Investors are demanding incentives for companies exporting industrial products
In the midst of every crisis lies great opportunity, according to the 20th-century physicist Albert Einstein, and Mohamed Al-Bahi, head of the Taxes and Customs Committee at the Federation of Egyptian Industries, seems to agree.
He believes that the Ukraine-Russia conflict could bring golden opportunities for the Egyptian industrial sector despite the fears of some business people and workers.
The government should prepare to receive more foreign capital as a result of the war thanks to Egypt’s security, political stability, and the economic and structural reforms it has introduced over the past five years, Al-Bahi told Al-Ahram Weekly on the sidelines of a seminar organised by the Egyptian Centre for Strategic Studies entitled “The Future of Egyptian Industry in the Light of Global Transformations: Towards More Localisation and Integration”.
The stability of Egypt’s tax system allows companies to predict their liabilities accurately over the short and longer terms, making Egypt attractive for foreign direct investment (FDI), he added.
Egypt targets $7 billion in FDI.
Mohamed Abdel-Karim, head of the Industrial Modernisation Centre at the Ministry of Trade and Industry, said there were now 83 investment opportunities in localising the production of 131 items that would save on imports worth $14 billion.
The government wants to increase the proportion of local components in products made in Egypt and increase exports by announcing incentives when offering industrial land for sale. Abdel-Karim said there were currently 17 industrial complexes available for industries to move to across Egypt.
The country’s industrial exports are targeted to reach $28 billion by the end of the year, up from $23 billion in 2021.
Alaa Al-Saqti, head of the Egyptian Small and Medium-Sized Enterprises Federation, told the seminar that integrating the informal sector into the formal economy would double Egypt’s GDP, increase exports, and attract more investments.
The government passed its Small and Medium-Sized Enterprises Law in 2020, the executive regulations of which were issued in 2021. The law aims to legalise industries working in the informal economy and clarify industrial policies, Al-Saqti said.
Ayman Qura, a member of the board of the Chamber of Food Industries in the Federation of Egyptian Industries, called for benefits to be drawn from the experiences of countries that have achieved industrial growth in Eastern Europe and Asia and where conditions are similar to those in Egypt.
“We have promising investment opportunities and sufficient manpower, especially young people. What we need is an integrated industrial map,” Qura told the Weekly.
Two crises in three years, first the Covid-19 pandemic and then the Ukraine war, have resulted in price hikes in energy and raw materials, meaning that Egypt should not rely on one country for imports, Qura said.
Egypt has the potential to become a regional hub thanks to its large market and the trade agreements it has signed with the European Union, the African countries, and the Gulf, he added.
The new global economic order requires exploring custom incentives for companies exporting industrial products, he said. The higher the percentage of the local components in such products, the higher the incentives should be, Al-Bahi suggested.
“This will allow Egyptian products to be available in more markets and increase the space for localisation to grow even further,” he added.
*A version of this article appears in print in the 31 March, 2022 edition of Al-Ahram Weekly.
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