Dailynewsegypt

Author: Shaimaa Al-Aees

  • Pharmaoverseas to launch plant in Sudan with $500m investments

    Pharmaoverseas to launch plant in Sudan with $500m investments

    Pharmaoverseas company is set to establish a plant for the production of pharmaceutical raw materials in Sudan, with a capital of $500m, according to Chairman Gamal Abdel Rahman.

    Abdel Rahman said the company is ready to implement the infrastructure for the project and establish a power plant to provide energy.

    Further, the project is expected to employ the national labour, and the company will implement social projects for the surrounding communities, he said during a meeting with Sudanese Minister of Investment Mudesir Abdul-Ghani on Sunday evening in Khartoum, Sudan.

    Abdul-Ghani said the Sudanese government provides facilitations and advantages to businessmen and investors for the implementation of various investment, productive and service projects. He noted that contributes to the development of the economy in both countries.

    Abdul-Ghani explained that the facilitations are given by the Sudanese government in the free zones, noting that his ministry’s vision in this area is to allow the free movement of capital, investment and commercial activity.

    In late August, Deputy Governor of the Central Bank of Sudan (CBOS) Elgaili Mohamed Al-Bashir told Daily News Egypt that Sudan has urged the Egyptian government to seek investments in the gold extraction sector.

    Trade exchange between Egypt and Sudan has reached approximately $340m in 2013, according to former minister of Industry and foreign trade Mounir Fakhry Abdel Nour.

    The volume of Egyptian investments in Sudan amounted to $7.8bn in 2014, spread over 230 ventures, Abdel Nour said.

  • EBRD, PPP Unit negotiate engagement of private sector in infrastructure projects: EBRD Director

    EBRD, PPP Unit negotiate engagement of private sector in infrastructure projects: EBRD Director

    The European Bank for Reconstruction and Development (EBRD) is negotiating with the Public Private Partnership (PPP) unit of the Ministry of Finance, regarding the engagement of the private sector in the unit’s infrastructure projects.

    Country Director for the European Bank for Reconstruction and Development (EBRD) in Egypt, Philip ter Woort, told Daily News Egypt these infrastructure projects include wet and dry ports, domestic transport (land and water), and water and wastewater plants.

    Ter Woort said the bank is working closely with the PPP unit and its head, Ater Hanoura, on a wide range of projects, including supporting the PPP Unit through a strategy study to develop the use of the Nile for cargo shipment.

    For the sea water desalination projects in Safaga , El-Alamein, and Al-Tor, the PPP unit agreed with the EBRD to finance the appointment of advisors to offer a seawater desalination plant.

    The Safaga Sea Water Desalination project’s tendering procedures will start in November.  The project funding amounted to EGP 450m.  The El-Tor Sea Desalination Plant’s funding amounted to EGP 250m, and the EBRD financed the advisory company Attkins to tender the desalination projects, according to the PPP unit’s data.

    The current portfolio of the EBRD’s projects in Egypt amounts to €739m.

    Last month, the EBRD announced its intension to provide a sovereign loan of up to $200m to finance the construction of a combined-cycle gas-fired power plant in Damanhour, Beheira. The project aims to provide high-efficiency power to the country, and help meet ongoing supply shortages, and contribute to improving the overall energy efficiency and carbon footprint of the power sector.

    The bank further announced the allocation of €100m to finance the Cairo Metro project. This amount could be increased to a maximum of €175m if no co-financing can be obtained.

    In October, the EBRD announced its equity commitment of $20m to the Ezdehar Egypt Mid-Cap Fund. The bank’s participation will help mobilise additional private sector investment in the fund.

    The bank is committed to providing a number of sovereign loans to the Cairo Integrated Transport Project – Inclusion Component, which includes the second line of the Cairo Metro, by purchasing 13 air-conditioned trains, and a portion of the long-term outsourced maintenance contract, mainly covering spare parts and equipment.

    Loans will also be granted for the sixth and seventh lines of the Cairo Metro by financing the future metro rail infrastructure development. The EBRD will also support the Cairo Bus Sector Reform Project by providing 500 clean compressed natural gas (CNG) buses and related depot investments, as well as supporting the Heliopolis Tram Modernisation.

    Two projects from the wider Cairo Integrated Transport Project are set to be carried out in cooperation with PPP Unit, such as the Bus Rapid Transit (BRT), which aims to construct segregated bus lanes within the existing roads.

