SAUDI DIRECT INVESTMENTS IN EGYPT HIT LE15 BILLION Source: Egypt State Information Service, August 16, 2008
Saudi King Abdullah bin Abdul-Aziz arrived in Egypt for a two-day visit to the country and discussed Arab issues and the latest regional and international developments. Egyptian President Hosni Mubarak held a series of talks with King Abdullah which reflects the latest Egyptian efforts to speed Egypt-Arab coordination on regional issues and bilateral ties. Saudi Arabia is one of Egypt's major investors with its direct investments amounting to 15 billion Egyptian pounds (about 2.83 billion U.S. dollars). The oil-rich Gulf country is also the largest importer of Egyptian non-petroleum products, which exceeded 970 million U.S. dollars in 2007. Bilateral trade and investment are expected to increase further due to the establishment of an Egyptian-Saudi industrial zone in the 6th of October Governorate at a total cost of some 750 million dollars.
GOVERNMENT TO END FERTILIZERS SUBSIDY IN TWO YEARS Source: Al Mal, August 24, 2008
The government is determined to liberalize the domestic fertilizers market completely over the next two years, a move that will likely increase prices by 200%, said Minister of Agriculture Amin Abaza. Subsidies allocated to fertilizers will be used instead to subsidize crops such as wheat, benefiting domestic farmers, he added. The liberalization of fertilizers prices will be followed by the liberalization of all agricultural products, Abaza said, adding that the elimination of subsidies will not hurt agricultural investment. The government raised domestic fertilizers prices by 90% on March 2, 2008 to EGP1500 (USD283) per ton in an initial step to liberalize their price. Fertilizer subsidies cost the government EGP1.3 billion a year, but some of the benefits of the subsidies are going to traders rather than farmers.
STATE DEFICIT DOWN TO LE59 BILLION Source: Al Masry Al Youm, August 19, 2008
The initial indicators of the final account of the 2007/2008 State Budget showed a decrease of the deficit to LE59 billion (6.8% of GDP). Finance Minister Youssef Boutros Ghali said the first budget deficit before detracting loan interests had also gone down by LE8.5 billion (1% of GDP), while total revenues and bonuses went up to LE2.1 billion by 21.2%. Tax revenues increased by 20.2% (LE137.4 billion), while non-tax revenues went up by 23.1% to LE81.1 billion according to the Minister.
Mr. Ghali added that income taxes over the fiscal year went up to LE76 billion by 15%, while sales taxes on commodities and services during the year generated about LE40 billion or 30.9% more. The Minister mentioned an increase in custom duties by 34.6% (up to LE14 billion) and said that all these data represented an increase in the rates of economic growth and revenues.
The Suez Canal contributed the most in the State revenues with its LE26.8 billion, LE15.1 billion as surplus for the Treasury, LE10.3 billion as paid-in taxes and LE1.4 billion as fees. This pushed up the Canal contribution to the State Budget compared to last year by LE4.6 billion (20.6%). The final accounts also highlighted around LE3 billion of exceptional revenues coming from the license of the third generation of mobile phones during the 2007/2008 fiscal year. Moreover, an additional LE6 billion of investments have been directed to water and sewage projects.
As for the total expenses during the same fiscal year, the Minister pointed out that they amounted to LE277.4 billion (31.9% of GDP) compared to LE222 billion (30.4% of GDP) last year. Salaries went up to LE62.1 billion by 19% during the 2007/2008 fiscal year compared to LE52.1 billion last year, while payments of loan interests increased to LE50.4 billion up by 5.7%.
Total subsidies also increased during the 2007/2008 fiscal year and reached LE84.2 billion compared to 2006/2007 (up by 56%). Subsidies include LE 16.5 billion for food commodities and LE60.3 billion for oil commodities (up by 50%).
The head of the final accounts department at the Ministry of Finance (link here) Amir Rizk Hanna said that the total expenditure on healthcare had risen by 21% up to LE12.7 billion, while effective expenditure on education amounted to LE32.9 billion (LE5 billion or 17.9% more than last year).
