Tuesday, 26 October 2021 05:57 GMT

Shipping costs hamper access to Mercosur for Egypt

(MENAFN- Brazil-Arab News Agency (ANBA))

Cairo – Sherif El Sayad (pictured above), chairman of the Export Council for Engineering Industries in Egypt, said that engineering products of the country are remarkably well placed in European and Gulf markets and that the industry is looking to expand to Africa, as well as benefiting from the free trade agreement between Egypt and Mercosur countries. Egypt has had a free trade agreement with the South American bloc since 2017.

El Sayad explained that the Egyptian engineering industry managed to meet the high demand from the international market, without failing to meet the Egyptian domestic needs and that Egypt has a large competitive edge in electric and household appliances industries.

Chairman of the Export Council for Engineering Industries in Egypt talked to ANBA

The engineer underscored the importance of reducing production costs, addressing customs issues, attracting domestic and foreign investments for complementary industries and fostering the national industry.

In an interview with ANBA, El Sayad praised the agreement with Mercosur and its significant role in encouraging cooperation and trade between Egypt and Latin American countries, particularly Brazil and Argentina, which have a strong economic potential. He said that a mutual benefit can be reached.

The Egyptian explained that Egypt-Mercosur ties are very likely to be strengthened, but some barriers must be overcome to facilitate the trade and investment flow and meet the goals of the agreement.“The main obstacle is the high transportation costs due to the long distance between Cairo and Latin American countries, particularly with no shipping lanes or significant trade volumes. Thus, aiming to build a real commercial and investment trade, addressing this issue is crucial,” El Sayad said.

Engineering exports from Egypt stepped up by 44% year to date through October, to nearly USD 2 billion.“Industry and exports are the drives for any economy aiming to grow and progress, as the largest countries around the world reached their prosperity by emphasizing the industrial sector,” the engineer said on the results of foreign sales.

Engineering exports from Egypt in USD millions

He explained that the increased logistics and raw material costs in China have benefited Egyptian exports in several markets. According to him, considering Africa, Southern Europe and the Gulf, Egyptian competitors are only China and Turkey, with China accounting for 70% of these markets.

But when the transport workers and raw materials strike hit China, the country become less competitive, thus allowing Egypt to become a strong exporter in this landscape, with a large potential to serve the needs of these markets, the engineer said.

El Sayad emphasized the potential of the Egyptian industry and its conditions to remain competitive as it has managed to meet the needs of the domestic market and increased exports by 44%.

Prospects in exports to Mercosur

El Sayad said that the Council is studying the export opportunities for the Mercosur markets starting with household appliances, lamps and televisions, whose products are flagships of the Egyptian market as they are exported to the European Union and Gulf countries, as well as the United Kingdom and the United States.

But due to high freight costs, household appliances like refrigerators, washing machines and stoves, which would take up a large share, will be dropped for now. He said that engineering products from Egypt are already sold in Latin American countries, with Argentina being the country that saw a growth in imports of these products this year.

Brazil has a strong industry

Top ten engineering products exported from Egypt in 2021

On the Brazilian market, the Council's chair said that Brazil is a strong competitor in engineering products. While preserving the traditional industries, the country is considered one of the most industrialized countries, with low production costs due to the availability of the workforce, being able to conduct its industry beyond the borders and creating basis around the world.

He said that the Brazilian company Embraco is considered one of the world's top builders of compressors for cooling systems, besides producing sealed compressors, condensing units and hermetic units for domestic and commercial use.

In Egypt

Top ten engineering products imported by Egypt in 2021

The chairman of the Export Council for Engineering Industries in Egypt stressed that the Egyptian government is working hard to strengthen the local industry, given the country's reliance on most production and raw material components, which leads to expenses with freight, customs and storage, thus resulting in an increased final production cost.

He explained that the goal of strengthening local industrialization is encouraging foreign investors to manufacture strategic and essential goods in Egypt, which are components and production supplies with no local alternative. Thus, local production of these products would be available instead of having to import them, which would reduce the national expenditure with foreign currency and would meet local needs.


On Egypt's good reputation in the foreign market, El Sayad said that the UK has increased large-scale imports of television screens, as well as household appliances, via international companies based in Egypt. The most viable solution to expand Egyptian exports would be focusing on the Gulf region, as well as Africa and Northern Europe countries, the engineer said.

The chairman of the Export Council for Engineering Industries in Egypt underscored the importance of the presence of the office of the Arab Brazilian Chamber of Commerce in Cairo, stressing that this is a right move for boosting trade and solving barriers faced by investors from both countries. The office was launched in late September with the presence of Brazil's vice president Hamilton Mourão.

He expects that the office work for stepping up trade and investment cooperation to meet the interests of both countries, as well as supplying viability studies and presenting the businesspeople with available investment opportunities, according to the needs and capabilities of each, as well as the advantages of investing in Egypt and Brazil.

Translated by Guilherme Miranda


The post Shipping costs hamper access to Mercosur for Egypt appeared first on Agência de Notícias Brasil-Árabe .


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