Egypt’s business community received news of President Abdel Fattah Al-Sisi’s directives to exclude production requirements and raw materials from documentary credit procedures that were recently applied to import process and return to the documentary collection system with a wide wave of welcome and satisfaction.
President of the Chamber of Commerce in Cairo Ibrahim Al-Araby stated that the president’s decision came to end a major crisis that would have hit the local market due to a shortage of raw materials needed for local manufacturing.
He added that the decision would reduce increasing demand for the USD, which will reflect positively on its availability and pricing discipline and will contribute to accelerating the pace of local production of many products, which will restore balance in price movements and reduce inflation rates that have increased at a cumulative pace during the past months. Furthermore, it would provide greater opportunities for the local industry to grow.
Al-Araby highlighted that the movement of prices for all products in local markets will begin to stabilise when the president’s directives come into force due to the return of industrial and agricultural production rates to normal after they faced a wave of disruption due to lack of production requirements and necessary raw materials.
Moreover, the Federation of Egyptian Chambers of Commerce praised the president’s initiative to support and localise industry to rely on local products, reduce imports of finished products, and go towards providing production inputs necessary for manufacturing and export by strengthening the role of the private sector in localising many major industries and encouraging micro, small, and medium enterprises.
For his part, Khaled Abu Al-Makarem — Chairperson of the Chemical and Fertilisers Export Council — said that many factories were threatened with closure due to a lack of raw materials and production requirements, which negatively affected price hikes in the local market.
He added that the decision would have positive repercussions on manufacturing, production, and export operations.
“The decision is a response to demands of manufacturers and export councils that submitted a memorandum to the minister of trade and industry calling for intervention in order to exclude industrial companies from applying the decision to stop dealing with the documentary collection system in all import operations issued by the Central Bank of Egypt,” he explained.
Chairperson of the Engineering Export Council of Egypt (EECE) Sherif Al-Sayyad commented that excluding production requirements and raw materials — including industrial equipment and machinery — by facilitating the entry of industrial raw materials is a decision that is in the interest of industry and export, because there is no industry in the world that provides all its needs from the local market.
He disclosed that the industrial sector is on the government’s agenda of work priorities during this period despite the surrounding global circumstances and challenges that are affecting the world. Therefore, it is necessary to expedite the implementation of the president’s directives in order to complete the state’s vision and plans to reach $100bn in exports,0 because there would be no exports without industry.
Furthermore, Matta Beshay — the Head of the Internal Trade Committee of the Importers Division of the Federation of Egyptian Chambers of Commerce (FEDCOC) — said: “Over the past period, there were great difficulties facing importers — whether in production requirements or finished goods — due to the very slow opening of documentary credits for import operations.”
The documentary credits decision caused a shortage of raw materials during the last period, and it is expected that Egypt’s industry will witness a major breakthrough in manufacturing and export operations after returning to work with the documentary collection system, which will have a quick return on production process.
These directives will lead to a major breakthrough in the provision of production requirements and raw materials for factories, according to Amr Al-Samdouni — Secretary of the International Transportation and Logistics Services Division at the Cairo Chamber of Commerce.
Al-Samdouni explained that work with documentary credits has affected industries’ needs of production requirements, intermediate goods, spare parts for production lines, and affected existing supply chains since the start of the coronavirus pandemic, which caused price spikes.