Improvement in Egypt’s Investment Climate Source: American Chamber of Commerce in Egypt, April 28, 2005.
The pre-annual general meeting and luncheon of the American Chamber of Commerce in Egypt (link here) took place on April 27, 2005 at the Conrad Cairo Hotel with, H.E. Dr. Mahmoud Mohieldin, Minister of Investment as guest speaker.
Dr. Mohieldin addressed the topic of “Investing in Egypt: Prospects and Challenges” in three parts, investment utilization, asset management and financial services, all under the supervision of the Ministry of Investment (MOI) (link here) and its affiliated authorities.
The MOI is now handling the portfolio of 169 public companies with assets worth LE70 billion in book value, not to mention hidden assets, and liabilities worth LE45 billion. Additionally, the MOI is managing public stakes in 695 joint venture companies. This is of course in addition to the traditional facilitation and registration of local private investment and FDI investment as implemented by the General Authority of Investment and Free Zones (GAFI) (link here).
The Minister considers the change in personal within GAFI a major achievement since he took office. He is now confident that issuing a company license, which used to take 4 months, can now be issued within 72 hours due to the clear procedures and good collaboration under the operation of the one-stop shop facility.
To benchmark the improvement in investment climate, Dr. Mohieldin pointed to the increase of issued companies’ capital for LE6 billion to LE11 billion in the first 3 quarters of FY 2004/05 (July 2004-March 2005) as a signal of the renewed interest in the economy. Likewise, privatization proceeds during the same period have reached LE3.2 billion, more than double their value during the last several years. Consequently, expectations of GDP growth for the current fiscal year are in the range of 5%.
He also stressed that unifying the foreign exchange market and elimination of queues; recent tariff cuts and a revised tariff code, in addition to the introduction of a new tax law are significant complements to the favorable investment environment.
To further stimulate growth, the ministry is working to attract projects to the Suez Special Economic Zone (SSEZ) under public-private partnership schemes.
The MOI is also supporting the MCIT (link here) in the privatization of Telecom Egypt (link here) and advising the Ministry of Petroleum (link here) on the first ever petroleum privatizations.
Concerning the banking sector, the GOE has initiated a program for banks’ privatization during 2005-08, beginning with the privatization of Bank of Alexandria (AmCham Member) (link here) and joint venture banks.
Insurance sector restructuring and privatization is also underway to address the diminishing market shares of public insurance companies, mainly being taken by the private life-insurance business.
As a natural consequence to all the above and the increase in product diversification, Egypt’s Stock Exchange (AmCham Member) (link here) has been announced as one of the most profitable markets by measure of all indices.
Egypt and UN Sign Agreement on Population and Food Security Source: MENA News Agency, April 24, 2005
Egypt , the UN Population Fund (UNFPA) (link here) and the UN Food Agriculture Organization (FAO) (link here) signed on Sunday, April 24 an agreement in the population, environment and food security fields.
As per the agreement, projects in the population, food security and environment will be implemented as part of the agricultural guidance programs with an initial budget estimated at $920,000.
The agreement aims at improving reproductive health, achieving an economic growth via sustainable development, improving living standard in rural areas and realizing food security at the individual and national levels.
The project will be implemented in 25 villages in five Egyptian governorates; Assuit, Suhag, Kafr al-Shaykh, Fayyum, Bani Suwayf and Minya.
The agreement was signed by Agriculture and Land Reclamation Minister Ahmed El-Liethy, FAO representative in Cairo Abd-al-Latif Thabit, UNFPA director in Cairo Faysal Muhammad Abd-al-Kadir and Director of Foreign Ministry's International Cooperation for Development Department Najla'a al-Husayni.
LE100 Million Allocated to Set Up Technological Centers Source: Info Prod, April 25, 2005
The government has allocated LE100 million to establish specialized technological centers to develop and modernize industry, Minister of Foreign Trade and Industry Rashid Mohamed Rashid said. He described the Ministry's plan to improve the current technological centers that contribute to developing furniture, textile, food, plastic, and leather industries.
Producers from every industrial sector will manage the centers and the government will provide them with the financial and technical support. The Minister's announcement came during his meeting with the Higher Committee of the National Institute of Quality held at the Arab Academy for Sciences and Technology in Alexandria.
The meeting's focus was on implementing the cooperation agreement between the Egyptian Authority for Quality Measures affiliated to the Ministry and the Productivity and Quality Institute affiliated to the Academy. The Academy will cover 30% of the cost of activities.
Russia Nears Deal to Sell Air Defense Systems to Egypt Source: AFX, April 27, 2005
Russia is close to a deal to sell an air defense system to Egypt, the head of Russia's top arms exporter said. 'Negotiations on the sale of anti-aircraft defense systems are nearing their end,' said Sergei Chemezov, head of the Rosoboronexport arms enterprise (link here), who accompanied Russian President Vladimir Putin on his trip to Egypt.
