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Ahmed Al-Wakil: Fair prices will not be realised unless commodity exchange controls are established - Daily News Egypt

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Ahmed Al-Wakil: Fair prices will not be realised unless commodity exchange controls are established

Import duty solution does not take into account the fact that consumers bear the costs of company and state failures

Ahmed Al-Wakil (Photo from Al-Borsa News)
Ahmed Al-Wakil
(Photo from Al-Borsa News)

By Inaam Al Adawy

The Egyptian government faces significant challenges in controlling food rates. Food markets have been plagued by uncontrollable prices and shortages, but the General Union of Chambers of Commerce rejects government policies to address these challenges.

Beblawi’s government, in the wake of former President Mohammed Morsi’s ouster, hasso far pursued limited options. Fears of a return to government control over markets have however revived. Such an approach was the source of many economic problems in Egypt over the past few decades, according to Ahmed Al-Wakil, head of the largest organisation of trade members in Egypt. According to Wakil, recent government policies have largely failed so far and are considered in business circles to be purely token measures

The Ministry of Supply recently announced that the government may intervene to impose pricing constraints on vegetable prices in Egypt. The state will launch a pilot program in an attempt to control prices for goods that Egyptians spend 48 percent of their income on, according to a report published by the Central Agency for Public Mobilisation and Statistics.

According to Wakil, fruit and vegetable prices should be reduced to ensure market stability, provided that this is achieved through free market mechanisms and influencing supply and demand rates, not through the imposition of formulaic prices.

“Ministry of Supply authorities disapproved of imposing an algebraic price system. The market is free and competitive, and everything that is being discussed on the Egyptian street and in the media are merely rumours,” said Wakil in response to the announcement of a government plan to impose fixed prices.

Wakil praised a campaign adopted by consumer groups to cut most food commodity prices by 15-20 percent. Government institutions have full freedom to make these cuts, he said, and have not negatively impacted the retail market.

According to Wakil, a number of initiatives should be taken by the Union to eliminate bottlenecks in the food supply. This, in turn, will reduce food prices. “We plan to coordinate with the Ministry of Supply to establish goods exchanges nationwide with the goal of developing mechanisms that will result in a dynamic market and fair prices.”

The General Union of Chambers of Congress began studying stock exchange commodity coordination between the Alexandria Chambers of Commerce and Al-Baheera at a cost of LE200 million. The Union Cabinet is awaiting approval for the project.The hope is that these plans will be disseminated to all parts of Egypt in order to control prices from above. This would eliminate the need to announce pilot prices of goods, said Wakil.

Wakil also spoke of a need to set up internationally recognisedlaboratories and private stores on the commodity exchange. Goods will have formal specifications and an invoice issued by the stock exchange.

Regarding the impact of the curfew in Egypt on the internal movement of trade over the past three months, Wakilaffirmed that all vehicles transporting goods must obtain licenses to pass through army checkpoints stationed along the way.

Wakil also touched on security in Egypt and the impact of instability on trade, insisting that all roads leading to centers of investment and industry shouldbe secured and measures taken to secure factories and companies against targeting by terrorists–particularly in provinces and cities which have seen a recent rise in marches, demonstrations, and sit-ins, namely Cairo, Giza, Alexandria, Suez, Ismailia, and North and South Sinai.

Wakil claimed that the Central Bank plans to inject necessary money into imports to make more goods available to Egyptians and increase product quality for consumers. Hehowever denied the existence of any obstacles to opening letters of credit for new commodities in light of the availability of dollars on the markets and low exchange rates of LE6.90 down from LE7.50 last year. Despite decreased export profits the Egyptian economy has recently benefited from lower prices on imported production inputs.

Wakil went on to denyrumoursthat the Ministry of Industry and Foreign Trade is leaning toward renewing anti-dumping duties on imported Turkish iron, one of the most prevalent types of iron on the domestic market and largely believed to reduce market prices for other iron production companies.

The Ministry revoked an earlier decision to impose anti-dumping duties on imported sugar, he said.“This decision was made to benefit the public sector at the expense of the private sector,without taking into account the consumer who ultimately bears the burden of public companies’ failures.”Egypt imports about 34 percent of its sugar, which stands incontrast with the push to impose anti-dumping duties according to Wakil.

Wakil also spoke about the future agenda of the Union of Chambers of Commerce,which includes proposals to amend eight economic laws that are not in line with the requirements of the global or local market or technological developments. The group also plans to launch initiatives to increase the competitive edge of Egyptian producers. These modifications will soon be reviewed in parliament, saidWakil.

Wakil is one of fifty members of a committee charged with rewriting Egypt’s constitution. He presented the Union’s vision of an economic constitution to the committee, saying the best option is to rely on market economics with the government playing a regulatory role.Fifty-six university professors and specialists from 14 scientific institutions participated in the writing of the economic constitution as presented by the Union. The academics came from Cairo University, Alexandria University, South Valley University, and the British University.

“We will present the idea of an economic constitution, one that the Muslim Brotherhood did not show any interest in,”said Wakil. Healso called on the government to open up dialogue with the Egyptian people about the difficult economic situation, saying “We have to show the people the truth.”

It is necessary to maintain economic relations with Turkey despite the country’s leaders taking a stance sympathetic to ousted president Mohammed Morsi, said Wakil. Most transactions between Egyptian and Turkish companies will not be affected by Turkey’s political position, he added. Egyptian companies working in the fields of transport and logistics will soon be cooperating with representations of Turkish companies and various European countries to begin implementing plans to build a communication bridge between Egypt, Turkey, and Europe.

The main Egyptian exports to Turkey include fertiliser, sand, polyethylene, textiles (yarn and cotton), salt, and other chemicals. Egyptian imports include iron and steel products, in particular rebar, chemicals, machinery, textiles, auto parts, grain, electrical goods, timber, cement, carpets, and both dried and fresh fruits.

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