    Further, the Nile Ferry project aims for the modernisation and expansion of the existing ferry service in Cairo.

    In late August, the EBRD announced a long-term loan of up to EGP 200m to the Egyptian Food Company (Faragello). The loan will be used to partially refinance existing short-term debt and finance permanent working capital requirements.

  • Egypt is capable of manufacturing automotives: Minister of Industry

    Egypt is capable of manufacturing automotives: Minister of Industry

    Minister of industry and Foreign Trade Tarek Qabil said Egypt is qualified for the establishment of a real automotive industry based on manufacturing, rather than assembly, by raising the proportion of local components and increasing the added value.

    This is in addition to making use of the competitive advantages Egypt enjoys, in particular its accumulated experience in this industry through major international brands operating in the sector, as well as highly trained technical workers.

    Qabil added that Egypt’s geographical location also makes it an ideal hub for exporting to various international markets. Moreover, Egypt is linked through many of the trade agreements that allow Egyptian products to enter the African, European and Arab markets without customs restrictions.

    Qabil said that Egypt is seeking to develop an integrated incentive system to encourage global-producing companies to manufacture their products in Egypt.

    He further pointed out that the automotive industry a labour-intensive industry and is interrelated with feeding industries, in which Egypt has major potentials and capabilities. Furthermore, the automotive industry is based on modern technology, making it feasible for exporting.

    The minister met with representatives from BMW and General Motors company to discuss the incentives for manufacturing automotives in African countries, including, for example, Morocco, South Africa and Nigeria.

  • 34.5% increase in public revenues during July, August: Ministry of Finance

    34.5% increase in public revenues during July, August: Ministry of Finance

    Public revenues during July and August of fiscal year (FY) 2015/2016 increased by 34.5% to a record EGP 46.3bn, an increase worth EGP 11.9bn compared to the same period of the last FY, according to the monthly report of the Ministry of Finance.

    This is considered the highest growth rate of public revenues in the past three years, according to the report.

    The report attributed this increase to the marked improvement in the national economy, which is reflected in an increase in tax revenue worth EGP 8.2bn, to achieve a total of EGP 36bn, marking an increase of 29.3%. This is in addition to the increase of non-tax revenues by EGP 3.7bn to record EGP 10.2bn, with a growth rate of 56.6%.

    The report added that the economic improvement and reforms undertaken by the government at the beginning of the last FY led to an improvement in income tax revenue, to record EGP 9.4bn, of which EGP 2.2bn is from the Suez Canal, marking an increase of 37.5% in two months.

    This comes in addition to EGP 3.4bn in payroll tax revenues, marking an increase of 18%, as well as EGP 800m in taxes from commercial and industrial activity, with a growth rate of 87.7%.

    “Sales tax revenues also rose to EGP 19.2bn, with a growth rate of 34.2%, the highest growth rate in sales taxes during the mentioned two months and over the past three years, which reflects the recovery of the domestic market and the growth of commercial and service activities since the beginning of the current FY,” the report read.

    “Property tax revenues rose by 37.2% to record EGP 4bn. Further, tariffs revenues rose by 22.2% to record EGP 3.5bn, with an increase of about EGP 600m compared to the same period of the last FY.”

    The report revealed that Egypt received grants and aids from Arab countries valued at EGP 2.6bn during the months of July and August of the current FY. Furthermore, goods and services tax rose by 50% to record EGP 2.6bn, due to the increase of tax collection from private equity funds, marking an increase rate of 39.5% to record EGP 1.7bn.

    As for public expenditure, the report said it saw a small hike to record EGP 110.4bn, an increase of 3.9%.

    Public expenditure included of EGP 33.6bn for wages of government administrative bodies’ employees, marking a slight growth of 2.6%.

    It also included the allocation of EGP 26.7bn for subsidies, grants and social benefits, marking an increase of 69.6%, which includes EGP 8.3bn to support goods and commodities subsidies, with an increase of 91.7%. The amount allocated for electricity sector support was EGP 5.2bn, according to the report.

    The report said spending on public investment increased by 61.4% to record EGP 3.3bn, and EGP 2.4bn were allocated for the purchase of goods and commodities, marking an increase rate of 33.4%.

