 
prioritizing the review of the Acts.  Recently th ere has been a review of the Road Traffic Act. 
 
V. AID FOR TRADE (3) AID FOR TRADE SUPPORT TO MALAWI  Page 59, paragraph 26, Table V.2 Donor operations 
 The EU would like to clarify that the EU 'Food F acility' is a separate programme from national and 
regional indicative programmes, created by Re gulation (EC) No 1337/2008 of the European 
Parliament and of the Council of 16 December  2008 establishing a facility for rapid response to 
soaring food prices in developing countries.  The indicative allocation for Malawi is €17.9 million. 
 Response  
 Noted. 
  WT/TPR/M/231/Add.1 
 Page 31 
 
 
 REPORT BY THE SECRETARIAT (WT/TPR/S/231) 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES DIRECTLY AFFECTING IMPORTS (viii) Standards and other technical requirements 
(b) Sanitary and phytosanitary (SPS) requirements 
 
Page 26, paragraph 37 
 
1. Could Malawi confirm whether the new food legislation (of which the draft is currently being 
reviewed according to the report) and/or changes in legislation will be notified to the WTO before 
entering into force? 
 
Response  
The review of the draft food legislation is till in in fant stage (being considered by the National Codex 
Committee). The draft legislation will be notified to  the WTO when the time is appropriate to do so. 
 
Page 27, paragraph 39 
 
Malawi is not frequently using the procedures of the WTO SPS Committee to notify its emergency 
and other SPS measures. 
 2. What steps is Malawi taking to enhance its capacity to ensure timely notifications of new 
legislation, changes in legislation and emergency measures to the WTO? 
 Response  
Malawi is requesting for technical and financial as sistance to enhance capacity to meet notification 
obligations.  Internally an SPS committee has been  revived to coordinate the formulation and 
submission of notifications. 
 
Page 27, paragraph 40  
3. Could Malawi inform whether informati on on import requirements for plants and plant 
products as well as a list of quarantine pests will be made available, for example on the IPPC 
webpage? 
 
Response 
 
Information on import requirement for plant and plan t products as well as a list of quarantine pests is 
presently not available on the IPPC port but can  be accessed upon request through the NNPO. The 
legislation has never been reviewed since it was framed in 1969. Presently efforts are being 
undertaken to have it reviewed.  
 4. Could Malawi inform whether a phytosanitary certificate is required for all plants and plant 
products, and whether the International Standard on Phytosanitary Measures ISPM 32 will be taken 
into consideration in this regard? 
 
Response 
 
Based on the current legislation, Phytosanitary certificates are required for all plants and plant 
products. As a country we are party to the IPPC and we would like as much as possible to comply WT/TPR/M/231/Add.1 
Page 32  
 
 with the ISPM 32. This is among the many weaknesses  that has been noted and is likely goind to be 
taken into account as we review the plant protection Act.  
(2) MEASURES DIRECTLY AFFECTING EXPORTS 
(v) Export-processing zones 
 
Page 29, paragraphs 55 - 56 
 
5. Could Malawi clarify whether the special rate of 15% of corporate income tax applies only in 
the cases where the company is operating in EPZs? 
 
Response: 
 
There is no corporate tax on firms operating in EPZs.  The 15% corporate tax applies to firms 
operating in priority industries.  Currently no industry has been designated as a priority.  The law 
reads as below: 
 
Rates of income tax appear under the Eleventh Schedule of the Malawi Taxation Act; Cap. 41.01. 
under the Eleventh Schedule, it sates as follows:   (i) in case of companies in the export processing zone , so designated by the Minister for this purpose 
by order published in the Gazette, the applicable rate shall be 0 per cent; 
 (ii) in case of companies operating in priority indus tries, so designated by the Minister for this 
purposes by order published in the Gazette, the applicable rate shall be either- 
 
 (a)
  0 per cent for such period , not exceeding 10 year s, as the Minister may grant in the order; 
 or   (b)
 15 per cent  
 Provided that an additional 5 per cent of taxable inco me shall be charged in respect of all companies 
not incorporated in Malawi. 
 
