The dollar crisis has no effect on GMC
Egypt’s investment system has to change
By Mahmoud Hammad
In an interview with MEO, Mohamed Genedy, Chairman of (GMC), said that GMC has not been negatively influenced by the dollar crisis due to its dependency on local materials. In regard to the closed factories, Genedy said that they will remain closed as a result of the lack of vision of the investment system. He added that imposing the value added tax (VAT) act will fail to obligate investors to pay taxes.
IWhat are GMC areas of expertise?
GMC operates in manufacturing household appliances, purchasing and selling oil products and delivering equipment maintenance services.
What is the effect of dollar crisis and its price increase in the black market on GMC?
GMC was not influenced negatively by the dollar crisis due to its dependency on local materials. GMC depends on 90 per cent of local materials when manufacturing cookers, 80 per cent when manufacturing washing machines and 98 per cent when manufacturing heaters. Thus, the more dollar price rises, the better GMC exports its products and competes with the global market.
What is the influence of dollar crisis on the whole economy?
I think it is disastrous, especially the dollar continuous its price increase in the black market. As a result, basic commodities of citizens’ everyday needs will witness a price increase and Egypt’s debts will rise dramatically because they are paid in dollars.
How do you view the closed factories problem and its influence on the economy?
Factories have been suffering from shutdowns as a result of the current investment system that lacks a clear economic vision. In addition, the government does not take a real interest in operating factories or developing industry which hinders any form of economic development in Egypt.
Is the government seeking to solve the factories problem?
The government is not taking a real interest in solving the factories problem which contributes to a larger unemployment rate. If these factories operate at their full capacity, each of them will employ more than 3000 labours.
What is your viewpoint of imposing the value added tax (VAT)?
VAT is imposed throughout the world and so it should be imposed in Egypt. However, I believe the mechanisms of imposing VAT should be altered. I think this will discourage more investors to pay their taxes, especially service providers, lawyers and physicians.
What are the consequences of imposing (VAT)?
Companies will dodge and skip payments of VAT, in addition to downsizing their capitals.
It is worthy of note that the Ministry of Finance aims at setting a registration tax of EGP 500k. GMC disputes this registration tax, along with tax rates of 14 per cent. A meeting was held with the presence of GMC and the ministry; we suggested to have the tax rates at 10.5 per cent but the ministry rejected our suggestion. In fact, the ministry wanted to have the tax rates at 20 per cent but fortunately it was passed as 14 per cent, under the current act.
