Auto sector should be a ‘national project’: BAG chairman

Daily News Egypt
5 Min Read
Chairman of Bavarian Auto Group Farid El-Tobgui

Farid El Tobgui is in a good position to see both the opportunities and obstacles facing Egypt’s auto industry. As chairman of the Bavarian Auto Group, he knows what it takes to produce high-quality vehicles – such as BMW cars – in Egypt. Meanwhile, in his role as board member of the Chamber of Engineering Industries, he has been exposed to the full range of issues affecting Egyptian business and the economy as a whole, from obstacles to investment to the role of banks.

El-Tobgui spoke with Daily News Egypt about his hopes for the auto industry on the occasion of the second Egypt Automotive Summit, laying out his concerns and making some suggestions for improvements in how the industry if governed.

What do you think of holding an annual automotive conference?

It’s a very good idea. In this way, we can discuss the problems facing the sector with all the concerned entities present. However, the recommendations of this conference should be seriously considered and implemented. The second Egypt Automotive summit is broader and more comprehensive, focusing on all aspects of the industry. The government’s presence and that of the investors will bring positive results.

What are the main obstacles hindering the growth of the automotive sector?

The foreign exchange shortage is a big problem; we need dollars to open letters of credit. Another issue is the indicative prices unjustly imposed by customs. Moreover, the automotive industry strategy has not been adopted yet, and we have no idea what the updates on it are.

Do you think Egyptian manpower can achieve the desired growth in the sector?

The human element is important for the success of any economic institution. When institutions succeed, nations grow. We must rely on education and training to keep up with global development. Manpower should be trained and developed to think outside the box – in which they have been sitting for a long time. We should establish a labour base that can later be exported abroad.

Is modification of existing laws a priority on the agenda of investors?

Of course! There should be a new industry law that keeps pace with the realities of the modern era, especially since the current law was prepared in 1958 and has not been changed since.

How do you see the future of the feeder industries?

The automotive industry starts with feeder industries. Upgrading the local feeder industries will drive local manufacturing to lower costs and higher-quality production. It is also consistent with the ultimate goal of the strategy.

Will banks have a role in promoting the growth of the sector in Egypt?

The banking sector must look at the automotive sector as a “national project”. The sector should be granted competitive advantages, and car loans should be provided for long periods – 10 to 15 years – to stimulate the demand on vehicles.

What are the main obstacles to the flow of investments?

The largest obstacle in the automotive sector is the lack of incentives and adequate exemptions. The state should provide exemptions and incentives to support the sector and attract investments, especially in the light of the availability of skilled labour and low wages.

The state should also facilitate routine procedures to overcome the obstacles hindering investors. Indicative prices unjustly imposed by the Egyptian Customs Authority should be revised, and an automotive strategy should be developed to determine the objectives sought by the state. In addition, more hard currency should be provided to banks.

What else should the government do to support the sector?

I call upon the government to activate trade agreements that help exports, such as agreements with Arab countries, the EFTA agreement, and with COMESA. The specifications of vehicles must be in line with international ones.


Share This Article
Leave a comment