EGYPT EXTENDS EXPORT BAN ON RICE UNTIL APRIL 2009 Source: Al Mal, June 2, 2008
The Ministry of Trade and Industry (link here) has extended the ban on rice exports until April 2009 in an effort to curb domestic prices. The Ministry had earlier banned rice exports for six months beginning in April 2008. The government has been struggling to control inflation, which soared to a three-year high of 16.4% Y-o-Y in April, driven mainly by 22% Y-o-Y growth in food prices.
CAR INSURANCE PRICES INCREASE 60% Source: Noozz Editorial, June 4, 2008
Supplementary car insurance prices in Egypt have leapt 60% over the past few days in response to the increasing price of car components. The price of car insurance had also been historically weak because of fierce competition among insurance companies, said the chairman of the Egyptian Insurance Supervisory Authority (EISA) Adel Monir. Egyptian Insurance Supervisory Authority (EISA) (link here) will not interfere to fix prices in the market although it has tools to control the negative impact of harmful competition. Historically, EISA has given pricing guidelines to insurance companies that are not mandatory. Supplementary car insurance is not obligatory for owners.
INFLATION BREAKDOWN SHOWS FOOD RISING 27% IN MAY Source: EFG-Hermes, June 12, 2008
A full breakdown for inflation in May shows transport prices rising 13% and tobacco prices 12% Y-o-Y in May, reflecting price adjustments made by the government on 5 May. The increase in fuel prices already seems to have affected food prices. According to the government statistics agency CAPMAS (link here), it rose 27% Y-o-Y (3.6% M-o-M) in May.
CEMENT MAKERS RAISE EX-FACTORY PRICES BY 15% Source: Al Mal, June 15, 2008
Cement producers recently raised their ex-factory prices by 15%, a move that will increase retail prices by 4.8% to EGP440 per ton, said Abdul Aziz Kassim, secretary general of the Building Materials Branch. The government does not intend to extend a ban on cement exports when it expires in October. Amr Assal, chairman of the Industrial Development Authority, said 4.5 million ton in new cement capacity will come onstream this year, increasing Egypt’s total cement capacity to 45 million tons. This includes the new companies Medcom and Al Wataneya.
EGYPT'S PARLIAMENT APPROVES FY2008/09 DRAFT BUDGET Source: Al Masry Al Youm, June 11, 2008
The Egyptian parliament approved the draft budget for FY2008/09 after adding EGP3 billion to expenditure. The new spending will be allocated mainly to education, health and agriculture. Finance Minister Youssef Boutros-Ghali assured the members of parliament that the government will reach its target of a budget deficit of 3% of GDP by 2010/11.
In the draft budget, government expenditure is set to rise to EGP341 billion, 25% above estimated actual FY2007/08 spending, as a result of a marked increase in spending on public wages and subsidies as inflation reaches its highest in 19 years. The government expects of revenue EGP276 billion. Revenue has been boosted by strong growth mainly in non-tax revenue, which is expected to constitute around 40% of the total. The government projects a budget deficit of 6.7% of GDP in 2008/09.
MNP TO BE LAUNCHED IN JULY Source: Al Mal, June 10, 2008
The National Telecommunications Regulatory Authority (NTRA) (link here) is expected to launch mobile number portability (MNP) for business subscribers in July. Business subscribers represent 20% of the total subscriber base and 80% of the total revenue for mobile operators. MNP was launched for individual subscribers on April 11. Up till now, only a limited number of subscribers have migrated their numbers from Egyptian Company for Mobile Phone Services (Mobinil) (AmCham member) (link here) to other operators and vice versa.
TE TO REDUCE FIXED-TO-MOBILE RATE Source: Beltone news, June 12, 2008
Telecom Egypt (TE) (AmCham member) (link here) reached an agreement with mobile operators in Egypt concerning reducing the interconnection rate from fixed-to-mobile, from EGP0.45 to EGP0.30 per minute all day. Meanwhile, revenue sharing proportions will stay the same, with 60% for the mobile operator and 40% for the fixed line operator, namely Telecom Egypt.
