Back to the complete issue
Sunday, 29 December 2019

Egypt’s automotive incentives package could soon see the light of day

Trade Ministry finalizes method to calculate local content’s added value under larger automotive strategy: Trade Ministry officials have finalized a new method to calculate the percentage of local content under a planned automotive industry strategy to encourage car manufacturers, Al Mal reported, citing an unnamed official. The proposed method should be handed over to Trade Minister Nevine Gamea for approval soon, the official said. This calculation appears to be part of the in-the-works package of incentives that would provide manufacturers customs breaks based on a threshold of local components they’ll have to meet. The incentives, we were told earlier this year, would link custom discounts afforded to manufacturers to a sliding scale based on how much local content they use.

What exactly is this new method? According to the official, the method will give more weight to the ‘value added rule’ when calculating the minimum percentage of local inputs. The source was otherwise short on details, but this appears to mean the strategy will consider the cost that went into the local components used when deciding whether a car qualifies to be considered locally-made.

When should we expect to see the strategy being implemented? The calculation method was due to be handed over for ministerial approval early last week, but had to be postponed until newly-sworn in Gamea was brought up to speed on other agenda items, the official said. This approval would serve as a starting point for a larger plan to draft an automotive strategy that, as far as we know, may be similar to the scrapped automotive directive, but watered down to avoid drawing criticism from Egypt’s EU trade partners. Uplifting the automotive industry a matter of urgency as the sector has been hurt by the removal of tariffs on EU-imported cars, and by a plan to do the same on Turkish imports at the start of the year.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.