QUESTIONS FROM JAPAN 
 
Secretariat Report (WT/TPR/S/231) 
 
I. Economic Environment (2) RECENT ECONOMIC DEVELOPMENTS 
(i)Trade-related macroecomomic policies 
(Question 1:  page 4, paragraph 10) 
 We have learned from Japanese companies operating in Malawi that the money transaction for the 
investment and the trading of raw materials by the lo cal enterprises are affected by measures, such as 
foreign exchange rationing, which was introduced b ecause of the shortage of the foreign currency 
reserves.  Please explain the measures taken or planned in order to address these problems. 
Response 
 Malawi's sources of foreign exchange are seasonal, wh ile uses are not.  This is the cause of mismatch, 
especially during lean periods which are from Oct ober to March when export proceeds of Tobacco 
start flowing.   WT/TPR/M/231/Add.1 
 Page 33 
 
 
 Due to the Global Financial Crisis, 2009, Malawi experienced an elongated lean period, hence the 
effect as felt by Japanese traders.  Authorities are addressing the impact from the supply side by 
rebasing, and diversifying the economy, along with global initiatives in resolving financial crisis 
effects.  II. Trade and Investment Policy Framework (1) General Institutional and Legal Framework (Question 2:  page 10, paragraph 2) 
 
We have been informed by Japanese companies work ing in Malawi that there are an increase in 
number of unresolved legal cases and longer periods to  settle lawsuits.  Please explain in details the 
measures taken to improve and expe dite civil and criminal procedures, especially in terms of the 
capacity building to deal more efficiently with court and legal cases.  Response 
 
In the past there had been capacity constraints due  to fewer numbers of lawyers graduating from the 
law school and working for government.  However in th e last ten year there h as been an increase in 
the training of lawyers and increased capacityfor th e courts to deal speedily with cases.  A more 
recent innovation has been the creation of specializ ed courts and tribunals such as the Commercial 
Court.  Creation of the Commercial court means that co mmercial matters do not get bogged down in the 
general registry.  The procedure in the commercia l court is streamlined, business friendly and faster 
than in the General registry.   In the general registry, the increase of personnel mean  fast disposal of cases both civil and criminal. 
Also the enforcement of Judgments and orders h as been improved and government keeps improving 
them. 
 The requirement for mandatory mediation in commerc ial matters means that the matter gets resolved 
more quickly as some do not need to go through the whole litigation process.  Increase use of 
alternative dispute settlement mechanisms h as been a plus in terms of case disposal.  
 
Malawi is currently reviewing most of the trade related laws and this helps improve the justice 
delivery system, in as far as case management is concerned.  In terms of criminal matters, the strengthening of the department of public prosecution by recruiting 
more lawyers has increased the disposal rate of crimin al matters.  Further to this the use of paralegals 
in the system has been and continu es to speed up the conclusion of cases. 
 
(4) Investment Framework 
(Question 3:  page 13, paragraph 24) 
 
We have been made aware of several cases where the delay in obtaining construction permits has 
affected the completion of projects.  Please expl ain plans or measures, if any, to simplify the 
procedures to obtain construction permits. 
 
Response  
Under the procedures to obtaining the construc tion permits, the Ministry of Lands and Urban 
Development in collaboration with the Ministry of Industry and Trade through the BESTAP project 
which is funded by the World Bank commissioned a st udy/survey on Doing Business in Malawi.  The WT/TPR/M/231/Add.1 
Page 34  
 
 study is referred as ‘Dealing with  Construction Permits in Malawi' w ith Blantyre as the case study.  
The study recommends the establishment of a Technical Working Group (TWG) to be chaired by the Commissioner for Physical Planning be formed  and the first meeting will be convened on 
3
rd June 2010.  The study also has come up with TORs for the TWG. 
 
Apart from this initiative, the Department of Physical  Planning in the Ministry of Lands is also trying 
to streamline the development application of Constr uction Permits.  They have also produced a draft 
brochure on the ‘Guidelines for Development Applic ations and Permits at Local Council Level – A 
Guide for Local Councils and for Citizens'.  The br ochure will be released by August and latest 
November 2010 which will contain the reviewed gu idelines which were developed in 1987.  The 
Department is also mapping 14-16 local authorities with assistance for Germany. 
 
III. TRADE POLICIES AND PRACTICIES BY MEASURE 
(1) Measures directly affecting imports  
(iii)Tariffs 
(c) Tariff exemptions and concessions 
(Question 4:  page 20, paragraph 16),   
 
Some Japanese companies have reported to us th at in some cases it took several years to get 
reimbursement for the VAT (16.5%) refund.  Please explain the measures taken to shorten the time 
for the reimbursement of the VAT refund. 
 
