U.S. AMBASSADOR SUPPORTS COMMERCIAL LAW EDUCATION Source: US Embassy in Cairo, October 24, 2007
The U.S. Ambassador and Dr. Hassan Nader, President of Alexandria University, conferred on October 23 on the planned U.S–Egypt University Partnership designed to strengthen commercial law education.
“Egypt and the U.S. both recognize the importance of developing human resources through education,” said Francis J. Ricciardone, the U.S. Ambassador to Egypt.
Under the U.S-Egypt cooperative program, officials of the Indiana University School of Law – Indianapolis (link here) will visit Dr. Osama El Fouly, Dean of the Faculty of Law, Alexandria University (link here), to finalize arrangements. This partnership between Indiana and Alexandria University will offer a new Master of Laws in International Commercial Law. At the same time a parallel partnership is being initiated between Faculty of Law- Cairo University (link here) and Indiana University.
Instruction will begin in January 2008 for approximately 25 students at each of the two Egyptian campuses, growing to about 75 students at each campus thereafter. The partners plan to grant degrees recognized both in the U.S. and in Egypt. The partnership will also modernize library and IT facilities, as well as conduct exchanges for senior faculty and offer training in the U.S. for junior faculty.
EGYPT SIGNED A MEMORANDUM OF UNDERSTANDING WITH THE NAIC Source: Asia Insurance Review, October 30, 2007
The Egyptian Insurance Supervisory Authority (EISA) (link here) signed a memorandum of understanding (MOU) with the National Association of Insurance Commissioners (NAIC) (link here) during the 14th Annual IAIS Seminar held in Fort Lauderdale, Florida, USA, last week.
The MOU was signed by NAIC President Walter Bell and EISA Chairman Adel Mounir, the agreement spells out a framework for regulators in both countries to share information, provide technical assistance, and co-operate on cross-border regulatory functions affecting the performance of insurance markets.
“As Egypt moves toward restructuring and privatizing its state-owned insurance companies, it is apparent that EISA views an efficient and competitive financial sector as essential," said Mr Bell, who is also Insurance Commissioner of Alabama. The NAIC has been involved in several technical assistance efforts funded through USAID, including providing training on risk-based capital and, most recently, hosting four interns through the NAIC’s International Internship Program last spring and an two more interns this fall.
INFLATION RISES 10.5 IN SEPTEMBER Source: Reuters, EFG Hermes, October 18, 2007
According to CAPMAS (link here), urban consumer prices rose 9.3% Y-o-Y in September 2007. CAPMAS said consumer prices for the country as a whole rose 10.5% Y-o-Y in September. Prices in the countryside rose 12.0% Y-o-Y.
EGYPT FIRST AMONG AFRICAN COUNTRIES IN FDI ATTRACTION Source: UNCTAD World Investment report 2007, EFG Hermes, October 18, 2007
The United Nations Conference on Trade and Development (UNCTAD) (link here) ranked Egypt as first among African countries, and second among its Arab peers, in attracting foreign direct investment (FDI). Globally, Egypt is ranked as 33 up from 35 last year. Foreign direct investment in Egypt reached $10 billion in 2006, 80% of which was in non-oil sectors, including manufacturing, banking and tourism. Egypt's share of FDI was 43% of that flowing to North Africa, and 30% of that to the African continent.
NTRA GRANTS ETISALAT EGYPT INTERNATIONAL TELECOM LICIENSE Source: Daily News Egypt, October 19, 2007
The National Telecom Regulatory Authority (NTRA) (link here) has announced the procedures, conditions and rules governing the licenses of international telecommunications gateway liberalization.
The NTRA’s board of directors had approved the framework of international telecom gateways liberalization in reference to the Telecommunications Regulation Law no.10/2003 that stipulates the end of Telecom Egypt’s monopoly of providing international calls services by the end of 2005. “This decision will allow mobile operators to be awarded international gateways licenses to provide international call services to their subscribers,” added an NTRA source.
Etisalat Egypt (Amcham Member) (link here), Egypt’s third mobile operator, was the first company to apply for the international telecommunications license. “NTRA has granted Etisalat Egypt the license, as it complied with the rules and regulations,” the source said. Both Mobinil (Amcham Member) (link here) and Vodafone Egypt (Amcham Member) (link here) have been informed of the licensing procedures and of Etisalat Egypt’s new authority to provide international telecommunications services. The two operators asked for a grace period till the end of 2007 to decide whether or not they are interested in obtaining the license.