IMF PROVIDES $250 MILLION FOR EGYPTIAN DEVELOPMENT Source: Bloomberg, August 24, 2008
The International Monetary Fund (IMF) (link here) plans to provide $250 million to help develop Egypt's rural provinces. The funds from the IMF, to be divided among five provinces, will be used to develop infrastructure and agricultural land, the newspaper said, citing a report by the Ministry of Economic Development (link here).
FDI FLOWS UP TO $13 BILLION THIS YEAR Source: Egypt State Information Service, August 21, 2008
"Foreign direct investment (FDI) flows hit 11.3 billion dollars during the first nine months of this year and are expected to reach 13 billion dollars during the 2007/2008 year," Minister of Investment Mahmoud Mohieldin said. Mohieldin said that all public investments are financed from the surplus of the public enterprise sector companies, which hit LE3.9 billion.
EGYPT CHEMICAL EXPORTS EXCEEDED LE10 BILLION IN 1ST HALF OF 2008 Source: Arab Finance, August 27, 2008
Egypt chemical exports exceeded LE10 billion in 1st half of 2008. Trade and Industry Minister Rasheed Mohamed Rasheed said his Ministry implements an integrated strategy to develop Egyptian industry, increase technological component and promoted exports. The strategy is based on transforming activities depending on using natural resources to medium technology then to high technological industry, Rasheed said. Egypt's chemical export during the first half of this year reached LE10.4 billion, by an increase of 25 percent compared to the same period last year.
Exports to the European Union accounted for, 32 percent of the total volume, Rasheed said. The number of factories stands at 3,311. Thirty-two new factories have been established with investments totaling LE 227 million, Rasheed said. He also urged chemical industries companies in Egypt to abide by the European regulatory system REACH, which is a new European community regulation on chemicals and their safe use. The system has been enforced on June 1st 2007 to deal with the registration, evaluation, authorization and restriction of chemical substances. Tthey still have until the end of November to readjust and comply with the new European legislation, otherwise, their products will be banned from entering European markets.
EGYPT RANKED 12 IN IT Source: Arab Finance, August 28, 2008
Egyptian Minister of Communications and Information Technology (IT) Dr. Tarek Kamel said that Egypt ranked 12 in the world in providing and exporting IT services that include e-business management, marketing and customer service centers and others, pointing out that Egypt's total technological exports reached $600 million and the country seeks to increase it to $1.1 billion in 2010.
The minister pointed out that the IT field created 35 thousand jobs to junior non-specialists in the field of communications referring that the State aims to attract new investments of $1 billion annually. The ministry aims to restructure telephone tariffs and create a framework of competition among mobile companies to contribute to improving the service and increasing number of subscribers to 47 million to help increase the rate of economic growth by 1%. The minister emphasized that NTRA (link here) controls the performance of mobile phone companies, examines the complaints about the poor level of service in some areas and checks the specifications of the license granted to the company.
LINGO MEDIA ANNOUNCES $5 MILLION INVESTMENT FROM ORASCOM TELECOM Source: Market Wire, August 26, 2008
Lingo Media Corporation (link here), a leader in online and print-based English language learning products in China, is pleased to announce the terms of a non-brokered private placement financing of $5,000,000 by Orascom Telecom Holding (link here). The Financing will consist of the issuance of 2,857,143 special warrants at a price of $1.75 per Special Warrant for gross proceeds of $5,000,000. Each Special Warrant is convertible for no additional consideration into units, with each Unit consisting of one common share and three-quarters (0.75) of one share purchase warrant.
Each whole Warrant is exercisable to acquire one further Common Share for a period of 24 months from the Closing Date as defined below: (i) at a price of $4.00 for a period of 12-months from the Closing Date, (ii) at a price of $6.00 per Common Share if exercised between 12-18 months from the Closing Date, and (iii) at a price of $8.00 per Common Share if exercised between 18-24 months from the Closing Date. The Warrants are callable, 120 days after the Closing Date, at the option of Lingo Media, in the event the Common Shares of the Company trade at or over 50% above the strike price of the Warrant for 10 consecutive trading days.
