End of an era

A stormy confrontation between the government and the traders of Port Said was averted with government concessions, but will the Port Said market ever boom again? Gihan Shahine examines the prospects
After days of fierce demonstrations and strikes, the shops of Port Said opened their doors on 10 January and readied for the road to recovery. The city was aflame with protest following a shocking 1 January governmental decree stipulating a 500 per cent rise in customs tariffs on imported clothing. Traders finally backed down last week after Prime Minister Atef Ebeid's 9 January amendment to the controversial decree -- the second in less than a week.
The new amendment grants shoppers visiting Port Said -- known as a place to find bargain prices on imported clothing -- the purchase of six tariff-free items of clothing per person, per visit. An adjustment of the earlier amendment offered by the government also extends the number of "tax-exempt" visits from one to four. It also applies to children's garments -- a point of contention in the last amendment that led to further demonstrations. A 10 per cent sales tax, however, will continue to apply to all purchases. A tally of each shopper's tax exempt purchases will be kept in an official database to ensure that there is no abuse of the "privilege."
The decree, which imposes duties as high as LE1,400 for a woman's suit and LE800 for a jacket, was crafted to protect Egypt's local garment industry from the crippling competition of cheaper garments from the Far East. For Port Said, however, the decree effectively ended the duty-free status granted the city and its environs by late President Anwar El-Sadat in 1976. Since then, the city has been the Mecca of price-shoppers and bargain-hunters from around the country.
When horrified shoppers were presented with what seemed to be exaggerated tariffs, they returned their purchases and abandoned the city altogether. The traders' market went silent and public unrest erupted. Traders mounted demonstrations protesting against the new tariffs. Temporarily mollified by the first amendment, more fierce protest revisited the city when it became clear that business was still at a standstill. Some 140 people were jailed in the demonstrations, forcing the government to come up with the latest modifications to the decree.
To curb the public outcry, President Hosni Mubarak has announced that Port Said will remain a duty-free zone for the next five years, during which imports will be gradually reduced and new job opportunities introduced. Plans to rescind the area's duty-free status, however, will now undergo further study by parliament and the Shura Council.
The new amendments have evidently triggered a tentative sigh of relief on the part of many Port Said traders, but whether business will actually pick up in the desolate market- place remains an open question. At the very least, there has been some life breathed back into the heart of the city, which looked like it was gasping its last breaths only a week ago. Shops have reopened and traders are back reorganising their wares in shop windows and outdoor displays. Unfortunately, this seems to be the only activity in the abandoned market.
Despondence has given way to resignation and many traders are clinging to the hope that the new amendments will bring customers back to the once booming market. Some traders have come to accept the government's adjustments as an uneasy compromise between personal and national interests. "The new amendments are considered a breath of fresh air when compared to the initial decree," says El-Sayed El-Mougi, a wholesale trader in clothes imported from Asia. El- Mougi was among the demonstrators who closed their shops for almost 10 days. Today, he is back to business and claims to have already sold some stock to salesmen.
"Now small traders can at least sell an item or two to make the LE20 or LE30 that can sustain their daily living," El-Mougi adds. "Many people in Port Said are very poor and live from hand to mouth. Those were the people really affected by the initial decree."
There are still restrictions on the number of (specified) tariff-free items visitors can carry back home and all items will still be levied the 10 per cent sale tax. Even so, traders are hopeful. "I honestly believe the new exemptions are enough for us to sell, especially since they now include children's clothes," said Hamdi Abu Bakr, who runs a small shop in Al-Hai Al-Togari (the commercial market). "I don't think that anyone would buy more than six items for each member of his or her family, or even come to Port Said more than twice a year. Our prices are irresistible and people will find a way around the tariffs," he said.
Abu Bakr, however, may be too optimistic. Many people speaking to Al-Ahram Weekly expressed reluctance to go on shopping trips to Port Said. "Why should anyone drive that long way, pay for the trip, and sometimes for a lodging, and come back with only six items?" one woman scoffed. "Last year I got piles of summer clothes from Port Said for my two daughters for LE500. They weren't the best quality, but at least I got a lot."
On the prospects of the Port Said market, MP El-Badri Farghali is pessimistic. "The new tariffs have scared visitors away and I don't expect shoppers to come back soon," Farghali warns. "I expect many people to suffer in the immediate future. When the market is slow in Port Said, every other business is as well. Trade is the main artery of the city."
The storm may have settled, but the amendments do not address the main problem facing Port Said, which has depended mainly on the import and trade of clothing for the last quarter century. Traders constitute a large majority of the town's 600,000 people and the question now becomes what they will do after the five-year grace period has elapsed and Port Said is no longer a duty-free zone. Many, especially young entrepreneurs, are fearful that they are facing imminent unemployment. The local government insists that employment opportunities will be made available by the numerous mega-projects planned as part of the city's comprehensive development plan. But it is unclear whether these projects will be up and running in the next five years.
Officials are optimistic, but Farghali is sceptical. The government has been talking about the launch of these projects for years, he says, but so far, there is little to show for it. The few factory complexes that opened in Port Said employ only outsiders and some 800 people have lost their savings in agricultural projects due to irrigation problems and the high salinity of the town's arable land, he explained.
Farghali suggests encouraging investment in Port Said, especially in the fields of industry and natural gas. He has also presented a memorandum to parliament suggesting that private investors be encouraged to utilise the area alongside the canal. Such investment could increase the canal's income considerably, and Farghali says his suggestion has already drawn offers from Arab investors.
The new tariffs do not only apply to Port Said. Travellers will have to be cautious about what they bring into the country from abroad, since the new decree is enforced in all airports and marine ports nationwide. There was a great deal of public anger and confusion over the decree, when it was initially believed that travellers coming to the country would not be able to bring more than six items of clothing for their personal use. It has now become clear that all used clothing is not subject to the tariff. For new, foreign-made clothing, the same rules apply as they do in Port Said: travellers will be allowed six tariff-free items and an unspecified number of gifts -- the latter depending on the period of stay outside the country.
Taking the pulse of people at Cairo airport, confusion still reigns. "The new tariffs have fuelled anger among travellers," said one traveller. "Many angry travellers refused to pay the exorbitant tariffs and decided it was better to leave their luggage at the airport until they could send it back to the country they came from. There are dozens of suitcases waiting in the airport's custody room."
Other travellers arriving from abroad, however, say the tariffs were not a factor. "I brought so many gifts and new clothes and nobody even looked at my luggage," said Eman Ahmed, who has just arrived on a visit from the US last week. "There were four other trips arriving and I didn't notice any problems at the customs' bureau," she said. Other recent travellers concur that the edict is obviously more relevant to those who are bringing in clothing for the purpose of trade.
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