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Parliament Takes a Stand to Save “Cotton”. And Calls upon the Ministers of Agriculture, Irrigation, Business and Industry

The Parliament’s committee of  agriculture and irrigation decided to call upon the Ministers of  agriculture, business, industry and investment, in an emergency meeting on Thursday to discuss the cotton crop crisis and the reason behind the government’s  decline to buy it from farmers with the agreed upon price.   Representative Raef Timraz, the director of the committee for agriculture and irrigation, stated that the government abandoned the farmers and left them prey in the hands of investors who control the price of cotton according to their mood. He also added that the government has set the price of cotton in Lower Egypt governorates to be 2700 EGP and 2500 EGP in Upper Egypt governorates; however, that did not happen. Moreover, the farmer cannot sell the cotton for 2300 EGP in the first place, and the investor wants to buy with the lowest possible price to slaughter the farmers. Representative Timraz added addressing Al Watan newspaper that the committee has prepared a memo for Prime Minister Dr. Mostafa Madbouly regarding the decline of the government to receive the cotton crop from farmers and not fulfilling its promises to the farmers. He also noted that the committee scheduled an emergency meeting next Thursday and called upon the Ministers concerned with the issue, especially as it is an issue of national security. He continued to add that President Abdel Fattah El Sisi calls for the return of white gold and Egyptian cotton exports to restart factories, but the Government is doing the opposite. What is happening today would adversely affect cotton next season, as it will reduce the areas planted, making farmers plant rice since cotton was its alternative even if said cultivation is in violation of the law. Secretary of the Committee and Vice Mayor Montaser Othman, stated that the government had already set the price for a pound of cotton, and initially companies and factories received a portion of the crop; however, they later refused to receive the rest without giving any clear reasons. Additionally, the ministry of agriculture said that its role ends at harvest however, sales and anything else is the responsibility of the ministries of business and industry. Moreover, Othman questioned how the government could encourage the cultivation of cotton, and at the same time refuse to receive them from the farmers, causing reluctant cultivation in the next season as farmers return back to rice once again. He continued by saying that the government suffers from a contradiction in its actions, which will ruin the farmers as it sets the pricing yet tells the farmers “you’re on your own”. Moreover, the crisis cannot bear the silence and it must be solved immediately. The deputy of the agriculture committee stated that they have sent a memo to Madbouly regarding the refusal of the government to buy the crops and Othman added that the farmers will turn to the cultivation of rice instead.  Abdelhamid El Demerdash, representative, committee member and president of the agro-export Council, stated that the government has announced the price of cotton crop in January before plantation. Initially, there was a commitment to the farmers but then “no one is buying cotton; the crop cannot find anyone to buy it”. El Demerdash attributed the ongoing crisis between the government and the farmers to the dispute that occurred between the United States (US), the largest cotton producer, and China which imports their cotton. This dispute resulted in the reluctance of china to import the US’s cotton which led to the collapse of the cotton exchange. He explained that globally no one buys cotton with prices between 2200 and 2300 EGP. Unfortunately, the government set the price of cotton as a substitute for rice, and then backed out because of the low global price. He added that Egypt has 2.5 million pound of cotton and the government must pay around one billion EGP to farmers, because the farmer cannot bear the collapse of the cotton exchange. Moreover, next season farmers will reduce the 350, 000 acres cultivated to almost half.  Additionally, he added that “no one will plant cotton after that and the government must adhere to and fulfil their promises”. El Demerdash stressed the need for the intervention of the Prime Minister to resolve the crisis and that the government should bear responsibility, especially if the farmer has planted cotton based on the pricing of the government, and therefore should not be suddenly abandoned. Amr El Gohary, member of the economic committee, called for the rapid intervention to end the cotton crop crisis. He also stated that the government should bear full responsibility for the suffering of the farmers as it is not the first time for the government to set the price and refuse to receive the crops as this happened before with sugar cane, wheat and rice. Gohary added that it is unacceptable for the government to abandon the farmer who has spent all of his money on a crop after it has set its price.  

Ministers of Industry and Planning discuss improving industrial output and increasing export rates

Minister of Trade and Industry, Amr Nassar, held an extensive meeting with Dr. Hala Al-Saeed, Minister of Planning, Follow-up and Administrative Reform, to discuss means of boosting cooperation and coordination between the two ministries. This is to improve the indicators of industrial development and foreign trade of Egypt in the next phase and to improve the mechanisms to implement this in the short and medium term within the framework of “Egypt Vision 2030” Amr Nassar said on Friday that the meeting discussed the importance of the efforts of all ministries to create an investment climate in various sectors, especially in the industrial sector in order to attract more investments, whether local or foreign direct investment in the Egyptian market. He pointed out that the plan of the Ministry of Trade and Industry during the next phase is based mainly on the expansion of the establishment of more specialized industrial clusters and the activation of untapped efforts in the factories, which contributes to achieving an increase in the rates of industrial output and industrial exports at a sustainable growth rate and provide more jobs as well as support the state's efforts in structural reform at the level of all sector. Nassar stressed the keenness of the ministry to adopt an ambitious plan to increase Egyptian exports through activating support programs, refunding export burdens, guaranteeing export risks as well as providing financing mechanisms for export operation. He also pointed out that there is coordination and cooperation between the various ministries and business organizations concerned with the industrial and trade sectors to implement this plan. For her part, Dr. Hala Al-Saeed, Minister of Planning, Follow-up and Administrative Reform, stressed the keenness of the Ministry of Planning to cooperate with the Ministry of Trade and Industry. Such cooperation is aimed at solving all the challenges facing the growth of industrial output and industrial exports and increasing them at a sustainable rate especially, that the industrial sector is one of the most important engines of the national economy and other economic sectors. The sectors contribute to the gross domestic product with an annual growth rate of more than 17%, as well as the ability of this sector to provide a sustainable source of foreign exchange. In addition to the potential of the sector to achieve added value to the national economy as well as its interrelationship with other productive sectors  The minister pointed out that the Ministry of Planning strives to coordinate with all ministries to improve performance indicators and achieve targeted growth plans. This will positively affect the rates of growth of the national economy, noting that the Egyptian economy achieved a growth rate of 5.4% during the fiscal year 2017/2018. Al-Saeed clarified that the industrial sector plays an important role in the national economy, pointing out that the government relies on this sector to achieve a remarkable developmental boom in the coming period because it is a high-growth sector. The sector is expected to contribute with 20% of the growth in fiscal year 2018 /2019, with the contribution gradually increasing in the light of the improvement in the growth rate of the industrial sector.

