The fourth annual summit of the automotive industry, Egypt Automotive, discussed the obstacles facing the feeder industries in Egypt and what is required to deal with them during the coming period.
Conference participants said that there are fundamental problems with competition, tariffs and taxation, and poor quality and adherence to international standards hinder the arrival of local products to the world.
Participants complained of a wide range of problems, notably the lack of incentives and the lack of an automotive industry strategy so far, but said there were real opportunities nonetheless.
Director of business development at the Industrial Engineering Co. (INDE), Shady Rashad, said that Egypt has the industrial potential to export and occupy high market space, but suffers from weak regulations.
He added that his company produces 1,000 motorbikes per month for the local market, with plans to produce 2,000 soon.
He noted that the problems of domestic competition are the main obstacles to industry and this is highlighted by the large tax evasion of companies, especially importers, which is an obstacle to fair competition.
Rashad called on the government to impose more market discipline mechanisms at the levels of manufacturing, import, and tax collection. He noted that some importers do not even have commercial records.
As for Tamer Anany, managing partner of ECAP, he said that the sector of manufacturing mufflers is strong in Egypt.
He stressed that industry is the key to solving Egypt’s problems. “Industry is better than waiting for tourism to come back,” he added.
Anany explained that Egypt’s location in Africa can give it the ability to manufacture and export to all African markets.
He pointed to Egypt’s possession of basic industry capabilities, which facilitate the process of development and achieve targets easily, compared to other markets, saying that the real industry is in components. The government has a clear vision for it, he said.
Moreover, he urged officials to talk about incentives and not opportunities, since all markets have the latter but incentives help investors to choose.
He explained that the sector and private companies talked about the automotive industry strategy for a long time, but have yet to see something real.
He also said that Egypt is one of the top three markets across Africa, despite its small size, calling on the state to exploit the current situation instead of holding off until later.
In addition, he said that automotive investors in Egypt must sit down with the government to discuss the mechanisms that could help drive real growth, adding that the government should also meet foreign manufacturers for the same reason and to give them conditional incentives to achieve specific growth rates.
Ahmed Magdy, deputy CEO of SEWS Egypt, said that working on local industries needs looking into other similar experiences in foreign markets to best use the available capabilities and to reach the right clients.
He noted that Africa is among the most important markets for the company, and Egypt in particular, considering its high population rates and the vast land available for investments, especially since only 5% of the country’s land is tapped.
He called on the government to increase its incentives to the industrial sector by reducing the prices of land, like neighbouring countries, or offering land free of charge in exchange for employing a certain number of workers, or bearing 50% of the cost of building on land.
He suggested to the Ministries of Investment and Industry to assign a manager for every set of companies in Egypt to handle the problems they may face.