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Increasing interest rates on loans has no effect on industrial sector on long term, inflation to fall in November: Kabil - Daily News Egypt

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Increasing interest rates on loans has no effect on industrial sector on long term, inflation to fall in November: Kabil

The industrial sector is facing lots of obstacles but is capable of continuing

Minister of Trade and Industry Tarek Kabil revealed that negotiations are ongoing between the Egyptian and Russian sides to resolve some issues regarding the Russian industrial zone. He said that there may be requests for tax exemptions from the Russian side, but this may result in providing other investors with exemptions.

The Russian trade minister, Denis Manturov, revealed that Russia is expecting to sign the governmental international agreement with Egypt during autumn of this year.

During the sohour party organised by the Ministry of Trade in Al-Masah Hotel two days ago, Kabil considered the Central Bank of Egypt’s (CBE) recent decision to increase the interest rate by 2% as a right one, noting that any decision comes with pros and cons and that this recent decision aims to control inflation but will not have an effect on industry on the long term. He also predicted a decrease in inflation in November.

Kabil pointed out that the ministry has launched 11 million metres of industrial lands last year, which is more than what was launched over the past nine years. He stressed that the ministry deliberately avoided industrial developer companies to enter into agreements in order to avoid high prices or exploitation of lands. “There is high demand on industrial lands,” he said.

Kabil revealed that the ministry aims to offer 15 million metres this year, where the offerings will be in Sadat City, 10th of Ramadan City, Badr City, and Suez City.

The minister did not explain the government’s stance from the file of reducing the prices of gas in energy-intensive factories, but he said that the state is less inclined to subsidise everything, because more subsidisation leads to more consumption.

“In all countries of the world, citizens pay for the services they receive, and only citizens who need subsidisations should be the ones to receive it. The government announced that it will stop subsidisation, including the one provided for factories. The industrial sector must stand on its feet by enhancing quality, reducing cost, and increasing competition, according to Kabil.

He described the increase of population in Egypt as disastrous, as population growth is more than that of agricultural lands, which stresses the importance of the one-and-a-half-mllion-feddans project.

Regarding the free trade agreements, the minister said that his ministry is seeking to hold a series of meetings over the upcoming period to introduce exporters to the Mercosur agreement, which was recently implemented, in addition to the Qualifying Industrial Zones (QIZ) protocol.

He explained that free trade agreements cannot be seen only as trade, but also as investment. He noted that the ministry assessed the free trade agreement with Turkey and discovered that Egypt benefitted greatly from it, with a noticeable improvement in the trade balance between the two countries.

Regarding the free trade agreement with the US, the minister said that Egypt prefers to go into this file gradually and that is seeks to start with the Trade and Investment Framework Agreement (TIFA), while negotiations will take place later regarding the free trade area.

He revealed that the executive regulations of the Industrial Licenses Law will be completed soon. “We are currently working on the final touches and will be sending them to the parliament soon,” he said, pointing out that the Industrial Development Authority works according to the law until regulations are issued.

The minister admitted that the exports of agricultural crops have faced troubles over the past period, so the ministry is currently working with the Agriculture Export Council to monitor crop exports. He stressed that each shipment will be subject to tests, adding that there are negotiations with a specialised association and approved by the European Union to review shipments.

Regarding the little demand on the offered cement licences, which are estimated at 11, Kabil explained that the process of studying cement licences now is different due to the increased cost after flotation.

Regarding the issue of commercial representation offices, the minister stressed that the problem was solved and that portions of salary payments were made this month, with 30% expected to be paid until full payments are made.

“Commercial representation offices have a main role in bringing investments and increasing exports, but their expenses have increased noticeably at some point, which we managed to deal with through going over the map of our representation offices; and we shut down 11 offices we did not consider strategic, and we opened new offices in the African market, which helped reduce expenses by 40%,” the minister added.

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