Egypt's Customs Authority has circulated instructions to the country's port authorities to prohibit the release of any fully manufactured three-wheeler vehicles, tuk-tuks or motorcycles, and to halt the import of their components. Acting on recommendations from the cabinet, Minister of Industry and Commerce Mounir Fakhri Abdel-Nour, issued a decision late on Monday to ban imports of the vehicles, effective immediately. The decision, number 105/2014, puts a one-year ban on imports of fully manufactured motorcycles of all kinds and on three-wheeler tuk-tuks in particular, whether for commercial purposes or for private use. It is expected that a further statement will follow listing the facilities provided for importers who have already received such goods, whether these have already reached the ports, are in customs, or are still in shipment. The decision also bans imports of the components used to make the vehicles, including engine parts and chassis, for a period of three months. One importer, the importer and assembler of Chinese Hanco motorbikes and three-wheelers, said that “the decision is hurried and effective immediately, so the government is not going to reconsider. The harm has been done and we will have to live with the results”. He said that the decision included motorbikes and three-wheelers (tuk-tuks), but not tricycles, and the ban on components only lasted three months. “Even with the three-month ban on components, it is not really such a big deal as many local manufacturers that assemble motorbikes and tuk-tuks have stocks of parts and components,” he added. The importer estimated that locally assembled units constituted about 60 to 65 per cent of the motorbike and tuk-tuk market, but insisted that the supply was bigger than the demand so any increase in prices would probably be limited to 10 per cent. According to Mohamed Mustafa Al-Sakka, secretary of the division of importers of motorbikes at the Cairo Chamber of Commerce, the decision should have been more thoroughly discussed with members of the division in order to weigh its repercussions. “We only knew about the decision from the newspapers just like everybody else. The economic impact on importers, local assemblers and even consumers could be immense,” Al-Sakka said. “We can well understand that the decision was taken for security reasons as motorcycles have been used in committing terrorist attacks and the targeting of police forces, but the decision will do more harm than good.” The Ministry of Interior had suggested the move to the government in the light of attacks by unidentified motorcycle riders on police officers. Al-Sakka said that the decision to ban imports of motorbikes and tuk-tuks would not stop terrorist attacks and that the government should have taken a different approach. Applying the existing laws would be a more effective solution, he said, and issuing licenses and registrations for motorbikes and tuk-tuks could have been a more reasonable approach. There are an estimated four to five million motorbikes in Egypt, and a further 200,000 to 300,000 are imported annually. Tuk-tuk prices have already increased by up to LE23,000 as a result of the ban. “Prices will inevitably rise, and even the tuk-tuk drivers have already increased their fares,” Al-Sakka said. In its decision last week, the cabinet also asked the Ministry of the Interior to be stricter about the licensing of new motorcycles and to set a two-week period for the licensing of any unlicensed motorcycles or tuk-tuks. GB Auto, the largest importer, assembler and distributor of motorcycles and three-wheelers from the Indian maker Bajaj, announced last week that the decision would have an “adverse impact” on the company. Tuk-tuks and motorcycles contributed 18.9 per cent of GB Auto's total sales in Egypt and 18.4 per cent of its total profit in 2013, the highest margin items in the company. “GB Auto sold a cumulative total of 354,827 tuk-tuks from 2006 to the first nine months of 2013,” Noha Baraka, an industry analyst, told the Weekly. The company's after-sales revenue by line of business in the first nine months of 2013 had come to LE48.2 million for tuk-tuks and motorcycles, she said. “In terms of the macro-economic outlook, no one can determine the exact impact of the ban on the economy or the employment figures, since most tuk-tuks are not registered and their drivers do not pay taxes. As a result, we cannot be sure about the impact on the official labour figures, but assuming that two drivers work with the same vehicle the market may have created more than 700,000 jobs since 2006,” Baraka added. Last week, and immediately after the cabinet had first proposed a 12-month ban on the import of two- and three-wheelers, Bajaj Auto's shares lost 3.23 per cent of their value on the Bombay Stock Exchange. According to analysts, the decision could impact Bajaj the most, as its exports to Egypt formed about six per cent of its earnings in the third quarter of 2013-14. The company's export earnings helped Bajaj to cushion the blow on earnings growth in 2013-14 when its domestic volumes declined. Egypt constitutes a vital export market for the company and contributed 31 per cent of total three-wheeler exports and three per cent of two-wheeler exports in 2012-13. The State Commissioners Authority (SCA) also issued a non-binding decision to the courts to halt imports of tuk-tuks in January. The state judicial body explained that tuk-tuks were often used to commit crimes due to their small size and that they could be considered a potential threat to security.