Businessmen Association holds a meeting to discuss the draft Customs Law

The Import, Export and Customs Committees of the Egyptian Businessmen Association is planning to hold a meeting next Monday to discuss the vision of the business community concerning  the new customs draft law. This meeting will be held amid continuing anger over the recently approved amendments to the existing law. The latest amendments to the customs have caused   anger within the  community of Egyptian businessmen and exporters, and  they sent a memorandum to the Ministry of Finance with their requirements and the Ministry has promised to meet with them to discuss the amendment of the  customs draft law. The most important objections were against the replacement of the enterprise asset security, which has been in place since 2002 as per the Prime Minister's Decision No. 1635 of 2002. Such replacement   with a bank guarantee is unrealistic since it is difficult  for the bank to grant sufficient credit to cover such guarantees with very large amounts of money.   Accordingly, this will lead to the increase of the cost of exports as it will lose one of the most competitive advantages in the overseas markets.  This will  also add more obstacles to businesses, which is contrary to the vision of the political leadership regarding supporting companies to work with its maximum capacities.   Secondly, imposing severe penalties and enforcing strict punishments and imprisonment against the Egyptian investors is a setback that will create a climate of uncertainty, which will be negatively reflected on the Egyptian economy and will directly hinder investments and exports. It also comes as a contradiction to all the procedures that the Government is following in order to encourage investment and exports. Thirdly, the exaggeration on the part of the competent entities to apply the percentage related to wear and tear is not in line with the scientific and international standards and is also unpractical which at the end makes the Egyptian exporter prone to penalties and become a suspect of smuggling.       Fourth, the Egyptian business community and exporters emphasize the fact that the decision-makers should seek the  participation of  the private sector, which represents the main driver for  development with a share that accounts to more than 70% of the size of Egypt's economy. The private sector’s vision must be communicated before making any decisions or issuing any economic legislation that affect the environment of the Egyptian economy. Fifth, the duration of the temporary grace period should not be changed and the current two years period should be maintained  at two years, as there is no need to  change it to   be one year. This reduction in the duration will lead to the default on the part of the exporters and will increase their costs as it will be difficult for them to commit to that period.    A  businessman who owns a large size business has  made some remarks about the temporary release system and the rules governing its work. He stated that the customs officers who implement   the temporary release system think that it is a system for collection and for increasing of the government revenue while it should be viewed as a system for developing the national economy, increasing production and creating work opportunities.  It   it should be seen as a system that aims to develop  the national economy, increase production, create job opportunities and increase exports. There  are currently more than 5,000 factories  that operate according to this system and account  for more than 70% of the exports.   He has also addressed some of the points that constitute  obstacles and require legislative amendments. The first one is Article 98 which criminalized the disposition of temporary release goods without obtaining prior approval from the Customs Department. This article will  expose  the  owners of operating factories to prison in the event of an unintentional deficit or low rates of use compared to those mentioned in the      decisions of the Industrial Control Authority. This will also impose the companies to sudden inspections in order to verify   stocks without  having any rules to govern the work of these committees, especially that its members  have little experience and they only think of increasing collections and aim at finding faults.   Second, reducing the temporary release period to one year and the possibility of extending it to another year. If this period ends without re-exporting the goods, the taxes and customs duties shall be due. Since the one-year period is not enough, this will lead to reducing the imports in order to avoid the limited period available for re-export. Thus the stock of raw materials will be reduced and the companies will be unable to meet the urgent export requests especially that the request for the import of raw materials requires a long period of time  for signing the contract, transferring the money, shipping and then releasing the materials and  then the preparation for manufacturing. This leads to the rejection of export requests due to the inability to deliver the products on time.   Third, the decisions related the rates of use and the percentages of wear and tear issued by the concerned authorities and implemented by the Customs Department are questionable as they include a lot of discrepancies and their usage is not fair for all companies.  In addition, the entities in charge of implementation do not set standard rules to be applied to all companies.  Therefore, the law requires the Customs Department to co-operate with the concerned authorities and to use international rates to determine the rates of usage, and wear and tear percentages   and applying them to all companies in order to achieve equity among them and indirect and legally covered smuggling. Fourth, if the companies have remaining stocks that they could  not re-export and want to settle them and pay the taxes, customs duties and the additional tax, they will be faced with the obstacle of fulfilling the rules of exemptions of imports. This is due to the fact that the banks refuse to issue form no. 4 which is required by the customs in addition to fulfilling the requirements related to the materials outside the customs offices. This is in addition to the field inspection of the companies’ warehouses by the customs’ committees, which require time and effort. Failure to fulfill this requirement will entail penalties that equal the value of goods.

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