Sunday, 28 August 2022

The biggest policy issues facing the new trade and industry minister, according to manufacturers

Which big policy issues do industry players hope the new trade and industry minister will prioritize as he takes office? A little over two weeks after Ahmed Samir was tapped as the new trade and industry minister, manufacturers and industry players appear to be optimistic that bringing in fresh blood will help spur action on long-stalled issues. Since he was sworn in as minister earlier this month, Samir has been fielding several requests from industry, particularly to enact measures that would help make raw materials more readily available, resolving issues with securing imports, addressing the high cost of industrial lands, and increasing government-provided export subsidies, our sources tell us.

How does this square up with industry sentiment earlier this year? Many of the points our sources brought up were also thorns in their side when we polled manufacturers back in June. However, our recent conversations indicate that some problems — particularly those that pertain to licensing and land provision — have become bigger priorities, while others such as raw material availability, have cropped up more recently.

Raw materials availability is top of mind: Making raw materials available is currently the biggest issue facing manufacturers, Chairman of the Federation of Egyptian Industries’ (FEI) engineering industries division Mohamed El Mohandes and FEI board member Mohamed El Bahi tell Enterprise. Some factories have effectively halted production after having run out of their stockpiles of raw materials, they told us. “Egypt is a raw materials importer, so ensuring the flow of these materials into the country is critical to protect factories from stalling and to allow producers to maintain their trade obligations,” El Mohandes said. Resolving this issue, or at least giving manufacturers visibility on when it will be resolved, is probably the biggest challenge facing the new minister, El Mohandes and El Bahi agree.

A shortage of raw materials, or skyrocketing prices to secure them, has been a significant sore point for industry players over the past several months, particularly following the introduction of import restrictions earlier this year. Although President Abdel Fattah El Sisi later announced that production inputs and raw materials would be exempt from the new rules that require importers to get letters of credit, rather than documentary collection, it has remained a problem area for manufacturers across several industries, including engineering industries, pharma, and printing and packaging.

The good news: There may be a breakthrough on that front soon, courtesy of new Central Bank of Egypt Governor Hassan Abdalla, who has been holding meetings with cabinet members and senior figures in the banking community, stoking expectations among business leaders that they may be looking for ways to ease the import restrictions that have hobbled everyone from manufacturers to retailers.

The next big priority: Tackling red tape and streamlining licensing procedures. Ending an ongoing “crisis” with handing out industrial licensing is also one of the big issues facing manufacturers today, 10th of Ramadan Investors Association Chairman Samir Aref told Enterprise. There are currently some 2k industrial licensing requests pending sign-off from the ministry, Aref tells us. Former minister Nevine Gamea was criticized by MPs and investors during her time in office for the slow pace of industrial licensing and bureaucratic reform. The ministry and the Industrial Trade Authority had issued earlier this year a detailed guide on the process for industrial licensing, which should allow investors to lock down an operating license on the same day as they apply.

Part of the problem is also the lack of clarity and the persistent overlap of government bodies’ mandates when it comes to licensing, says Amr El Samdouni, secretary of the Federation of Egyptian Chambers of Commerce’s transport and logistics division. “Although there has been some momentum in resolving this issue recently, it hasn’t been resolved fully enough to address problems with a shortage of industrial land for manufacturers,” El Samdouni tells Enterprise.

Then there’s the high cost of industrial land: “The state has spent bns on infrastructure and equipping industrial zones and cities, but industrial land pricing requires a massive amount of capital investment,” Aref said, suggesting that making industrial land available through a usufruct framework would encourage investors to set up new factories and expand existing ones. Samir has received formal requests from manufacturers to lower the price of industrial land, our sources confirmed to us.

Are we finally going to see the automotive strategy soon? Samir, the new minister, was one of the architects of the new automotive strategy, which has been in the works for years and aims to increase local vehicle manufacturing and assembly and increase the sector’s competitiveness to become a regional manufacturing hub and bolster export volumes, head of the Egyptian Association of Automobile Manufacturers Khaled Saad told Enterprise. His involvement in the drafting of the strategy could be a sign that the policy package could see the light soon, Saad said. Introducing the production incentives could help prop up the ailing automotive industry, which is grappling with irregular imports and difficulties getting cars through customs, Saad told us.

Your top industrial development stories for the week:

  • South Korea’s state nuclear power company has signed a KRW 3 tn (USD 2.2 bn) contract with Rosatom to supply equipment and help build the 4.8 GW Dabaa nuclear plant.
  • Hyundai Rotem has signed a USD 656 mn contract to locally produce rolling stock for the Cairo metro.
  • The Supply Ministry has inked contracts with private sector players to build three new commercial trading and logistics centers worth EGP 2.4 bn.
  • Aswan could get a massive EGP 20 bn fertilizer industrial complex: Aswan Governor Ashraf Attia presented a EGP 20 bn project to build the governorate’s largest fertilizer industrial complex.
  • Anchorage Investments has shortlisted four international firms to build its USD 2 bn petrochemical complex in the Suez Canal Economic Zone.

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