QIZ & FTA to Place the Egyptian Textile Industry Ahead in the US Market Source: Globes [online], November 21; Fibre2Fashion.com, November 29, 2004
The global textile industry will be keenly watching the fall of the textile regime sending developed and underdeveloped countries scurrying to pick market share from the USA and European Union. For Egypt and its textile industry the battle for survival hinges on securing the QIZ and FTA agreements with the US.
Egyptian apparel exports and in particular, woven trousers will be threatened by the Chinese juggernaut as the challenges of the implementation of the ATC agreement on the 1st of January 2005, will cause dire situation.
On the part of the governmental efforts recently, Rashid Mohamed Rashid, the Egyptian Minister of Industry and Foreign Trade, discussed setting up a free trade agreement (FTA) with the USA, besides implementing the QIZ agreement similar to the one currently existing between the USA, Jordan, and Israel.
Minister of Economic Affairs at the Israeli Embassy in Washington Boaz Raday said last week that negotiations for the establishment of a joint Israel-Egyptian industrial zone were nearing completion, particularly catering to US markets.
He even refuted a ‘New York Times’ article Thursday that claimed Americans feared that the import of cheap textiles from the Middle East without quotas or customs duties would harm the US textiles industry. Raday stated, "Negotiations between the three countries are in an advanced stage, and we expect the negotiations to reach a successful conclusion within days. To the best of our knowledge, the information reported by The New York Times is incorrect." He said Egypt minister for trade had met US officials in Washington on November 15, adding, "So far as we know, the talks were good."
Having concluded the QIZ between Egypt, Israel and USA, Egypt exports of woven and knitted apparel to the USA are expected to exceed US$2 billion by the end of 2007, due to the existence of an apparel sewing industry unlike the situation of Jordan. The Asian foreign investments in Egypt and in particularly in apparel sewing is expected to increase in parallel to take advantage of the availability of low cost labor, energy and infrastructure.
Having the only vertically integrated textile industry in the Middle East and Northern African countries, Egypt is the only country with the availability of fibers (Egyptian Cotton), spinning industry, dyeing and finishing, apparel and home textile manufacturing industry.
Among the different categories of textiles to benefit from the FTA & QIZ agreements, home textiles manufacturers and exporters will prove to be the quintessential beneficiaries due to the reputation they have gained through the use of Egyptian cotton by consumers in the USA. This has been asserted from the exports of terry towels and bed sheets which exceeded US$115 million, by the end of 2003.
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Egypt’s Raya Wins Top HP Awards Source: Trade Arabia, November 29, 2004
Egypt's Raya Integration (AmCham Member) (link here) and Raya Distribution (link here), two subsidiaries of Raya Holding (AmCham Member) (link here), one of the largest IT and Telecommunications companies in the Middle East, have been awarded the prestigious Hewlett Packard (HP) (AmCham Member) (link here) Achievement Awards for the year 2004.
The "HP Sales and Service Partner-Corporate & Enterprise, 2004" and "HP Logistics and Service Partner, 2004" were won by Raya Integration and Raya Distribution respectively for achieving the 2004 fiscal year targets and maintaining its edge in the highly competitive marketplace in Egypt.
Raya Integration won the "HP Sales and Service Partner-Corporate & Enterprise, 2004" award for its contribution in providing outstanding service by achieving service targets and implementing state of the art HP solutions to several strategic projects in Egypt as well as achieving key certifications.
Raya Distribution won the "HP Logistics and Service Partner" award for its outstanding performance in achieving high financial targets and generating the highest revenues in Egypt. Consistent quality data reporting and extensive marketing initiatives and other key landmarks including the successful launch of two new HP products, HP GSM i-PAQ and Tablet PC in the Egyptian Market in 2004 stood in good stead for Raya.
Egypt Chosen in UN Internet Team Source: Xinhua General News Service, November 25,2004
Egypt has been chosen as a member of the UN working team to discuss future Internet strategies, which is formed by UN Secretary General Kofi Annan. Baher Esmat, Director of Planning Department at the Ministry of Communication and Information Technology (link here) will represent Egypt in the team established under the recommendation of World Summit on Information Society (WSIS) (link here) in Geneva last year to draft a management plan for the Internet by 2005. The team will draft the outlines of the Internet management concept and specify all topics related to the Internet. Egypt was selected in recognition of its pioneering role in developing Internet services with cooperation between the government and the private sector. The team is expected to hold its first meeting next week in Geneva.
