AmCham, Citibank and the Bank of New York Sponsor ''Egypt: Open for Business'' Conference Source: Business Wire, March 16, 2006
The American Chamber of Commerce in Egypt (AmCham Egypt) (link here) , Citibank (link here) and the Bank of New York (link here) held a joint sponsorship of a day-long conference entitled "Egypt: Open for Business" at the Waldorf-Astoria Hotel on March 16, 2006.
The conference featured U.S. and Egyptian business executives discussing emerging business and investment opportunities in the Egyptian market as the government of Egypt continues an aggressive program of economic liberalization and privatization designed to open the market to foreign investors. Dr. Mahmoud Mohieldin, Minister of Investment, represented the Egyptian government at the conference. Dr. Mohieldin's ministry is in the midst of a global campaign to promote foreign direct investment (FDI) in Egypt.
"We have come to New York to highlight the rapid progress of economic reform in Egypt," said AmCham president Dr. Taher Helmy. "We speak from our experience as American and Egyptian business men and women committed to real, sustained reform. The key to expanding economic opportunity in Egypt is attracting business investment from international investors, especially those in the U.S."
Egypt's economic reform program has been underway for 20 months and has included dramatic reductions in business and personal taxes, tariffs and non-tariff barriers to trade, broad financial service sector reforms, and the eventual privatization of some 200 government-owned businesses and 400 public-private joint ventures.
These economic reforms are designed to enable international and Egyptian investors to tap the comparative advantages the country offers, including:
·Preferential access to U.S., European, Middle Eastern and African markets under the terms of free trade agreements negotiated in recent years.
·Close proximity to European, east coast U.S., Middle Eastern and African markets.
·Low-cost and reliable energy, water and labor supplies and abundant, accessible raw materials.
·A developed transportation, energy, water, telecom and business service infrastructure.
·A large educated and technically-trained workforce with proficiency in English, French and Italian.
·A young, rapidly growing domestic market.
After less than two years, the reforms are already having positive effects:
GDP growth rose to 5% last year and is on track to reach 6% this year.
Inflation, which spiked at 12% in 2004, receded to 3.1% by late 2005.
Egypt's current accounts posted a surplus of 3.3% of GDP last year, climbing from a 1.2% deficit five years earlier.
Market capitalization doubled in 2005, and the total value of stocks traded on the Cairo Alexandria Stock Exchange (AmCham Member) (link here) increased four-fold last year.
After four years of stagnant growth, FDI tripled last year and is poised for another dramatic increase in 2006.
Independent credit and investment climate analysts are now recognizing this progress. For example, Moody's Investor's Service (link here) Egypt Credit Opinion (August 2005) notes that:
"The government of Ahmed Nazif since July 2004 has clearly played a role in the revitalization of the economy. Some important reforms such as reduction of customs tariffs and taxes have been set in train. Even the privatization programme which had stalled a few years ago, has been revived."
The Institute of International Finance (link here) (Summary Appraisal: Egypt, October 2005) states:
"(Egypt's) economic prospects appear more favorable now than for a decade or more. Tax reform, trade and exchange rate liberalization, a revival of privatization and ongoing restructuring of the banking system have raised confidence, as reflected in a surge in FDI and a booming stock market."
The World Bank (link here) (Doing Business 2006 - Creating Jobs, September 2005) ranks Egypt 6th among 150 nations for its economic reforms, stating that:
"Some of the boldest reforms, driving the biggest improvements in the Doing Business indicators were... Egypt's streamlining of customs procedures and trade documents."Finally, A.T. Kearney's Global Services (link here) Location Index (2005) ranks Egypt among the 12 most attractive locations worldwide for IT, call center and business process services, just behind the United States and ahead of all Middle Eastern, North African and all European locations, with the exception of the Czech Republic. For cost-sensitive companies, Egypt jumps from 12th place to 5th, trailing only locations in the Far East including India and China.
For further information on Egypt-U.S. Relations (click here).
For AmCham’s latest research on textiles and clothing(click here).
World Bank Provides Support to Reducing Industrial Pollution Source: M2 Presswire, March 27, 2006
The World Bank (link here) approved a $ 20 million loan to finance the second phase of the Second Pollution Abatement Project (SPAP) in Egypt.
One of the main objectives of SPAP is to demonstrate applicability of market-based instrument for promoting industrial pollution abatement in hotspots locates in the areas of Alexandria and Greater Cairo. This project will provide assistance to the Egyptian government for improving its environmental management capabilities in continuation of the successful collaboration that was developed during Phase 1 over the past several years.
