Export duty hiked EGYPT's Ministry of Trade and Industry has imposed a levy on exporting scrap fabrics in the amount of LE3,500 per ton in a bid to protect the local industry. Minister of Trade Tarek Qabil said the decision aimed at protecting the local textiles industry and mitigating the negative consequences of a shortage in scrap fabrics in the local market as a result of increasing exports. The decision represents a hike in the levy by 40 per cent starting in January 2016 and up from the current LE2,500, according to a ministerial statement released on Sunday. Qabil said that exports of scrap fabrics had more than tripled in 2015. The difference between export prices and local prices explained the rise, he said. A ton of scrap fabric could be exported in 2015 for around LE9,780 after export tax, but sold locally at only LE3,700. Al-Sisi refuses budget PRESIDENT Abdel-Fattah Al-Sisi is said to have refused to endorse the 2014/2015 budget, with a government official telling the daily Arabic newspaper Al-Youm Al-Sabei that the president had refused to sign off on the balance sheet that had been submitted to him and had returned it to the Ministry of Finance for revision. The official said the refusal had come hard on the heels of observations made by the State Audit Authority (SAA), which had spotted a number of mistakes in the document prepared by the ministry. A source at the SAA told the newspaper that the errors related to payments made to the Egyptian General Petroleum Corporation (EGPC) worth some LE16.8 billion in violation of the law. These also made the budget deficit appear lower than it should be. According to the Ministry of Finance's balance sheet, the budget deficit reached LE279.4 billion last year, representing 11.5 per cent of GDP whereas the target was 10 per cent. The SAA also found errors in increases of some allocations in the budget by the ministry in the absence of a law authorising the additional allocations. According to the law, the Ministry of Finance should seek the approval of the legislative authority in the case of increasing allocations. However, in this case it had not done so. Supporting trade with Africa THE AFRICAN Export-Import Bank (AFREXIM) will provide Egypt with $500 million to support trade between Egypt and the bank's African member states, announced Tarek Qabil, the minister of industry and foreign trade, last week. The programme is designed to help support Egyptian companies making exports to Africa, including in the provision of funds, insurance and guarantees. It will further provide payment guarantees for Egyptian importers from the bank's member countries and fund investments for Egyptians in member countries. The bank could double the funding to $1 billion if the first tranche proved successful, Benedict Oramah, the head of the bank, was quoted as saying in a press release. Qabil said in a press statement that the funding represented a major opportunity for exporters and investors interested in the African market to increase their exports and investments. The Cairo-based Bank had proposed in November to arrange a facility of up to $1 billion, underwriting $500 million of the amount, for the Central Bank of Egypt to improve foreign currency liquidity. Egypt is facing a foreign currency crunch as main foreign currency earners like tourism and foreign direct investment have been left reeling from political instability following the 25 January Revolution. Suez Canal Economic Zone EFFORTS are underway to attract investors to the New Suez Canal Area Development Project (SCADP), which is subject to zero customs rates, Ahmed Darwish, head of the Authority formed to oversee the management of the zone, told members of the American Chamber of Commerce in Cairo recently. He added that if a project within the zone was exporting to Egypt, it would only pay customs on materials not the value added. Exports to Egypt from elsewhere are subject to customs on the whole product. The SCADP covers an area of over 600 square km and includes six ports within its boundaries. The target is to develop it into a logistics hub and industrial centre for the new Egypt. Darwish, who has been in post for around one month, has said he wants to set up a conducive environment for investors to work in and to focus on establishing the regulations that will govern all aspects of the investment cycle, from registration and licensing to arbitration and dispute settlement. “This is what will keep the relationship with investors smooth,” he said, adding that the legal structure of the authority he heads is “flexible” and that decision-making has deliberately been kept in a single place. “The authority of ministers is delegated to the board of directors of the authority,” he said, adding that “if we receive a request for a project, we will study it ourselves and approve it without having to send it back to the cabinet.” The law also allows the authority to work as an investor or to partner with other investors to establish projects. “Going into partnerships gives more confidence to investors,” Darwish said, promising that he would also commission a study to look into the effect of the 22.5 per cent tax that will be collected from projects in the zone. He believes that lower taxes are needed if the zone is to compete with similar economic zones in Dubai, Singapore or Hong Kong. Before the law governing the zone was amended, it subjected projects to a 10 per cent tax but now projects are liable to the same tax rate throughout Egypt.