Egyptian Stocks Gain Strength Source: Trade Arabia, November 19 & 28, 2004
Egypt's benchmark stock index rose to a record closing high on November 18, helped by foreign buying in Vodafone Egypt (AmCham Member) (link here) and results from Ezz Steel Rebars (AmCham Member) (link here), which fuelled a steel sector rally, traders said.
'There's a pick-up in the big caps. I think there's a lot of buying coming in from the Gulf and some foreign institutions,' one trader said.
A foreign buyer in Vodafone Egypt pushed the stock up 2.73 Egyptian pounds ($0.44) to last trade at 57.37 pounds and officially close at 56.63 pounds, traders said.
Traders said rumors that state-owned National Bank of Egypt (AmCham Member) (link here) had found a buyer for its stake in National Societe Generale Bank (AmCham Member) (link here) helped the stock to last trade five percent higher at 58.92 pounds. The Central Bank of Egypt (link here) denied last month a report that NBE had received any offers for its 19.3% stake in NSGB.
EFG-Hermes (AmCham Member) (link here) helped the benchmark Egyptian share index to a record closing high on November 28, fuelled by speculation the investment banking firm would benefit from anticipated privatization, traders said.
The benchmark Hermes index was last quoted 1.2% higher at 23,410.05 points. The broader CIBC index rose 1.3% to a closing level of 105.75 points.
EFG-Hermes last changed hands 1.8% higher at 13.20 Egyptian pounds ($2.12) and officially closed at 12.87 pounds in heavy volume.
'It's mostly foreign buying,' CIBC sales director Bassim Arida said. 'With the economy picking up, it's bound to do well with investment banking deals. They're going to do well from privatization,' he said.
Statements underlining renewed government commitment to selling state firms have helped push the bourse to record levels. Arab Cotton Ginning was one of a clutch of small caps which rose because many of the bourse's smaller firms are viewed as undervalued compared to the larger companies, one trader said.
Officials Announce Ambitious Reform Measures for Trade and Investment Source: Egypt Invest Conference, November 24-25
Cairo witnessed the second International Investment and Trade Forum, Egypt Invest 2004 (link here), during November 24-25.
The event was co-organized by International Events Partners (IEP) (link here) and Egypt’s General Authority for Investment and Free Zones (GAFI) (link here) and took place at the new InterContinental Heliopolis Cairo (AmCham Member) (link here). The conference held around 500 attendees from the local and international business community.
In the opening session on the first day of the conference, Mr. Mohamed Mansour, Chairman of Mantrac (AmCham Member) (link here) and past president of the American Chamber of Commerce in Egypt (link here), presented the future challenges that faced Egypt in attracting foreign direct investment (FDI) into the country. In this respect, he outlined eight key elements, namely the re-structuring of GAFI, promoting export-oriented industries, forming alliances with multinationals, targeting 8% growth in GDP and jobs for 700,000 every year, bureaucracy and transparency, privatization, public-private partnerships, and highlighting Egypt’s assets.
The keynote host speaker was Prime Minister Dr. Ahmed Nazif. In his speech, Dr. Nazif focused on three major challenges currently facing Egypt, namely the local business environment, international business and consumer confidence and preserving social class. Minister of Investment, Dr. Mahmoud Mohieldin, Minister of Petroleum, Eng. Sameh Fahmy, and Dr. Ziad Bahaa Eldin, Chairman of GAFI, also gave speeches on the first day of the conference. The restructuring of GAFI and shifting its role from a regulator to an investment promoter was mentioned at the forefront of Dr. Bahaa Eldin’s presentation and reoccurred several times in other presentations as an important measure for the promotion of private investment in Egypt. The establishment of the one-stop shop for investment was also stressed on.
Dr. Mohieldin outlined the ambitious plan of the Ministry of Investment (link here), to which other entities are affiliated to including GAFI, all public sector companies and joint ventures, the Capital Market Authority (link here), and the recently added Special Economic Zones. He stated that the measures of success for this plan include the raising of FDI inflows in 2005 to a higher level than their average over the last five years. The same goes for domestic infrastructure and portfolio investments. This is in addition to the implementation of a comprehensive set of institutional reforms.
The minister of investment announced that of the first wave of 14 companies listed for privatization, three of them have already gone, the fourth is about to go. Ten are under valuation and they are going to be privatized soon.
'One big transaction ... shouldn't be less than half a billion dollars in terms of size ... We will have another one that shouldn't be less than four billion (Egyptian) pounds ($642 million),' he said.
The government has said one of the country's big four state banks would be among those firms privatized. Dr. Mohieldin said insurance firms would also be on the list.
