The Egyptian government has introduced a new 'Value' certificate aimed at transforming the way the country's industrial sector is supported. According to Yahya Ahmed El-Milwani, a member of the Alexandria Businessmen's Association, the certificate represents a significant shift in the philosophy of industry support, moving away from relying on a fixed percentage of local components to a comprehensive evaluation of the economic value added by industrial establishments to the national economy.
El-Milwani explained that the traditional reliance on a fixed percentage of local components, such as 40%, did not always reflect the actual contribution of each factory. This is because different industries have varying levels of dependence on imported raw materials and components. He noted that some industries may achieve high added value through manufacturing, operation, research, and development, even if their direct local component percentage is lower than required.
The 'Value' certificate provides a more comprehensive view of industrial establishments by considering several elements, including investment in research and development within Egypt, the percentage of Egyptian workers and their training level, local components, and the company's contribution to building supply chains and developing local suppliers. El-Milwani emphasized that this system encourages factories to increase investments in technology, innovation, and product development, rather than focusing solely on meeting a specific local component percentage.
The 'Value' certificate also links government incentives to the evaluation score obtained by establishments, creating a positive competition among factories to improve their performance and increase their economic contribution. El-Milwani called for a gradual and clear system of incentives, where establishments that achieve higher added value scores receive incentives proportionate to their contribution. He also suggested that the certificate should be linked to facilitating access to industrial land through a rental system that ends with ownership.
In terms of government procurement, El-Milwani stressed that giving locally produced products with a 'Value' certificate a preference in government tenders and contracts is an important tool for expanding the market for Egyptian industry and providing stable demand to help factories increase production capacity and expand investment. He emphasized the need for this preference to be based on precise technical and economic criteria, balancing support for local products with guarantees of quality, price, and efficient supply.
El-Milwani also called for a clear mechanism for calculating evaluation points and announcing the relative weights of each element of the 'Value' certificate. This would enable industrial establishments to know the requirements for obtaining higher scores and identify areas that need development within their factories. He also recommended simplifying the certificate issuance procedures, unifying the responsible evaluation and review bodies, and relying on an electronic database linked to the government procurement system.
The success of the 'Value' certificate depends on providing support programs for small and medium-sized enterprises to help them develop production systems, quality, digital transformation, and training. This would ensure that evaluation criteria do not become an obstacle for establishments with limited capabilities, but rather an incentive for them to develop and improve their performance. The certificate has the potential to reshape Egypt's industrial map by encouraging integration between large and small factories and increasing reliance on technology and scientific research.
Key points
- The 'Value' certificate represents a significant shift in Egypt's industry support philosophy.
- The certificate evaluates industrial establishments based on several elements, including investment in research and development and local components.
- The certificate links government incentives to evaluation scores, creating a positive competition among factories to improve their performance.
