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Wednesday, 11 December 2019

Is Egypt’s auto manufacturing incentives package coming out of hibernation soon?

LEGISLATION WATCH- Is the auto manufacturing incentives package finally going to emerge from months of hibernation? Proposed amendments to the Customs Act that will provide customs discounts to car manufacturers in return for increasing their use of local components will be sent to the House of Representatives “soon” for review and approval, head of the Industrial Development Authority’s domestic manufacturing department Alaa Salaheldin said yesterday, according to Hapi Journal. Salaheldin otherwise remained tight-lipped on the incentives package, saying only that the proposed incentives is “similar” to previous iterations of the program, by which we assume he means the scrapped automotive directive.

The proposed program has apparently been cleared with the European Union and will not violate any of Egypt’s trade agreements, Salaheldin told the local press. EU Mission Chief to Egypt Ivan Surkos had shot down the proposed automotive directive back in 2017, saying it would violate the terms of Egypt’s trade agreements with the EU.

What we’ve heard about the package so far: Two government officials had told us back in July that the Madbouly Cabinet had approved the Customs Act amendments in their final form. The updated amendments reportedly split customs breaks into three tiers according to the percentage of local content used, streamlining previous plans for a more complex five-tier system. The cabinet economic group had also reviewed in September a proposed package of incentives for auto manufacturers, but details were scant on what the package entails.

What the industry wants to see: Several members of the feeder industry called on the government to help provide raw materials for component manufacturing and lower customs rates on imported components, the local press reports. Speaking at the Egypt Automotive Summit yesterday, industry figures also urged the government to set a clear vision and implement policies that would attract foreign companies to the feeder industry.

Most of all, they just want to get the ball rolling: Fiat-Chrysler Automotive Egypt CEO Abdel Rahman Sultan said at the conference yesterday that time is of the essence in launching the incentives package, pointing out that it’s difficult to make plans as a business for the year ahead when a potentially groundbreaking policy move has remained in the shadows for so long, according to the local press. Sultan also warned that the prolonged process of bringing the package out of the woodworks is causing further strain to the auto industry. Any industry would struggle when faced with repeated changes in policy direction, he said. Meanwhile, customs on Turkish-origin cars will officially drop to zero as of next month, advisor to the finance minister for customs affairs Magdy Abdel Aziz said at the conference yesterday, according to the local press.

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