ELECTRICITY MINISTRY AWARDS EGP560 MILLION CONTRACTS Source: Al-Mal, Al-Alam al-Yom, June 11, 2008
The Egyptian Ministry of Electricity and Energy (link here) awarded three contracts worth EGP560 million for water treatment works at Al-Atf and Sidi Krier power plants near Alexandria. The contracts were awarded to a consortium of the UAE’s Metito (link here), Greece’s Arktodon and two companies owned by the Egyptian government, West and Central Delta Electricity Production. With the signing of these contracts, all necessary agreements pertaining to the project have been completed, said Egyptian Minister of Electricity and Energy Hassan Younes. The two plants, being built at a total investment cost of EGP5.7 billion, are expected to begin operation by 2010, adding 1,500 megawatts to the national electricity network.
EGYPT SOLD NATURAL GAS AT USD7 PER MBTU IN APRIL Source: Bloomberg, June 3, 2008
Egypt exported liquefied natural gas at an average price of USD7 per mbtu in April, said Deputy Petroleum Minister Shamel Hamdy. Export prices should be higher in May, as international oil prices have increased, he added. Spain, France, Italy, the UK and the US are the main markets for Egyptian gas exports. Due to the rise in international prices, the government has been keen on renegotiating export agreements with a number of countries to increase the price they pay for its natural gas.
EGYPT PLANS TO DISCOURAGE FOREIGN OIL COMPANIES FROM EXPORTING THEIR SHARE IN NATURAL GAS Source: Al Masry Al Youm, June 10, 2008
Egypt plans to encourage foreign oil companies not to export their share of natural gas under their production agreements by raising the price at which the government buys gas, said Mohamed Abu El Enein, Head of the Industry Committee at the People's Assembly. Under the agreements, the gas produced by the oil companies is divided between the government and the companies. The government may increase the price to USD4.3 per mbtu, and perhaps to as high as USD5 per mbtu, from the current price of USD2.65 per mbtu. Egypt announced that it will stop signing new natural gas export contracts until 2010 or until it believes world prices have stabilized.
831 FEDDANS OF LAND IN DREAMLAND AUCTIONED Source: Noozz Editorial, Al-Mal, June 3, 2008
The Egyptian Authorities auctioned 831 feddans (3.5 million square meters) of land near the Dreamland project in Sixth of October City. Only three out of 23 offered plots (a total of 41 feddans or 172,000 square meters) were sold during the auction to two companies. The sale of the remaining plots was postponed. The plots sold from EGP1,100 to EGP1,500 per square meter for a total of EGP249.9 million. The state-run National Bank of Egypt (AmCham member) (link here) and Banque Misr (AmCham member) (link here) had taken possession of the land to settle debts of its previous owner, who had defaulted on loans.
OT TENDER OFFER APPROVED Source: EFG-Hermes, June 3, 2008
Orascom Telecom Holding (link here) announced that its cash tender to buy back 12 million of its local shares or their GDR equivalent was approved by the CMA (link here). It will pay EGP83 for each of the shares (around USD77.5 per GDR) in an offer that will expire on 30 June, unless it is extended. Last month, OT bought 106 million of its local shares (including GDRs) at EGP83 each in a similar tender that was more than three times oversubscribed.
CBE REQUIRES FINANCIAL INSTITUTIONS TO USE NEW CREDIT BUREAU FOR INVESTIGATION Source: Al Mal, June 4, 2008
The Central Bank of Egypt (CBE) (link here) has begun requiring banks and mortgage companies to rely on the newly formed Egyptian Credit Bureau "I-Score" (link here) to investigate the credit history of their clients without resorting to the credit database at the CBE. The bureau, owned by about 25 private and state banks and the Social Fund for Development (AmCham member) (link here), received a license from the CBE in January. It exchanges credit information on borrowers with banks, mortgage finance companies and leasing companies. The CBE will be monitoring banks and mortgage companies on their degree of reliance on the new system to ensure credit quality. The CBE will continue to receive data from banks on their clients as usual to rule out the possibility of any disruptions. The Egyptian Credit Bureau has a database of 2.2 million customers, including 27,500 small and medium enterprises, said Mohamed Refaat, the bureau’s CEO. The CBE has been working to reform the banking sector to ensure credit quality and facilitate the process of granting credit.
