Egypt is holding talks with the Chinese automobile manufacturer Dongfeng with the aim of establishing a factory in the local market, in conjunction with the Chinese side’s comparison between Cairo and Rabat, making one of them a window for production in the Middle East and Africa.
The two countries are practically engaged in an economic struggle to win new investments in the field of cars, which reinforces the transformation of one of them into a regional center for this industry in the region.
Cairo’s attempt to attract Dongfeng raises questions about the extent of its ability to do so. If the location and infrastructure are easy to provide, it will remain unclear how to provide skilled labor, in addition to the ability to provide financial resources.
This situation will be in light of the crisis of hard currency shortages in the country, with the absence of the required investment incentives. In the event of relying on a local workforce, it will face the obstacle of prior vocational training in an advanced industry such as the automobile industry, especially in the field of electric cars as a newcomer to the country.
The Egyptian Ministry of Trade and Industry renewed its negotiations with the Chinese group to manufacture its cars locally and launch a regional production project that will feed the region. The step comes after negotiations between the government and Dongfeng stopped for nearly two years, but they did not succeed in reaching an agreement due to Egypt’s rejection of the percentage of local components that it wants to prevail from within.
Cairo is engaged in intense negotiations with the company’s representatives and is betting on the privileges it grants to local producers, namely customs reductions on production components, preparing infrastructure and having a license that accelerates the granting of operating licenses.
Morocco has a greater chance of attracting Dong Feng after it has made great strides in the field of automobile manufacturing and has become a destination for many companies that employ tens of thousands of workers, which made the country achieve large transaction numbers that amounted to about 11 billion dollars last year.
Morocco has succeeded in attracting a number of manufacturers of electric vehicles, such as Fiat, Opel, Renault and PSA, which has put it on the global map for manufacturing these types of cars.
This may be a double-edged sword, and the Chinese company may attract or prefer to invest in Egypt because it will not find competition from other internal parties currently.
Khaled Saad, Secretary General of the Association of Automobile Manufacturers in Egypt, said, “Morocco excels in the automobile industry, and entering into competition with it is an uncertain adventure, because the foundation of the automobile industry is experience, the mechanism and method of manufacturing, and keeping up with new developments.”
He added in a statement to Al-Arab, “It is difficult to withdraw from the competition, but the authorities must make every effort to attract Chinese investments in order to put the country a step on the path to progress in this sector, especially with regard to electric cars.”
If Egypt succeeds in attracting Dongfeng, it will benefit from joining the BRICS group, as transactions are carried out in the Chinese yuan and the Egyptian pound without the need for the dollar.
The path will be a step that creates a breakthrough in the local car market, as well as involving flexibility in negotiation between the government and the Chinese company.
International reports enhance Morocco’s opportunities in the field. The Global Electric Transport Readiness Index for 2023, issued by the American consulting firm Arthur D. Little, revealed that the Kingdom ranked 22nd, while Egypt ranked 28th.
The index includes 35 markets worldwide, and the electric mobility sector in Egypt is classified as a “frontier market.”
The organization’s report warned of the weak charging infrastructure in Morocco, but it expected that Rabat would be an important center for the manufacture of electric cars, with many international companies eager to invest in it.
Egypt is currently planning to equip its cities with infrastructure for electric cars and has succeeded in providing about 300 charging points, which will increase over time in Greater Cairo, which includes the governorates of Cairo, Giza, Qalyubia, and some areas outside it.
Osama Abu Al-Magd, head of the Automobile Dealers Association in Egypt, explained that it is difficult to deny the difficulty of Egypt’s position in the competition, because the Moroccan experience in the automobile industry has become internationally famous, and Egypt has not reached its level in the manufacturing or assembly stages of vehicles.
He told Al-Arab, “In order to be able to compete, the Egyptian authorities must provide an attractive climate for all aspects of investment in the automobile industry, such as not expanding taxes, and increasing its duration, which reached about 25 years in Morocco when companies began operating.”
He also explained that the Chinese project will not face a financing crisis, as it depends on the parent company at the beginning of the new manufacturing.
The automobile sector in Egypt is witnessing a state of near stagnation due to the crisis of foreign currency scarcity, which makes it look for ways to mitigate the damage.
Manufacturers and traders face obstacles that prevent them from opening approval documents in banks for imports from abroad or agreeing with the parent companies to obtain a number of cars due to the lack of the dollar, which has led to the market’s needs for vehicles not being met.
However, Cairo is making efforts to advance the sector. With the launch of its own strategy, the government decided last July to establish the Supreme Council for the Automotive Industry, a regulatory body responsible for setting policies for the localization of the industry, including the assembly of electric cars.
The authorities agreed to launch a new fund that provides incentives to companies responsible for assembling environmentally friendly cars, and last June, the House of Representatives approved two initiatives with the aim of adopting electric cars in Egypt.
Morocco has a greater chance of attracting Dong Feng after it has made great strides in the field of automobile manufacturing and has become a destination for many companies.
Egypt has expanded the list of importers eligible to receive customs discounts of up to 90 percent, provided that the percentage of the local component constitutes no less than 30 percent of the final product, to include companies involved in the manufacture and assembly of electric vehicles.
Moreover, it decided to reduce the minimum customs duty to 10 percent, to encourage the assembly of electric cars.
Morocco has become an important regional platform in the automotive industry at the African level, and it invested early in qualifying workforce in the field, after years ago heading towards establishing a “cities of vocations and competencies” strategy to create a high-quality workforce that supports the automotive sector.
Rabat has inaugurated equipped industrial zones and modern ports, such as the Tangier Med Port, with its high capacity to unload containers and complete orders in a short period of time, in addition to modern logistical supply chains.