Egypt’s Minister of Finance Mohamed Maeet revealed in a meeting with members of parliament’s Industrial Committee on Monday morning that imported production inputs and raw materials necessary for the local paper industry will be exempted from the value-added tax (VAT).

“The VAT law will be amended to help the local paper industry in competition with imports,” said Maeet.

The minister said the government believes the local paper industry is strategic and that it should be protected to save it from declining. “VAT will be also imposed on imported paper as an additional measure aimed at protecting the local industry from cheap paper imports,” said Maeet.

MPs and local paper producers, however, said these measures are not enough to save the industry from collapse.

Chairman of the Industrial Committee Farag Amer said, “the local paper industry is facing a crisis because of high energy (natural gas) prices, taxes, customs and a dumping of substandard imported paper on the local market. We urge the government to move quickly to help solve these problems to save the paper industry from declining,” said Farag, proposing that “a protection fee be imposed on imported paper.”

Amer said while natural gas is exported at $3 per cubic metre, it is sold to local paper industries at $5.5 per cubic metre. “This is utter injustice and causes the local paper industry a lot of harm,” said Amer.
In response, Maeet said the above prices are not correct “I have to ask the minister of petroleum to verify these figures,” said Maeet.

Maeet, however, said he is aware that lower energy prices are necessary for the local paper industry to be competitive. “Egypt has become a major electricity producer and we are about to be a leading exporter of natural gas, and this will help us in the future to reconsider energy prices imposed on the local paper industry.

“This issue is on the top of the agenda of the political leadership. President Abdel-Fattah El-Sisi urges the government at all times to do its best to help local industries,” Maeet stressed.

Maeet indicated that “it is the Ministry of Industry and Trade that has the power to impose a protection fee on imported paper.

“What the finance ministry can do, however, is abolish the VAT on production inputs and raw materials necessary for the local paper industry. We will also impose VAT on imported paper to stem the tide of cheap imports and protect the local industry,” said Maeet.