EGYPT REPORTS 7.2% ECONOMIC GROWTH
Source: AMEinfo, November 27, 2006

Egypt's economy grew at a rate equivalent to 7.2% in the July-September quarter, 2006 compared with 5.3% in the same period last year. In the last fiscal year (2005/06), GDP grew by 6.9%, a level not seen since the 1980s. The expansion of the natural gas industry and a construction boom partly supported by oil rich Gulf States have been key growth factors.

GOVERNMENT MAY REPLACE CEMENT TRANSPORT PENALTY WITH FLAT FEE
Source: Al-Ahram, Al-Akhbar, November 15, 2006

The government has proposed replacing penalties for overloaded cement trucks with a system where cement producers would pay the Ministry of Transportation a flat fee of LE3.5 for ton of cement that is shipped, said Ali Moussa, the president of the General Division for Building Materials at the Chambers of Commerce and Industries. The new system would reduce the transportation costs that companies pay by about 66% and therefore reduce cement prices for consumers. Producers now pay LE22 for each extra ton above the maximum 30 tons allowed per truck. The ministry would use the extra fees to maintain and strengthen roads. Because the government would no longer have to inspect trucks on the road, the new system would also speed up transportation, Moussa said. This issue is still under discussion, because some cement producers, including Assiut Cement (AmCham Member) (link here) and Al Amereya Cement, have not yet accepted the proposal.

Cement production in the Arab world should increase by 45 million tons in the next three years to 80 million tons per year, Egypt’s Minister of Industry and Trade Rachid Mohamed Rashid said. Demand in the region is enough for 25 new cement projects, implying $6 billion investments in the next three years, he added.

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1 MILLION SIM CARDS FOR MOBINIL BY SAGEM ORGA
Source: AMEinfo, November 16, 2006

Sagem Orga GmbH (link here) has received a landmark order for SIM cards from Mobinil (AmCham Member) (link here), the leading mobile operator in Egypt. For Sagem Orga this is an important success in the booming Egyptian mobile telecommunications market.

Egypt's mobile telecommunications market was privatized in 1997 and since then rapid growth rates can be noticed. Last year, according to industry analyst BIS Shrapner, it experienced a growth of 84%. With 14 Million GSM customers today in comparison to a total population of almost 79 Million people, 62.9% of them aged 15 -64 years, the country offers a huge potential.

"The order of 1 Million SIM cards is a significant milestone for Sagem Orga in one of the most important markets in the Middle East/Africa and reinforces our presence in the region. We look forward to continue our relationship with Mobinil exploring new opportunities for solutions and value added services which will support Mobinil in further enhancing the number of services to their subscriber base," says Jessica Westerouen van Meeteren, Managing Director of Sagem Orga's regional office in Dubai, United Arab Emirates.

NOKIA-SIEMENS SET UP OFFICE NETWORKS MANAGEMENT
Source: MENA News Agency, November 16, 2006

International technology giants Nokia (link here) and Siemens (AmCham Member) (link here) are setting are up a joint representative office for network in Cairo to provide support for communication networks in Egypt and Africa. According to a senior Nokia source, Nokia-Siemens Networks will start expansion in the market through promotion of their investments in the communication field, via upgrading fixed-lines and mobile communication networks. Meanwhile head of communication and PR at Nokia in the MENA region, Eddy Rizk, ruled out the possibility that the company will appoint new distributors in the market, thereby rejecting news of an agreement with a UAE company to market Nokia's products in Egypt. He pointed out that Nokia is seeking to enhance relations with its local distributors in Egypt through a recently opened Cairo office for mobile phone transactions. "The office will be expanded to boost promotion and marketing efforts for Nokia handsets in Egypt, Libya, and Sudan to strengthen our presence in the region", he said.

TECHNOLOGY EXPORTS HIT $500 MILLION
Source: Noozz, November 27, 2006

Technology and communications’ services exports recorded approximately $500 million over the first ten months of 2006, according to Gamal Mohamed Ali, deputy chairman of the Information Technology Industry Development Agency (link here). Ali said exports of technical support and call center services made up the largest percentage of total technology exports as a result of growing sales in the USA and European markets. “Software exports followed as the Software Engineering Competence Center (link here) provides training to developers on international quality standards so that they can penetrate international markets,” he added.