Response  
Section 31(1) of the VAT Act requires a taxable person to claim VAT where input tax deductable 
exceeds output tax due in respect of the accounting period.  The Act further states that the excess 
input tax may be carried forward for a period of th ree months before a ref und is made.  However, a 
refund may be made before three months elapse if th e nature of the business is such that the taxable 
person is in a repayment situation.  This norma lly occurs where the business is producing zero rated 
goods or exporting its products or selling its goods to privilege d persons, such as embassies and 
diplomats.   
Previously MRA used to audit the records of a ta xpayer to confirm the correctness of the VAT claim. 
This process caused a lot of delays in effecting VAT refunds.  Using a risk profiling scheme, compliant taxpayers are refunded their VAT within 30days from the time of lodging an application and thereafter subjected  to a post audit.  That is payments for refund 
are made without audit for compliant taxpayers and a udits follow later.  The refunds account is treated 
as a statutory expenditure and as such there no f unding delays.  The Malawi Revenue Authority is 
further categorising taxpayers into gold, silver a nd bronze for VIP treatment as part of its taxpayer 
service scheme that aims at rewarding compliant  taxpayers and punishing the non-compliant.  
 
(Question 5:  page 21, paragraph 18, page vii paragraph 6)   
 
According to the Secretariat's Report, Malawi's tariff is complex because of numerous exemption 
schemes, and the nature of these schemes is discre tionary and non-transparent.  Please explain the 
current measures and the policy hereafter toward  rationalization of Malawi's tariff schemes. 
 Response 
 
Prior to 2006/2007 budget, the Minister of Finance had discretionary powers under section 38 of the 
Public Finance Management Act to waive taxes.  This indeed caused disparities in according duty free 
status and the process was non transparent.  Upon r ealizing this, Government announced the repeal of  WT/TPR/M/231/Add.1 
 Page 35 
 
 
 this section in its budget statement of 2006/2007.   Currently only those goods which fall under 
Section 22 "Customs Procedure Codes and Speci al Transactions" are duty free.  The Customs 
Procedure Codes cover goods for diplomatic pe rsonnel, returning residents, etc.  The 8th schedule of 
the Customs and Excise Tariffs also provided duty free status to raw materials used as inputs in industries.  Effective from 29
th May 2010, the Minister of Finance has cancelled all licences for 
Industrial Rebate Scheme.  All manuf acturers who want to operate unde r this scheme have to re apply 
for registration.  A committee will be set up to re view applications and one of the criteria for 
qualification is value addition of 20% local content.   In an attempt towards rationalizing the Malawis' tariff scheme, Government has in the past two 
Budgets, deleted some CPCs and made  provisions in the main tariff.  For example, in this years' 
Budget Statement (2010/11), Government has deleted the following CPCs:  4000.401and 
4071.401;4000.402 and 4071.402; 4000.425 and 4071.425; 4000.481 and 4071.481.  The following CPCs have been amended by deleting buildi ng materials:  4000.422 and 4071.422;  4000.442 and 
4071.442.  The policy being applied is to graduall y phase out as many entries in the CPCs and place 
them in the main tariff to bring transparency an d remove inconsistencies in tariff applications. 
 The policy is to reduce the numerous bands into thr ee:  0% for raw materials and capital goods; 10% 
for intermediate goods and 25% for finished go ods.  This year Government of Malawi has 
implemented measures towards addressing the problems of complexity of the tariffs order and numerous exemptions.  
 
(3)Internal Measures 
(i)Incentives  
(Question 6:  page 30, paragraph 60)  
We have been informed by Japanese companies opera ting in Malawi that there are long delays in 
obtaining approvals for new investment projects.  W ith regards to this issue, please explain in details 
the "automatic incentives system" as announced in the budget speech for 2008.   Responses 
 
