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Tuesday, 3 September 2019

Will Egypt’s auto manufacturers incentives strategy see the light of day soon?

Will the auto manufacturers incentives strategy see the light of day soon? The Madbouly Cabinet’s economic group reviewed yesterday a proposed package of incentives for automotive manufacturers to spur domestic manufacturing and assembly, according to a Cabinet statement. Prime Minister Moustafa Madbouly ordered the finance and trade and industry ministries to complete all the necessary studies on the incentives and their implementation by the end of the month, at which time the economic group will discuss the matter again.

What does the strategy entail? The statement did not disclose any details on the proposed strategy, but our sources in government previously told us that the incentives — which would be introduced through amendments to the Customs Act — would provide customs discounts of varying amounts to car manufacturers in return for increasing their use of local components. The customs breaks would be split into three tiers according to the percentage of local content used.

Background: We were told last summer that, after scrapping the original incentive plan (known as the automotive directive), the government was looking at an alternative strategy that could borrow heavily from one adopted by successful regional players including Morocco and South Africa. The strategy involves a policy of supporting full-fledged auto manufacturing customs-exempt zones that would offer a range of as-yet unspecified tax and customs breaks.

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