Egypt's local gold markets are currently on edge as they await the Cabinet's decision regarding the extension of the initiative that exempts personal gold imports from customs duties. The initiative, which expired last Friday, has sparked significant debate among industry stakeholders.
George Tadros, a member of the Gold Division at the Cairo Chamber of Commerce, expressed concerns that prolonging the duty-free status for gold brought in by returning expatriates, excluding value-added tax, is detrimental to the domestic industry. According to Tadros, the initiative had been previously used to bolster local gold reserves amidst rising demand and ongoing restrictions on importation by gold companies. It also allowed Egyptians working abroad to buy gold at a time when their dollar remittances were decreasing and the black market was expanding.
The Egyptian Cabinet had approved the extension of Resolution No. 1801 of 2023 last November, granting a customs exemption to gold imports for a six-month period ending on May 10, 2024.
Tadros pointed out that extending this initiative would lead to an influx of imported finished gold products, which could harm local manufacturers and deprive the state of substantial dollar revenues from expatriates' remittances. He emphasized the need to encourage domestic manufacturing and boost exports instead of imports, especially as the country needs to develop sustainable sources for acquiring dollars.
The market has seen a stable demand for gold since the last decision to float the currency, with a significant portion of demand directed towards finished gold products. Moreover, the market is currently experiencing a stockpile of gold through resale operations by citizens, leading to an emphasis on exporting raw gold, hence diminishing the need for extending the initiative.
Sales of gold bars, often purchased by many citizens as a hedge to preserve the value of their money amidst the local currency's decline, have also decreased.
The Cabinet's decision covers exemptions from customs duties and other charges for semi-finished and ready-for-cash-trading gold, as well as jewelry and parts made from other precious metals, even if they are plated or clad with precious metal veneers, brought in through customs ports accompanied by passengers from abroad, excluding VAT.
The Cabinet justified the extension of the gold import exemption due to its positive impact on regulating the markets and restoring stability and balance to prices.
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