(MENAFN- Daily News Egypt) Minister of Trade and Industry Tarek Qabil announced Tuesday that the automotive industry strategy is near completion, and a supreme council will be formed for the development of the industry.
Qabil said, at the second Egypt Automotive Summit, that Egypt is moving in the right direction by completing the last step of the roadmap announced in 2013 by conducting the parliamentary elections, and is currently working on accelerating the pace of economic growth.
He added that the government suffers from three major challenges: the budget deficit, attracting new investments, bridging the balance of the trade deficit through increasing the exports and decreasing imports. That can be done through supporting the local industry to achieve a jump in local production.
The minister said the sector does not make use of the facilitations the state granted it in the last period, and did not exploit and build on them to move forward.
According to the minister, it is not customary for the state to protect any industry against imports from abroad. This situation is temporary, and has to be changed, after the companies gain strength and move forward.
He added that the government, in coordination with all concerned parties, is working on putting forth a clear strategy to advance the automotive sector, enabling it to achieve a major boom in the next period. However, he did not set a date for presenting the strategy.
According to the ministry, the government is currently working on helping the automotive manufacturers work towards a local components rate of 80%, and exporting abroad after that, which would provide the country with much-needed foreign exchange.
Qabil further noted that the government is working on forming a supreme council for advancing and developing the automotive industry in the upcoming period.
According to Chairman of GB Auto, Raouf Ghabbour, Egypt is suffering a severe crisis in providing dollars, which hinders the importation of all feeder components for the automotive industry, and increases the production cost, and consequently the products' prices.
Ghabbour added that the automotive sector did not really kick off until just 20 years ago, noting that the government has until now failed to properly develop the automotive industry, which could have been achieved by creating a positive encouraging climate for the industry.
According to Ghabbour, Egypt has the ability to advance the automotive industry, and increase the rate that this industry contributes to the GDP, noting that Morocco really supported the industry through bringing all the international companies specialised in advancing the automotive industry, and supporting the sector.
He said the government is required to provide significant investment incentives to attract the international companies operating in the automotive sector, especially as Egypt currently is not economically stable, and is still suffering from a deficient investment climate.
Chairman of Business News, the organising body behind the Egypt Automotive Summit, Mostafa Sakr said it has been a year since the first summit, which allowed for major steps to be made in the automotive industry, in cooperation with the government and the private sector.
He asserted the preparation of the automotive strategy was the motivation behind holding the second annual summit. The question it raises is whether Egypt can assume a place in the automotive industry, as in Morocco and South Africa, especially as, in spite of conducting agreements with Africa to make Egypt a gateway for the continent, these agreements did not create growth.
According to Bavarian Auto Group Chairman Farid El-Tobgui, Egypt still suffers from the weakness of the purchasing power directed to the automotive sector, in addition to the lack of trained qualified labour in the automotive industry.
He demanded that the government announce the strategy for boosting the automotive industry to resolve the hindrances to the industry's growth promptly, and enable an increase in production and attract more major international companies operating in the sector.
Meanwhile, Chairman of the Consumer Protection Agency (CPA) Atef Yacoub said the standard specifications on cars are not applied throughout the sector to date. He said they are working on communicating with automotive manufacturers to address and avoid any mistakes in order to prevent any complaints from consumers in the future.
Yacoub added that Egypt must increase its road capabilities in order to guarantee a positive future for the sector, and avoid exhausting cars. Egypt suffers from the lack of driving culture, Yacoub noted.
He added that Egypt is suffering from the lack of foreign exchange; however, he expects that the crisis will be eased in the near future.
Further, Qabil commented that the government will not allow any disproportionate increases in car prices, in order not to allow citizens to pay the cost instead of the investors, demanding that investors to take into consideration the market's condition.
Ghabbour further expressed his objection to the government policy of giving priority in providing dollar to some goods instead of others, saying the government must provide dollars for any approved.
He added that he does not object to prioritising strategic goods in providing dollars, given that it also provides the dollar to the remaining sectors, even at higher commissions and prices.
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