In cooperation with A.T. Kearney (link here), the Egyptian Information Technology Industry Development Agency (link here) aims at developing a strategic plan of action to increase exports of technology companies to $1 billion by 2010. The plan will focus on value-added services, such as technical support and contact centers.

TELECOM EGYPT PROFITS HIT LE550 MILLION
Source: Noozz, November 17, 2006

Profits of Telecom Egypt (link here), achieved from its 48.9% stake in Vodafone Egypt (AmCham Member) (link here), exceeded LE 550 million over the first nine months of this year, said Chairman of Egypt Telecom Akil Bashir.

Bashir told reporters that total revenues of Telecom Egypt surged 7.9% to LE 6.9 billion over the first nine months of 2006 compared with a year earlier. The increase in revenues was due to growth in the number of fixed-line subscribers by 4.7% to LE 10.7 million.

He pointed out that the 17% decline in the company’s net profits to LE 1.5 billion was due to the increase in provisions and higher cost of the average fixed-line installation to LE 4,000 from LE 2,500 as a result of increasing copper prices (the main component of cables) as well as exchange price variations.

The nine months results for Telecom Egypt show a drop in the company’s capital spending by 36% to LE 1.2 billion with earnings per share down to LE 0.89 compared with LE 1.07 a year earlier.

Meanwhile, the number of subscribers at the company’s broadband Internet operation TE Data (AmCham Member) (link here) soared to 68,600 subscribers in the January to September 2006 period compared with 21,700 a year earlier.

EGYPT VENTURE FUND SELECTS 9 FIRMS FOR INVESTMENT
Source: TradeArabia, November 22, 2006

The Technology Development Fund (TDF) (link here), a venture capital fund propelling the growth of innovative, early-stage Egyptian companies in the field of information technology, has selected nine companies exhibiting well-researched, viable and innovative plans for inclusion in the fund.

The fund, managed by EFG-Hermes Private Equity (AmCham Member) and owned by financial group EFG-Hermes (AmCham Member) (link here), provides the chosen companies with venture capital financing, strategic support services – including strategic and financial planning, partner identification, management consulting and legal counseling – as well as incubation facilities in Egypt's Smart Village (link here).

Established by EFG-Hermes Private Equity and Telecom Egypt (link here), Ideavelopers (link here) acts as the fund management advisor, assisting in assessing investment opportunities and portfolio management and providing strategic and consulting services to the companies.

The first round of the fund, at LE 50 million, opened in July 2004 and has been covered by Egyptian institutional investors such as Telecom Egypt, Misr Iran Bank for Development (link here), Faisal Islamic Bank (AmCham Member) (link here), El Charq Insurance, Misr Insurance (link here) and Egypt Reinsurance (link here). The Fund has also received strong backing from the Egyptian Ministry of Communications and Information Technology (MCIT) (link here) due to its potential impact on the Egyptian IT sector. The second round will see the amount triple to at least LE 150 million and is expected to open in the coming year, with the largest asset allocation dedicated to outsourcing as well as other export-oriented opportunities, said a statement.

CENTRAL BANK OF EGYPT ANNOUNCES PARTNERSHIP WITH SUN MICROSYSTEMS
Source: Al Bawaba, November 21, 2006

In its efforts to modernize and restructure the technological infrastructure, and renovate work mechanism using IT solutions and applications, the Central Bank of Egypt (link here) announced a partnership with Sun Microsystems (AmCham Member) (link here), the world's leading IT Company. Sun will work with strategic partner Promise (link here), to execute the project that includes top notch technological solutions and applications for Integrated Data Centers. The project's budget is estimated to reach LE 16.3 million.

The decision to move to an Integrated Data Center is part of a larger plan to mechanize and modernize the bank’s internal systems, and upgrade the computer network, data centers, integrated applications and security systems.

The project is the largest undertaken so far between Sun Microsystems and the Central Bank of Egypt, including servers, data processing systems, and specialized services. As for the project's time frame, Hatem Ezzo, Promise Operations Manager, said the execution steps of the project have already started and are expected to be finalized by the first quarter of 2007.

For AmCham’s Telecom Study (click here).