EGYPT’S SECOND FIXED-LINE OPERATOR TO USE TE’S INFRASTRUCTURE Source: Al-Mal, EFG Hermes, October 22, 2007
The second fixed-line operator in Egypt, expected to launch in late 2008, will use Telecom Egypt’s (TE) (Amcham Member) (link here) infrastructure, which will bring significant returns to TE, as the company’s CEO Akil Beshir said. The National Telecommunications Regulatory Authority (NTRA) is currently studying the mechanism through which the rental of network and infrastructure will be achieved. Lower fixed line-to-fixed line tariffs would not be possible after the launch of the second operator, seeing that the tariffs are currently below cost and subsidized through international calls revenue.
TENDER ANNOUNCED FOR ELECTRICITY PLANT COMPONENTS Source: Al-Alam El-Yom, EFG Hermes, October 18, 2007
Egypt will launch an international tender for bids on the foreign components of its largest ever steam-turbine electricity plant in Abu Kir, Alexandria, announced Minister of Electricity and Energy Hassan Younes. The plant, which is expected to cost up to L.E 8 billion, will have a capacity of 1,300 mega watts (MW); and it is one of four steam-turbine plants the government plans to build by 2012. Other plants include: El Tebben, south of Cairo (with capacity of 700 MW); West Cairo (700 MW); and Ain Sukhna, on the Gulf of Suez (1,300 MW). The foreign component of the Abu Kir project will amount to $933 million and be financed by loans from Arab funds and the African Development Bank (link here), while Egypt’s West Delta Electricity Co. the project owner, will finance L.E.2.5 billion.
ORASCOM CONSTRUCTION WINS A POWER PLANT CONTRACT Source: Thomas Financial, October 22, 2007
Orascom Construction Industries (Amcham Member) (link here) has won a $109 million contract for the construction of a new 62 megawatt (MW) integrated solar combined cycle power plant in Kuraymat, Egypt from the New and Renewable Energy Authority, a subsidiary of the Egyptian Ministry of Electricity (link here).
The contract involves all civil work in addition to two years' worth of operation and maintenance for the plant, Orascom said. The contract also includes the engineering, procurement, construction, testing and commissioning of the solar field and service area for the power plant.
The project will be co-financed by the Global Environment Facility (link here), through the International Bank for Reconstruction and Development and by the Egyptian government through a loan provided by the National Bank of Egypt (Amcham Member) (link here).
EGYPT TO BOOST GAS SUPPLY TO JORDAN Source: Tehran Times, October 28, 2007
An official at Jordan's Ministry of Energy and Mineral Resources said that Egypt will soon supply Jordan with additional quantities of natural gas after the two sides finalized negotiations over the prices for the industrial sector in the Kingdom.
The first phase of the new deal includes supplying Jordan with an additional 550 million cubic meters of gas a year for the industry and electricity sectors. The deal comes five months after local news reports claimed that Egyptian gas flow to the kingdom was suspended after the supplier reneged on a pricing agreement.
Officials from both sides dismissed these reports, with the Egyptian side insisting it was committed to the original agreement which stipulates that the price of gas Jordan imports from Egypt will remain without a hike till 2018.
In 2004, Egypt agreed to supply Jordan with 2.3 billion cubic meters of gas a year at preferential prices for 15 years. But the industrial sector in the Kingdom was not included under the agreement. It is worth mentioning that 85 percent of Jordan's electricity is generated by Egyptian gas.
EGYPT’S NUCLEAR ENERGY PLAN ON THE GO Source: Radio Netherlands Worldwide (RNW), October 30, 2007
On Monday the 29th of October President Hosni Mubarak gave the go ahead to build several nuclear energy plants in Dabaa, near the Mediterranean coast. In a speech delivered at the launching ceremony of a new 1000-megawatt thermal power station in Cairo, President Mubarak announced proudly that he decided to go the nuclear route "because securing sufficient energy supplies for the nation is an integral part of its national security and an important step in its march towards the future.
President Mubarak firmly stated that Egypt’s nuclear plans were for purely peaceful aims and that the whole project would be fully transparent. The proposed plant consists of four energy generation units, each with a 1000-megawatt capacity. He instructed his government to take all the necessary technical, administrative and legal measures to build the plant and train staff.