  • CBE orders banks to accept cash deposits in foreign currency: Industry minister

    CBE orders banks to accept cash deposits in foreign currency: Industry minister

    Minister of Industry and Foreign trade Tarek Qabil announced that the Central Bank of Egypt (CBE) has instructed all banks to accept cash deposits in foreign currency from exports to Libya, Syria, Sudan, Palestine, Iraq and Yemen, according to a number of conditions set by the CBE.

    Qabil said in a press statement that this step comes in the context of the government’s efforts to stimulate exports, after intensive negotiations between the ministry and the CBE’s governor.

    Qabil pointed out that the conditions set by the CBE stipulate that the deposits’ value is commensurate with the size and nature of the usual client activity and the value of the export process documents. In addition, exporters must provide a copy of the customs declaration showing the exports and the value of exports approved by the competent customs.

    The minister added that this declaration copy should be adopted by the General Organization for Export and Import Control (GOEIC) and the Ministry of Industry. Then exporter must submit this adopted declaration to the concerned bank to deposit the amount requested for export.

    “This action is the beginning of a series of decisive decisions and procedures that the ministry targets during the current period to restore growth rates in Egyptian exports in various sectors and markets,” Qabil said.

    “All business communities have been informed, in particular the Federation of Egyptian Industries, Federation of the Egyptian Chambers of Commerce and export councils to immediately start implementation to the increase Egyptian exports to these markets.”

  • Industrialists can now easily obtain industrial record: IDA

    Industrialists can now easily obtain industrial record: IDA

     

     

    Non-registered investors, industrialists and entrepreneurs must extract industrial records for their organisations as they have become easier to obtain and only require three essential documents, said Ismail Gaber, Chairman of the Industrial Development Authority (IDA).

    The documents required are the commercial register of the facility, the insurances record as well as membership in the Federation of Egyptian Industries (FEI).

     

    Gaber requested registered factory owners to renew and update their own industrial records data. He noted that the Minister of Industry and Foreign Trade Tarek Qabil formed a committee under the leadership of IDA to “count industrial facilities” and review industrial records data.

     

    “The IDA is seeking to do a comprehensive update to recorded factories data to support government decision-making affecting investor protection, concessions and incentives for supporting competitiveness,” Gaber said. “There are great advantages enjoyed by the investor if the industrial record is obtained, such as benefit from the tariff advantages on imports of raw materials and spare parts of machinery.”

     

    Gaber noted that participation in governmental and non-governmental tenders and auctions requires an industrial record, as well as dealings with banks to open financial credits, loans, obtain export subsidies, and to import chemicals materials.

    The chairman added that temporary industrial record procedures take only 24 hours. Furthermore, record renewal procedures require low-fees taking into account the interests investors, especially junior investors.

    Gaber explained that the industrial facilities committee is currently in coordination with stakeholders to speed up the executive plans to link the industrial data at the national level electronically.

     

    “This step is preliminary to issuing an ID number for every facility to make it easier for state agencies and investors to operate,” the chairman added. “IDA addressed the industrial chambers and investor associations to coordinate with the authority and urge factory owners to adopt this initiative.”

     

  • Egyptian foreign reserves enough for only 3 months imports: KECG Director

    Egyptian foreign reserves enough for only 3 months imports: KECG Director

    The current Egyptian foreign reserve is equivalent to just over three months in imports, which is very tight, according to Kyung-Soon Song, Founding Representative Director of Korea Expert Consulting Group (KECG).

    Song said there is concern regarding the country’s foreign reserve situation, noting that the foreign exchange situation of emerging economies could become more difficult if the US starts to raise interest rates.

    “The good news is that Egypt seems far less vulnerable now to global uncertainties in the short term, as its economic agenda is supported strongly by its neighbours with a huge FX pocket,” Song said.  “In the meantime, the rapidly improving political situation should help the country to continue strengthening its FX reserves”.

    It would not be a bad idea for the central bank to take action to depreciate its currency given the current situation, he said.

    He further noted that President Abdel Fattah Al-Sisi’s government succeeded in eliminating some of the problems regarding political stability.

    “I think implementation is another matter to cope with due to unexpected problems and challenges. The focal point of the development process is the capacity of the government to implement it,” Song said.

    “Another constraint is human resources, which is the role of the government and should be clearly defined. The government can play different functions, such as regulator, planner, services provider, party, and allocates resources.”

    Song said the government’s role is to monitor the changes in the economic environment very closely and be able to address irregularities in a timely manner to ensure the stability of economic activities.

