Egypt reverses duty-free alcohol restrictions

Ahmed Feteha, Tuesday 27 Dec 2011

In the wake of soaring prices on the black market and mounting criticism from the Egypt Free Shops Company and the tourism ministry, the decision to restrict alcohol and cigarette purchases is withdrawn

Since alcohol is sold at astronomical prices in Egypt's local market due to the high custom charges, buying alcohol from free-shops seems as sound alternative for tourists as well as Egyptians coming from abroad (Photo: Ahram archives)

On 13 December, Egypt's government decreased the entitlement of duty-free alcoholic beverages from four to one bottle, and of cigarettes from four to one carton, leading to prices on the black market to soar.

"I went to my regular dealer and found out that a whiskey bottle that used to cost around LE300 went up to LE550 or even LE600. The dealer told me he will be raising the price even more," says Ahmed Shawa, a 25 year old computer programmer.

Shawa was very displeased with the decision, which he said was taken "just to make an already complicated life even harder".

Egypt's Ministry of Finance has now withdrawn its decision to constrain the sale of alcohol and cigarettes through duty free shops, according to a statement issued by Egypt Free shops Company (EFSCO) and delivered to the stock market.

"The decision was devastating, not only for duty free shops companies, but also for the tourism industry as a whole," says Bahaa Soliman, head of EFSCO.

Soliman explains that many tourists bought their alcohol from the duty-free shops. "The tourists will just go to Israel or any other country that does not impose much restriction on alcohol," he said.

Imported alcoholic beverages are sold at extremely high in Egypt's local markets, as they are burdened with a heavy custom tariff that goes up to 3000 per cent. Accordingly, buying alcohol from free-shops was a sound economical alternative for tourists, as well as Egyptians coming from abroad.

"Ever since the decision to limit purchases, we have been faced with hundreds of angry tourists in our shops. Obviously, the decision was not properly thought through," Soliman adds.

The decision was also slated by tourism officials, and the tourism minister is reported to have interfered to reverse the decision.

The decision caused astonishment across Egypt, especially its timing coming at the start of the Christmas and New Year season.

Some speculated that Egypt's elections, which resulted in an overwhelming win for conservative Islamist parties might have been a factor in the decision to restrict the sale of alcohol. But Soliman says, “I don’t think Islamists had anything to do with the decision. It is just bad administration on the part of the government.”

Prices of alcoholic beverages on the black market are reported to have doubled and even tripled following the ban.

The black market for alcoholic beverages in Egypt is a thriving market, with the locations of dealers in the Cairo districts of Zamalek and Heliopolis well-known amongst those who consume alcohol.

On New Year’s Eve, the Heliopolis street that houses "Albert", a well known grocery shop that illegally sells high-end alcoholic beverages is usually full of young Egyptians, carrying bottles in black plastic bags in broad daylight.

Many of the bottles sold on the black market carry the free-shops sticker.

For their part, Ministry of Finance officials explained that the decision was initially taken to decrease smuggling of custom-free products into the local market.

"If they wanted to combat the black market they could have done it in a million ways without hurting other businesses and sectors,” Soliman says. “Anyway, we are thankful the decision has been revoked.”

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