Egypt’s industry minister rejects imposing 30% protection tax on imported paper

Gamal Essam El-Din , Sunday 8 Dec 2019

The minister, however, vowed that he would do his best to cut the high production costs that local paper industries currently face. Gamal Essam El-Din reports

Amr Nassar
File Photo: Egypt's Trade and Tndustry minister Amr Nassar (Photo: Al-Ahram)

In a meeting held by parliament’s industrial committee on Sunday morning, local paper producers teamed up to press for imposing a 30 percent protection tax on imported paper, a proposal that was rejected by the Minister of Trade and Industry Amr Nassar.

Mohamed Abdel-Rehim Hussein, head of the Sugar Company for Integrated Industries, said that Egypt’s local paper producers face several problems, foremost among which are high energy prices (electricity and natural gas), high customs duties and taxes, and a proliferation of substandard, cheap paper.

“Either we impose a 30 percent protection fee on imported paper or the government cut energy prices and reduce taxes so that local producers can compete,” said Hussein.

Gamal Mohamed Saudi, head of the Egyptian Company for Paper Production, said the company was able to overcome the liberalisation of the exchange rate in November 2016.

“We have even achieved big success in covering the local market needs for cardboard and packaging paper,” said Saudi, adding, however, “that the current trade war between the United States and China has led the price of paper in Europe to drop to EGP 30 per tonne, but in Egypt the price is as high as EGP 2,000 per tonne.

“So there is a kind of unfair competition because we currently face a war in the form of dumping huge quantities of substandard and cheap imported paper into the market,” said Saudi.

Sherif Osman, head of Al-Obour Paper Company, also asked for imposing a 30 percent tax on imported paper.

MPs Mohamed Atiya El-Fayoumi, Radwan El-Zayati, and Amr Kamal agreed that the Ministry of Industry should move quickly to cut down production costs should it reject imposing a 30 percent protection tax.

In response, Minister Nassar vowed that he would fight to reduce the price of natural gas and other essential production inputs.

Nassar agreed that the current economic conflict and commercial war between the United States and China has worsened the local paper industry’s three chronic problems: high natural gas prices, high customs duties, and the Value Added Tax.

However, Minister Nassar rejected the producers’ request for a 30 percent protection tax.

“It is quite difficult at the moment to impose such a tax because we could face international lawsuits against us,” said Nassar.

“So, what is much better right now is to do our best to reduce the costs of production, lower prices of natural gas and electricity, and make sure that imported paper is of a high quality and goes in line with international standards and specifications.”

Parliament's industrial committee, led by businessman Farag Amer, will hold a meeting on Monday morning to discuss problems facing the drug industry.

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