"With this project, Egypt is considered the first country to receive the largest resources on pollution control from the World Bank and its partners. It is a demonstration of global commitment to the Millennium Development Goals," commented Hocine Chalal, the project's Task Team Leader.
The World Bank $20 million loan succeeded in attracting an additional $145 million of concessionary lending and grants from: The Japan Bank for International Cooperation (JBIC) (link here); The European Investment Bank (link here); Agence Franaise de Developpement (link here); and the Government of Finland (link here) are now completing the steps for securing their participation to SPAP.
The project will be also accompanied by a parallel operation to be financed by the Global Environment Facility (GEF) (link here)for an estimated amount in the order of $7.5 million. GEF's support will focus on the conservation, protection and development of Lake Mariout of Alexandria, one of the pollution hotspots in Egypt. This will also address the regional concern of pollution of the Mediterranean.
SPAP includes essentially two components: An Environmental investments component that will focus on pollution abatement in major hot spots in Alexandria and Greater Cairo areas. These investments will target the industrial sector through soft loans targeting pollution abatement measures.
The second component is a technical assistance one to provide the necessary expertise to the financial sector, the beneficiary companies to be selected and the Egyptian Environmental Affairs Agency on regulatory and institutional aspects.
In addition, a Carbon Finance sub-program will be developed in parallel that will consist in promoting Clean Development Mechanism (CDM) projects for which the Bank will purchase Carbon emission reduction credits with a particular focus on ensuring significant local sustainable development contribution.
This initiative aims also at contributing to Egypt's effort in addressing Climate Change. A share of the revenues generated through this purchase will be transferred to the Egyptian Environmental Protection Fund for the establishment of a financing system that can contribute efficiently to the sustainable development agenda of Egypt.
For AmCham’s Banking Sector Developments in Egypt New (click here).
Telecom Egypt Selects Convergys to Consolidate Billing Operations Source: Business Wire, March 27, 2006
Convergys Corporation (link here), a global leader in customer care, human resources, and billing services, announced that Telecom Egypt (link here), the largest fixed line provider in the Middle East and Africa, has signed a 5-year licensing contract for Convergys' Infinys rating and billing solution.
Convergys will manage the replacement of Telecom Egypt's existing billing systems with its Infinys solution by providing the following professional services: project management, business requirement analysis, solution definition, configuration, installation, testing, and data migration services. The consolidation project will be completed in 2008. The first Infinys-generated bill is expected during the second quarter of 2007.
Telecom Egypt is the country's incumbent telecommunications operator established in 1998 to replace the former Arab Republic of Egypt National Telecommunication Organization (ARENTO) and serves over 10.5 million subscribers.
With Infinys, Telecom Egypt will lower its IT costs by consolidating and eliminating redundant systems, utilizing a distributed open source platform, and limiting the need to pay for expensive and time-consuming custom system or application development. Convergys' Infinys solution will also facilitate revenue growth and profitability for Telecom Egypt through its capabilities to support the rapid launch of new convergent service bundles; the roll out of next-generation IP based services, and the application of new business models.
With more than 20 years of experience in billing and customer care, Convergys combines its broad portfolio of professional and consulting services, deep technical and operational expertise, and award-winning Infinys software to solve its clients' complex BSS and CRM business problems. Convergys is Outthinking and Outdoing on behalf of its clients every day.
Telecom Egypt raising prices Source: Reuters, March 17, 2006
Telecom Egypt (link here), the country's only fixed-line operator, announced it was raising some prices by up to 25% to cut losses on its local calls business.
Chairman Akil Bashir told a news conference that the new call rates would not completely eliminate those losses, which he estimated at 800 million to 1 billion Egyptian pounds ($140 million to $175 million) a year.
TE, which was 20% privatized last year but remains state-controlled, announced that it made a net profit of 1.836 billion pounds in 2005, 82% up on 2004. The profits came from other services.
Local calls contributed 1.592 billion pounds in revenue in 2005, 19.5% of TE's total revenue from sales of services.
Bashir declined to say how much extra revenue the higher charges would bring in but added: 'They don't compensate for all the losses on the local calls.'
The monthly subscription fee will rise to 10 pounds from eight pounds for residential lines and to 16 pounds from 13 pounds for commercial subscribers. With 10.4 million subscribers in the country, that increase alone will bring in at least 250 million pounds extra a year.
