Household Appliances Division: Central’s decision makes importers lose confidence of foreign suppliers

4 مارس، 2022

Mohamed Helal, vice president of the Household Appliances Division at the Cairo Chamber of Commerce, said that the recent decisions taken by the Central Bank to limit imports to documentary credits only will cause importers to lose their customers abroad and will lead to higher prices and the exit of small importers from the market, and will negatively affect additional burdens on goods and products.

The Central Bank of Egypt decided to stop dealing with collection documents to implement all import operations and to switch entirely to documentary credits only.

Helal explained in press statements today that over the past years, the Egyptian industrial entities succeeded in gaining the confidence of foreign suppliers and building a bridge of positive communication with the world. Egypt, because it will shake the confidence of foreign factories in the ability of Egyptian importers (whether raw materials or products) to pay, and will cause them to deal with Egypt with new policies devoid of the facilities that Egypt has gained over the past years.

Helal explained that the difference in documentary credits is that the transaction is between the importer’s bank and the exporter’s bank, and the banks are the link between the exporter and the importer, as they withhold the price of the goods from the importer before the arrival of the goods, and then send them to the exporter’s bank after their arrival.

As for the method of collection documents, the interaction between the importer and the exporter is directly based on trust and old transactions, while the role of the bank is limited to transferring funds only.

He also denounced at the same time allowing foreign companies in Egypt that have offices in import and credit and excluding them from the decision, wondering where is the right of the importer and the local factory, and the government should have, before taking such decisions, refer to the competent authorities for import, whether it is the Importers Division or the General Federation of Chambers of Commerce Or the Federation of Industries, the business community and export councils.

He drew attention to the fact that suppliers abroad do not work with documentary credits, but with the normal collection system.

Mohamed Helal stressed that the costs of the import process in this way will cause great harm to importers, in addition to the rise in product prices as a result of all these costs. Shipping companies will be seriously affected as a result of this decision, which will undoubtedly reduce the volume of import operations.

He demanded that the industrial sector be excluded from the decision, especially since the state aims during the next stage to maximize its exports to reach $100 billion in exports by 2025, which requires facilities and grants the industrial sector several privileges, and the decision contradicts the state’s direction.

Six deputies from the House of Representatives and the Senate submitted requests for briefing to the government to cancel the decision, including Representative Magdy Al-Welily, a member of the House of Representatives, who submitted a request for a briefing to Counselor Hanafi Al-Jabali, Speaker of the House of Representatives, directed to the Prime Minister and the Minister of Trade and Industry, regarding the Central Bank’s decision to compel banks to stop Dealing with collection documents in import operations and relying only on documentary credits, and the subject of the briefing request stated: “A sudden decision was issued by the Central Bank of Egypt, to stop dealing with collection documents in the implementation of all import operations and to work with documentary credits only as of February 13, 2022, without consulting with the community business and money”.

He continued, “This decision affects import operations, especially strategic goods, and will reflect on the volume of production and provision of goods and may lead to an increase in many of them. It also did not take into account companies that do not have credit facilities with banks, especially small and medium enterprises, which represent the largest segment of industrial establishments.”

The Federation of Industries, the General Federation of Chambers of Commerce and the Egyptian Businessmen Association demanded, in a unified letter, Dr. Mostafa Madbouly, Prime Minister, to intervene in order to cancel the Central Bank’s decision to stop dealing with collection documents on all import operations.

The letter mentioned that the decision has negative repercussions on the industry and the rate of production. And the consumer, especially since the decision was not preceded by a societal dialogue to find out the full picture, whether in terms of import for the purpose of manufacturing or import for the purpose of trade.

He stated that the letter threatens to supply the industry with its needs of production requirements, intermediate goods and spare parts for production lines on a regular basis, which deepens the problem of supply chains that began in conjunction with the Corona pandemic, which in turn will reflect on the volume of production, the provision of goods and the rise in their prices, including negative consequences for the product And the consumer alike.

The letter noted that the decision will negatively affect the confidence of the foreign investor in the Egyptian industry and the Egyptian economy, as it contains a warning message of a defect in the