Upon the automatic conversion of the Special Warrants into Units, Orascom Telecom will become a new control person of Lingo Media, holding 22.96% of the issued and outstanding Common Shares of the Company (or 34.28% on a fully diluted basis). Pursuant to applicable securities laws and TSX Venture Exchange rules regarding new control persons, the Company will seek shareholder approval of the Financing at its annual and special meeting scheduled for October 14, 2008.
£25M CONTRACT WINS ANNOUNCED BY TWMA Source: AMEInfo, August 19, 2008
Leading integrated environmental services specialist TWMA (link here) has announced contract wins of £25m secured within the last quarter. The majority of the work will take place in Nigeria, Egypt and the UK and includes new projects with Total (link here) and Senergy, as well as extensions to existing contracts for BP (AmCham member) (link here), Exxon Mobil (AmCham member) (link here) and Oilexco. The new contracts include handling the cuttings that are a by-product of the drilling industry both on and offshore, using thermal technology to separate them into water, oil and solids which can then be recycled.
KUWAIT INVEST SELLS BROKERAGE STAKE TO EFG-HERMES Source: Reuters, August 18, 2008
Kuwait Invest Holding Co said it sold a 50 percent stake in a brokerage unit to EFG-Hermes (AmCham member) (link here), Egypt's largest investment bank by market value, for 33.4 million dinars. EFG-Hermes said the unit, Offset Holding KSC, owns 90 percent of Gulf Financial Brokerage Company, which has a 26 percent market share in Kuwait. Under the agreement, EFG-Hermes will assume the management and operation of Offset Holding and Gulf Financial, which will operate under the brand name EFG-Hermes IFA, the statement said. "With no new brokerage licenses being offered for sale in Kuwait on the Kuwaiti market and no foreseeable change to the regulatory environment, there is substantial scarcity value in acquiring interests in a Kuwaiti brokerage firm," EFG-Hermes Chief Executive Officer Hassan Heikal said.
EFG-HERMES BUYS STAKE IN CAMERON 'FAMILY FIRM' Source: Arabian Business, August 19, 2008
Investment bank EFG-Hermes (AmCham member) (link here) said it had agreed to buy a 9.97 percent stake in UK stockbroker Panmure Gordon (link here) for 3.16 million sterling ($5.97 million) in cash. Egypt’s largest investment bank by market capitalisation will acquire 6,732,675 shares in the company at 47 pence per share. "The markets we operate in are becoming more international and the opportunities available through a business relationship with EFG-Hermes are compelling," Panmure Gordon chairman Tony Caplin said.
Hassan Heikal, chief executive of EFG-Hermes, said that the deal was further testament to the growing importance of the region’s markets on the global investment stage. Founded in 1876, Panmure Gordon is an independent mid-cap investment bank based in London. Including its US franchise, it has 280 employees in the US, the UK and Switzerland.
ALMARAI SEALS EGYPT DAIRY FIRM DEAL FOR $112MILLION Source: Trade Arabia, August 20, 2008
Saudi Arabia’s Almarai (link here), the largest dairy company in the Gulf Arab region by market value, said it has initially agreed to buy International Company for Agricultural Industrialisation Projects. Almarai will pay about $112 million to complete the acquisition of a majority stake in the Egyptian dairy and juice manufacturer. It is expected to complete the transaction next month. If completed, the acquisition would be Almarai’s first in Egypt where Almarai’s business is currently focused.
TRANSGLOBE ENERGY BUYS HIGHER STAKE IN WEST GHARIB PROPERTIES Source: The Canadian Press, August 18, 2008
TransGlobe Energy Corp. (link here) has acquired another 25 percent stake of its West Gharib properties in Egypt from its partner, a private company registered in Cyprus, for US$18.0 million. The acquisition, announced Monday, brings TransGlobe's stake to a 100 percent working interest on all nine West Gharib exploration leases. TransGlobe is focused on exploration and development in the Middle East and North Africa, with production in Egypt and Yemen.
