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Arab ministers move to censor satellite broadcasts

Arab foreign ministers gathered in Cairo passed a resolution that imposed a list of restrictions on satellite television channels. The resolution declares that satellite channels should not negatively affect “social peace, national unity, the public order,” “Arab morals” and “the highest interests of the Arab world.”

All 22 countries voted in favor of the resolution, with the exception of Qatar, home of Al Jazeera. It is unclear how the resolution will be enforced. Satellite television broadcasts in the region are carried by two operators, Arabsat, based in Saudi Arabia, and Egypt’s Nilesat.

Textile workers demand higher wages

At least 10,000 employees of Egypt’s biggest textile factory gathered last month to protest against price hikes, and demanded a sharp rise in minimum wages nationwide. Workers at the Ghazl Al Mahalla factory demanded a minimum wage of LE 1,200 a month.

Last September, at least 24,000 workers at Ghazl Al Mahalla went on strike over unpaid profit shares and low wages. The government subsequently agreed to their demands and similar strikes were held in other factories.

The latest action, however, marked the first protest calling for wider demands and came as the Higher Council for Wages, a quasi-governmental organization, recommended that the government increase the minimum wage from LE 105 to LE 350 per month. The proposed wage hike would require the cabinet’s approval.

CBE raises lending, deposit rates

The Central Bank of Egypt (CBE) has raised its overnight lending and deposit rates by a quarter point following a pickup in inflation. The overnight lending and deposit rates are now 9 percent and 11 percent, respectively.

Inflation increased to 10.5 percent in January, reversing a steady decline since September. The CBE stated that high international food prices and record growth rates could lead to more inflationary pressure.

Advisers selected for SME bourse

The Nile Stock Exchange (NileX) has selected five financial services companies – White House Securities, Fincorp Investment, Cairo Financial Investments, Grand Investment and Naeem Holding – to serve as nominated advisers for companies seeking a public listing. The new bourse was inaugurated in October 2007, and trading is expected to begin in April or May. A spokesperson for the exchange said that it has approved five companies for listing, without providing names.

NileX is the Middle East’s first exchange for small and medium-sized enterprises (SMEs). Companies are eligible with a paid-in capital of between LE 500,000 and LE 25 million. A nominated adviser is required to guide and assist SMEs in terms of meeting listing and disclosure requirements.

Forged bills seized in Sinai

Egyptian authorities in Sinai have seized more than $1 million in counterfeit US currency since the breach of the border between Egypt and Gaza on January 23, according to Palestinian news agency Ma’an. The money is presumed to have been made in the Gaza Strip and brought into Egypt after the border breach. The Egyptian government has attempted to stop the reuse of these bills by telling merchants to examine money before taking it, the report said.

Growth forecasts downgraded slightly

Economic growth should reach 7 percent this fiscal year, according to Minister of Investment Mahmoud Mohieldin. The minister downgraded expected growth from an earlier forecast of 8 percent due to rising concerns over domestic inflation and a possible recession in the US. But he believes that Egypt’s economy should still perform well this year as a result of strong corporate earnings and investment flows.

The government announced in February that GDP grew at a rate of 8.1 percent year-on-year from October to November 2007.

Minimum capital on LLCs lowered

The Ministry of Investment has issued a decree reducing the minimum capital requirements of limited liability companies (LLCs) from LE 1,000 to LE 200. The decree is part of the ministry’s efforts to facilitate the growth of small and medium-sized enterprises (SMEs). When companies take the legal form of an LLC, their liabilities are not extended to an owner’s private money. SMEs also stand to gain access to banks and financial institutions to obtain finance, the ministry said.

Gas exports flow to Israel

Egypt has begun supplying natural gas to Israel via a 100-kilometer underwater pipeline from Al Arish to the Israeli port of Ashkelon. Under the terms of a 2005 agreement, East Mediterranean Gas (EMG), an Egyptian-Israeli consortium, will export 1.7 billion cubic meters of gas a year over 15 years for a total of $2.5 billion. Opposition groups have protested the decision to supply gas to Israel in light of Tel Aviv’s ongoing blockade of the Gaza Strip, where Palestinians struggle to find fuel.

