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Tuesday, 20 September 2016

Kabil discusses chaos in commercial sector, automotive directive, food import bans

Kabil: “Egypt has been in a state of commercial chaos for years that we’ve only begun addressing recently.” So declared Trade and Industry Minister Tarek Kabil in an interview with Al Mal that ran yesterday.

Cement licenses and public tender law: The delay in announcing the results of the bids on the new cement licenses was caused by a cabinet request to hold off until amendments to the Public Tender Law are made, he said. The results were expected last August. Kabil said eight bids were received, even though 14 licenses were on offer; in addition, a request filed with the Industrial Development Authority by a public-sector company that wants a license is now being studied. The Public Tender Law is awaiting approval by the House of Representatives, which is currently in recess.

Separately, Kabil says the Armed Forces did not request a license to build a steel factory, despite statements by the head of Armed Forces’ Engineering Authority that President El Sisi had ordered them to pursue steel manufacturing. Also, a land plot has been allocated for the Russian industrial zone in the Suez Canal Axis, said Kabil, but Russia had requested exceptional incentives and exemptions, to which Egypt responded with the available incentives but rejected the exceptional requests. Meanwhile, Kabil says the Russian-Egyptian-UAE investment fund is currently studying 20 investment projects.

Implementing the long awaited-automotive directive will be an eight-year process, said Kabil at the sidelines of his meeting with the Egyptian Automobile Manufacturers Association (EAMA) and auto industry leaders, which we noted yesterday. The automotive directive will hope to raise the domestic components in cars produced in Egypt to 60% from a current 45.5%, refuting statements made earlier this week by the head of the Egyptian Automotive Feeder Industry Association Ali Tawfik that domestic content will be raised to 80%. Kabil added that the ministry will begin drafting the directive’s executive regulations this week, in anticipation of when the House of Representatives approves the legislation after the recess. Kabil promised to include EAMA and the Federation of Egyptian Industries in the committee it is forming to set standards for the auto industry. At the meeting, GB Auto chairman Raouf Ghabbour called for greater cooperation with manufacturers and assemblers in implementing the strategy, Al Borsa reports.

Kabil also addressed the issue of the ban on Egyptian food exports, stating that the Saudi Food and Drugs Authority had cleared frozen Egyptian strawberries from Egypt of any harmful viruses, the newspaper reports. He denied that the US Food and Drug Administration (FDA) had placed a blanket ban on Egyptian produce. He did acknowledge a number of Egyptian companies had been placed on the FDA’s “red list” of companies which have received warnings and whose goods must thus be quarantined, but all but one of these were listed before 2016. As we noted on Sunday, an outbreak of Hepatitis A in the US linked to Egyptian strawberries prompted investigations by the UAE and Jordan, while Russia imposed a ban on plant products from Egypt. Saudi Arabia had reportedly placed import limitations on fruit and vegetables from Egypt prior to the incident, according to Saudi media.

The issue could get worse, as a member of the Agriculture Ministry’s Agricultural Export Council stated that sewage had indeed been contaminating Egypt’s agricultural produce for some time now, Al Shorouk reports. Council member Wagdy El Walily blames this on the wave of construction that replaced agricultural land, with sewage systems being built adjacent to farmlands. Isabel Bottoms, writing for the Egyptian Centre for Economic and Social Rights and relying on CAPMAS data, blames the lack of wastewater infrastructure in rural areas for the contamination. El Walily believes that this may have a severe impact on exports at a time when the nation has shifted its policies to relying on them in light of the FX crunch. El Walily’s revelations confirm the widely picked up report by the US Department of Agriculture that sewage water seeping into irrigation systems was behind the Hepatitis A infections in Egyptian strawberries.

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