Russia and Egypt are to develop their 'traditional cooperation in the military and military-technical domains, given bilateral interests and international engagements', said a joint statement issued by Putin and Egyptian President Hosni Mubarak.
Ahead of the visit, Putin advisor Sergei Prikhodko said Egypt was interested in buying aviation equipment and anti-aerial defense missiles.
Prikhodko said Russia was having trouble breaking into the Egyptian market because it is controlled by the US, adding that 'Egypt needs these weapons.'
Russia to Launch Two Egyptian Satellites Source: Itar Tass News Agency, April 28, 2005
Russia will produce two satellites for Egypt and will launch them into orbit. The agreement has been added to a special protocol of intentions that was signed in Cairo, according to Rosaviakosmos (link here) [Russian Space Agency] chief Anatoliy Perminov. On the Egyptian side, the document was signed by the head of the national committee for remote Earth survey and space research.
The contract to this effect would be signed before the end of 2005. The value of the contract will be specified later.
The contract envisages construction of two satellites - "Egypt-Sat-1" and "Egypt-Sat-2" - as well as ground infrastructure for processing the satellite data.
Perminov said that Russia and Egypt had set up a joint working group to coordinate the details of cooperation. He expects the first Egyptian satellite to be launched not earlier than in three years' time.
Cairo Seeks Advisor for Alex Bank Sale Source: Middle East Economic Digest, April 22, 2005
The Investment Ministry is seeking an international investment bank to advise on the sale of Bank of Alexandria (AmCham Member) (link here), the country’s fourth largest state-owned bank. The adviser will be required to carry out a review of the bank’s operations and recommend a strategy for the sale.
Bank of Alexandria holds about 6.2% of the deposits in the country’s banking system. On 30 June 2004, it had total assets of $6,440 million and a net worth of $268 million. Investment Minister Mahmoud Mohieldin announced recently that, following the sale of Bank of Alexandria; he will seek to privatize Banque du Caire (AmCham Member) (link here).
Capital Increase to Fund Raya Expansion Source: Middle East Economic Digest, April 22, 2005
The local Raya Holding Technology & Telecommunications (AmCham Member) (link here) will launch on May 6 the private placement of a 61% share in the company, aimed at raising LE175 million ($30.2 million) to fund a regional expansion.
The placement will be open to investors who participate in the secondary offering on 3 May of 28% of the company’s existing shares. Participants in the subsequent capital increase will be offered, on a pro-rata basis, 35 million shares priced at LE5 ($0.86) each.
The local Beltone Financial (AmCham Member) (link here) and Bahrain-based Securities & Investment Company (link here) are lead managers on the placements. The company is also preparing an application for a listing on the Cairo & Alexandria Stock Exchanges (CASE) (AmCham Member) (link here), which is expected in May.
The proceeds from the capital increase will be used to complete the acquisition by Raya’s retail division of the local Sama Distribution & Trading Company, which is the local distributor of mobile phones from South Korea’s Samsung Electronics (link here).
It will also be used to finance Raya’s new Algerian operation to sell mobile phones from Nokia of Finland (link here). The additional funds will also help the establishment of a joint venture with National Bank of Egypt (AmCham Member) (link here) to provide IT services to the local banking sector.
EAB to Acquire American Express Source: Al Alam Al Youm, April 20, 2005
Egyptian American Bank’s (AmCham Member) (link here) General Assembly (GA) tentatively approved the acquisition of American Express Bank (AmCham Member) (link here). The GA also approved an increase in the bank’s paid-in capital by LE216 million to reach LE648 million. The capital increase will be partly financed from legal reserves (LE 72 million) with the balance from FY04 net earnings (LE144 million).
Egypt’s CIB Opens Units in UAE Source: Gulf News, April 17, 2005
Egypt's largest private sector bank, Commercial International Bank (AmCham member) (link here), plans to replicate its Qatar experience in the UAE by opening units in local banks. The bank, listed on the Abu Dhabi Securities Market (ADSM) (link here), formally announced the opening of its representative office in the UAE.
"We have no immediate plans to open branches in the UAE. But we are planning to open units in local banks here. The units will service our Egyptian customers here. The Qatari experience is very successful," Hisham Ezz Al Arab, CIB chairman and managing director, told Gulf News.
CIB set up a unit in Qatar Commercial Bank (QCB) (link here)a year ago to service Egyptians there. "We want to have the same model with a bank or banks here," he said.
