Egypts Imports and Exports
As the country continues to struggle with a foreign currency crisis, Egypt has also witnessed difficulties with imports, which have declined by 19 percent. Additionally the government has introduced a number of restrictions on imports, for instance in December 2015, the Ministry of Trade and Industry issued Decree No. 992/ 2015, which imposes a mandatory obligation on factories, looking to import their product into the Egyptian market, to be registered in a specified registry held with the General Organization for Export and Import Control (GOEIC).
According to the ministerial decree, the Customs Authority will not release imported products from the custom’s zone unless the producers of such product are registered at the aforementioned registry.
The application of this Ministerial decree has resulted in several issues; such as owners of trademarks who desire to import their products into the Egyptian market having to register their factories that deliver their products to Egypt separately with the GOEIC. In addition they must comply with a long list of ISO certificate requirements in order to complete the said registration as per international standards.
However in order to expedite the process , the Egyptian government has amended the previous law by issuing the Ministerial Decree No. 43 for the year 2016. According to the said amendment, the owners of the trademarks or factories may now register all their trademarks or factories that delivers products to Egypt in one single process without the need to register every single trademark or factory independently. Also, the number of the required documents have been minimized reducing the type of product subjects categorized for registration.
Regarding the registration process of the factory or the trademark, owners are required to complete the said process through an application to be submitted to the GOEIC supported by all the determined certificates and documents. According to the law this registration processes usually take approximately from 2 to 3 weeks. However, from our experience in dealing with such matters, the registration time can take as long as 5 to 6 weeks.
The government’s aim in issuing such a decree is to encourage reliance on local products, bolster local manufacturing and the national economy, rather than depending on the import of foreign products. Moreover the decree helps to enhance the competitiveness of locally produced products against foreign products. This decree is set to allow a fairer playing field for local companies to compete with individual importers who smuggle or evade customs by providing fraudulent bills. The companies, which are commonly harmed by this, are the Egyptian textiles factories who have to compete with cheaper Chinese imports that have been smuggled into the country. Therefore, if local textile companies are better positioned; they would be able to possibly compete with the Chinese textile imports, and even possibly begin to have a competitive edge in smaller foreign market.
However, there is no guarantee whether the result of the issued decree will positively affect the direction of the country’s economy or if it will make it more difficult for business, especially the small and medium businesses owners, to import critical raw material tools. It may also make it harder for the Egyptian companies to import from the European market. Bearing in mind a similar attempt was made previously in the 1950’s when the governments wanted to promote the first ever Egyptian-made car, and in order to do so they raised duties on imported passenger cars and the result ended up rather hurting than helping the local economy.
Since then the tax on foreign cars has only increased, creating a discrepancy of fuel efficient new vehicles coming into the country and allowing for older, recycled cars which are not environmentally friendly to become the dominate source of transport in the country.
Additionally by making it more difficult to import, the government in turn is sending mix signals to all the foreign investors who are being invited to initiate business in Egypt . For example the so-called luxury companies in Egypt like the British chocolate maker Cadbury, French cosmetics producer L’Oreal, the Dutch firm Frico Cheese and Korean electronics giant Samsung that started out as exporters to the country. When they saw that there was sufficient demand in the local market, they decided to build a factory, noting that these multinationals have also brought with them new technology and industry expertise with them. With less competition from abroad the local market will not be exposed to the know-how of various industries which are transferred to local companies and will not be able to compete in an aggressive and highly competitive marketplace.
Beside all the advantages and disadvantages gathered , global trade and investment are an essential part of any developing economy and people need to support their local industry as much as they accommodate foreign industries .The government must put an adequate system in place to ensure the quality of locally made products are up to par with the international standards to avoid shortages that might be faced if the local products cannot be replaced with the imported one.