The return of Mercedes to Egypt .. State cheered and the company reap profits

Mahmoud Siddiq - Cairo

Less than four years was enough to turn statements by officials and businessmen on the system on the significance of the existence of Mercedes company to manufacture cars in Egypt and its usefulness and its implications to the contrary completely.

When the German company decided to leave Egypt during the first quarter of 2015, Minister of Economy and Trade Mounir Fakhri Abdel Nour came out to say that "the withdrawal of Mercedes from the Egyptian market is a decision for the company and does not represent a serious risk to the car market in Egypt."

The financial expert and businessman Hassan Heikal welcomed the decision by Mercedes to leave Egypt, describing it as a good news, saying that it is not right to reduce customs on cars manufactured in Germany and assembled in Egypt.

After the announcement of the company's intention to return to production from within Egypt, statements were made by government officials ranging from President Abdel Fattah al-Sisi, parliamentarians, media and industry to describe the decision as a certificate of guarantee for the Egyptian economy and a clear indication of his recovery and launch to the world and step on the road to Egypt to be a regional center for the automotive industry, A parliamentary deputy said.

What is the meaning of this step, and what are their implications? Does it really reflect the improvement of the investment climate, Sissi said, or is it related to other factors?

Expected exit
Daimler AG and German EGA announced early in 2015 that the assembly of cars in the Egyptian domestic market would be discontinued by May of that year because of its economic inefficiency. The company sold its stake in the Egyptian German company - Minority - to the national company of cars "NATCO".

But auto experts have backed the decision to raise the company's tariff to 50 percent, and Mercedes will receive other offers from Algeria and South Africa, in addition to the company's objection to the investment climate at the time.

Mercedes sole winner
"We have to differentiate between Mercedes before its departure from Egypt in 2015 and its decision issued a few days ago. Mercedes closed all its tax and insurance files inside Egypt four years ago. It was working according to the investment law, which failed miserably to attract investments," said an economist who asked not to be named. , And what the system and the media is now hoping for is a company that will build a new factory on the axis of development of the Suez Canal according to a law of a special nature.

"We do not know exactly the features of the agreement that was made, nor the exemptions or benefits that the company got from the state," he told Al Jazeera.net.

He asked about the site of the news from the President of the Arab industrialization Abdel Moneim Al-Taras that Egypt is on its way to produce a local car.

The expert expressed his astonishment at this tirade that fills the media and speaks to the speakers about the fact that the decision reflects international confidence in the Egyptian economy. The company that withdrew from the Egyptian market for the high cost of its assembly will not return unless it has attractive advantages and tax and customs facilities Make the giant company decide to return, especially since Mercedes has a large factory in South Africa.

For domestic consumption
The company will produce its cars classified as luxury cars and special segments, and will be re-exported abroad and earn profits to go to the parent company.

He asked: What will the state gain from all this besides the employment of no more than 500 workers, without the benefit of producing the luxury models that can not be purchased by the vast majority of Egyptians who want to purchase cars.

He also asked the expert: Is it right that the Egyptians pay the cost of processing the Suez Canal area of ​​facilities and other loans to pay the benefits burdens the Egyptian economy and the burden and do not benefit non-foreign companies, stressing his belief that all the hype and the depreciation are only for domestic consumption no more.

While the car expert Mohammed Sheta that the return of Mercedes is a positive step calculated for the government, and a good indicator of investment, pointing to the announcement of the German company that it will help Egypt in the production of electric cars and self-driving, and everyone is waiting for the company announced the detailed plans to invest in Egypt at the level of manufacturing or Export in the coming months.

Khalid al-Shafei, the economic expert, considered the decision to return Mercedes as proof of changing the company's future plans in light of the drop in demand for cars, especially those produced by them, for higher prices.

He said that the company has found in Egypt structural changes that give it a comparative advantage in manufacturing and going to the African market through it.

Car industry numbers
Mercedes's investments in Egypt until its withdrawal were 2 billion pounds (about 113 million dollars), and since 1997 it has produced about 4,000 cars a year.

The percentage of domestic production continued to decline until this year reached about 1000 local cars and the rest is imported, and employs 550 workers.

The Egyptian market currently has about 170 companies with investments estimated at $ 3 billion, of which only 19 companies are manufacturing and assembling cars, accounting for more than half of investments.

The local market consumption in 2017 amounted to about 100,000 cars, half of which was produced in Egypt.

Official statistics estimated exports of the automotive sector and feeder industries, which includes 12,000 workers, at 700 million dollars.