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Wednesday, 19 October 2022

Is Egypt finally getting serious about its domestic auto assembly industry?

Auto assembly legislation + expat car import scheme get parliament sign-off: The House of Representatives’ general assembly gave its final approval yesterday to two separate bills of particular interest to car assemblers and distributors. The first is legislation that will see the establishment of a new council to set policy for local vehicle industry (including EV assembly), alongside a new fund for environmentally-friendly cars. The second is a bill that will allow Egyptians living abroad to import cars and get customs and fee rebates.

Automotive bill #1: The House passed legislation that will establish a new regulatory body to set policy for the Egyptian automotive industry and launch a fund to provide incentives to businesses that assemble more environmentally friendly vehicles. The Supreme Council for Vehicle Manufacturing will draft policies, strategies, regulation and legislation governing the wider automotive industry, including EVs.

The council’s purview: Laying out policies and a general strategy to develop the local automotive industry, including legislative and administrative reforms, taking “any steps it sees fit” to create a business environment suitable for automotive assembly, and working to bring in institutional knowledge and know-how, according to a copy of the bill seen by Enterprise.

About the incentive fund: The fund is designed to help develop the domestic production of environmentally friendly cars, including putting in place incentive programs to encourage innovation and otherwise make the sector competitive. The law defines “environmentally-friendly vehicles” as those with zero emissions or a smaller carbon footprint than traditional cars (including electric vehicles, dual-fuel, and other hybrid cars), with details on emissions standards for eligibility to follow.

Automotive bill #2: The bill allows Egyptian expats to import new cars and get an eventual rebate on all related fees if they pay upfront in FX. Expats will have four months following the publication of the law in the Official Gazette to register their personal information, details of the car they want to buy, and pay the required fees and taxes (customs fees, VAT, and other taxes) upfront to the Finance Ministry in FX. They’ll then have a year to finalize the purchase of their car and can get a full rebate on the dues in five years’ time in EGP, at the USD-EGP exchange rate at that time and without interest.

The details: The Finance Ministry is expected to publish a detailed list of the customs and required FX deposit sizes for different car models within two weeks of the law being published in the Official Gazette. Importers can also switch car models after registering their details as long as it’s still within the one-year window and they settle any difference in the value of the FX deposit.

FinMin expects big inflows of FX and cars: The scheme could raise up to USD 2.5 bn in FX, Finance Minister Mohamed Maait said earlier this week. The state is hoping to see domestic distributors bring between 300-500k cars in the four-month window — a significant jump from average annual car imports of 150k a year, Maait said.

WHAT’S NEXT- The bills should now go to President Abdel Fattah El Sisi for signoff. Policymakers then have up to six months to finalize and publish the executive regulations for the bills.

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