Industry-Specific Reforms > Customs Clearance

  • Customs clearance is a very lengthy and redundant process in Egypt. Whereas customs processing time does not exceed two days in neighboring countries, such as Turkey and the United Arab Emirates, it ranges from two to five weeks in Egypt.

According to the World Bank Group's Doing Business 2018 Report:

  • The customs clearance process for exports in Egypt consumes 136 hours at a cost of $100 per container, whereas it consumes 37 hours, 20 hours, and 33 hours, in Morocco, Turkey, and UAE respectively; in OECD countries, the processes consume about 2 hours at a cost of $35.4 per container.
  • The release of imported shipments takes up to 505 hours at a cost of $1,554 per container in Egypt. In contrast, the cost per container reaches $344 in Morocco, and $126 and $961 in Turkey and UAE respectively. In OECD countries, the process takes about 3.5 hours at a cost of $25. 

Industry-Specific Reforms > Customs Clearance

  • Set targets to reduce the customs clearance time for imports and exports by 2021, to be on par with developed countries: from 505 hours to 24 hours for imports and from 136 hours to 24 hours for exports; and eliminate financial penalties associated with delays.
  • Introduce a customs risk management system and an import risk analysis scheme, under which source countries and goods are classified based on specific risks identified.
  • The Ministry of Finance should sign a protocol agreement with the World Bank to develop the customs systems and facilitate cross-border trade in line with international best practices; this will increase the confidence of foreign investors in Egypt. 
  • The issuance of a final release permit should suffice to lift any reservation that may be placed on the shipment. This can be achieved by consolidating the efforts of the General Organization for Export and Import Control (GOEIC) and the various ministries; the issued consolidated final release permit, approved by GOEIC, should allow the importer to take the shipment out of his warehouses, regardless of its geographical location. 

Industry-Specific Reforms > Customs Clearance

Delays in customs clearance result in many challenges, including:

  • Disruption of production, undermining the ability of industrialists to meet deadlines and diminishing the efficiency of working capital. Ultimately businesses incur significant losses due to late delivery penalties that they have to payout. 
  • Burdening businesses with excessive storage fees, as trucks wait long in ports awaiting loading.

Several factors contribute to customs clearance delays, including:

  • The procedures for inspecting, appraising, reviewing, and examining cargoes are laborious and lengthy.  
  • The opening and full inspection of export containers in the customs area, with no consideration given to putting into effect the whitelist, which includes exporters with a solid track record of fulfilling the customs requirements on time. 
  • Prolonged cargo clearance processes in airports, particularly with the introduction of one-stop shops (the process can take up to 3 months), noting that fees can reach LE 1,300 per shipment.
  • Fees for laboratory analysis fluctuate, even when the volume/quantity of the sample remains fixed.
  • In some instances, the Customs Authority will stop doing business with some inspection companies without notifying importers. 
  • Many spaces that are designated for cargo examination are located outside the customs area, which prolongs the time period for sample examination.
  • The severe shortage of ultrasonic testing equipment, and the reliance on the manual examination and inspection, which entails opening the containers.
  • The insufficient number of laboratories in customs points to carry out all kinds of analysis and testing.
  • The continued reliance on traditional paper-based processes, rather than adopting digital communication methods for interacting with clients or other government entities. 
  • The less than adequate digital interconnectivity across the various customs points, especially in remote areas, which results in delays in cargo release. 
  • For cargoes that require a permit from the Ministry of Health, the Customs Law does not provide for a specific time frame for completing the sample inspection. In some instances, the inspection takes up to 25 days due to strikes by workers of the Central Laboratories (affiliated with the Ministry of Health) in the Port of Alexandria. As a result, samples are sent to Cairo for analysis, which leads to the accumulation of samples awaiting analysis, and thus delays in the clearance process.  
  • Due to the poor coordination among the different competent entities, customs officials sometimes issue arbitrary decisions to halt the clearance of shipments, which disrupts work.  

The following examples illustrate the problem:

  • The release of shipments containing materials used in the manufacturing of cosmetics came to a halt in border customs points until the payment of the health stamp tax (retroactivity, going back to 2015). This decision was based on a decree issued by the Ministry of Health; however, the said decree did not pertain to cosmetics, but rather pharmaceuticals, and had no legal basis.
  • Customs officials suspended export shipments of tea bags for weeks, on account of an internal circular concerning tobacco, which had nothing to do with tea.
  • An examination of frozen corn shipments intended for human consumption came to a stop in response to a letter from the commercial representation office in Spain, the country of origin; the letter noted injuries in the corn crop, however, without providing any scientific evidence.