NEW CEMENT PLANTS REQUIRED TO USE 20% LOCAL FACTORS Source: Al-Alam al-Yom, EFG Hermes, October 24, 2007
The Government will require all cement companies that win licenses for new cement plants to use local factors of production worth L.E.4 billion, representing 20% of the new plants’ cost. There will be a reduction in the license cost for companies using more than 20% local factors of production. This was intended to create about 40,000 new jobs. Amr Assal, Chief of the Industrial Development Authority (IDA) (link here), said that the government’s target is to reach L.E.7 billion in local factors in the new cement projects, representing 35% of the projects’ costs, creating 70,000 new jobs.
EGYPT GRANTS LICENSES FOR SIX CEMENT PLANTS Source: Reuters, October 29, 2007
On Sunday the 28th of October Egypt granted six licenses to build Greenfield cement plants as part of efforts to increase domestic supply. The first license went to Nile Valley Cement for L.E.251 million.
Local affiliates of Mexican company Cemex (Amcham Member) (link here) and French company Lafarge (link here) each won licenses to expand production by 1.5 million tons per year. Cemex affiliate, Assiut Cement, bid L.E.202 million for the license and Lafarge affiliate, Beni Suef, Cement bid L.E.134.50 million for a second license.
Winning bids for the Greenfield licenses ranged from L.E.22-251 million, and brought in a total of L.E.801 million. Auctions for two additional licenses for Greenfield plants were cancelled due to a lack of bids.
Government officials have said that cement supply should increase 19 million to 20 million tons annually within five years after the new plants come on line, and following the expansion of six other existing factories.
A Nile Valley official said that his company would build its plant in Beni Suef, where it had already invested L.E.35 million. "It was important for us to get the first license. Whoever gets the first license has the right to choose the location," he added.
OCI BUYS REST OF NATIONAL STEEL FABRICATION Source: OCI press release, November 1, 2007
Orascom Construction Industries (OCI) (Amcham Member) purchased the remaining 50% equity stake in 6 October-based National Steel Fabrication (NSF), giving it full ownership of the largest steel fabrication company in the Middle East. OCI bought the stake from Athens-based Consolidated Contractors International Company S.A.L. (CCC) for $13.5 million. NSF’s fabrication services include cutting, drilling, bending, welding, sand blasting and painting.
In February 2007, OCI announced it was building another new steel fabrication plant, in Algeria, with a capacity of 12,000 tons per year. It also operates two fabrication facilities in Egypt with a combined capacity of 55,000 tons per year.
EGYPTAIR AND LUFTHANSA LAUNCH THEIR FIRST CODESHARE OPERATIONS Source: Middle East Aviation, October 28, 2007
EgyptAir (link here) and Lufthansa German Airlines (Amcham Member) (link here) successfully launched their first code-share flights on October 28. The code-sharing will be introduced on EgyptAir’s daily services from Cairo to Frankfurt and Munich, and Lufthansa’s double daily services from Cairo to Frankfurt as well as on its three weekly flights from Alexandria to Frankfurt. This will bring the total to 31 code-share flights being operated by Egypt Air and Lufthansa.
Commercial cooperation between both carriers is planned to cover other domestic and international destinations in the future.
Passengers of EgyptAir and Lufthansa will benefit from the mutually-coordinated timetables with more flight possibilities and convenient connections between Germany and Egypt. Passengers will also be able to take advantage of additional frequent flyer program benefits; they can accrue and redeem miles on all code share flights. As a promotion marking this cooperation, Egypt Air and Lufthansa offer their customers extra mileage from 28th of October till 30th of November.
DUBAI PORTS BUYS 90 PERCENT OF EGYPT CONTAINER FIRM Source: Reuters, October 31st, 2007
Dubai Port World (DPW) had acquired a 90 percent stake in the Egyptian Container Handling Company (ECHCO) for $670 million. Located at Sokhna, near the mouth of the Suez Canal, the port is expected to have a capacity of 1.2 million 20-foot equivalent units by the end of 2009. Meanwhile; Orascom Construction Industries OCI sold its 50% stake in the (ECHCO) and Dubai Ports World (DPW) paid $372 million for the 50% stake
The Dubai government plans to sell a 20 percent stake in DP World next month in what could be the Middle East's largest initial public offering
EGYPT TO APPOINT EUROBOND SALE MANAGER Source: Bloomberg, EFG Hermes, October 24, 2007
The Egyptian government is close to appointing a manager for the sale of 10-year Eurobonds denominated in local currency, with the proceeds going to finance the budget deficit, Mohamed Assaad, Adviser to the Minister of Finance on Public Debt Management, said in an interview with Bloomberg. He did not state the amount of money the government is seeking to raise with the bonds, nor the expected yield on the bonds. Egypt raised $1 billion in July 2007 with a sale of a similar bond, with an average yield of 8.875%.
