Boeing to supply Avengers to Egypt Source: Trade Arabia, July 30, 2006
Boeing (link here) has signed a Foreign Military Sales (FMS) agreement with the US Army (link here) to deliver Avenger short-range air defense fire units to Egypt.
The $50 million contract includes associated spares and logistics support, a company statement said. The previous FMS contract with Egypt was valued at $25 million and awarded in 2000. The exact number of units sold was not disclosed.
The Avenger is the US Army's mobile, shoot-on-the-move, short-range air defense system. Armed with Stinger missiles and a 50-calibre machine gun, Avenger provides effective tactical defense and convoy protection against helicopters, cruise missiles and unmanned aerial vehicles.
"Avenger is a lethal forward-area air defense system with proven capabilities deployed worldwide," said Debra Rub-Zenko, vice-president and program director for Boeing Integrated Missile Defense.
The new contract calls for Boeing to deliver the Avengers by September 2008. Under a previous FMS contract, Boeing delivered Avengers to Egypt from 2000-2004.
The Egyptian order will allow Boeing to restart the Avenger production line, which has been dormant since 2004. Having an active production line ensures Boeing's ability to respond quickly with an affordable short-range air defense solution for both domestic and international customers.
EGYPT AND US PROBE OIL COOPERATION Source: InfoProd, July 23, 2006.
Petroleum Minister Eng. Sameh Fahmy and US Secretary of Energy Samuel Bodman discussed developing the activities of the US oil companies working in Egypt.
In statements, Fahmy said that he discussed with the US official expanding the activities of the US companies in the oil, gas and petrochemical industries as well as luring new companies. Fahmy said that he expects the US companies to contribute to increasing Egypt's output of crude oil, especially in the Western Desert area. Talks also covered the development of Egypt's exports to liquefied natural gas and high-quality petroleum products which contributed to the improvement of trade balance between the two countries as Egypt's liquefied natural gas exports since 2005 amounted to $ 892 million.
CAREFUL ADJUSTMENT IN PETROL PRICES Source: Oxford Business Group, July 25, 2006
On July 21 the Egyptian government increased the price of petrol for the first time in 15 years. For a country that is so heavily dependent on subsidies, the move might have caused something of a greater stir, were it not for the targeted approach adopted by the government.
In a move to protect the vast majority of low-income earners in Egypt, the government refrained from increasing the price of the lower grade 80 octane, while increasing that of higher grade fuels. The price of 90-octane petrol was increased from $0.17 a liter to $0.22, while diesel was hiked from $0.08 to $0.13. Although prices for fuel oil for factories, natural gas and kerosene were increased, that of butane and natural gas for home usage remained unaltered. In line with this carefully tailored approach, the fund to provide subsidies for bread - the mainstay of the Egyptian diet for low-income families - was increased by $174.2m per year.
Cutting fuel subsidies - albeit selectively - has been more than a necessity for a government that is struggling to significantly reduce the budget deficit, projected at more than 9% of GDP for 2006-2007. The government has set aside a hefty $6.9bn for fuel subsidies in its latest budget, up from the $3.8bn on the previous year. Shouldering the weight of high global oil prices is becoming increasingly unsustainable, particularly if the administration is to lower the budget deficit to between 2 and 3% of GDP within three to four years as planned.
This is not to say that other measures have been ineffective in relieving pressure from the budget. A cut in tariff rates in September 2004, followed by cuts in income taxes in June 2005, was heralded as a great success, though insufficient to fill the macroeconomic budgetary hole. This was in spite of the fact that tax returns from corporations and individuals alike have increased by almost 100% since the Ministry of Finance's tax reform program was put into effect.
The government has had to tread particularly carefully in dealing with such emotive issues as subsidies and price increases. Ensuring that the poorest segment of Egyptian society does not absorb the consequences of fiscal belt-tightening has been a pressing concern. Minister of Finance Dr. Youssef Boutros-Ghali has repeatedly reiterated that as little as 20% of energy subsidies benefit those who really need them. Re-channeling the remaining 80% of subsidies to areas where greater state support is required - such as health and education - remains a priority. The new price structure for higher-grade fuels marks a step in that direction.