SIDC TO BID FOR DEVELOPMENT OF SIXTH OF OCTOBER LAND Source: Al Mal, June 4, 2008
Suez Industrial Development Company (SIDC) (link here), 60.5% owned by Orascom Construction Industries (OCI) (AmCham member) (link here), has purchased the conditions booklet for the second phase of the Industrial Developers Program, said Amr Assal, chairman of the Industrial Development Authority (link here). Under the second phase, the authority is offering 22 million square meters that will be developed into 13 industrial plots. SIDC is among 26 local, international and Arab companies bidding to develop 13 new industrial areas, which will have a combined investment cost of about EGP37 billion, Assal added. The deadline for the financial bids is 15 June. The plots lie in three industrial areas in Egypt, and SIDC is interested in the Sixth of October area, where the authority is offering four 1.8-million-square-meter plots of land, said OCI investor relations manager Hassan Badrawy. SIDC is on in the industrial developers list and has the right to participate in the industrial development in any area offered by the authority, said Assal.
MOF AND BANQUE MISR SIGN DEAL Source: Zawya, June 9, 2008
The UAE’s Ministry of Finance and Banque Misr (AmCham member) have signed an agreement to provide electronic bank guarantee service and e-registration of bank guarantee.
The agreement was signed by Faisal Ali Al Mansouri, Revenue Administration Director in Ministry of Finance, and Mohammed Farid Kamal Aldin, Abu Dhabi Branch Manager, Banque Misr. Al Mansouri said under the agreement bank branches operating in the country will issue bank guarantee letters electronically for the Ministry of Labour through the e-dirham system managed by the Ministry of Finance.
Since the Ministry of Finance launched e-registration service in April 2003 in accordance with its agreement with the Ministry of Labour, all procedures relating to payments of bank guarantees have been done electronically under the e-dirham system.
MENA TOURISTIC LAUNCHES EGP59 MILLION PROJECT ON NORTH COAST Source: EFG-Hermes, June 2, 2008
Egyptian Mena for Touristic and Real Estate Investment (link here) is launching a real estate project in North Coast at an estimated investment cost of EGP59 million. The company expects EGP80 million in sales from the project and a net profit of EGP21 million. The project, which will occupy 30,000 SQM and will be finished in 24 months, will have 200 residential units of 55 to 100 square meters in size, a four-star hotel with 60 rooms and a retail center.
CABINET TO CONSIDER CONVERTING LUXOR GOVERNMENT BUILDINGS INTO HOTELS Source: Noozz Editorial, June 5, 2008
The Egyptian cabinet has discussed a measure to convert government administrative buildings in historic parts of Luxor into 18 new hotels to meet growing demand for hotel rooms. The Ministry of Tourism (link here) meanwhile is cooperating with the Ministry of Interior (link here) to spend EGP53.9 million to upgrade Nile river ports to serve floating hotels. The Ministry of Tourism and Ministry of International Cooperation (link here) have spent about EGP1.2 billion to develop Luxor as a tourist destination, said the Luxor City Council chief Samir Farag.
OT INTERESTED IN ACQUIRING STAKE IN PAKISTAN’S SME BANK LTD. Source: Dow Jones, June 4, 2008
Orascom Telecom (OT) is one of 29 entities who have submitted expression of interest in acquiring a 93.88% stake in Pakistan’s SME Bank Ltd. SME Bank has 630 employees and 27 branches, among which 13 are active commercial branches. OT wanted to move into money banking in another country, Bangladesh, through its mobile operator Banglalink (link here) and was considering buying a bank or a banking license in Bangladesh to do so, said CEO Naguib Sawiris.
ARAB INT'L WOMEN'S FORUM HELD IN EGYPT Source: Khaleej Times, June 13, 2008
The Arab International Women's Forum (AIWF) collaborated with the Hawkamah Institute for Corporate Governance and the Mudara Institute of Directors (IOD) recently to present its first regional seminar on Corporate Governance in Cairo.
The seminar featured a distinguished group of speakers from local partners, the Mudara Institute of Directors, the Women's Strategy Group, Egypt's International Economic Forum, DLA Piper Middle East, the Commercial International Bank (CIB) (AmCham member) (link here) and the IFC (link here) among many others. Khalid M Al Suwaidi, Chief Executive Officer of the Mudara Institute of Directors said: "We are proud to be supporting an opportunity for women leaders to workshop ideas and share information about the challenges they face in relation to effective corporate governance. We are certain that the seminar will be a highly useful, interactive experience for all attendees.”
This seminar was the first of many joint initiatives on Corporate Governance planned for the future as part of the AIWF and Hawkamah partnership, which began in December 2007 with the aim of advocating corporate sector reform and strengthening corporate governance for women entrepreneurs with businesses and investments in the MENA region.