For AmCham’s IT Study (click here).

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LE 20 BILLION FOR WATER NETWORK IN POOR NILE REGIONS
Source: ANSAmed, November 24, 2006

The Egyptian government has allocated about LE 20 billion to develop the water and sewer system throughout the poor villages in the Nile region. Egypt's Housing and Urban Development Minister Ahmed el-Maghrabi confirmed the initiative on November 23 at the opening ceremony of a Euro-Egyptian summit devoted to water issue. The minister explained that the government was promoting projects in cooperation with the private sector, institutions and private funds. The government's aim is to attract private investments in the sector.

NORTH SINAI SIGNS $85 MILLION CONTRACT TO BUILD 2ND WHITE CEMENT LINE
Source: Al-Alam Al-Yom, November 29, 2006

North Sinai Cement will sign a $85 million contract to build its second white cement production line, said chairman Hassan Rateb. The line's capacity will be 600,000 tons a year, making it the largest white cement line in the world, he added. It will increase North Sinai's white cement capacity to 1.05 million tons a year. North Sinai exports most of its white cement to Europe, Morocco, Algeria and Tunis. It is said that the name of the company that will build the line in Arabic is "N. L. Schmidt". Construction of the line will start at the beginning of December, with operation starting in 2008, he said.

CENTAMIN EGYPT REPORTS 13% RISE IN GOLD RESOURCES AT SUKARI PORJECT
Source: Afxnews, November 28, 2006

Centamin Egypt Ltd (link here) reported a 13% increase in gold resources at its Sukari Gold project over the previously announced resource in August and said there is a potential for further significant resource addition within the Ra and Gazelle areas. The gold exploration and development company said its resource at Sukari Hill has been upgraded to 7.7 million ounces of gold and that the upgrade exceeded its expectations during this time. The company has 9 rigs on site and is currently focusing drilling in the Ra and Gazelle zones with 'significant further ounces' being expected to be delivered in these areas. The next resource upgrade will be reported no later than Feb 2007 with interim drilling results expected prior to that, it added.

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EGYPT EYES CHINESE TOURISTS IN 2020
Source: ANSAmed, November 16, 2006

Egyptian Minister of Tourism Zohair Garana will lead a large Egyptian tourist convoy to China to promote tourism in Egypt. The visit, which took place from November 21-24, aimed at attracting Chinese tourists to Egypt especially that China will become the biggest tourist exporter by 2020 with the number of tourists reaching 100 million.

EGYPT'S HOTELIERS URGE GOVERNMENT TO STOP FALLING PRICES
Source: ANSAmed, November 24, 2006

Hotel and tourist villages owners have urged Egyptian Tourism Minister Zoheir Garana to intervene to stop falling prices which threaten to make Egypt an exclusively cheap tourist destination. Tourism expert Fakher Raof said some hotels offered such low prices that they do not match the real costs in Egypt, nor are they in line with prices in neighboring countries. In this way the damage to Egypt is twofold, economically and from an image point of view as it become perceived as a destination "for poor people". Several weeks ago Egypt launched a television campaign in Europe, Asia and North America, 'The Gift of Sun', seeking to change the traditional idea of "once-in-a-lifetime trip". A total 8.6 million tourists visited Egypt in 2005.

For AmCham’s Tourism Study (click here).

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EGYPT HITS RECORD $10.6 BILLION IN OIL EXPORTS
Source: Al Alam El Youm, November 16, 2006

Egypt's exports of oil, gas and petroleum products hit a record in the 2005-2006 fiscal year, reaching $10.6 billion, a target initially set for 2010. Oil sector exports represent 55% of Egypt's total exports. Oil Minister Sameh Fahmi said the sector provided gas and petroleum products worth $20 billion for the domestic market.

PETROFAC AWARDED $200 MILLION EGYPTIAN GAS DEAL
Source: AMEinfo, November 15, 2006

Petrofac (link here) says it has been awarded a $200 million contract by Khalda Petroleum Company to build a new gas processing facility at Salam in Egypt. KPC is a joint venture company between Apache Corporation (link here) and Egyptian General Petroleum Corporation. The project is scheduled for completion before the end of 2008.