LE1 BILLION FOR IMPROVING BREAD Source: InfoProd, July 23, 2006
In the framework of President Mubarak's directives for improving bread and providing it for the limited-income brackets, the government has decided to increase subsidy assigned for bread by one billion LE to bring aggregate annual subsidy to LE9 billion.
Dr. Youssef Butros Ghali, Minister of Finance, said the new subsidy would be devoted to supporting bakeries by LE700 million and mills by LE300 million. He stated that increasing subsidy appropriations would restrict the phenomenon of the leakage of subsidized flour to the black market and put an end to the low quality of bread. This comes in the context of the attempts by the Ministry of Social Solidarity to shouldering the difference in price of gas oil that is used by bakeries with the aim of increasing quantities of bread.
FERTILIZER PLANT PLANS Source: Egypt Investment Portal, July 17, 2006
More details of the plans to set up a a $325 million phosphoric acid plant in Egypt by Indo Egyptian Fertilizer Company Ltd, the joint venture between Indian Farmers' Fertilizer Co-operative Ltd (link here) and the Egyptian State-owned El Nasr Mining Company (link here) were announced.
The proposed plant has bee given permission for duty free import of all capital goods and the income of the company would be tax-free income for 10 years.
According to the plans, El Nasr would supply 2 million tons of rock phosphate to the joint venture company and IFFCO would buy out the entire phosphoric acid thus produced for manufacturing di-ammonium phosphate in India.
The International Finance Corporation (link here), which was appointed as the lead arranger to tie up the finances, is in the final stage of submitting its appraisal report in August and hope to tie up the finance by around November.
IFFCO holds 76% of the joint venture, while EI Nasr holds the balance.
FOUR PHARMACEUTICAL COMPANIES INVEST IN SAUDI ARABIA Source: ANSAmed, July 28, 2006
Four Egyptian pharmaceutical companies are taking part with Saudi Mazen Betraji, in the construction of a plant in Jeddah with a total investment of 100 million riyals (approx. 21 million euro). The four companies include, Epico (link here), Pharco (link here), and Al Amriya and account for 60% of Egypt's pharmaceutical product exports.
The participating Egyptian companies aim to expand the scope of their operations in the Gulf countries. The plant is to start operations in October.
GULF VISITOR NUMBERS TO EGYPT INCREASE SHARPLY Source: Middle East Company News Wire, July 28, 2006
Egypt visitor numbers from Arab countries are up 15% between January and June this year, which trade sources attribute to successful marketing, the abundance of airline capacity and the traditional holiday period.
Qatar recorded a huge 86.9% jump in visitors to Egypt, followed by Palestine (17.4%) and the UAE (11.9%), and their tourist nights rose 63.8%, 26.9% and 25.1% respectively. Saudi Arabian visitors increased 8.9% to 42,245, cementing its position as the premier regional market and fourth biggest overall after Germany, the UK and Italy, while Bahrain arrivals increased 8.3% to 1,574 visitors. Lebanon and Libya also performed strongly, both recording double-digit growth.
TOURISM FIGURES UP Source: Egypt Investment Portal, July 19, 2006
Over the first half of this year, about 4.35 million tourists visited Egypt against 4.260 million in the first half of 2005, an increase of 2%.
Big increases in tourists from Asia were reported. Indian tourists visiting Egypt increased by 18.3%, South Korean tourists increased by 25.6%, Chinese increased by 32.4%, Thai tourists in Egypt increased by 25.6%, Indonesian tourists increased by 14.7%
Markets in North and South Americas also reported a remarkable increase in the number of tourists flying to Egypt. On the one hand, tourists arriving from North America increased by 18.2%. On the other hand South America reported an increase of 17.4% in the number of its tourists flying to Egypt. African visitors reported a big increase estimated at 34.3% in the same period. The travel traffic from Australia and New Zealand witnessed an increase of 13.2 in the first half of 2006. Arab tourists increased by 15.1%. According to reliable figures, about 831195 Arab tourists visited Egypt, constituting an increase of 19.12%.
UK reported an increase of 41% in the number of its tourists flying to Egypt in the first half of this year, Ireland 58.3% and Ukraine reported an increase of 30.5%.
