CAIRO - 1 September 2022: Egypt’s Ministry of Finance issued earlier this week new decisions aimed at facilitating import procedures in ports, and easing the burdens of importers who face difficulty in providing hard currency to release goods due to the application of the documentary credits system.
The decisions included allowing shipping agencies to transport imported goods from ports to warehouses and dry ports outside customs ports, giving a period of 4 months for food commodities before converting them to “disused,” and 6 months for non-food products.
The ministry noted that the most important decisions were to stop the collection of customs fines from those who are late in completing customs procedures due to the documents required from the relevant authorities, and to release within days of any shipments that completed customs procedures and are waiting for Form (4) to finance imports in coordination with the Central Bank of Egypt and the Ministry of Trade and Industry.
Form 4 is the most important paper in the import process, and it is issued by banks because it is a pledge to pay the foreign supplier, which enables the importer to receive his goods and merchandise from customs and not be subjected to the seizure of goods in customs.
Many manufacturers, companies and businessmen were affected by the decision to work with documentary credits, and several businessmen and investor associations sent letters to the cabinet and the Central Bank in order to reverse this decision.
The Central Bank of Egypt (CBE) had stopped dealing with collection documents in the implementation of all import operations, and worked with “documentary credits” only.
In documentary credits, the transaction is between the importer’s bank and the exporter’s bank, and the banks are a key player in the process, while the dealing in collection documents is between the importer and exporter directly and based on an old trust between them in dealing, where the role of the bank is only an intermediary, and documentary credits require larger amounts, and the process takes longer compared to collection documents.
Last May, Egypt excluded production requirements and raw materials from dealing with documentary credits in import operations, to re-work the collection documents, in a step that would push the wheel of production in factories again, after some of them stopped in the last period.
Egyptian President Abdel Fatah El-Sisi directed, at the time, to exclude production requirements and raw materials from the procedures that were recently applied to the import process, by returning to the old system through "collection documents."
Meanwhile, two government sources who spoke with Al-Sharq announced that the CBE and the Ministry of Trade and Industry began consultations regarding “releasing imported shipments that did not obtain Form 4 on the condition that they issue a bank guarantee for a period of 6 months.
In the event that the CBE and the Ministry of Trade and Industry reach a final agreement in this regard, this means the exit of all goods and commodities to the markets, with the banks undertaking to provide the currency to pay the value of the goods within six months.