Effective the 1st of February 2005, issuing of import 'permits' to private sector enterprises has been suspended, effectively banning overseas trading by Eritrea�s private sector.

Following regulations issued in 2003, businesses willing to import items from abroad had to secure two permits for each consignment; an import permit from the Ministry of Trade and Industry and a currency permit from the Commercial Bank of Eritrea. Now both permits will not be issued to private sector importers. The government issued no official statement, but all applications for permits, lodged by private businesses as of February 1, were turned down by the Ministry of Trade and the applicants were told that the decision is for an indefinite period.

While no explanation was given about this new policy, certain indicators point to an official policy trend aiming at weakening and crowding out the private sector. In addition to continuing campaigns against the private sector in the official media, and a series of economic and administrative measures that already diminished the role of the private sector significantly, the following recent indicators are of special interest:

(i)                 PFDJ and local administration officials lodged new allegations against the private sector in neighborhood (�mmHdar�) meetings in the last few weeks. The officials told gathered residents of Asmara that "the government's repeated warnings to the businesspeople did not bear any fruit" and that it was time to take more effective measures.

(ii)               Preparations are underway to open government retail shops in various quarters of Asmara and the first of such shops under PFDJ are already in operation.. It is also to be recalled that starting in 2004, distribution/sale of most consumer goods (particularly food stuffs) in the workplace, through ministries and other government offices, is already in effect. (These steps are reminiscent of the Derg�Ethiopia�s occupying government��community shops� (hebret suk) which were in dominance)

Business people expect the government and party companies, and particularly the Red Sea Trading Corporation (RSTC), to dominate all external trade, while government-administered retail shops will be the main distribution outlets in the country.

The Eritrean Investment Centre (EIC) has been effectively closed. The Centre has been without an officially-designated head since the assignment of its last director, Mr. Ahmed Tahir Baduri, as Eritrea's ambassador to the United Nations.  An official announcement has yet to be made of the closure. However, the few staff who had remained in the EIC have been transferred to the Ministry of National Development and the Ministry of Trade and Industry, among others.