'We are going to privatize or sell one of the main insurance companies to the private sector before the end of 2005 and we started the due diligence and the necessary measures for that,' he told the conference
On the second day, Eng. Raafat Radwan, Chairman of the Information Decision Support Center (IDSC) (link here), made a keynote speech on the differences between the Intelligent Government initiative, which Egypt is currently embarking on, and the Electronic Government.
In the concluding session, Dr. Youssef Boutros Ghali, Minister of Finance, announced that the Cabinet had just approved the Draft Tax Law and that it was ready to go to Parliament and expected to be passed by March 2005. The Cabinet also passed other amendments to the Sales Tax Law to allow rebate of sales tax on capital goods, the law of Customs to eliminate leeway of customs officers in the assessment of customs, and the law of Customs Exemptions to eliminate the value judgment element. Dr. Ghali stated the reform in the customs tariff that would cost the Treasury LE3.2 billion are expected to recoup in 18 months through the rise in imports. As for the cost of tax reform on the state Treasury, it is estimated at LE4.5 billion over 2.5 years.
European Investment Bank Provided $900 Million Source: InfoProd, November 28, 2004
The European Investment Bank (link here), the European Union's financing institution, provided Euro 700 million ($900 million) worth of aid to Egypt this year. Egypt invested this support in transport and energy projects. The Bank's new Facility for Euro-Mediterranean Investment and Partnership (FEMIP) is to promote private sector development (especially SMEs) and projects helping to establish a propitious climate for private investment (economic infrastructure, health and education schemes).
Egypt to Modernize 100 Textile Factories Source: Liquid Africa, November 18, 2004
The Egyptian Industry Modernization Center (link here) has started the implementation of a major program to modernize some 100 factories working in textiles and ready-made clothes in an attempt to confront foreign competition in a pre-step to cancellation of quota exports system as of 2005.
The center director, Selim Al-Talatly, told Al-Akhbar newspaper the local textiles industry will face "cut-throat" competition following the cancellation of the quota system as massive inflow of imports will access Egypt, a move which requires the Egyptian industry to keep pace with the international developments.
The center will focus on 25 companies working in the manufacture of ready-made clothes. Al-Talatly added that the center had contracted with a specialized German firm to study status of the would-be modernized factories to determine the foreign markets that could receive their products.
World Bank Satisfied with Egypt's Economic Reform Measures Source: Xinhua News Agency, November 27, 2004
An official of the World Bank (link here) said on Sunday that the major financial organization is satisfied with economic reforms initiated by the Egyptian government.
Mahmoud Ayoub, the head of the Bank's Egypt Department, who will leave for Washington after having ended his term in office, said in a statement that the bank fully supports Egypt's economic measures, especially those related to attracting investments and enhancing exports as well as slimming down the unemployment rate. Ayoub revealed that the bank was considering financing three major projects in the fields of ports, irrigation and electricity in Egypt. Ayoub's term will end on Nov. 30, and his successor is due in Cairo on December 10.
Canadian Methanex To Set Up First Egyptian Methanol Project Source: InfoProd, November 28, 2004
Methanex Corporation (link here), a Canadian marketer and distributor of methanol, had signed an agreement to set up a Canadian-Egyptian company to carry out a petrochemical project with investments reaching up to $450 million. The project, which is the first of its sort in Egypt, will produce 1.3 million tons of petrochemicals annually. The project will start production in 2008. Methanex is the world's largest producer and marketer of methanol.
Confident Work on Sukari Gold Project to Recommence Soon Source: AFX.COM, November 25, 2004
Centamin Egypt Ltd (link here) said it is confident that work on the Sukari Gold project will recommence soon. In an AGM statement, chairman Sami El-Raghy said negotiations are ongoing and as such the company looks forward to reporting on further progress shortly.
At Sukari has nearly 3 million ounces of gold defined in only the southern sector of a large mineralized system. It has seven drill rigs ready to re-commence activities and to continue to grow this resource. In addition to the Sukari deposit, there are other prospects contained within the Sukari area, including Umm Ud, Hangaliya, Atud and Sabahyia as well as two newly discovered porphyry hills similar to Sukari.
El-Raghy said there has been a marked improvement in the working relationship with the relevant government ministry, which will soon see the company again focusing efforts on its business of mineral discovery and the development of mines in Egypt. During meetings with the Ministry, Minister of Petroleum Sameh Fahmy has clearly stated his support for the company returning to work and renewing its exploration and development activities in Egypt.