Meanwhile, Syria announced that it will start receiving natural gas from Egypt in March when work is complete on the $1.2 billion Pan-Arab Natural Gas Pipeline project. A 2001 agreement obliges Egypt to supply natural gas to Jordan, Syria and Lebanon for 30 years. Syria will import 900 million cubic meters per year.

The pipeline will eventually extend from Al Arish through Jordan and Syria to the Turkish border. The section between Syria and Lebanon is expected to be ready by mid-2008.

Food subsidies to reach LE 17 billion

Food subsidies are slated to increase to LE 17 billion for the coming fiscal year, from LE 14.4 billion in FY 2007-08. The amount includes LE 2 billion earmarked to provide ration cards to cover 15 million low-income citizens. The government is facing pressure to slash its budget deficit while also widening the country’s social safety net.

Four foreign publications banned in cartoon row

Issues of four foreign publications were pulled from newsstands in Egypt following their re-publication of Danish cartoons of the Prophet Muhammad that have been deemed offensive to Muslims. The cartoons sparked a wave of protests by Muslims worldwide when they first appeared in a Danish and other European newspapers in 2005.

Several Danish dailies elected to republish the controversial caricatures following the discovery of a plot to assassinate one of the cartoons’ artists. Issues of The Wall Street Journal, The Observer, Die Welt and Frankfurter Allgemeine were pulled from Egyptian newsstands on February 19 after reprinting the caricatures in their coverage of the story.

Investor mulls expansion in Toshka

Prince Walid bin Talal’s Kingdom Agricultural Development Corporation has offered to reclaim and develop 130,000 feddans in Toshka, in addition to the 120,000 acres he already owns there. The company hopes to reclaim 20,000 feddans per year.

The Toshka project aims to irrigate some 540,000 acres of arable arid soil with water from Lake Nasser. The government has been building a massive pumping station and irrigation canals to transport water for the project. The agricultural land is intended to grow fresh fruits and vegetables for export to Europe during the winter.

Road accidents claim lives

A string of horrific traffic accidents in February has highlighted the dangerous conditions of Egypt’s roads, where an estimated 6,000 people die in car accidents each year. A multi-car pile-up south of Cairo on February 7 resulted in at least 29 deaths and 16 injuries, with fog cited as the likely cause of the accident.

A bus filled with tourists overturned in southern Egypt on February 13, causing at least 27 injuries. Two police officers were killed when their car overturned while carrying the bus driver, who had been arrested following the accident.

Another accident on February 25 in Cairo killed 13 people when their minibus plunged into a canal.

Egyptian roads are often in poor shape and characterized by lax traffic regulation enforcement and speeding.

Cargo ship disappears off radar

An Egyptian cargo ship that went missing in January has yet to be found. The ship, named Badr 1, disappeared from sight and radar screens on January 12, three days after its departure from the Suez Canal. The ship was bound for Port Sudan, a 1,400-kilometer trip that normally lasts a few days.

The ship’s owner later said the vessel was found stalled 70 miles off the Sudanese coast, and that the ship and crew were in good condition. He said the crew had been victims of piracy, without providing any evidence to support his claims.

The Ministry of Transport subsequently released a statement saying that Badr 1 has yet to be found, and that the ministry has not received any reliable information on the ship’s whereabouts.

Draft law proposes pension increase

The Ministry of Finance has finalized a draft social insurance law after a year of contentious debate with the lower house of parliament and the Doctors’ Syndicate. The draft legislation would raise pension benefits from 50 percent to 70 percent of an employee’s final salary. It would also allow pensions to be inherited and provides a LE 100 fixed pension for unemployed senior citizens. The government typically makes an upward revision to pension payments of around 10 percent annually to cover costs of living increases.

