While facilitating customs procedures has had a positive impact on local manufacturers, some importers are still voicing complaints. Mona El-Fiqi reports The customs regime has seen sweeping changes in the past seven months. The tariff reform announced in September 2004 was a strong start, yet some problems persist. The government hopes that any lingering issues will be dealt with in the process of the comprehensive development of the Customs Authority. The extent of the customs reforms already carried out was presented by the chairman of the Customs Authority at a seminar organised by the American Chamber of Commerce in Cairo. "No economic reform can be achieved without a well-developed customs system since importers, exporters and even consumers are affected by customs procedures," said Galal Abul-Fetouh in his opening remarks. According to Abul-Fetouh, the Customs Authority used to concentrate its efforts towards collecting duties and preventing tariff evasion but now the priorities have changed. "Our ultimate goal is to save time and gain trust," added Abul-Fetouh. In order to achieve this goal, the authorities issued decrees to facilitate customs procedures and are considering further amendments of the current customs law. To provide a greater flow for imports and exports and to help the local industry meet World Trade Organisation (WTO) commitments, in September 2004 the government decided to cut customs duties drastically, reduce tariff bands from 27 to six items and cancel custom service fees. Moreover, the Customs Authority succeeded in reducing the period goods have to wait in storage before they are released, from 28 days to only two days. "This means saving importers' and exporters' time and money," Abul- Fetouh said. The long wait in storage works out to an average of a one per cent increase per day in the goods' cost. Cutting down the storage duration has meant a 15 per cent reduction in import prices and a 17 per cent increase in the value of exports. "One of the important reasons that drove the government to reduce tariffs was to provide cheaper consumers prices," said Abul-Fetouh. Abul-Fetouh admitted that the customs system was in dire need of modernisation. Importers and exporters were previously obliged to undergo lengthy bureaucratic procedures, going through a gantlet of 28 separate approvals. "Now with the one-stop shop in place, only two approvals are required," said Abul-Fetouh. To improve its customs service, the Customs Authority will open several model customs outlets throughout the country. "In the next two weeks, three of these developed customs outlets will be opened, one in Suez and two in Alexandria," Abul-Fetouh added. In the meantime, the Ministry of Finance is considering some amendments to the current customs Law 66/1963, in order to reflect the economic developments of the past four decades. The current tariff law gives the chairman of the Customs Authority the right to determine the fine imposed on tariffs violators, which ranges from 10 to 50 per cent of the shipment's value. This means that some dealers might pay 50 per cent while others get off the hook paying only 10 per cent if the official is more lenient. To overcome this element of arbitrariness, articles 115 and 116 in the current customs law are expected to be changed to reduce the fine to a fixed rate of 10 per cent for commercial cases and 15 per cent for other cases. A few weeks ago, the Customs Authority announced that calculation of the Egyptian pound equivalent customs charged on imports is based on the value of the Egyptian pound announced by the Central Bank of Egypt (CBE) in the day before the goods' entry. The new regulations replaced the scheme under which the figure was calculated on the basis of the previous month's average exchange rate. Businessmen are pleased by the improvements in the customs procedures. "The customs system is no longer an embodiment of our business so we welcome the new customs regulations. On the contrary it has an important role to play in the economic development," said Khaled Hamza, chairman of the Customs and Imports Division at the Egyptian Business Association. The improvement of the customs system includes a change in the attitude of customs officials themselves. Hamza explained that in the past businessmen used to encounter problems with customs officials who refused to approve the invoice price of imports and preferred to re-value the price with unjustified reasons. But the story is different now. According to Hamza, the customs officials usually accept the invoice price of imports and even if they refuse, they have to record a logical reason for their refusal. Moreover, Hamza said that by computerising the customs system, the flow of goods become easier. "We hope that the improvements of tariff procedures continue so that goods can be released from customs outlets in a few hours," Hamza added. There will be no more complicated checking procedures according to Hamza, since the Customs Authority decided that the new developed outlets will apply a time-saving risk management policy. This means that customs officials do not have to do a complete check for the goods of manufacturers who have been importing the same items on a regular basis. While these customs reforms are being viewed positively by businessmen, the application of the customs reduction was followed by some distortions. Ihab El-Meseri, chairman of the Imports Committee at the Federation of Egyptian Industries said that following the application of the customs reduction a few months ago, business associations presented complaints to the Customs Authority. While 90 per cent of those distortions have been overcome, some problems linger. Hamdi El-Leithi, an importer, complained that when manufacturers of pharmaceuticals import materials needed for pharmaceuticals such as perfumed oils and plastic bags, they pay average duties of 12 to 20 per cent in addition to 10 per cent taxes. El-Leithi added that pharmaceuticals manufacturers can not add these tariffs and taxes to the product's cost price since the Ministry of Health determines a fixed price for all pharmaceutical products. To overcome such tariff distortions, Abul-Fetouh suggested that this problem be presented to the Ministry of Health and then the Technical Tariffs Committee and the Supreme Council for Tariffs.