RUSSIAN COMPANIES TO DEVELOP GAS FIELDS IN EGYPT
Source: Itar-Tass, November 27, 2006

The Russian gas company Novatek (NVTK) (link here) and Egypt’s EGAS (link here) and Tharwa Petroleum signed on Monday, November 27 two memorandums of understanding.

NVTK Board Chairman Leonid Mikhelson said that EGAS had welcomed the Russian company’s participation in the development of Egyptian gas fields and in a tender for concessions. In his words, this means geological prospecting and subsequent extraction of natural gas in the west of Egypt on the Libyan border and in the Mediterranean offshore areas. Egypt is one of the first projects of the Russian company, which until recently has worked only inside Russia. It will extract more than 28 billion cubic meters of gas in Russia this year. It also plans to get involved in projects in the Middle East. Egyptian Oil Minister Amine Sameh Fahmi said Egyptian-Russian relations in the oil and gas sector “have undergone historical changes and moved from the stage of geological prospecting agreements to strategic cooperation and joint investments.” According to the minister, the memorandums envisage the creation of joint ventures in the fields of oil and gas development, extraction and sale.

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19 BANKS TO SET UP MORTGAGE REFINANCING COMPANY
Source: Al-Alam Al-Yom, November 19, 2006

Nineteen banks have agreed with the Central Bank of Egypt (link here), the Mortgage Subsidy and Guarantee Fund and Egypt’s three mortgage financing companies to set up a company for refinancing mortgages. The company will have a capital of LE214 million and will begin operating next year. National Bank of Egypt (AmCham Member) (link here), Banque Misr (AmCham Member) (link here) and the Housing and Development Bank meanwhile have allocated LE12 billion to construct 500,000 residential units in the next five years.

AFRICAN DEVELOPMENT BANK TO LEND EGYPT LE587 MILLION FOR REFORMS
Source: Al-Alam Al-Yom, November 26, 2006

The African Development Bank (link here) has agreed to give Egypt loans and grants worth $588 million to enhance financial sector reform and support small and medium-sized enterprises (SMEs). One loan of $500 million will complement a loan Egypt received from the World Bank (AmCham Member) (link here) earlier this month. It aims to reform the banking sector, support the non-banking financial sector, enhance financial monitoring bodies such as the Central Bank of Egypt (link here) and the Capital Market Authority (link here) and strengthen corporate governance, said Minister of International Cooperation Fayza Aboulnaga. The second loan, worth $87.15 million, will help the government’s Social Fund for Development (SDF) (AmCham Member) (link here) finance its medium and micro enterprises program that is designed to reduce poverty and unemployment. The SDF will also receive a grant of $875,000.

MORE BANKS RAISE RATES IN RESPONSE TO CENTRAL BANK DECISION
Source: Al-Alam Al-Yom, November 26, 2006

The Housing and Development Bank (HDB) (AmCham Member) (link here), Commercial International Bank (CIB) (AmCham Member) (link here) and Banque Misr (AmCham Member) (link here) became the latest banks to raise interest rates following a decision by the Central Bank to raise its policy interbank rates by 50 basis points (bps) on 2 November. HDB raised its deposit rates by 50-75 bps, while CIB raised the return on its five-year fixed-rate certificates of deposit (CDs) to 9% a year from 8%, and the return on its three-year CDs to 8% from 7.5%. Banque Misr also raised the yield on its five-year CDs to 8.5% from 8% and its seven-year CDs to 8% from 7.5%. A number of other banks have also raised their rates in the last few weeks. High inflation has increased the pressure to raise rates. Inflation rose to 11.8% in October from 9.6% in September and 3% in October last year. The interest rate on bank deposit currently averages about 7.25% a year.

UNITED BANK CHOOSES MISYS EQUATION AS ITS CORE BANKING SYSTEM IN EGYPT
Source: AMEinfo, November 28, 2006

Misys Banking Systems (link here), a global leader in banking software and solutions, announced that its core banking system, Misys Equation, has been selected by the United Bank to help optimise inter-branch communications and reporting for the bank's head-office and its branch network, currently comprising over 40 locations across Egypt, but set to expand further.