SMES STOCK EXCHANGE OPENS IN CAIRO Source: Daily News Egypt, October 26, 2007
In a major step towards developing small and medium-sized enterprises (SMEs), Minister of Investment Mahmoud Mohieldin inaugurated on Thursday the 25th of October Egypt’s highly anticipated SME bourse named the Nile Stock Exchange (Nile X).
Enlisting is expected to begin within one week, and actual trading will take place in two months’ time.
“With the SME stock exchange, these companies will be able to enhance their competence and improve their competitiveness,” said Mohieldin. “The new bourse will help SMEs expand and increase capital through trading.”
“By registering, companies can further grow and team up with regional or foreign partners,” explained Maged Shawky, chairman of The Cairo and Alexandria Stock Exchange (CASE) (Amcham Member) (link here). “Stock performance and evaluation of listed companies will be divulged which can encourage others to invest in these SMEs. Hence, being listed on the bourse [in a way] helps promote the companies.”
Guidelines to enlist on Nile X involve lower transaction fees than that of the regular bourse to encourage many companies to register. Capital of member firms will range from a minimum of L.E.500,000 to a maximum of L.E.25 million.
Trading on Nile X will be conducted through bidding as opposed to the usual buy/sell transactions. The highest bidder acquires shares in the company. “That method will help minimize manipulation of share prices,” added Shawky.
The SME stock exchange, he said, was a natural evolution in Egypt’s growing economy. “Eighty percent of economic development in Egypt comes from SMEs, and they fulfill 75 percent of our employment needs,” he pointed out. “Still, these enterprises need to increase their capital and funding to better improve their business. And from here the necessity of establishing an SME stock exchange derives.”
Officials foresee that Nile X will create a new class of assets and enhance financial capabilities of Egypt’s SMEs, further increasing employment rates and sustaining the country’s growth level.
EL WATANY BANK SHARES ARE OFFERED FOR SALE Source: Forbes, Arab Finance, October 29, 2007
The National Bank of Kuwait (NBK) (link here), the Gulf Emirate's largest bank, has acquired 93.77 (70.33 million shares) percent of Al Watany Bank of Egypt (Amcham Member) (link here) in a deal worth more than $900 million.
Chief executive officer Ibrahim Dabdoub described the deal as a significant step within NBK's expansion strategy in the region. He expected the deal would promote cooperation between Egypt and Kuwait and encourage trade and investment flows.
Al Watany Bank has 22 branches across Egypt and its assets stand at $2 billion.
UAE-BASED AMLAK FINANCE BEGINS OPERATIONS IN EGYPT Source: Bloomberg, EFG Hermes, October 30, 2007
Amlak Finance (link here), the United Arab Emirates biggest mortgage lender, began its business operations in Egypt. The company will finance home loans in Egypt as part of its plans to expand throughout the Middle East. “Mortgages are crucial for Egypt's economic growth, which averaged about 7% of it’s GDP in the last couple of years”, said Amlak chairman Nasser Al-Shaik.
NEW CRITERIA FOR TEXTILE FIRMS SEEKING SUPPORT Source: EFG Hermes, October 25, 2007
Three criteria have been set for new textile companies applying for support given by the Export Development Fund: these include having an operating factory, providing an endorsement from a legal accountant, and financial statements for two years, or the initial year for newly established companies. Additionally, The Textile Export Council has set six criteria determining the eligibility of textile companies to participate in international fairs and exhibitions. According to Magdi Tolba, chairman of the council, these include having minimum exports in the previous year of no less than $2 million in the case of group participation, or $5 million in the case of a company wishing to participate individually.
CHINA TO SPEND $100 MILLION ON NEW INDUSTRIAL ZONE IN SUEZ Source: Reuters, November 1, 2007
China will spend $100 million to build the infrastructure of a new industrial zone in Egypt's Suez region, the Ministry of Trade and Industry (link here) announced in a statement. The zone, to be completed over 13 years, is expected to attract investments of $2.5 billion from Chinese firms operating in industries such as textiles and ready-made garments, petroleum pipelines and gas, cars and car components and electronic equipment. It will act as a regional hub for Chinese manufacturers looking to invest throughout the Middle East and Africa.
The first phase of construction, which will last three years and cover one square kilometer, should attract $250 million in investments. The second phase will be completed over ten years and cover another four square kilometers.
China will provide Egyptian firms with $200 million in credit for production lines and technology transfers with favorable conditions, including a seven-year grace period and interest rates of no more than 2%, the statement added.
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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