Talks with local banks have yet to start. Only a small percentage of the bank's shares are traded in the UAE and Kuwait where they are listed. "In the future, we intend to increase our capital and that will improve the liquidity in the markets and thus increase trading volumes on the stock exchanges, especially Abu Dhabi and Kuwait”, according to Ezz Al Arab.
The bank has no plans to list on any other GCC stock market. The representative office of CIB in Dubai got off to a soft launch two months ago and the core business will be trade and corporate finance.
"Our main aim through the representative office here is to promote trade and investment between Egypt and the Gulf, particularly the UAE. We will help corporates from the UAE to do business in Egypt and find opportunities for investors here back in Egypt, either direct investments or in the capital markets," he said. "But our main focus is to find trade opportunities for our customers in the Gulf. We will cooperate with local banks and complement their business."
With total assets of $ 4.8 billion (Dh17.61 billion) and a market capitalization of $1 billion (Dh3.67 billion), CIB has a 78% free float on stock exchanges. It is also listed on the London and New York stock exchanges through GDRs (global depository receipts) and ADRs (American depository receipts). The bank's net profit jumped 23% in 2004 to $87 million (Dh319.29 million).
For Amcham’s Proceedings of the Conference on the “Reform of the Egyptian Financial Sector” (Click here)New
Bids in for Alex Wastewater Source: Middle East Economic Digest, April 22, 2005
A joint venture of Germany’s Bamag (link here) and the local Alexandria Construction Company is the frontrunner for the two main packages on the project to build a wastewater treatment network in the Ameriya district of Alexandria. The team emerged as the lowest bidder for both contracts when bids were opened in late March by the Alexandria General Organization for Sanitary Drainage.
Package one involves construction of an estimated $20 million wastewater treatment plant on the city’s southern outskirts with capacity to treat 50,000 cubic meters a day of effluent. The estimated $50 million second package involves the construction of a pumping station and sewerage network serving Ameriya’s 300,000 inhabitants.
The project is being financed by a German government grant administered by Kreditanstalt fuer Wiederaufbau (link here) Germany’s SRP Schneider & Partner (link here) is the consultant on the project. The facility will be the fourth treatment plant to be built in Alexandria since the 1970s. The first two were built with funds from the US, while the third was financed by the European Investment Bank (link here) .
Nissan Motor Starts Production, Sales of Pick Up Commercial Trucks Source: Mena Report, April 25, 2005
Nissan Motor Co., Ltd. (link here), announced the start of production and sales of the Pickup commercial vehicle in Egypt. As the first model to be produced and sold under Nissan's direct management in Egypt, the Pickup marks the start of the company's plan to establish Egypt as an automotive industrial base for the Middle East and North Africa.
Miyatani, Nissan vice president in charge of marketing and sales for the Middle East, Africa, Latin America and the Caribbean said that the expansion of Egyptian operations supports Nissan's performance under its new three-year business plan, NISSAN Value-Up.
Under the plan, which began on April 1, Nissan aims to grow its global sales to 4.2 million units, maintain a top-level operating profit margin among global automakers and maintain a 20% return on invested capital.
The Pickup is being built at Nissan's expanded and refurbished manufacturing plant at 6th October Industrial City, 40 kilometers west of Cairo. Sales began early April. Nissan plans to add more models to its production lineup in the future, including passenger cars and sport utility vehicles.
Nissan has also started importing the new 1.6-liter Sunny sedan from Japan for the local market. In the summer, Nissan will also begin imports of its popular X-TRAIL sport utility vehicle. Nissan's imports for Egypt are handled by Nissan Import Egypt, Ltd. (NIEL), a newly established subsidiary. Sales are being handled through Nissan Marketing & Distribution Egypt, S.A.E. (NMDE), also a newly established company. The Sunny went on sale earlier in April.
Mitsuji Sato is chairman and managing director of NMDE, as well as Nissan Motor Egypt, S.A.E., Nissan's assembly operations in Egypt.
Total industry sales in Egypt amounted to 70,335 units in calendar year 2004, up 12% compared with the previous year.
Nissan began manufacturing operations in Egypt in 1997 through a local, privately owned company. On June 28, 2004, Nissan announced it would take direct control of its manufacturing operations in Egypt by investing $60 million to buy out the manufacturing facility at 6th October Industrial City, refurbish and expand the plant, and enhance its sales, marketing and distribution operations in Egypt.
The newly refurbished plant at 6th October Industrial City has an annual capacity of 17,000 units per year. All of its facilities – including the body, paint, and trim and chassis operations -- have been upgraded. The plant employs 245 people.
By 2010, Nissan's investment in Egypt is expected to rise to more than $100 million as the company expands its operations in the country.