It would be helpful to understand the specific de layed approvals which the Japanese companies have 
pointed so as to enable appropriate specific res ponses.  However with reference to the automatic 
incentive system, the Malawi Investment Promotion Agency (MIPA) in its mandate to encourage, 
promote and facilitate investment in the country hereby responds as follows: 
 Indeed the Minister Finance mentioned the ‘aut omatic incentive system' on page 34 of the 2008/09 
Budget Statement.  The Minister was actually refe rring to the prevailing system where all investors 
now enjoy incentives without discrimination.  The Government of Malawi presently offers general 
incentives to all investors as well as incentives for investors in speci fic priority sectors such as 
manufacturing and tourism (for details of these incentives please visit www.malawi-invest.net).  Thus it is ‘automatic' for investors to get incentives un like in the past where through the Public Finance 
Management Act, the Minister of Finance had disc retionary powers to give out incentives to specific 
and particular investors upon application.  Thus the incentive regime was neither predictable nor 
transparent.  The amendment of the Public Fi nance Management Act removed the discretionary 
powers from the Minister and gave out the ‘autom atic incentives system wh ere incentives are clearly 
stipulated in the tariff book and through the Custom s Procedure Codes as well as in the taxation Act.  
Investors are presently informed of investment in centives with transparency and accountability.  The 
‘automatic incentives system' is therefore automatic because it is not dependent on the discretion of any authority. 
 WT/TPR/M/231/Add.1 
Page 36  
 
 IV. TRADE POLICIES AND PRACTICIES BY MEASURE 
(1) AGRICULTURE (i)General features and policy framework 
(Question 7:  page 38, paragraph1-6)  
We have been told that most la nd cultivators do not own the land or lease this land as most of the 
farms are owned or managed by heads of tribes.  Ple ase tell us if there are some plans to legislate to 
reform the agricultural land ownership.  
 
Response 
 
Malawi has four land tenure systems through wh ich ownership can be passed on from one owner to 
another.  These include customary, freehold, lease hold and public land tenure systems.  On customary 
land, ownership is passed from the old to new owner ma inly through inheritance.  In Malawi, this is 
the most common way land is acquired.  Most smallh older farmers operate on cu stomary land and this 
makes it easy for an individual in the sub-sector to ac quire land.  Most smallholder farmers, therefore, 
possess land from inheritance.  The only snag about it is that most pieces of land acquired through 
customary land tenure systems are small.  
 
At the time tobacco burley growing was being intr oduced to smallholder farmers in Malawi, a pilot 
land reform programme was carried out in the central region particularly in Lilongwe district.  This is 
only one out of 28 districts in the country.  Pi eces of land owned and managed by various members of 
family were indeed registered under the head of the family in a Ndunda System.  This was done to 
enable them easily sell tobacco produced by differe nt members of the family under one name at the 
Auction Floors to minimise transaction costs asso ciated with too many small producers.  The Ndunda 
System further helped farmers to access credit inputs.  The piece of land and a group of farmers operating under one name were used as  collateral security for the loan.  
 Such reforms in areas of tobacco production were observed to increase income levels for farmers 
associated with burley tobacco growing.  Due to some socio-economic problems associated with the 
management of the Ndunda System and its failure to improve the loan payment system, it was not 
replicated else where in the country.  Currently, th e system is not even actively being practiced in 
Lilongwe District where it started though what one sees are some residues nor is it adopted in any other part of the country.  But even in Lilongw e district where this pilot was implemented, each 
family member is responsible for ownership and ma nagement of land that was registered under the 
Ndunda system.  What you heard that most cultivar s do not own land or lease it is not true because 
that system is actually obsolete.   The weakness, however, associated with customary land system is the inadequate practice of 
formalizing land ownership title.  The government nonetheless has already put in place a legitimizing 
land ownership in a new land owne rship policy in the Department of Lands.  This policy is under 
implementation.  Some people have already taken adva ntage of this policy.  The only step government 
would undertake now is to ensure that this policy benefits every farmer which has not happened yet. 
The government through the Department of Lands  has plans undertake farmer mobilization on the 
existence and use of the policy.   WT/TPR/M/231/Add.1 
 Page 37 
 
 
 VI. Aid for Trade 
(2) Mainstreaming Trade into Nati onal Development Strategies  
(ii)Trade Integrated Framework 
(Question 8:  page 54, paragraph 7-9)  
According to the Secretariat's Report, despite the Diagnostic Trade Integration Study (DTIS) 
undertaken under the Integrated Framework (IF ) approved by the Government, the process of 
mainstreaming trade into sectoral strategies, initiated by the IF Focal Point at the Ministry of Industry 
and Trade in 2006, was suspended in 2008 due to l ack of financial support.  Please explain why this 
process lacked financial support.   Response 
 
Cognizance of the dynamic nature of global trade imperatives Malawi has b een updating her policies 
including the MGDS which is expiring in 2011.In th e revision 17 sector working groups or thematic 
groups have been identified including one on Industry and trade which hitherto had not been the case. 
This will present an opportunity to mainstream trade di rectly into the various sectoral strategies.  The 
current Enhanced Integrated Framework (EIF) provides a framework for continuing the 
mainstreaming of trade due consideration will be  given to implementation of the revised DTIS 
developed under the EIF. 
 
