Egypt's tax experts have welcomed the Central Bank's decision to launch an investment fund worth 1 billion EGP to restructure struggling factories. The fund, launched in partnership with the Ministry of Industry, aims to support the industrial sector and increase its contribution to the country's GDP. According to the Egyptian Tax Experts Association, this move is a crucial step towards preserving employment and enhancing local production capabilities.
The fund will focus on investing in struggling industrial facilities with promising operational prospects, with the goal of restoring their efficiency and promoting growth and sustainability. The Central Bank's Governor, Hassan Abdallah, and the Minister of Industry, Khaled Hisham, announced the launch of the fund, which will participate in the capital of struggling industrial facilities and work on restructuring them. This initiative is part of the state's efforts to support the industrial sector and boost economic growth.
According to official data, there are currently 11,300 struggling factories in Egypt, with 5,500 in the construction phase and 5,800 operational but not working. The Association notes that restarting a struggling factory can save construction costs and return to production in half the time it takes to build a new factory. The Egyptian Tax Experts Association has proposed seven additional steps to resolve the crisis of struggling factories, including providing low-interest loans to purchase machinery, equipment, and raw materials.
The Association's Secretary-General, Ashraf Abd al-Ghani, expressed concerns that the fund might become a partner for all industrial entities seeking restructuring, which could hinder the flow of new investments. He identified eight reasons for the distress of industrial facilities, including the liberalization of the exchange rate, high raw material prices, and increased energy and labor costs. These factors have contributed to the struggles of many factories, particularly small and medium-sized enterprises.
Abd al-Ghani proposed several solutions to address the crisis, including rescheduling bank debts, waiving tax fines, and increasing reliance on local components. He also suggested providing technical and logistical support, especially for small factories and start-ups, and promoting the separation of ownership and management in family businesses. These measures aim to help struggling factories overcome their challenges and become more competitive.
The Central Bank's fund will adopt a specialized investment strategy focusing on serving industrial facilities facing financial or operational challenges. The fund's team will work with the management of these facilities to implement comprehensive restructuring plans, including loan restructuring, injecting new capital, and applying programs to improve operational efficiency and governance. This approach aims to restore production efficiency, preserve job opportunities, and support the competitiveness of Egypt's industrial sector.
The Egyptian Tax Experts Association believes that finding non-traditional solutions to the crisis of struggling factories is crucial for preserving employment and promoting local production. The Association's proposals aim to support the industrial sector and contribute to achieving the state's vision of increasing the sector's contribution to GDP to 20% by 2030. The fund's success will depend on its ability to address the complex challenges facing struggling factories and provide effective support to the industrial sector.
Key points
- The Central Bank's fund aims to support struggling factories and increase the industrial sector's contribution to Egypt's GDP.
- The Egyptian Tax Experts Association has proposed seven additional steps to resolve the crisis of struggling factories.
- The fund will focus on investing in struggling industrial facilities with promising operational prospects.