European tourists constituted about 68.8% of the total number of Egypt's visitors in this period (a decrease of 1.5%).
Throughout June this year, the top 10 countries were Germany, the UK, Italy, Saudi Arabia, Russia, Libya, Palestine, the US, France and Poland.
ADNH AND TRAVCO TO ESTABLISH TOURISM INVESTMEST FIRM Source: Nationwide International News, July 28, 2006
The Abu Dhabi National Hotels Company (ADNH) (link here) and Egypt's Travco (AmCham member) (link here) are set to establish a tourism investment company.
The new company will operate in the tourism sector in the UAE and the Middle East under an agreement signed by ADNH Chairman Khalifa Nasser Al Mansouri and Travco Chairman and CEO Hamed Al Chiaty.
The two parties agree to cooperate for their best mutual interest and develop travel, tourism and hospitality related projects in Abu Dhabi and Al Ain in the current phase and to expand to other territories in the future phase.
Abu Dhabi Tourism Authority (ADTA) Chairman and Board of Directors Sheikh Sultan Bin Tahnoun Al Nahyan hailed the agreement saying that it was an integral part of the ADTA strategy.
E-SIGNING IN EGYPT Source: Al Ahram Weekly, 20-26 July 2006
The Information Technology Development Agency (ITIDA) (link here) issued four licenses last week to Security and Network Services (SNS), Egypt Trust, Advanced Computer Technology (ACT) (AmCham member) (link here) and Misr for Central Clearing, Depository and Registry (MCDR) (link here) for the launch of e-signature solutions on the Egyptian market.
In a conference inaugurating the issuance, a memorandum of understanding was signed between ITIDA and the Cairo Regional Center for International Arbitration (CRCIA) (link here). The memorandum is thought to focus on the development of e-commerce dispute settlement mechanisms, by means of which electronic signing will be the primary means of validating legal consent. The event was jointly organized by the United States Department of Commerce (link here) and ITIDA. A major need highlighted by conference participants in Cairo and Alexandria was the creation of specialized courts to tackle e- commerce dispute settlements and authentication issues.
ITIDA CEO Mohamed Omran also cited cooperation between the Ministry of Finance and the Ministry of State for Administrative Development (link here), as well as ITIDA to incorporate e-signatures into the administrative public domain. "People need to know that it is taking us so long to implement, because this sort of project must be done under the highest levels of secrecy. There is only one original encryption that will authenticate electronic signatures in Egypt. Any leak of information can result in the collapse of the whole system, jeopardizing the market as a whole," Omran said.
SNS, among the firms that were granted licenses, has already begun delivering its services to banks such as the Commercial International Bank (CIB) (AmCham Member) (link here) in mid-2005, by providing PKI [public key infrastructure] solutions on four application zones. These are internal banking uses, Internet banking, corporate clients, and pay roll recipients,"
SNS will soon export its original solution to the Government of Bahrain as part of its e- government initiative.
EGYPT INKS TWO AGREEMENTS FOR OIL AND GAS EXPLORATION Source: Reuters, July 18, 2006
The Egyptian Natural Gas Holding Company (EGAS) (link here) has signed two agreements for gas and oil exploration in the deep waters of the Mediterranean with British Gas (Link here), Petronas (Malaysia) (link here) and German RWE (AmCham Member) (link here).
Under the agreement the first exploration will take place in the North Sidi Kerir deep offshore area, and the company said in a statement it would start drilling in 2008. We are delighted to be granted this concession area. We plan to acquire 3D Seismic in 2007 and expect to drill the first well in 2008," said Ian Hewitt, President of BG Egypt. BG says it is responsible for more than 40% of Egypt's gas output. Egypt has proven reserves of natural gas of 66 trillion cubic feet (1.9 trillion cubic meters).
Sidi Kerir and will be carried out by British Gas and Petronas with a total investment of $80.6 million and a commitment to drill three wells in eight years. The second exploration will be held in the North Ameriya area and will be carried out by German RWE with an investment of $25 million and a commitment to drill four wells in nine years.
$500 MILLION LOAN FOR FINANCIAL REFORM Source: Egypt Investment Portal, July 29, 2006
Egypt has been awarded a loan of $500 million from the African Development Bank (ADB)(link here), which will be used to support the country's structural and financial reform program. This is the biggest loan ever awarded to any regional member country.