ALEXFERT RENEGOTIATING LOW-COST NATURAL GAS CONTRACTS DUE TO EXPIRE NEXT YEAR Source: Al Mal, June 5, 2008
Alexandria Fertilizers (AlexFert) is negotiating with the Ministry of Petroleum (link here) to link the price it pays for natural gas to its export prices, said Moataz El Alfi, executive director of Egyptian Kuwaiti Holding (EKH), which is a major shareholder in the company. Alexandria Fertilizers currently pays USD1.70 per mbtu for its natural gas under low-price contracts that expire next year, El Alfi said. The impact on costs from the new pricing is likely to be offset or minimized by a recent surge in urea prices to above USD700 per ton.
HIKMA PHARMACEUTICALS TO SPEND USD15 MILLION TO EXPAND EGYPT PLANT Source: Al-Alam al-Yom, June 10, 2008
UK-based Hikma Pharmaceuticals (link here) will spend USD15 million (EGP80 million) to expand the capacity of its plant in Egypt, said Mazen Darwazeh, managing director for Hikma’s Middle East and North Africa operations. The new production line will make types of diabetes and cardiac drugs not currently produced in Egypt. Hikma acquired Alkan Pharmaceuticals in September 2007 for EGP336 million. Hikma intends to further increase its presence in Egypt through organic expansions and acquisitions of other private pharmaceutical companies, added Darwazeh. Egypt is the second largest market for pharmaceuticals in the region, after Turkey, and is expected to continue to grow because of its fast population and economic growth as well as the increase in health awareness and spending on health insurance, Darwazeh said.
EL SEWEDY CABLES TO ESTABLISH POWER CABLES FACTORY IN QATAR Source: Gulf Times, June 3, 2008
Egypt’s El Sewedy Cables (AmCham member) (link here) will establish a plant in Qatar for the production of power cables with a total cost of 820mn Egyptian pounds ($150mn). The project, which will produce low, medium and high voltage cables, will be financed 40% through equity and 60% by medium term loans. El Sewedy Cables will hold 50% of the venture while Qatar's Aamal Holding will own the remaining half. The plant will have an initial production capacity of 30,000 tonnes a year with the majority of production sold locally in Qatar and the rest exported to neighbouring Gulf countries. The project will come onstream at the end of 2009 or the beginning of 2010, El Sewedy said. Imported machinery, utilities and raw materials for the factory will be exempted from custom duties.
EGYPT'S JUHAYNA PLANS NEW $84 MILLION INVESTMENTS Source: Reuters, June 11, 2008
Egypt's Juhayna Food Industries (AmCham member), one of the biggest dairies in the Middle East, said it was setting up two new subsidiaries with a combined capital of 450 million Egyptian pounds.
The privately-owned Egyptian firm, which exports to 48 countries including the United States and Japan, said the first subsidiary was for marketing and distribution with a capital of 200 million pounds. The second company specializes in agricultural development. "Sales are expected to reach 2 billion pounds this year, reflecting the value of Juhayna in the market of food products, and the company is keen to have a very strong distribution network," said Chairman Safwan Thebet. Juhayna has investments worth 1.2 billion pounds in Egypt. The company owns 6 factories producing dairy products and fruit juices. It employs 3,000 workers.
PIRELLI INVESTS $65 MLN TO RAISE TRUCK AND BUS TYRE PRODUCTION IN EGYPT BY 50 PCT Source: Thomson Financial, June 3, 2008
Pirelli & C. SpA (link here) said it has invested $65 million to increase its production in Egypt of radial tyres for trucks and buses by 50 percent. The new investment will allow its factory in Alexandria to increase its annual production to one million pieces, Pirelli said. The Alexandria development is part of Pirelli's strategy to increase its manufacturing presence in countries with strong market growth and cost competitiveness.
PALM HILLS COMPANY EXPANDS INTO THE SAUDI REAL ESTATE MARKET Source: ArabFinance, June 8, 2008
Palm Hills Developments (link here) said it would invest LE 3 billion ($561 million) in Saudi Arabia. It will undertake residential and administrative real estate projects with a local partner.
The company bought an area of 6.7 million square meters in Riyadh and Jeddah. Yassin Mansour, Palm Hills chairman, said that this step represents a starting point for the company in implementing its strategy to expand regionally. He added that Riyadh’s project will be constructed on an area of 3.7 million square meters and that of Jeddah will be constructed on an area of three million square meters.