Egypt Seeks Funding for New Power Project Source: Middle East Economic Digest, November 19, 2004
The World Bank (link here) is considering an application from Egyptian Electricity Holding Company (EEHC) (link here) for a $250 million loan to support the construction of a 650-MW power plant at El-Tebbine in southern Cairo. The estimated $350 million project is to be built on the site of an existing power plant and comprises two 325-MW steam turbines using natural gas as the main fuel and fuel oil as the back-up fuel.
The project includes the decommissioning of the existing plant, which comprises three 15-MW steam units operating on fuel oil and two 23-MW gas turbine units operating on natural gas, and further preparation of the 100,000-square-metre site. Upgrading of the gas pipeline and the transmission network area are also required.
A draft feasibility study has been prepared for the project and a preliminary environmental assessment drafted along with terms of reference for a full environmental and social impact assessment. World Bank approval for the loan is expected in mid-September 2005. The plant is planned to come on stream in 2009.
Miro Radici Group and Oriental Weavers Sign a Joint Venture Agreement Source: Egytex.com, November 28, 2004
Recent days have seen the initialing of a joint venture agreement between the Miro Radici Group (link here) and Oriental Weavers (Amcham Member) (link here), and Ronile (link here), the American distribution company, for the creation of a new terry cloth production facility.
The accord provides for the formation of “Oriental Weavers and Miro Radici Group Textile”, with share capital of 12.5 million dollars (45% Miro Radici Group, 45% Oriental Weavers and 10% Ronile).
The new company development plan foresees, in the coming months, the opening of a factory in the Tenth of Ramadam region. Built on a surface area of 30,000 square meters, it will employ 600 and have 94 looms about half of which are jacquard and supplied by the Itema Group (link here), a Miro Radici Group company and a world leader in the textile engineering sector.
This new facility, situated within a “free zone” of 500,000 square meters, will have an initial capacity for 5,000 tons of terry cloth produced annually with a turnover close to $30 million dollars and with the objective of tripling the output over the next three years to reach 15,000 tons of fabric for a turnover figure of almost $90 million.
The finished terry cloth will be primarily destined for linens (bathrobes, towels for bathroom and kitchen, beach towels). For the medium term, moreover, Oriental Weavers and Miro Radici Group Textile intend to expand their production to other goods, broadening the supply to encompass the whole home textiles sector.
Al Yousuf Opens Exclusive Distribution Center In Egypt Source: Gulf News, November 25, 2004
In response to the growing market penetration of personal computers, Al Yousuf has opened an exclusive distribution center in Egypt. The facility is the first dedicated Al Yousuf Distribution LLC center in Egypt.
The company has had a presence in the market for the past five years through its association with distribution partners, and will continue to work with them to meet rising market demands.
Egypt accounts for 35% of the company's international business, putting it on a par with Saudi Arabia. Other Middle East markets account for the remainder of international business.
Expansion plans across the region include particular focus on Lebanon, Jordan and Syria.
The company expects Al Yousuf Distribution to generate sales leads, and directly impact formulating marketing strategy and sales forecasting through market research and data collection. Egyptian government departments will be targeted as key accounts.
Al Yousuf Distribution will continue to be associated with its existing distribution partners in Egypt, Better Business and MAS Egypt.
The company is also one of the leading distributors for Western Digital, handling both internal and external hard drives.
Egyptian Bank Lists on UAE Bourse Source: Trade Arabia, November 24, 2004
The Abu Dhabi Securities Market (link here) listed on Monday Egypt's biggest private sector bank Commercial International Bank (AmCham Member) (link here).
The Bourse said the bank is the third foreign entity to be listed after Qatar Telecom (Qtel) (AmCham Member) (link here) and Sudan Telecom (Sudatel) (AmCham Member) (link here).
CIB already has global depositary receipts listed in London.
In August, it said in a statement that the Kuwait stock exchange had approved the listing of its shares
Merrill, Morgan Stanley, BNP strike $1billion Gusher in Egypt Source: Asset Securitization Report, November 22, 2004
The bulkiest deals this year have sprung from Russia and Turkey and now Egypt is joining the mega-league. In the works is a $1 billion transaction from state-owned Egyptian General Petroleum Corp. (EGPC)(link here), with BNP Paribas (link here), Merrill Lynch (link here) and Morgan Stanley (link here) as joint book runners, according to sources. Morgan is also global coordinator.
National Bank of Egypt (NBE) (AmCham Member) (link here), which enjoys a 50-year creditor relationship with EGPC, will co-manage the transaction, along with Banque Misr (AmCham Member) (link here), according to a source close to the transaction.