Cement price-fixing trial postponed

The trial of 20 Egyptian cement executives accused of price fixing adjourned until March 10 after a brief procedural session held on February 18 in Cairo. The government filed the accusations of anti-competitive practices last October after a 14-month probe by state investigators. Prosecutors allege that the executives colluded to set prices of Portland cement in 2005 and 2006.

DP World to invest $1.3 billion in port expansion

DP World announced plans to invest $1.3 billion to expand Sokhna Port, a deep-sea port on the Red Sea south of Suez. The Dubai ports operator acquired a majority interest in Egyptian Container Holding Company (ECHCO), the company that operates Sokhna Port, for $670 million last November. DP World said at the time that it wanted to expand the port’s capacity from 450,000 containers per year to 1.2 million by 2009.

Balloons crash in Luxor

Seven foreign tourists were injured in separate incidents when three hot air balloons carrying 60 tourists crashed in Luxor on February 26. The crashes were attributed to strong winds. Hot air ballooning is a popular pastime of tourists visiting Luxor, with operators promising stunning aerial views of the area’s ancient monuments.

Italian fashion brands to set up shop

Ten Italian companies have announced they will set up textile, apparel and leather goods factories in Egypt. Their brands, which include Marzotto, Ermenegildo Zegna, Valentino and Salvatore Ferragamo, stand to benefit from Egypt’s low production costs and its long-staple cotton. The factories plan to export the finished goods, primarily to European markets.

National airline upgrades fleet

EgyptAir Express has bought six additional Brazilian-made Embraer 170 aircraft. The total value at list price is $189 million, and delivery is expected in 2009. The short-haul carrier launched service in June 2007. The original contract signed in September 2006 covered six firm orders and six options, which the airline has now confirmed.

Construction slowdown anticipated

The surge in steel, cement and brick prices since 2005 is having a deep impact on construction costs, causing analysts to forecast a slowdown in construction growth for this year. The higher costs are hurting contractors’ profits, and several have gone out of business recently.

The Ministry of Housing announced that low-income beneficiaries of the national housing project would not be adversely affected by the price rises. The ministry said it would cover the higher housing expenses.

Steel prices rise

Steel manufacturer Ezz El Dekheila raised the price of its steel in early February by LE 370 per ton to LE 4,170 per ton ex-factory, and LE 4,800 for retail. A company official said that the price hike was due to a rise in raw material costs, which he expects to continue this year. Steel billet costs could rise by 50 percent due to steep demand, he said.

Taxman skips low-income housing

A property tax law being prepared by the Ministry of Finance is expected to provide a tax exemption for residential units valued at less than LE 250,000. Such units represent 90 percent of all residential units in Egypt.

The proposed new tax rates are 0.07 percent for properties worth LE 250,000 to LE 1 million; 0.1 percent from LE 1 million to LE 2 million; 0.17 percent from LE 2 million to LE 5 million; and between 0.2 percent and 0.25 percent above LE 5 million. Units that remain unfinished or are being refurbished would also be subject to paying property taxes – a modification to existing legislation aimed at preventing tax evasion.

The new measure aims to boost tax revenue to LE 1.5 billion per year. Annual tax receipts were between LE 175 million and LE 200 million over the last five years.

Spain to fund infrastructure projects

Spain has agreed to provide Egypt with E240 million in soft loans and a E10 million grant intended for infrastructure and transportation projects. The agreement was signed between Egypt’s minister of trade and industry, Rachid Mohamed Rachid, and Spain’s minister of industry, commerce and tourism, Joan Clos.

The two ministers also signed a protocol of cooperation for the first Egyptian-Spanish industrial zone in Egypt. The 2-million-square-meter zone is expected to bring about E4 billion worth of investment in Egypt in the first two years of operation. Construction is to be completed within the next 18 months.

New regulations to expand CMA’s role

Proposed amendments to existing legislation are intended to strengthen the supervisory role of the Capital Market Authority (CMA). The new rules would allow the CMA to monitor stock price movements in order to better enforce insider trading violations. The amendments would also facilitate debt issuances by local and foreign companies and lower the minimum par value requirements for listing companies to LE 0.10 per share, from LE 1.

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