The above projects will increase the company’s owned lands to 47 million square meters. Palm hills will own 51% stake in both projects and the Saudi partner will own the rest.
EGYPT FIRM TO BUILD $411 MLN SUDAN HOUSING PROJECT Source: Reuters, June 12, 2008
Cairo-based Mena Touristic and Real Estate Investment will build a housing complex in the Sudanese capital Khartoum under a contract with a local property company. The housing units, which include detached villas and apartment buildings, would have a sale value of 2.2 billion pounds ($411 million).
Its Sudanese partner is Hayy al-Mal Real Estate Development, which owns the 141,000 square metres (35 acres) of land for the complex in what is planned to be a new financial district for Khartoum. Mena will have a 69 percent stake in the project, with Hayy al-Mal owning the remaining 31 percent. Mena will raise the money for the project from its own resources and from advances on the housing units.
Work on the project should start in early 2009 and it will take five years to complete, he said. Mena has completed a separate 411,000 square metres housing project in the Soba district of southern Khartoum called Al Yasmine Residence.
FLSMIDTH WINS EGYPT CEMENT LINE EXPANSION ORDER Source: Reuters, June 11, 2008
Danish engineering group FLSmidth (link here) said it had won a large expansion project from Arabian Cement Company in Egypt worth 63 million euros ($97.62 million). The contract is to supply engineering and equipment for a complete 6,000 tonnes per day cement production line, an expansion of an existing cement plant near Suez.
PARLIAMENTARY COMMITTEE MAKES FURTHER AMENDMENTS TO PROPERTY LAW Source: Al Ahram, June 8, 2008
The Budget and Planning Committee at People's Assembly, or lower house of parliament, has introduced additional amendments to the draft of the property tax law that the Shoura Council, or upper house, approved last week. The exemption threshold for the unit’s value was increased to EGP550,000 from EGP450,000 and the tax rate reduced to 10% from 12%. The maintenance cost, which is subtracted from the rental value of the unit, was raised to 30% from 25% for residential properties and to 32% from 30% for commercial units. The committee also provided property-tax exemptions for hospitals, political party headquarters and educational buildings. Minister of Finance Youssef Boutros-Ghali said that the government will the pay the tax for any citizen unable to pay after doing social research.
NEW AMENDMENTS TO THE CAPITAL MARKET LAW Source: The Ministry of Investment, June 2, 2008
The People’s Assembly has approved the amendments of the capital market law No. 95/1992, stated the Minister of Investment, Dr. Mahmoud Mohieldin.
These amendments come within the government’s efforts to extend the investment base and enhance the capital market by supporting the supervisory competencies of the Capital Market Authority (link here).
The amendments were enacted to enhance the primary issue market of securities by reducing the minimum nominal share value to ten piasters instead of one Egyptian pound in order to widen the investors’ base and support more flexibility of transactions. Corporate characters including companies and other institutions are now entitled to issue securities to be traded on the stock market.
According to the new amendments, violations to the capital market law will be punished by a fine up to LE 20 million in some serious crimes, which add risks to the market and give illegal returns of million of pounds.
The concept of the crime of using internal or preferential information was extended to involve not only who breach the confidentiality of information by virtue of his position but also any person who misuses this information by dealing on the stock market to achieve a profit or safeguard himself against a loss. With the new amendments, the Capital Market Authority has the right to conclude reconciliation on criminal cases at any stage.
THE PEOPLE’S ASSEMBLY APPROVED A DRAFT BILL AMENDING LAW 38 OF 1977 Source: Beltone news, June 12, 2008
The People’s Assembly approved on Sunday June 8th a draft bill amending law 38 of 1977 regulating operations of tourism companies. The amendments aim to i) raise the capital of tourism companies operating in Egypt from EGP100,000 to EGP2 million, in line with the expansion in tourism activities in Egypt, ii) allow foreign tourism companies to establish branches in Egypt with a capital of EGP3 million, provided their country of origin allows Egyptian companies to open branches, iii) remove distortions in the law related to the range of companies’ activities iv) regulate the legal structure of the tourism companies.
Compiled by: Business Studies & Analysis Center E-mail: Studies@amcham.org.eg If you want to receive this bulletin on a regular basis, fill out this form
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