The brokerage arms of HC Securities and Investment (AmCham Member) (link here) and EFG-Hermes (AmCham Member) (link here) will also distribute the paper.
A withholding tax issue that has stalled a financial future flow deal originated by NBE and being handled by Merrill and Morgan Stanley should not be a problem for the oil-backed deal, according to a source. The tax code "is ambiguous when it comes to banks," he said, explaining the origin of the NBE impasse. What's more, the participation of four Egyptian entities no doubt bodes well for execution. EGPC explores and develops oil and natural gas deposits. Egypt is the second-largest natural gas producer in Africa, after Algeria.
High Oil Prices Trigger Record Revenues for Suez Source: Middle East Economic Digest, November 19 2004
Suez Canal revenues are forecast to reach a record $3,000 million this year as a result of high oil prices, according to Suez Canal Authority chairman Ahmed Fadel. Speaking in early November, Fadel said the canal earned about $268 million in October, taking the total for the year to about $2,500 million.
He said that the strong revenues were the result of increased traffic resulting from high oil prices, which have made it cheaper for ships to go through the canal than to sail around Africa. Fadel said the canal was also benefiting from the boom in global trade with China. Transshipment to or from China grew by 34% in 2003 to reach nearly 53 million tons, about 10% of the canal’s total annual tonnage of about 549 million tons. Fadel was speaking shortly after the rescue of a broken down oil tanker that had closed the canal for three days in early November, holding up over 100 vessels.
Tanganyika Oil to Commence Drilling in Egypt Source: Canadian Corporate Newswire, November 22, 2004
Tanganyika Oil Company Ltd. (link here) announced a two-well exploration program on the Company's West Gharib concession in Egypt. The first well is expected to spud by the end of November 2004. The two oil exploration wells will test the Fadl and Hoshia prospects.
The Shingli Bohai Chinese rig ZJ45 is currently being mobilized to the Fadl-1 site which is located approximately 9.2 km southwest of the Hana field. Approximately 60 truckloads of equipment from Hurghada will be moved to the Fadl location.
The Company has signed an investment agreement with Yukon Investments through which Yukon will finance 53.6% of Tanganyika's share of the drilling cost of the first two exploration wells, Fadl-1 and Hoshia-1, for 25% of the generated net revenue if successful. The Company continues to hold 70% working interest in the current gross field production averaging approximately 1800 bopd from Hana field.
Fadl-1 is scheduled to be drilled to a total depth of 5840 feet and will target the Upper and Lower Rudeis sandstone reservoir similar to the nearby West Bakr M field operated by a Japanese group since 1982.
The ZJ45 rig will then move to the next location, Hoshia-1, which is planned to be drilled to a depth of 4500 feet targeting the Nubia sandstone reservoir and possibly the Lower Rudeis sandstone, Cretaceous sandstone and Eocene limestone reservoirs. The Hoshia-1 well will be located approximately 14.5 km northwest of the Hana field.
Tanganyika Oil is a Canadian oil and gas company with production and exploration assets in Egypt and Syria. Its shares are traded on the TSX Venture Exchange and Swedish Depository Receipts trade on the Nya Marknaden of the Stockholm Stock Exchange.
General Dept. for Underground Water in the Eastern Desert issued a request on November 29, 2004 for construction of Wadi El Baroud El Abiad Dam in Safaga City. The specification fee is L.E. 500, the bid bond is L.E. 90,000 and the performance bond rate is 5%. Deadline for the submission of offers is December 29, 2004.
The General Dept. for Horizontal Expansion & Irrigation Projects in East Delta, issued a request on November 27, 2004. The request is for offers for construction of a navigational bridge of 90 tons capacity across Ismailiya Canal at Kilo 37.400 within Anchas, Markaz Belbeis in Sharkiya Governorate. The specification fee is L.E. 500, and the bid bond is L.E. 115,000 and the performance bond is 5%. Deadline for the submission of offers is December 29, 2004.
Electromechanical Works
November 24, 2004. The request is for supply & erection of a new hypochlorite unit at the location of Abu Sultan power station. The specification fee is L.E 2,000 and the bid bond is L.E.100,000. Deadline for the submission of offers is December 28, 2004.
Abu Zaabal Co. For Fertilizers and Chemicals, the Cashier, issued a request on November 21, 2004. The request is for construction of two industrial waste-water treatment stations of 7,000 M3/ day & 1,000 M3/ day capacity. The specification fee is L.E 3,000 and the bid bond is L.E.300,000. Deadline for the submission of offers is December 26, 2004.
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