Local manufacturers are debating the impact customs tariff cuts will have on their business, reports Mona El-Fiqi Consumers will soon be enjoying the benefits of the recent reduction in customs tariffs, with manufacturers of foodstuffs, furniture, durable goods, air-conditioners and vehicles all announcing that the prices of their products are going down. Two weeks ago, a decree was issued reducing customs tariffs from an average of 14 per cent to just nine per cent. Local manufacturers welcomed the government's decision, with a remarkable number of producers in different sectors announcing that prices of local products will be reduced in the next few weeks. These reductions represent an attempt by local producers to guarantee that they will still be able to compete with imported goods, the prices of which are also going down thanks to the tariff cuts. Among the products affected by the decree were automotive spare parts (where duties were cut from 23 and 33 per cent to 12 and 5 per cent), imported cement (down from 37 to 22 per cent), fertilisers (down from 33 and 13 per cent to just two per cent), beans and tea (down from 33 to five per cent), and sugar (down from five to two per cent). Consumers, however, remained sceptical. Accountant Mohamed Saleh said he did not expect any prices to go down. Since the "tariffs will have a clear positive impact on some products and a negative impact on others," he said, manufacturers whose products will remain competitively priced in comparison to their imported counterparts will have no incentive to bring their prices down. Federation of Egyptian Industries (FEI) Chairman Galal El-Zorba was more confident that the majority of local manufacturers would be bringing their prices down. The FEI held a meeting last week with some 200 members of 15 different industrial chambers to discuss the impact the new tariffs might have on their businesses. El-Zorba said some industrial sectors had already decided to reduce their prices. Foodstuffs, he said, would go down by five to seven per cent, while furniture products might experience a 10 per cent price drop. The customs reduction decision, he said, would also help to develop production, by raising the competitiveness of local products, boosting exports and providing more job opportunities. Those industrial sectors, meanwhile, that are expecting to be negatively affected by the decree have decided to form a committee composed of Customs Authority officials, local producers, and members of the FEI to discuss the impact the new customs duties might have on different industries. El-Zorba said things would become clearer in that regard within the next two weeks; based on that clarity regarding the impact the customs reductions might have on each sector, he said, an annex to the new decree might be recommended to handle the negative impact on some industries. Customs Authority Chairman Mahfouz El- Argawi said technical issues related to the application of the new tariff cuts might also arise. These, along with any recommendations by the FEI, would be carefully examined by the authority and presented to the finance minister. The local paper industry is one sector that expects to be hard hit. Printing Chamber Chairman Ahmed Atef said the new decree actually raised customs duties on certain kinds of paper from 10 to 12 per cent, which will have a negative impact on the consumer price for books and notebooks. Atef argued that the new customs system should give both locally produced goods and imports a fair chance. "Imposing a five per cent duty on a printed book while raw paper is levied at 12 per cent will negatively affect many local publishers." Slashing customs duties on imported vehicles will also have a negative impact on local automotive producers. FEI's Engineering Industries Chamber Chairman Farid Hassanein said that while the new tariff cuts help resolve the vast majority of local manufacturers' customs-related problems, it would also mean greater hardships for vehicle and automotive component manufacturers. "The customs duties imposed on 14 components needed for the production of vehicles should be reduced in order to help producers compete with imports," Hassanein said. On the administrative level, businessmen complained that they still have problems with customs officials. Sameh Noseir of the FEI's IT Chamber said that although all imports of IT spare parts and technical components have been exempted from duties, customs officials are refusing to apply the new system on shipments of CDs. El-Argawi's response was that the authority would soon begin a series of training courses for its officials and employees in order to avoid these kinds of problems in the future. Representing producers and importers, Said Kotb, a member of the FEI's Leather Industries Chamber, said he hoped the new system would eventually be better streamlined to help eliminate cases of dual taxation and over-valuation of duties.
