More industries qualify for export subsidies under new program
We now have more details on the state’s new export subsidy program: Exporters in the automotive, ceramics, pharma, electronics, and chemicals industries can now enrol in the export subsidy program for the first time, under a decision approved by the Export Subsidy Fund on Friday, the Trade Ministry announced. The program will come into effect for three years as of July for most eligible industries, while the automotive sector subsidy program will run for seven years. Further incentives include:
- A 50% boost in subsidies for exports headed to the African market and subsidize up to 80% of shipping fees;
- A 50% bump up from the basic rate for Upper Egypt, border governorates, the Rubiki industrial zone and Damietta furniture city;
- An additional 2% subsidy rate for exports bearing an Egyptian brand;
- Projects established in the Suez Canal Economic Zone will be eligible for the program.
This comes as the central bank prepares to launch a new export credit risk guarantee company in the coming weeks, which will protect Egyptian businesses exporting to other parts of Africa.
Increasing exports front and center in new structural reform program: The government has recently been talking up its ambitions to revive Egypt’s non-oil exports, which despite the EGP float in 2016 have remained anemic. The recent unveiling of a new round of structural reforms contained pledges to ramp up exports in manufacturing, telecoms and IT, and agriculture, and the cabinet has moved to reinstate an export council which will be charged with setting national policy and increasing the country’s exports.
Background: The new export subsidy program received the green light from the Cabinet last week, and will replace a 2019 EGP 6 bn export subsidy program that saw pushback from exporters due to a lack of clarity in its executive regulations and for what were seen as lackluster promises to reimburse exports via cash and non-cash incentives, rather than just cash.