Eng. Mohamed Al-Suwaidi, Chairman of the Federation of Egyptian Industries (EFI), declared that the federation stuck a deal with the Central Bank of Egypt (CBE) in order not to paralyse the movement of products, whether in ports or outlets. These procedures include the quick release of required documents for importers and managing the supply of foreign currency.
In a telephone interview with Daily News Egypt, Al-Suwaidi commented that the federation arranged with CBE to open an overdraft account in dollars for importers, so that they are able to receive their imported goods, in case the bank cannot provide them with the required foreign currency.
Al-Suwaidi mentioned that the EFI began promotional rounds, as an ambassador for the Egyptian Economic Conference for Development (EECD), which will be held in March in the City of Sharm El-Sheikh. The results of these rounds are positive and will extend even after the EEDC ends on 15 March.
You launched a hotline with the CBE to deal with the dollar crisis, so what happened?
We represent the EFI and the manufacturers, so we opened a hotline with the CBE to overcome the dollar crisis (shortage of the available dollars), the fact that impedes industry`s development. Both parts agreed on the following principle: none of the articles or the products will disappear from outlets. This step will be achieved through the following procedure: the quick release of the importers` documented accreditations, keeping in mind that the priority will be given to manufacturers not traders, aside from the importers of basic materials.
We also agreed with the CBE to open an overdraft account in dollars for importers, so they are be able to receive their imports, in the case the bank could not provide dollars. Moreover, the importer can pay back the bank in Egyptian pound, through the overdraft account.
To what extent did the CBE`s last decisions affected the dollar`s price within the industrial community?
Lately, financial polices aim to confront the black market, which was so active, and aim to improve the Egyptian pound status, which does not represent its real value. Thus, it needs improvement to protect industry, this will happen through supplying importers with foreign currency, for the sake of industry.
The last decisions made by the CBE was necessary in order to reach a local currency that represents its real value against dollar and to unify the dollars price, instead of having to values in the market, of course because the last fact mentioned, investors will fear entering the Egyptian market, thus their entrance today and to convert from Egyptian pound to dollar can lead to their money`s shrink, due to the fall back of the practical value without practically starting the investments, what happened in the Economic Summit was a great example, already we do not have the luxury of time.
The decrease of the Egyptian pound will raise the cost of our imported products especially that we are an importing country?
Of course, the cost of imported products will increase. It will negatively influence the balance of payments, but this is a temporal influence, and it will disappear soon. Thus, the decrease of the Egyptian pound against the dollar may drive the importers, aiming for trade, to manufacturers, the fact that will convert Egypt from an importing consuming economic community to a productive one, which will increase Egypt`s reserves for the foreign currency.
The current reforms will cause some disturbance at the beginning, but luckily, the industrial community will improve in a short time, and the currency`s decrease will enable the Egyptians exports to compete. I believe that the decision took by the government, for the governmental institutions not to deal with dollar, whether purchasing or selling, is a very wise decision and will reduce pressure on the local currency.
The EFI preformed rounds, as an ambassador for the Economic Summit, to promote for it, what were the results?
We preformed a lot of promotional rounds, till now, but it was only in the Arab countries, like Lebanon. The promotional rounds will be still preformed, even after the Economic Summit, and Europe will be our destination.
The main scope of the promotional rounds is: presenting the government efforts for the economic situation reforms; explaining what is really happening in Egypt, to what extent the government is serious and ready to create an investing atmosphere suitable for the Arab and foreign pumping capitals; proving that the political administration is serious about radical and real reforms; and whether these reforms are administrative, legislative, financial, cash or security reforms.
The Economic Summit is a step to put Egypt on the map of the international investments, keeping in mind that this is not the end. I am optimistic, especially that the Egyptian market still enjoys a high earnings level.
How do you view the last reforms for the laws of investments, is it enough?
For me personally, I am optimistic about the final outcome of legislative reforms, not only for the Investments Guarantees and Incentives Law, but also for the rest of the legislations which organise and control the economic activity.
The EFI held two sessions with the government to discuss the points that the EFI disagrees with, concerning the last draft for the New Investment Law, the result was agreeing around all points. Thus, the EFI believes that there should be institutions to guarantee the total removal of bureaucracy, when it comes to dealing with investors. Also the EFI called for some reforms concerning the process of applying control on imports and exports, through free zones, also applying control on tax`s system in these zones.
The actual government is strongly supporting the industrial sector and it fulfils its demands. This was proved the government issued the law of Domestic Product Preference and the Combat Smuggling Law. Now, along with government, we are issuing the Value Added Tax Law, the outcomes of this law are: of great advantages for the investors; will help to destroy the parallel economy; will improve the investments atmosphere; attract new capitals in the case that tax justice is imposed; provide the Public Treasury with income; double the actual one. I expect that this law will be approved very soon, but not before the Economic Summit.
As an economic community, what did you call the government for?
The government approved applying the first phase of the clearing system in tax accounting and tax sales; we hope it will expand to cover banks or any subsidiaries institutes that belongs to the Ministry of Finance. A committee, consisted by EFI, will investigate a law that allows the factories to import energy, especially intensively used energy.
All investors fear pumping money in Egypt, because of the energy shortage crisis, what do you think about this?
The government is making a lot of effort to solve the energy shortage crisis. It opened the door to import gas, and it started deals in order to import huge amount. Electricity prices are clear for the coming five years and there are more than 157 private companies that presented themselves to generate electricity from wind and solar energy. Concerning the industrial lands shortage, we are waiting for the activation of Allocation of Industrial Land by direct law, which was integrated in the Investment Law.
The private sector is still asking the government to decrease taxes, concerning this issue, what is your opinion?
We, as EFI, do not ask the government to decrease taxes, instead we ask for expanding the base of taxpayers by: increasing financiers; applying procedures and controls that punish tax evasion; aiming to increase the tax revenues (outcomes) without imposing new taxes for the business community.