    “Egypt is located in a strategic location between Europe, Africa, MENA, and Asia. So far, the main constraint is political stability but I think it is very healthy process because in Korea we had the authoritarian rule we had transformed to democracy. This process is not easy, but should be managed and the current government does this very well,” Song said.

    Commenting on the interest of Korean companies in the Egyptian market, Song said they are very interested in the IT sector and automotive industries in Egypt. International companies want to go global, not only to Korean companies. In Egypt there are some potentials and opportunities, as well as high investment returns.

  • 45% decline in fertiliser exports during August: CEC report

    45% decline in fertiliser exports during August: CEC report

    Egyptian fertiliser exports declined by EGP 2.1bn during the first eight months of the current year to record EGP 1.4bn, compared to EGP 3.5bn during the same period of 2014, according to a report issued by the Chemicals and Fertilizers Export Council (CEC) .

    The report said fertiliser exports declined by 45% during the month of August, reaching EGP 208m, compared to EGP 381.5m in August 2014.

    Abu Zaabal Fertilizer and Chemical Factory topped the list of fertiliser sector exports, valued at EGP 229.8m during the period from January to August 2015, followed by the Egyptian Fertilizers Company (EFC), from which exports amounted EGP 185.1m in the same period. Abu Qir Fertilizers Company came next, where exports amounted to EGP 143.7m, and Alexandria Fertilizers Co. (AlexFert) exports amounted to EGP 128.3m.

    Misr Fertilizers Production Company (MOPCO) exports amounted about EGP 99.1m by the end of August, while exports from the Suez Company for Fertilizer Production (SCFP) reached approximately EGP 97.9m, and exports from the Egyptian Chemical Industries Company (KIMA) amounted to EGP 91.2m.

    Brazil accounted for 28% of Egyptian fertiliser exports during the period from January to August 2015, at EGP 358m, followed by France with EGP 338.8m, and Italy with EGP 142.5m, and Greece with EGP 132m.

    Further, chemical and fertiliser exports declined during June by 37% compared to June 2014. Organic chemical exports declined to record EGP 6.8m compared to EGP 150.7m in June 2014, marking a decline of 95%.

    Moreover, fertiliser exports also declined by 54% to reach EGP 177.6m in June 2015, compared to EGP 384.1m in June 2014.

     

  • PPP unit offers 12 projects, with investments of EGP 20bn during FY 2016/2017

    PPP unit offers 12 projects, with investments of EGP 20bn during FY 2016/2017

    The Public-Private Partnerships (PPP) projects unit of the Ministry of Finance established in 2010 launched a strategic plan to carry out infrastructure and exportation projects in cooperation between private sector and banks.

    The PPP unit offered five new projects for investors before the end of the current fiscal year (FY) 2015-2016. The total cost of the projects is estimated between EGP 7bn and EGP 8bn.

    The unit will offer 12 more projects during the upcoming FY 2016-2017, that will cost between EGP 17bn and EGP 20bn, according to Ater Hanoura, head of PPP unit at the Ministry of Finance.

    The current and new projects that the unit is working on include:

    Safaga Sea Water Desalination Plan: Contractor: National Authority for Potable Water and Sewage. The project is under prefeasibility studies. The PPP Supreme Committee completed its re-feasibility study for the project, which is expected to start the tendering   procedures in October 2015. The unit is in negotiations with EBRD to finance the transaction advisor.  Sea water desalination plant has a total capacity of 40,000m3/day to provide Safaga City with the necessary water. The plant will be constructed on two phases, 20,000 m3/day each.

    El-TOR Sea Desalination Plant: Contractor: National Authority for Potable Water and Sewage. The project is under prefeasibility studies. The project aims to finance, design, construct, operate, and maintenance of El-TOR seawater desalination plant with a total capacity of 20,000 m3/day. The project’s operation duration will be eighteen years and the construction period will be two years. The pre-feasibility study has been finalised and the Supreme Committee approved starting the tendering procedures. It is expected to start tendering procedures in Q4 2015Constructing four water plants in Qalyubiya Governorate: Contractor: Ministry Of Housing under the supervision of the unit and will be implemented in Qaliubiya Governorate. The duration of the project and period of operations will be determined in the tender document.