On 26 June 2006, the United Bank acquired the United Bank of Egypt (link here), the Nile Bank and Islamic International Bank for Investment and Development (link here). The United Bank chose The Misys Equation solution to help in data conversion and consolidation of the three acquired banks via streamline operations across Retail, Islamic Banking Products, Corporate and Investment Banking Divisions. The United Bank of Egypt is a long-standing Misys customer and based on that successful partnership, Misys Equation will be used across the whole of the operations of the new organization.



The United Bank is to implement Misys Equation for its core banking function, while the Branch Automation module will be deployed to ensure efficiency between branches and give full support to tellers and customer services operations. Misys Trade Innovation is implemented, for workflow management within the trade finance business. Access to the bank via the Internet is crucial to the bank's customers and so part of the deal includes the IFM Internet Banking from Misys. Additionally, Misys Webform will be used for reporting within the solution. Implementation of all modules is expected to take nine months and it will be integrated with the legacy ATM system and will enable easy access to the SWIFT networks.

For Amcham’s Banking Study – 2005 (click here).

For Amcham’s Bank Rankings (click here).

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CHEMPLAST SANMAR INKS AGREEMENT WITH EGYPT TO ACQUIRE SODA PLANT
Source: RTTNews, Reuters, November 17, 2006

Chemicals company Chemplast Sanmar Ltd. (link here) announced that the Sanmar Group (link here) would acquire a chemicals business in Egypt for $200 million.

Chemplast Sanmar informed that the Sanmar Group entered into an agreement to acquire a Caustic Soda plant located at Port Said, Egypt, with a capacity of 200,000 tons per annum for a consideration of $200 million. The plant also has facilities installed to manufacture chlorine-based products, such as hydrochloric acid, chlorinated paraffin wax, sodium hypochlorite, ferric chloride, etc. On completing the acquisition, the Sanmar Group would evaluate the possibility of manufacture of further products at Port Said, such as ethylene dichloride and vinyl chloro monomer using the chlorine available by pumping in additional capital investments.

The Group intends to operate this as a separate business headquartered at Port Said and is in the process of identifying a top management team for it.

SIDPEC TO SET UP TWO NEW FACTORIES AT $65 MILLION INVESTMENT COSTS
Source: Noozz, November 24, 2006

Sidi Krir Petrochemicals, SidPec Company (link here), has started to set up a new plant that will produce butadiene for the first time in Egypt. Butadiene is an important industrial chemical used in the production of synthetic rubber. The plant will be established with total investments of $40 million (almost LE 230 million). The company also plans to set up another plant to produce materials used in the production of natural gas pipelines at a total cost of $25 million (approximately LE 144 million).

Mohammad Nor-Eddin, SidPec chairman, said that his company has fulfilled the required measures for setting up the butadiene plant at a capacity of 24,000 tons a year. “The plant’s production, which will be financed with the company’s self-resources, will bring an end to importing butadiene and synthetic rubber from the international market in addition to opening up export markets,” he added.

The chairman of SidPec pointed out that the company was mulling over a proposal to establish another plant to produce materials used for manufacturing natural gas pipes with investments of $25 million.

POLIMERI EUROPA TO SUPPLY PROPYLENE TO ORIENTAL PETROCHEMICALS FOR 4 YEARS
Source: Al-Alam Al-Yom, November 29, 2006

Italy-based Polimeri Europa (link here) agreed to supply Oriental Petrochemicals Co. (link here) with 108,000 tons of propylene in each of the next four years at an annual price of $102 million. One of the world's biggest petrochemicals companies, Polimeri has been its main supplier since Oriental Petrochemicals started operating in 2002. Oriental Petrochemicals uses propylene to make the polypropylene used in manufacturing carpet threads, wrapping material, woven bags and some man-made textiles. With an annual capacity of 160,000 tons, Oriental Petrochemicals has 87% of the Egyptian market and exports 25% of its output to Europe and North Africa.

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SINGAPORE AND EGYPT TO DISCUSS ECONOMIC COOPERATION
Source: Middle East Times, Channelnewsasia.com, plastemart.com, November 14, 2006

Singapore and Egypt have signed a declaration of intent to negotiate a comprehensive economic cooperation agreement (CECA). Singapore's senior minister of state for foreign affairs Zainul Abidin Rasheed and Egyptian minister of foreign affairs Ahmed Abul Gheit signed the declaration in Cairo on Monday, November 13.

