Egypt scraps discounted customs exchange rate on “luxury” imports
Egypt has scrapped a discounted customs exchange rate of EGP 16 for non-essential imports including tobacco and cosmetics. The move is effective for at least one month starting 1 December, the Finance Ministry said in a statement (pdf). The rate for these goods will now be determined by the CBE’s average exchange rate from the previous month. The discount rate remains in effect at EGP 16 for strategic and essential goods.
The move is expected to bring in around EGP 2-2.5 bn for state coffers once it is applied to the more than 400 items, a Customs Authority official tells Enterprise.
Expect to pay more for mobile phones, computers and pet food: The list of non-essential goods includes pet food, mobile phones and computers, as well as products for which domestically manufactured or assembled alternatives exist. A complete list of all the goods now subject to a floating FX rate for customs calculations can be found here. The list was drawn up by the Cabinet economic group, which includes the ministries of finance, trade and industry, investment, and planning.
Egyptian manufacturers love the move, importers less so — shocking, we know. The head of the Federation of Egyptian Industries’ (FEI) engineering division, Abdel Moneim El Kady, lauded the move.
Local car assemblers like it, too, saying it will help offset the cut to 0% of customs duties on European Union car imports that goes into effect on 1 January, said a spokesman for AMIC, the car industry association. Prices of imported cars could rise 2-5%, said an expert quoted by financial daily Al Mal.
Finance Minister Mohamed Maait is expected to hold a presser today to further explain the decision, according to Masrawy.