    River Transport Projects: Contractor: Ministry Of Transport and located in Upper Egypt governorates of Qena, Sohag, and Assuit. Atkins – one of the world’s most respected design, engineering, and project management consultancies – is doing some studies related operations duration. The project aims to construct three-river transport ports to develop river transport to be one of the main and important transportation facilities in Egypt.

    Safaga Industrial Port: Contractor: Ministry Of Industry and Foreign Trade – industrial and mining projects council. The prefeasibility study was finalised and the project was approved by the PPP Supreme Committee and agreed to appoint IFC as a transaction and financial advisor for the project. It is expected to start tendering procedures in December 2015.

    Nile River Bus Ferry: The project aims to develop, manage, and operate the river bus facility in Greater Cairo. It includes the modernisation of river transport fleet and adding new units to it, in 30 new river ports, half of which are new. The project will be announced in November.

    The project aims to purchase, finance, and operate the river transport fleets (30 boats), develop 16 current terminals, adding around 14 new terminals, design, build, finance, operate, and maintain. The project investment amounted $66m.

    Real Estate Registration Offices project: This project aims to rehabilitate all notary offices nationwide and even establish new ones to reach a total of 400 offices. It will also develop the programmes they operate and the technology they utilise – at an investment cost of some EGP 560m.

    The Commercial Register Project: This project aims to develop 88 offices and digitise them, as well as to develop delivery services, with investments of 1.2bn during 2 years.

    The PPP unit launched its first plan in 2009 covering the education, medical, and utilities sectors. These projects were suspended due to the 25 January Revolution and the unit seeks to implement them in the next stage.

  • EGP devaluation is not a condition to increase exports: Exporters

    EGP devaluation is not a condition to increase exports: Exporters

    Former head of the Food Export Council (FEC) Alaa El-Bahi said that the devaluation of the Egyptian pound would affect exports positively.

    El-Bahi added that the exchange rate of the pound after devaluation gives a competitive advantage for Egyptian products in foreign markets, which may increase exports and increase revenues of hard currency coming into the country.

    Meanwhile, former head of the Textile Export Council Magdi Tolba said that the devaluation is expected to increase exports but other procedures must follow.

    Tolba added that these procedures are; increasing industrial production, solving the problems of suspended factories and supply energy for the factories.

    Tolba criticised the contradiction between the monetary and banking policies from one side and the economic and industrial policies from another side, which led to the decline in exports.

    He explained that the devaluation may have a slight positive affect because the added-value of the exported raw materials remain high as it requires hard currency to be imported.

    “The higher the added-value is, the higher the prices of production materials are, which leads to more burdens on the exporter,” he said. “The devaluation would increase the activity of factories to largely provide production for export.”

    Tolba demanded the reformation of industries in Egypt to benefit from the devaluation of the pound.

    He noted that textile exports declined starting three years ago and witnessed a serve decline during 2015, adding that textile export revenues amounted to EGP 3bn three years ago and now exports don’t exceed EGP 2.5bn.

    Mohammed El- Mohandes, Head of the Engineering Industries Export Council, said a number of countries had to devaluate their currency to stimulate their economies, such as China to increase exports. However, with the situation in Egypt, exports decreased and imports increased.

    “Exporters didn’t get the money allocated for export support and it was not obtained from the last fiscal year (FY) 2014-2015 funds, and some exporters and factories rely on it,” El-Mohandes said. “Now factories and exporters can rely on this amount of money or calculate it in the cost.”

    Economic scholar at the Carnegie Middle East Center, Amr Adly, said that the reduction in the exchange rate comes to hit the black market and provide dollar liquidity in the banks and then in the official market, and then pay the efforts of re-unification of the actual exchange rate again.

    Adly noted that the classical economic theory states that lowering the exchange rate would stimulate exports and improve the balance of trade by reducing imports.

    Adly added that this theory may apply to the Egyptian situation and may not because it is not clear if Egyptian exports enjoy flexibility. Flexibility is needed to take advantage of the competitive advantage granted by the exchange rate devaluation, especially since about half of Egypt’s exports are petroleum raw materials, which experienced a decline with the fall in world oil prices.

    He pointed out that the increase in import prices may reduce the chances of economic recovery because it will raise the cost of production inputs.

    “However, the devaluation will open the door to local products to better compete with imported products on the basis of price,” Adly added. “The recovery of the economy may double the problem of black market increase due to high demand on hard currency”.