Workers in the automotive sector welcomed the decision of the Ministry of Finance to fix the price of the customs US dollar (the dollar’s price upon which custom fees are calculated) at EGP 18.5 until the beginning of March, considering the decision a step in the right direction to calm down the market.
Head of Brilliance Bavarian Auto in Egypt Khaled Saad said that although the customs tariff is high, the decision serves all the workers in the sector, especially importers.
He added that the decision enables them to continue their importing operations in accordance to studied plans. The most important factor is that the price is fixed for a time, unlike the customs value.
Saad expected the effects of the Egyptian pound’s flotation to emerge in the near future, considering it likely that the automotive market’s situation will improve in six months’ time.
He asked to be patient with the price increase, mentioning the request by President Abdel Fattah Al-Sisi asking citizens to be patient with the current situation for six months.
Saad said that July will witness the end of the difficult situation of the automotive sector in particular and all sectors in general.
Member of the automotive division at the Federation of Egyptian Chambers of Commerce and head of El-Saba Automotive Alaa El-Saba welcomed the decision to fix the customs dollar, adding that fixing it at EGP 18.5 is a fair decision.
He added that the businesspeople, especially those responsible for exporting, requested to fix it at EGP 13-15; however, decreasing the price of the customs dollar below the actual dollar’s price will lead to the state losing its right.
El-Sabaa considered the decision a step to fix the cost on importers for month and a half, and that the price will change in March, in accordance to the fair value of the average US dollar’s exchange rate in February.
He said also that the decision to fix the value of the customs tariff will achieve justice among importers, because those importers who used to delay receiving their shipments for a period of two or three days used to pay different fees than their competitors, which the decision eliminated.
According to honorary chairperson of the Automotive Marketing Information Council (AMIC) Raafat Masrouga, the decision closes the door of some distributors and traders’ corruption and will also contribute to the stability of cars’ prices.
He also said that the decision will enable the agents to decide on prices in a better manner. Although the prices may not decrease, they will at least not witness an increase as long as the customs dollar is fixed.
Masrouga believes that it would have been better if the price of the customs dollar had been fixed for three or six months instead of only month and a half.
He also believes that cars’ prices will decrease in the next period, expecting the US dollar’s exchange rate to decrease, which will create a state of semi-stability.
Head of B Auto for car trading Ahmed Magdy said that ever since the flotation, he has been waiting for the decision to fix the price of the customs dollar which caused confusion in many sectors, not only in the automotive one.
Magdy attributed the instability in the cars’ prices recently to the consecutive changes in the custom tariff before the decision of fixing the price of the customs dollar.
Head of El-Ezz Motors car shop Ahmed El-Goukh also welcomed the decision, expecting the dollar’s price to decrease in the coming period.
He added that the dollar exceeded EGP 18 as result of what he described as “the bad management of the economy throughout the past years, for which the current government is paying the price”.
El-Goukh said that the continuation of Al-Sisi’s efforts in national projects, the situation is expected to stabilise, especially with the beginning of 2018 after these projects bear fruit.
According to El-Goukh, the decision will have a good effect on investors and will serve the expected investments in the Suez Canal area.
Also, the decision to fix the price of the customs dollar paves the way for the dream of price stability among the workers in the sector, after the instability the market had witnessed in the past months.
Last week, the minister of finance issued decision No. 19 of 2017, fixing the price of the customs dollar, upon which the customs and taxes on imports will be calculated until the end of the next month. The minister also decided to determine a new tariff for March, based on the average US dollar price in February.
According to a statement by the Egyptian Customs Authority, the decision is pursuant to the provision of Article 22 of the Customs Law, as the value of imported goods will be calculated on an exchange rate of EGP 18.5 to the US dollar.
The authority said that starting from 1 March, the value of imported goods will be determined on a monthly basis, based on the average exchange rates of currencies, as announced by the Central Bank of Egypt last month.
The decision came in response to the requests of the workers in the industrial, commercial, and importing fields to fix the price of the customs dollar to stabilise prices.
A number of car agents had stopped paying custom fees of imported cars and made the distributors pay them in exchange for determining the cars’ prices.
The agents had made the decision after the price of the customs dollar reached EGP 17.82, compared to EGP 8.80 before the flotation decision. The companies pay the cars’ prices in US dollars, and after they reach the Egyptian ports, the distributors or traders pay the custom fees.
As a result, the distributors and traders were involved as partners in importing and pricing cars, as the agents paid the cost of importing the cars from the parent company until they reached Egyptian ports.