VODAFONE EGYPT ACQUIRES SARMADY COMMUNICATIONS Source: AMEInfo, August 20, 2008
Vodafone (AmCham member) (link here) is acquiring the majority of shares in Sarmady Communications (Sarcom) (link here), the Cairo-based digital media specialist and one of the fastest growing online businesses in the region. This acquisition is a major development for Vodafone's internet strategy as it significantly expands its presence in online media and accelerates the roll-out of its mobile advertising business. Vodafone Egypt already enables millions of Egyptians to access the Internet through its mobile broadband, fixed ADSL and USB broadband services.
Through the Sarcom acquisition, Vodafone Egypt will own some of the largest online destinations in Egypt. Sarcom's online media 'magazines' are read by over 800,000 people a week. Sarcom has revolutionized web advertising in the region with a suite of products for small and medium enterprises and the first fully automated Arabic and English advertising system with online payment in the Middle East. Its 'Ezee-ads' service enables other websites to benefit from an affiliate programme for advertising.
TURKEY EXEMPTS EGYPTIAN COTTON TEXTILES FROM IMPORT DUTIES Source: Al-Alam al-Yom, August 31, 2008
Egyptian cotton textile exports to Turkey will be permanently exempted from Turkish customs duties, said Trade and Industry Minister Rachid Mohamed Rachid. The decision, which follows negotiations between the two countries’ trade and industry ministries, makes Egypt the only country in the world to become exempted from Turkish textile duties. Egypt has submitted proof to the Turkish authorities that the increase in Egyptian cotton textile exports to Turkey has not harmed Turkish producers. Egypt and Turkey have a bilateral free trade agreement that has led to an increase in trade and investments between them, Rachid added.
SUEZ CANAL BANK AND BELTONE FINANCIAL ESTABLISH 'AL AGYAL' FUND Source: Zawya, August 18, 2008
Suez Canal Bank (AmCham member) (link here) and Beltone Financial (AmCham member) (link here) have established the second fund under the name Al Agyal. Al Agyal is an open investment fund capitalized at LE100 million, and will be managed by Beltone Asset Management. The objective of the fund is to invest in Egyptian equity with a strategy of maximizing returns within an acceptable risk limit. The fund does not distribute dividends, and will be issued with a certificate par value of LE10. The duration of the fund is 25 years starting the day of inception.
Suez Canal Bank General Manager and Head of Risk Mohamed Samy commented on the fund by saying that one of its unique features is that it allows for daily subscription and redemption. The initial subscription for the fund will consist of a minimum of LE5000 only. Beltone Asset Management Executive Director Hisham Akram said that the fund specifically targets investors with an appetite for diversification in the Egyptian stock exchange; and that are looking to tolerate a certain degree of risk associated with this type of investment in return for substantial medium and long-term profits. Akram added that the LE10 certificate value would provide the fund with added liquidity and would specifically appeal to smaller investors. This will provide investors who have limited experience with an opportunity of exposure to the Egyptian stock market without having to bear the risk of managing the funds.
ASEC MINING TO INVEST IN ETHIOPIA Source: EgyptWire, August 18, 2008
ASEC Company for Mining (ASCOM) (link here) said it was taking a 20% stake in a new company that will produce cement in Ethiopia. It said the Ethiopian venture, in conjunction with ASEC Cement, would be the company's first investment in cement production. The Ethiopian company would have a capital of $100,000 and would build and run cement plants, own limestone quarries, and export clinker and other products.