The ADB says the loan will support activities aimed at increasing private sector participation in the financial sector, restructuring state-owned banks, and strengthening regulatory and supervisory capabilities of financial sector regulatory agencies.
It would also help restructure the insurance industry and reduce the state's dominance of the sector through privatization and expansion of the capital market.
The Financial Sector Reform Program’s main aim is to develop a market-based, competitive and sound financial system that would better serve Egypt's development and growth.
The program seeks to enhance the efficiency of financial intermediation and risk management to build sound banking and non-bank financial sectors through structural and financial reforms that will accelerate Egypt's economic growth and development.
EFG-HERMES BOARD ACCEPTS ABRAAJ BID Source: Financial Times, July 25, 2006 and Strategiy July 30, 2006
The Board of Directors of EFG-Hermes (AmCham Member) (link here) has accepted the bid made by Dubai based Abraaj Capital (link here) for the acquisition of 25% of EFG-Hermes.
According to the announcement the EFG board met in Cairo on 29th July and accepted Abraaj’s offer to subscribe to 97,074,010 of the common shares of EFG by way of a capital increase exclusively issued in favor of Abraaj Capital at a price per share of EGP30. The acquisition of these shares will be made through a wholly owned subsidiary, Abraaj Egypt limited and the transaction is valued at $505 mn.
The transaction is still subject to the approval of EFG-Hermes shareholders and relevant regulatory authorities. If approved, the transaction would position Abraaj Capital as the single largest shareholder in EFG-Hermes, who in turn is the largest shareholder in Bank Audi (link here), Lebanon.
The senior management of both firms are fully aligned and are supporting the transaction. Arif Naqvi, CEO and Executive Vice-Chairman of Abraaj Capital, stated, “This transaction is a strategic and long term investment for Abraaj and it shows our confidence and commitment to the future of Middle East. EFG-Hermes is widely regarded as the leading investment bank in the region, our strategy moving forward will be to catalyze and accelerate the regional development plan of EFG-Hermes to become the foremost integrated financial services institution in the region.
EFG is listed on the Cairo and London stock exchanges, and is about two-thirds publicly owned. Shares in EFG in Egypt, jumped 23.8% overall on news of Abraaj's offer.
Abraaj is undeterred by EFG's exposure to Lebanon, where the bank acquired a 20% stake in Bank Audi this year. The country now accounts for about one- third of EFG's overall business.
EFG has more than 40% of the market for securities broking in Egypt, and has won about 7% of this market in the United Arab Emirates since opening an office there in late 2004.
This year the bank won a license to operate investment banking and asset management activities at the Dubai International Financial Exchange (link here). It then won a license to operate in Saudi Arabia, and as part of its expansion plans acquired the stake in Bank Audi, one of Lebanon's largest banks.
Fitch (link here), the ratings agency, last week said it might cut Bank Audi's C/D rating, because of the possibility of impaired lending resulting from the Lebanon conflict.
AHLI UNITED BANK ANNOUNCES PARTNERSHIP WITH TAAMIR Source: Middle East Company News Wire, July 23, 2006
Ahli United Bank B.S.C. (link here), one of the Gulf's leading financial services institutions, today announced the launch of their new partnership with Taamir Mortgage Company, Egypt's first mortgage company, and a pioneer in the field of home financing.
The new partnership was made official during a signing ceremony at Ahli United Bank's Seef headquarters in the Kingdom of Bahrain. As part of the new partnership, Ahli United Bank will promote and market Taamir Mortgage Company's line of loans for purchase, construction or renovation of property in Egypt, as well as pre-qualify applicants wishing to obtain mortgages on Egyptian properties. Ahli United Bank's association with Taamir Mortgage Co., a pioneer in the mortgage industry in the MENA region, will give a wider audience the opportunity to take advantage of property investment and mortgage loans within Egypt. Taamir Mortgage Company is a leader in the mortgage industry throughout Egypt. The company was founded through a partnership between eleven of Egypt's biggest companies in the fields of real estate, banking, and insurance, with a combined total capital of LE500 million (US $87.5 million).
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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