BG Launches Two Egyptian Gas Projects Source: International Oil Daily, April 21, 2005
The UK's BG Group (AmCham Member) (link here) announced on April 19, the delivery of first gas from two of its operated projects offshore Egypt's Nile Delta -- the Simian Sienna field development in the West Delta Deep Marine (WDDM) concession, and Phase 2 of the Rosetta field.
The BG-led Simian Sienna project, located 120 kilometers offshore Alexandria in the Mediterranean Sea, will supply the first train of the $1.9 billion Egyptian LNG (ELNG) venture at Idku, which is due to come on line before the end of June 2005. Simian Sienna will produce 565 million cubic feet per day of gas.
BG says the $949 million ELNG Train 1 project will catapult Egypt into the top seven global liquefied natural gas (LNG) exporters by 2006. The country made its debut on the LNG market this year.
The entire 3.6 million tons per year output from Train 1 has been sold to Gaz de France (link here) under a 20-year agreement. BG is partnered by Petronas (link here) and Egyptian Natural Gas Holding Company (EGAS) (link here).
Train 2 is set to produce its first LNG cargo before the end of 2005 and will be supplied by the BG-operated Sapphire field in the WDDM concession, which is due to come on stream in the third quarter of 2005. BG will take the 3.6 million-ton/yr output of Train 2 for supply, initially, to the Lake Charles, Louisiana receiving terminal in the US, and later to supply the Italian market.
BG needs more gas to support a third ELNG train, but for now is relying on its exploration in the WDDM concession.
Separately, BG and its partners, Edison International (Amcham Member) (link here) and EGAS, recently delivered first gas from the Rosetta Phase 2 project to the Egyptian domestic market. Under an amendment to the Rosetta gas sales agreement, the daily contracted amount of output from Rosetta will rise to 345 MMcf/d from the current 275 MMcf/d in 120 days' time.
Rosetta Phase 2 consists of an unmanned wellhead platform tied back to the existing Rosetta platform. The Rosetta field, located 60 km offshore, came on stream in January 2001.
First gas from Simian Sienna is the latest link in the chain that will connect WDDM reserves with high-value export markets in Western Europe and the US. Completing this chain required the synchronization of $1.3 billion of upstream capital expenditure and $1.9 billion of capital expenditure on the LNG facilities.
ELNG Train 1 started in January 2005 using gas from the Scarab Saffron fields, which began producing in March 2003, and will now be replaced by Simian Sienna gas.
The WDDM offshore facilities comprise eight sub sea wells tied in to the existing WDDM gas-gathering network and a shallow-water control platform. The onshore facilities form part of the Idku gas hub where the ELNG facilities are also located.
LE 666 Million Worth Contracts to Supply Koreimat Turbines Source: Info Prod, April 19, 2005
Minister of Electricity Hassan Younis witnessed on April 17, the signing of three contracts to supply 750 kilowatt gas turbines. Two contracts were destined for the electric power plant at Koreimat, 55 miles south of Cairo, one of which will be kept as a backup, while the third contract was for the power plant to be established at Damietta.
Following the signing of the contracts, Younis stated that the Ministry of Electricity intends to boost the capacity of Egypt's electricity network to the tune of 4.500 megawatts by 2007. Moreover, the new phase at the Koreimat plant would be financed by the European Investment Bank (EIB) (link here) and the OPEC Fund for International Development (link here) , due to the credibility Egypt enjoys and the economic value of the projects.
The Ministry of Agriculture, Productive Activities Project for Female Beneficiaries at New Lands, issued on April 27, 2005 a request for supply of machinery, equipment & requisites to enable training on Agro industries including the pressing of olives, processing of dates & dairy products, baking of bread, also tailoring & production of ready made garments under funding from the African Development Bank & Fund. The specification fee is LE 100. The Bid Bond is LE 4,500. Deadline for the submission of offers is May 18, 2005.
Information Technology
The Ministry of Communication & Information Technology, The Finance & Administration Department, issued on April 17, 2005 a request of offers from alliances of local or international companies for the mechanization/ computerization of the documents at the National Documents House [about 90 million documents] including the development of systems, related databases & their electronic publishing on the Internet in cooperation with the Ministry of Culture. The specification fee is LE 1,000. The Bid Bond is LE 400,000. Deadline for the submission of offers is May 24, 2005.
The Egyptian Public Authority for Drainage Projects issued on April 17, 2005 a request of offers from eligible bidders according to the World Bank guidelines to supply & install hardware & software for the improvement & extension of MIS - Management Information Systems, including related training & implementation services under funding from the World Bank. Works will be performed at the Authority headquarters & at subordinated Drainage Directorates spread countrywide. The specification fee is LE 5,000. The Bid Bond is 2%. Deadline for the submission of offers is May 8, 2005.
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