Matti Beshay, Head of the Trade Committee at the Importers Division of the Federation of Egyptian Chambers of Commerce (FEDCOC), has issued a stark warning about the dangers posed by smuggling in Egypt's mobile industry. He highlighted that smuggling threatens investments worth EGP 4.5bn, which support approximately 2,050 jobs in the sector. Several international smartphone manufacturers, including Samsung, Xiaomi, Vivo, Infinix, Nokia, and Micromax, are involved in local production in Egypt. These companies have varying production capacities aimed at localizing mobile phone manufacturing. However, Beshay emphasized that smuggling undermines these efforts by introducing foreign goods into the market without paying customs duties, making them artificially cheaper for consumers. This unfair competition discourages consumers from purchasing locally produced phones, resulting in lower demand for domestic products, which leads to layoffs and rising unemployment. Beshay further pointed out that taxes and customs duties are crucial sources of revenue for Egypt's state treasury. Smuggling erodes this revenue, which negatively impacts the funding of essential development projects, both service-oriented and productive. He warned that smuggling also creates an unfavorable environment for both local and foreign investment. For foreign investors in particular, understanding the level of legal protection for their products is a key consideration when entering any market. Beshay highlighted the broader implications of smuggling across various sectors in Egypt. For example, in the tobacco industry, smuggling accounts for an estimated 20-30% of the market, according to a World Bank report. The Central Agency for Public Mobilization and Statistics also estimates that around 4.5 billion cigarettes are smuggled annually into Egypt. He also noted that while Egypt is the second-largest chocolate manufacturer in Africa, with factories for global brands like Nestlé, Cadbury, and Mars, these companies often complain about the ongoing smuggling of products into the country. Similarly, smuggling is affecting Egypt's cosmetics sector, with the Export Council for Medical Industries estimating the value of the parallel market at EGP 1.2bn, including smuggled or illicitly manufactured cosmetics worth around EGP 100m. The auto spare parts market has similarly been impacted by smuggling, prompting the Automotive Division to request that the Ministry of Investment and Foreign Trade take action to prevent the entry of non-compliant or smuggled car parts. In response, the Ministry of Finance, through the Customs Authority, issued a directive prohibiting the import of any automotive parts, whether new or used, that are not sourced from the country of origin or from recognized brand centers. Beshay's comments underscore the growing challenges posed by smuggling in Egypt and its potential to undermine the country's industrial base and economic growth.