The agreement will send a strong signal to the international community of the commitment of both countries to economic development and reform and help to catalyze interest by businesses and investors to the economic opportunities available in Egypt and Singapore. The CECA, which was concluded instead of a bilateral free trade agreement, will form a strategic bridge between Asia and the Middle East and North Africa.

Furthermore, Egypt and Singapore agreed to work on multimillion-dollar joint ventures. Talks are already underway for a US$2.3 billion petrochemical plant at the Suez Gulf.

JORDAN AND EGYPT SIGN 16 COOPERATION AGREEMENTS
Source: Jordan Times, November 17, 2006

Prime Minister Marouf Bakhit met with Egyptian President Hosni Mubarak to discuss bilateral relations and regional issues. The meeting followed the conclusion of the 20th session of the Jordanian Egyptian Joint Higher Committee, which ended with both sides signing 16 agreements, memoranda of cooperation, protocols and executive programs related to the various fields of cooperation.

President Mubarak told Bakhit he had directed concerned authorities to remove all impediments to the full implementation of the agreements, especially in the field of pharmaceuticals. He urged the private sectors in Jordan and Egypt to establish joint ventures, diversify production and open new markets for products from both countries.

The accords included the fourth executive program for implementing a labor cooperation agreement between the Egyptian Ministry of Manpower and Immigration and the Jordanian Labor Ministry in 2007-2008. The executive program was signed by Egyptian Manpower Minister Aisha Abdel Hadi and Jordanian Labour Minister Bassam Al-Salem. Tourism Minister Zoheir Garana and his Jordanian counterpart Munir Nasser inked an executive program for cooperation in the tourism domain from 2007 to 2009. Egypt and Jordan signed memorandums of understanding on cooperation in the fields of media, exports increase, development projects, industry and social development. Also, a 2007-2008 executive program of a cooperation protocol in the field of youth was signed along with a cooperation agreement between the Jordanian Institute of Diplomacy and the Egyptian Institute of National Planning. Moreover, a technical cooperation protocol was inked between the Ministry of Electricity and Energy and the Jordanian Ministry of Energy and Mineral Resources.

EGYPT INITIATES ESTABLISHMENT OF ARAB ASSOCIATION OF INVESTMENT PROMOTION
Source: Xinhua, November 19, 2006

Egypt launched an initiative to set up an association of Arab investment promotion agencies that would operate within the World Association of Investment Promotion Agencies (WAIPA) (link here). Ziad Bahaa-El-Din, Chairman of Egypt's General Authority for Free Zones and Investment (GAFI) (link here), made the announcement on the sidelines of a WAIPA conference, which was held in Egypt's Red Sea resort of Sharm el-Sheikh. Eight Arab countries have expressed support for the initiative. Bahaa-Eddin said he met with representatives of Saudi Arabia, Lebanon, Qatar, Jordan, Algeria, Tunisia, Sudan and Libya, and the new body will include all associations of investment promotion of the Arab countries.

It is important to have cooperation among all the Arab associations to improve image of investment in the Arab region, whose countries suffer from wars, instability and insecurity, he said.

The two-day WAIPA conference was under the theme of "Investment Promotion Agency Capacity Building and Investment Promotion Strategy in Africa and the Middle East."

GOE TO SIMPLIFY PROCEDURES FOR INVESTORS
Source: ANSAmed, November 17, 2006

The Egyptian Finance Ministry (link here) is close to finalizing a new bill on tax procedures that aims to simplify procedures for investors and taxpayers after the recent merger of the income tax and sales tax departments. Egyptian Tax Department (link here) head Mahmoud Ali said the department has devised a plan to settle debts with taxpayers through negotiations without recourse to criminal courts. The new organizational setup for the tax department will be referred to the Egyptian Central Agency for Organization and Administration for final approval.