Industry-Specific Reforms > Customs Clearance

  • The Prime Minister issued Decree No. 20 of 2019 forming a ministerial committee to monitor the implementation of the single-window system. The system, which aims at facilitating trade and improve the investment climate, is implemented by the Ministry of Finance.
  • The Minister of Finance issued Decree No. 74 of 2019, which stipulates that an Egyptian company, MTS Logistics, shall implement, manage and operate the national single-window system in accordance with the contract concluded with the Customs Authority. The implementation framework for the single-window system was released.
  • The plan, including the timetable, for developing and implementing customs applications for the national single-window system for foreign trade was released.
  • A study prepared by the Ministry of Planning and Administrative Reform on rationalizing imports and developing exports included the following two key recommendations:
  1. Continue with the efforts to prevent smuggling at customs points and harshen the penalties against smugglers.
  2. Accelerate electronic connectivity between the Customs Authority, GOEIC, and IDA to reduce the time and cost of transactions.

Industry-Specific Reforms > Shipping, Transportation and Storage Services

Sea transportation

  • The low efficiency and productivity of port cranes —the container moves per hour in the Port of Alexandria is 10-12/hour, compared to a global average of 20-25/hour.
  • The poor quality of many of the services offered, including the transporting of bulk goods, services for vessels carrying vehicles; and inadequate shipping lines.
  • Some ports charge storage fees (while the convoys of trucks are waiting) even though the ports lack in warehouses.
  • The Inland Ports Authority imposes loading and discharging charges even though, the responsibility for the loading and discharging of cargo falls on the transport operators.
  • Rising freight rates due to several reasons, including increasing costs of transportation and marine fuel.
  • The rising cost of shipping lines; and the mandate that payments be made in US dollars even though the service is provided on Egyptian territory (not a free zone).

Responsible Entities

Date 3/21/2019

Industry-Specific Reforms > Shipping, Transportation and Storage Services

  • Issue a comprehensive and uniform fee schedule for services provided at Egyptian ports to develop and modernize the maritime transport functions and services; prohibit the imposition of any extra fees or charges for services, under any name, except for taxes and fees prescribed by law or ministerial decrees.
  • For maritime transport activities and services, give priority to companies that own ships flying the Egyptian flag in order to increase the trade volume, and stimulate exports.
  • Take the necessary steps to remove abandoned cargo from the port area, and make available storage facilities outside ports to receive it.
  • Develop the Port of Alexandria to address the widespread disorganization and lack of professionalism; upgrade the infrastructure, including roads, sewage, water, and electricity, and remove dilapidated buildings and waste, and constructing a new passenger terminal. 
  • Give priority to the national commercial fleet-owned vessels for shipping Egyptian cargoes; this preference does not conflict with GATT rules for the maritime transport sector or free market mechanisms.
  • Enhance the performance of stevedoring companies operating in ports, and make appropriate facilities to licensed private sector stevedoring companies to enhance their technical competence and improve their access modern equipment so that they can provide high quality and speedy service; this will ensure a high  quality of services offered by Egyptian ports, and maintain their reputation. 
  • Develop the shipyards and Egyptian ship repair companies, whether privately- or publicly- owned companies, in order to attract ship owners to have their ships (both the transiting and docking) renovated and repaired in Egyptian port, this will increase revenue. Additionally, design policies aimed at maximizing shipyard capacity utilization in construction and repair work to develop the Egyptian merchant fleet.
  • Investigate the reasons behind the high costs of supplying provisions to ships in Egyptian ports compared to neighboring countries; higher costs in Egyptian ports result in ships seeking resupply in other ports, which leads to a waste of resources and reduced revenues.
  • Mandate that payment for services rendered on Egyptian territory be made in Egyptian pounds.  

Responsible Entities

Date 3/21/2019

Industry-Specific Reforms > Shipping, Transportation and Storage Services

In July 2019, the Cabinet approved the proposal of the Ministry of Transportation to amend a number of provisions of two decrees issued by the Minister of Transportation and to abolish a third.