11 INDUSTRIAL ZONES TO BE ESTABLISHED AT INVESTMENTS OF LE37 BILLION Source: Egypt State Information Service, August 26, 2008
Eleven industrial zones will be set up in the 10th Ramadan City, the 6th October City and Sadat City by Egyptian and foreign companies, said Minister of Trade and Industry Rasheed Mohamed Rasheed. The companies have submitted applications to the Industrial Development Authority (IDA) (link here) before the deadline expired on August 23, 2008. A committee from the authority has been formed to consider the applications, the Minister said. Investments of the would-be industrial zones will hit LE37 billion, said Rasheed. The zones, which are the second of an industrial plan, are aimed at increasing industrial exports. They will provide up to 115,000 job opportunities. The industrial zones in the first stage are expected to create 175,000 jobs.
EgyptAir (link here) has confirmed ordering two Boeing 777-300ER (Extended Range) jetliners as part of the airline's twin-aisle fleet upgrade for its long-haul service. The order is worth $529 million at current list prices. On July 11, EgyptAir celebrated its induction as the 21st member of Star Alliance, officially expanding its network to 1,624 weekly flights to 69 destinations around the world. The Cairo Airport Authority plans to open a dedicated Star Alliance terminal later this year, capable of serving 11 million passengers annually.
The 777’s operational performance, with its significant savings in fuel and maintenance costs, will have a positive impact on EgyptAir’s growth plans and help the airline achieve greater profitability. EgyptAir’s new business class seating planned for the 777-300ER includes 49 full lie-flat beds with a 78-inch seat pitch. The airline is slated to receive its first 777-300ER on lease in January 2010 with three additional airplanes delivering throughout the year.
VISITORS TO EGYPT INCREASE MORE THAN 25 PCT Source: Reuters, August 25, 2008
The number of people visiting Egypt increased more than 25 percent in the financial year 2007/8, compared with the previous year, said Tourism Minister Zoheir Garrana. Statistics show that Egypt had about 9.8 million visitors in the financial year 2006/7. The number of nights tourists spent in Egypt and the amount of tourist revenue reaching the country increased 32 percent in the year, which ended in June, the minister added.
Tourism accounted for 6.5 percent of Egypt's gross domestic product in 2007, World Bank figures show. It employs directly or indirectly about 13 percent of the workforce. The government estimates that every extra million tourists create 200,000 new jobs. One of the biggest growth areas has been tourism from Russia, which now accounts for more tourists to Egypt than any other country. Russian tourists numbered 1.5 million in calendar 2007, overtaking Britain, and Garrana said he expected that to rise to 2 million in calendar 2008. By the end of 2008 the number of hotel rooms in Egypt will increase to 240,000 from 203,000 now, meeting earlier than expected one of the six-year targets H.E. President Hosni Mubarak set in his presidential re-election campaign in 2005, he said.
EGYPT UNVEILS PLAN TO BOOST AUTO INDUSTRY Source: Egyptian International Trade Point, August 18, 2008
Egypt’s Minister of Trade and Industry Rashid Mohamed Rashid said that his ministry planned to turn the North African country into a regional hub for manufacturing car components. The minister added that a full-fledged programme was being carried out to boost auto-making industry in Egypt. "A specialized zone for cars and engineering industries has been set up in the Six of October City, where 35 firms signed contracts to establish business so far," Rashid added. Egypt’s Industrial Modernisation Centre (link here) is also boosting firms to produce car components, like compressors, cables and other related products.
Now 15 Egyptian firms export to major world auto makers, the official explained. "The Egyptian Government is committed to giving all possible support to encourage the car industry through making use of local components to produce Egyptian cars, which would increase jobs," added Rashid on the sidelines of a ceremony launching a car-painting unit for General Motors Egypt in the Six of October City, some 38km northwest of Cairo.
"Setting up a unit like this is a step to enhance car industry here, which will create opportunities for cooperation with big-name world auto-makers," the official said.Egyptian exports of spare parts totalled $190 million in 2007. There are 370 firms that produce spare parts in Egypt, according to Rashid."There are 17 plants working in the car assembly business, where 27 lines of production are dedicated to light transport vehicles, buses and camions of total investment exceeding LE7 billion ($1.3 billion)," he added.Egypt produced more than 100,000 cars in the past year. Production rose by 4.3 percent in the first-quarter of this year, totaling 35,703 vehicles.
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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