ITPO SIGNS MOU WITH EGYPTIAN GOVERNMENT
Source: Delhi Newswire, November 25, 2006

The Indian Trade Promotional Organization (ITPO) (link here) and the General Organization of International Exhibitions and Fairs in Cairo (link here), signed a Memorandum of Understanding (MoU) to boost trade between India and Egypt on November 24, 2006. The two-year agreement signed by executive director of ITPO, Rajiv Yadav, and Egyptian Ambassador E Hamid Higazy states that both the countries will not only invite each other to their fairs and exhibitions but also provide free space and publicity to the other. “The MoU will encourage bilateral trade between the two countries. We are looking forward to greater participation from Indian companies at the Cairo Fair to be held in March next year,” said Hamid Higazy. Major exports to Egypt include engineering goods, textiles, chemical and fertilizers. India imports petroleum and its products, row cotton, rock phosphate, cooking coal.

EGYPT EYES TURKISH INVESTMENTS
Source: ANSAmed, November 22, 2006

In anticipation of final Turkish parliament ratification of the Egyptian-Turkish Free Trade Agreement (FTA) signed on December 2005, Prime Minister Ahmed Nazif and Minister of Trade and Industry Rachid Mohammed Rachid went to Istanbul for a two-day visit aimed to promote bilateral trade and investment. It is said that both sides stand to benefit from the ratification of the FTA. Egypt will definitely benefit from Turkish expertise and know-how in the textile industry. The agreement phases out customs duties on trade between Egypt and the EU by 2012 and could be used as a safety net for Turkish businesses moving to Egypt in case Turkey continues to face difficulty in joining the EU. Total bilateral trade reached $949 million in 2005. Turkish investment in Egypt now stands at $80 million, a number that could reach more than $1 billion by the end of 2007 with more than 100 Turkish companies expected to move their operations to Egypt to take advantage of its Qualified Industrial Zones privileges with the United States and Trade Partnership Agreement with the European Union (EU).

EGYPT READY FOR FREE TRADE WITH EUROPE IN THREE YEARS
Source: Al Ahram, ANSAmed, November 22, 2006

Egypt will be ready to create free trade area with Europe in three years. The announcement was made by Prime Minister Ahmed Nazif, during an open session of a meeting of Environment Ministers of the countries of the Mediterranean. Egypt already has a tariff preference agreement with the EU, but it does not include all products traded. Nazif stated that his country has made efforts to build relations of partnership between the European Union (EU) through a reform program in the economic, cultural and social areas. He added that the efforts for intensification of cooperation with the EU follow the same logic of the movement of reforms in the country and that there is a greater and greater concern with democracy, human rights, and women's and children's rights. The event in which Nazif participated was the Third Euro-Mediterranean Conference of Environment Ministers (link here), the first to take place outside Europe.

Furthermore, the European Union has earmarked an additional credit line of 18 million euro to help Egypt increase its exports to Europe as of next year. The decision came during a meeting organized by the Federation of Egyptian Industries (AmCham Member) (link here) in cooperation with the Chamber of Food Industries (link here) and the European Commission (link here).

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GOVERNMENT DRAFTING CUSTOMS LAW; REVENUE HITS LE20 BILLION
Source: Al-Akhbar, November 20, 2006

A draft customs law bill now being written is expected to be presented in three months to Finance Minister Youssef Boutros-Ghali, who will later refer it to parliament, said Galal Abu EL Fotouh, Head of the Customs Authority (link here). The law will streamline procedures for investors and provide more stringent penalties for customs tax evaders. Recent customs reforms increased revenue 15% to LE20 billion in FY2005/06. Custom fees generated LE10 billion, sales tax LE8.5 billion and new facilities introduced this year another LE1.5 billion. The proportion of customs operations executed over the internet has reached 80% and will soon reach 100%.

DRAFT PROPERTY TAX LAW WOULD REDUCE RATES, LIMIT EXEMPTIONS
Source: Al-Akhbar, November 21, 2006

The Ministry of Finance has finished drafting a new property tax law that it will soon present to parliament. The new law would reduce property taxes to 10% from 40% and limit the properties that enjoy tax exemptions to government buildings, religious establishments and public places. Exemptions granted under the current law effectively exclude 95% of all properties from taxation. Because of this, the government now collects less than LE300 million a year from property taxes, said Ismail Abd El Rasool, chairman of the Property Tax Authority. The new law would also simplify tax filing and calculation procedures.

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Compiled by: Business Studies & Analysis Center
E-mail: Studies@amcham.org.eg
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