QUESTIONS FROM CHINA 
 
Report by the Secretariat  
Section I:  Economic Environment Paragraph 9, Page 4: 
 
The Secretariat Report notes that "Simplification of the tariff structure with a single MFN tariff (for example between 5% and 10%) across all products, w ith no exemptions or concessions, would in all 
likelihood increase revenue."  Question 1:  Does Malawi plan to apply a single MFN tariff across all products? 
 
Response 
 
This is the international best practice and Malawi  is gradually moving towards achieving that goal by 
first aligning its MFN tariff structure with COMESA/SADC customs union common external tariff. 
Part of this alignment has been done this year.   
 Paragraph 16, Page 6  The Secretariat Report notes that "Malawi's expor ts are highly concentrated, with agricultural 
products accounting for nearly 90% of merchandise exports." 
 Question 2:  How does Malawi intend to achie ve greater diversification of its exports? 
 
Response 
 The current Malawi Growth and Development strategy (MGDS) stresses the importance of 
diversifying Malawi's economy and exports.  At pr esent efforts are being made to enhance production 
of products that have potential for export.  These products include paprika, cassava, fruits and nuts, 
textiles, plastics, confectionary products, wheat fl our, handcrafts, minerals  (e.g. uranium mining), WT/TPR/M/231/Add.1 
Page 38  
 
 timber products and hides and skins.  The Govern ment's Green Belt Initiative will create a ‘green 
zone' around Lake Malawi and the major rivers, making an irrigation area up to twenty kilometres 
from the lakeshore.  The Green Belt runs from Karonga in the North to Nsanje in the South.  Only 2% 
of the land in Malawi is currently irrigated, leav ing farmers dependent on rain fall.  Better irrigation 
will enable Malawian farmers to harvest throughout  the year, increasing production and providing an 
opportunity for diversification.  The Malawi Government is seeking to support and promote 
cooperatives institutions.  These institutions facilita te the pooling of resources and hence enable 
smallholders to take advantage of new opportuni ties and proper diversification including value 
addition of production.  
Manufacturing sector also puts emphasis on the agro-processing, cotton, textiles and garments for 
both domestic and export markets.  The food and agro-processing sub-sectors account for more than 30 percent of manufacturing output with value a ddition ranging between 30-35%.  Malawi Economic 
Growth Strategy had identified agro-processing as a high growth potential sector.  Agro-processing 
largely concentrates on tobacco, tea, sugar, cott on and wheat.  Nonetheless, agro-processing of fruits 
and vegetables, rice, cassava, macadamia, cashew nut s, Irish potatoes and spices.  Government is 
trying to address the constraints which include poor and inadequate infrastructure such as roads and 
electricity which Government has embarked to  address as evidenced by interventions from the 
Millennium Challenge Account programs in electric ity sector.  Government is also emphasizing on 
providing a favourable macroeconomic environment,  addressing issues of low level of vocational 
skills, enhancing marketing and distribution syst ems for raw crops, increasing productivity of 
smallholders, and issues of high import duties on equipment and reviewing the policy and regulatory 
frameworks.  
QUESTIONS FROM INDIA 
 
Para 1 of the summary of the Secretariat Report hi ghlights several areas of deficiency in Malawi 
including trade related laws, simplification of Mala wi's tariff together with exemption schemes, trade 
facilitation measures etc.  Question No. 1 We would appreciate to know from Malawi  steps it proposes to take to address 
comprehensively these deficiencies and in order to benefit from trade. 
 