  • The first, Decree No. 488 of 2015, regulates the service fee charged to ships in Egyptian seaports, other user charges associated with utilizing floating and fixed facilities, e.g., structures, gear, and equipment, which belong to the Egyptian Ports Authorities and the Egyptian Authority for Maritime Safety, and fees charged for electronic services provided Egyptian Ports to their clients.
  • The second, Decree No. 800 of 2016, regulates the conducting of sea transport activities and operations, and the user-related charges and fees. 
  • The third, Decree, No. 468 of 2018, which was abolished, sets out the incentives offered to customers in Egyptian seaports.

Based on the Cabinet approval, in July 2019 the Minister of Transportation issued Decree No. 416 of 2019, which includes the following incentives:

  • Reducing insurance fees from LE 10,000 to LE 5,000, and the licensing fees from LE 3,000 to LE 1,000, in addition to reducing the fees associated with vessel resupply services by 50%.
  • A 10% reduction in the lighthouse fees in the case that a ship passing through Suez Canal enters one Egyptian port, in the case the ship enters two or more ports, the fees are reduced by 20%.
  • Increasing the duration of the license granted for loading and unloading activities (currently 5 years) to 10- 15 years, with the possibility of renewal for other similar periods; increasing the duration of the license granted for storage and warehousing activities (currently 5 years) to 10 years, renewable for similar periods; reducing the amount of insurance that the licensee is obliged to pay from LE 10,000 to LE 5,000 (to be paid either in cash or under a bank guarantee letter); and reducing the license fees for marine works / marine supplies activities from LE 3,000 to LE 1,000, for each activity separately.
  • Reducing the fees for obtaining the ship supply services by 50%; reducing the annual fees paid by companies operating in the area of ship waste procurement to LE 1,000 (currently it is LE 10,000), eliminating the requirement that the Egyptian partner's share in the capital of joint venture shipping agencies should not be less than 51%.

Responsible Entities

Date 3/21/2019

Industry-Specific Reforms > Shipping, Transportation and Storage Services

River Transportation

The nature and characteristics of the waterway itself, and the structures constructed along the river undermines the efficiency of the inland waterway transportation system, for example:

  • The prolonged periods of low water levels, reaching 150 cm, pose challenges for inland navigation and place limits on the size, weight, and type of water carriers, which negatively affect the economics of river transportation. Additionally, low water levels result in accidents. 
  • The presence of bridges and locks along the river slows down traffic and increases the total journey time; the long wait times, especially at locks, creates bottlenecks and affecting the smooth flow of traffic along the waterways.

Responsible Entities

Date 2/2/2020

Industry-Specific Reforms > Shipping, Transportation and Storage Services

  • Expand Egyptian National Railways Authority’s scope of activities, and introduce new areas to improve profitability, e.g., investing the vast areas of land under its jurisdiction. 
  • Increase the number of refrigerated railroad freight cars, and those equipped to carry containers to shorten the storage period and protect perishable freight.
  • Connect the various seaports (Damietta, Dakahlia, Port Said, and Suez) to the river transportation network.
  • Establish inland ports along the inland waterways.
  • Give adequate consideration to the load factors during bridge design so as not to impede the passage of ships.
  • Upgrade the navigable waterway as well as the inland waterway fleet, and provide the fleet with wireless communication devices which are connected to stations distributed along the waterway.
  • Adopt a multimodal inland waterway transportation system; this requires linking the various transportation modes, such as rail and road transportation, and making available the needed material requirements for this integration.
  • Provide ports with the latest cargo handling equipment, including high-capacity floating cranes, conveyor belts for solid cargo, and pipelines for liquid cargo; consider linking these ports with other modes of transportation.
  • Equip the navigable waterways with the needed advanced navigation aids. 

Responsible Entities

Date 2/2/2020

Industry-Specific Reforms > Ready-Made Garment Industry

  • Manufacturers are facing increased financial burden from the additional fees imposed on them, as well as the COVID-19 pandemic.

Industry-Specific Reforms > Ready-Made Garment Industry

  • Temporarily reduce fees associated with the following services:
  1. New logistic services in the customs department.
  2. Special roads toll rates on containers. 
  • Activate the Emergency Fund of the Ministry of Manpower and Migration, which is partially financed through monthly contributions by factories (1% of the basic wage of workers), to pay the salaries of workers in the event that it was decreed that industrial establishment should shut down. 
  • Exceptional Measure: Exempt all incoming shipments (that were already contracted for) from all the fees associated with customs clearance delays in Egyptian ports.