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From what I understand about the new import restrictions that wi…

Posted on January 8, 2016 by Shahid Bolsen

From what I understand about the new import restrictions that will begin implementation next month, there is not really a “ban” on foreign goods, but the government is imposing a set of conditions that will make it more difficult for smaller importers to bring goods into the country.

Generally speaking, import restrictions are protectionist measures, and they make sense for a developing economy to safeguard local industry.

The restrictions being imposed in February, however, as I understand them, may tend to undermine smaller companies in Egypt, as conditions for import will only easily be met by larger firms.

This will certainly decrease the supply of imported goods in the domestic market, which will inevitably raise prices.

It is also not clear whether these restrictions will affect the transfer of goods that take place internally within companies, and that is important. Roughly 40% of what is called “global trade” actually takes place within corporations; the movement of goods from one subsidiary to another.

It is also not clear whether imported goods will be affected that are not subsequently sold in the Egyptian market, but simply pass through Egypt for distribution elsewhere in the region.

What I would expect from the new regulations is that larger companies, subsidiaries of multinational corporations, and companies owned by the army, will benefit from decreased competition and higher market prices.

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