Response 
 
Trade Related Laws:  Under the Business Environment Support Technical Assistance Project 
(BESTAP), a project supported by the World Bank, tr ade related laws are being revised to improve 
the business environment in Malawi.  Laws which are under review include the Companies Act, the 
Taxation Act, the Communications Act, the Busin ess Licensing Act, the Arbitration Act, the Business 
names registration Act and the Control of Goods Ac t, Investment and export promotion Act, Customs 
and Excise Act, the Export Processing Zones Act, the export incentives bill, The Competition and Fair Trading Act.  
The Government is also undertaking an exercise to re view it's laws pertaining to trade in services to 
make them compatible with the WTO laws.  This exercise is being undertak en with the assistance 
from TRADECOM in the following sectors:  telecommunications services;  financial services (banking and insurance);  transport (road and ai r, cargo and freight);  construction and related 
engineering services;  and tourism 
 
Tax Laws:  The Malawi government has been taking progressive steps towards addressing the 
inconsistencies in Malawi's tax structure.  In 200 6, section 38 of the Public Finance Management Act 
(PFMA) was amended to remove discretionary powers to grant waivers by the Minister of Finance.  
In 2008, Government introduced a new system wh ere incentives are automatic  as long as investors  WT/TPR/M/231/Add.1 
 Page 39 
 
 
 meet the necessary conditions.  Also, special Cust oms and Procedure Codes (CPCs) were introduced 
for specific sectors.  In the 2010/2011 budget, Gove rnment has removed and amended some of the 
CPCs in order to address new challenges that came with the new system of incentives.  Trade facilitation:  National trade facilitation measures bein g undertaken include the following: 
establishment of  risk management unit by Malawi  revenue Authority (MRA), adoption of Simplified 
Customs Documentation within the COMESA region to  facilitate small scale trade, introduction of 
one stop border posts and plans are also underway to  further simplify customs documentation among 
other initiatives.    
Para 15 of the Summary of the Secretariat Repor t points out that the one of the main growth 
constraints is a significant shortage in electricity supplies.  Question No. 2 We would like Malawi to share with us th e plans it has to bridge this shortfall 
including putting in place a transmission infrastructure for importing electricity. 
 
Response 
 
In attempt to bridge up the gap in power shortfa lls, Government has embarked on a policy mix that 
encompasses both local and international initiatives.   Locally, the government seeks to improve the 
capacity of power supply by ESCOM through ta riff revisions.  In December 2009, the ESCOM 
revised the tariff charges upwards by 30% and the pr ocess will continue over the next two years.  This 
exercise will enable ESCOM to recover costs and ac cumulate supplementary resources so as to be in a 
better position to provide suffici ent and reliable electricity. 
 Internationally, the Government has identified potential donors towards funding the development of 
Kapichira phase two.  In addition, the Millennium Challenge Corporation (MCC) has offered to assist 
Malawi to undertake a comprehensive rehabilitation of existing hydro-power stations.  Finally, there 
are plans at an advanced stage to connect to  Southern African Power Pool (SAPP) Grid. 
 Para 16 of the Secretariat Report brings out that  Malawi needs to pay attention to the future 
development of the services sector, in particular tour ism and necessary investment in human capital to 
enable growth in services. 
 Question No. 3 We would like Malawi to share with us its  short-term and medium-term action plans 
in the area of development of the services sector. 
 
Response 
 
The services sectors have contributed 35%-45% to GDP in the past decade.
3  I n  v i e w  o f  t h i s  
contribution, government has started putting in pl ace policies that will promote growth of these 
sectors.  The Malawi Growth and Development Strate gy identifies Tourism Sector as one of the high 
growth sectors along with mining and integrated cotton industry.  However, through Malawi's 
participation in the SADC and COMESA trade in service liberalization programmes in construction, 
communication, finance, energy, tourism and trans portation were identified as high growth potential 
sectors and have been earmarked as priority sectors.  Although, the MDGS emphasizes on infrastructure development in energy, water, construction, 
energy and transportation sectors, the services pr ovided in these sectors contribute immensely to the 
GDP and the development of the economy.  It is e xpected that with good infrastructure development 
                                                     
 
3 See Annual Economic Reports for the past years, Ministry of Economic Planning and Development.  WT/TPR/M/231/Add.1 
Page 40  
 
 in these sectors, the services provided will be more  efficient and competitive and hence contribute to 
the development of other real sectors in the economy.  In view of this, the country has put in place sector  policies and strategic plans to ensure that these 
developmental goals are met.  For instance, the t ourism sector has specific policies to ensure that 
services provided in the sector are of high quality and that infrastructure available is of international 
standards as well as enhancement of human resources,  expansion of institutional capacity.  In the 
tourism development plan most elements relate to  infrastructure, eco tourism, cultural tourism and 
promotion of domestic tourism.  
 
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