The Ministry of Finance, chaired by Finance Minister Hany Kadry Dimian, held a meeting with Minister of Industry Mounir Fakhry Abdel Nour, and Chamber of Engineering Industries Chairman Hamdi Abdelaziz, to discuss a new automotive industry strategy.
Abdel Nour said his ministry will announce the new strategy, which aims to develop the automotive industry and attract more investment to this important and vital sector.
He added that the strategy includes many incentives to set up factories and large production units. This would also utilise large production through exporting, especially in the spare parts sector – which can strongly compete in many foreign markets.
Abdel Nour stressed the ministry’s keenness to open new export outlets for Egyptian products, particularly in the African market. He emphasised the great demand for this from the Egyptian market, especially in engineering goods, which have achieved major breakthroughs in export rates to Africa and internationally.
He said the ministry is currently implementing a comprehensive strategy to develop Egyptian exports that grants more benefits and incentives to encourage producers to enter new markets. This would, as a result, meet the deficit in the Egyptian trade balance with many countries. Abdel Nour also noted that he is currently reviewing the rules of supporting exports in order to achieve the maximum benefit to support the export system.
Abdel Nour added that the engineering industries sector is a key pillar for comprehensive industrial development in the next phase. The sector is notable for its attributes, potential, and ability to produce high-quality products that meet global standards. He added that the ministry is currently working to provide full support for the development and creation of a big leap for this sector. The Ministry of Trade will also lend its support to all innovative and constructive ideas to deepen local manufacturing and increase the added value of engineering products industries and other industrial sectors.
He stressed that the Engineering Export Council of Egypt has promising opportunities, competitive ability, great potential, high-quality products, advanced technology, and open markets. Collectively, this qualifies the market to achieve a leap in exporting to various global markets.
Chamber of Engineering Industries Chairman Hamdi Abdel Aziz said the Ministry of Finance held a meeting with the Chamber and the Ministry of Industry to study the terms of the strategy.
Abdel Aziz added that the meeting was considered a presentation to the Minister of Finance on what the automotive industry strategy could offer, and how Egyptian consumers can benefit, to avoid increasing car prices.
He added that all producers agree on the automotive industry strategy, and strive to implement it to promote the automotive sector’s development, and access an increase of local components in the automotive industry.
Abdel Aziz stressed that automotive manufacturers pledged not to alter the prices of locally produced cars if the government approves the proposed strategy. The automotive industry is one of the leading development industries, as it is characterised by abundant manpower, he added.
Abdel Aziz revealed that the strategy is based on the replacement of customs tariffs on imported cars with a new sales tax of 30% on average. Also, part of this plan is to decrease customs without affecting the market structure in the case of exempting countries that signed free trade agreements with Egypt. The proposal includes a sales tax exemption for the domestic manufacturers, if their local manufacturing rate reaches 45%, or if they achieve good export rates.
He stressed that the strategy requires the adoption of legislative amendments of the sales tax act. This would come in addition to amendments to some ministerial decrees aimed at manufacturing some 1m cars in Egypt per year, and increasing the local components rate to 54%.
He explained that the strategy suggests increasing sales taxes on vehicles at different rates according to the motor’s capacity. Customs on cars of up to 1600 cc are to be reduced from 40% to 15%, while customs on cars of up to 2000 cc are to be reduced from 135% to 65%. For cars of more than 2000 cc, the customs will be reduced from 135% to 80%.
The strategy also includes increasing the sales tax for cars of up to 1600 cc engines from 15% to 40%, and from 30% to 85% on up to 2000 cc cars, while cars with engines of more than 2000 cc will see a tax increase from 45% to 90%.