TE is also cutting the number of free minutes it allows per residential line to 50 a month from 166, Bashir said. Commercial subscribers do not get free minutes.
QTel Set to Enter Egypt market Source: Reuters, March 27, 2006
Qatar Telecommunications (Qtel) (link here) is set to enter the Egyptian mobile phone services market, following its successful venture in the Sultanate of Oman.
Qtel’s subsidiary in Oman has signed up 300,000 new customers, which represent 20% of the Omani mobile market during its first year of service, according to a report in The Peninsula.
Qtel is currently exploring several investment opportunities in the region as part of its expansion plan.
Qtel was sponsoring a number of students and graduates from the College of North Atlantic and is also conducting training courses for national workforce within the company's departments that have led to an increase in the number of Qatari employed at Qtel.
Partner Seeks Higher Share For Egypt's Orascom Source: Financial Times Information March 26, 2006
Partner Communications (link here) and its largest shareholder, Hutchinson Telecommunications International (link here) , will ask the Ministry of Communications & Information Technology (link here) to allow Egypt's Orascom Telecom (link here) to increase its holdings in Partner to more than 10%.
The possible acquisition by Orascom Telecom of holdings in Partner was included in contract for the sale to Orascom Telecom of a 19.3% share in Hutchinson. The sale went through at the end of December.
The acquisition gives Orascom Telecom a 9.99% share in Partner. Orascom Telecom previously avoided increasing its share in Hutchinson so as to avoid its holdings in Partner exceeding the 10% maximum, an increase that would require the signed approval of the minister of communications.
The deal will be subject to a security evaluation by the General Security Services, but the
Ministry of Communications itself will only intervene in the event that Orascom Telecom's indirect holdings in Partner exceed 10%, in contravention of Partner's license.
Egypt to Establish a Sugar Plant in Sudan at $300 Million Source: Arab Press Digest, March 14, 2006
Cairo-based Sugar and Integrated Industries Company (SIIC) (link here) , a 100% subsidiary of Egypt's state-owned Holding Company for Food Industries, is negotiating a deal to establish a $300 million sugar cane factory with a capacity of 300,000 tons per year (tpy) in Sudan.
The Egyptian government would contribute 10% of the sugar company's capital, through SIIC and National Investment Bank, while the remaining 90% will be held by Sudanese banks, insurance and agricultural companies.
Negotiations are being executed to source half of the targeted investments from Saudi Arabia and other Gulf countries.
SIIC is currently constructing sugar-refining units for the Sudanese government at one million Euros ($1.19 million). SIIC has solid presence in Sudan since it has executed several rehabilitation and modernization projects related to the sugar industry in Sudan in the 1990s. The combined value of five of these projects reached $7.7 million.
SIIC's latest investment of in Sudanese sugar industry was the construction of White Nile cane Sugar factory at $325 million in Khartoum with a capacity of 300,000 tpy.
Moreover, SIIC is currently also negotiating with the Iranian government, in light of the collaboration protocol that was signed on October 2005 to establish a paper manufacturing plant from the residue of sugar cane and a sugar beet factory in Iran.
Established in 1868, SIIC is one of the oldest companies and one of the major sugar companies in Egypt with 20 factories all over the country.
UAE deal for Egyptian firm Source: Reuters, March 27, 2006
An Egyptian firm has won a $206.6 million deal to build a pipeline and water storage facilities for the Abu Dhabi Water and Electricity Authority.
The Wam news agency quoted visiting Investment Minister Mahmoud Mohieldin as telling a news conference that the contract was awarded to Egyptian Contracting Company. He did not give further details. Mohieldin said Egypt's Investment Authority and Dubai Holding Company would sign a memorandum of understanding to facilitate cooperation between the two bodies.
Agrium, Egyptian Partners Launch $850 Million Fertilizer Plant Source: Arab Press Digest, March 17, 2006
Agrium Egypt for Nitrogenic Products (E-Agrium), a new Egyptian Canadian joint-venture, plans to build an $850 million fertilizer plant with an annual production capacity of 1.2 million tons of urea.
The plant, to be located on a 600,000 square meters site in a free zone in the city of Damietta, will provide 2,500 direct and indirect jobs. It is scheduled to start production by 2009.
Calgary-based fertilizer company Agrium, which owns 67% in E-Agrium, partnered in the venture with two state-owned local firms, the Egyptian Petrochemicals Holding Company (ECHEM) (AmCham Member) (link here) and the Egyptian Natural Gas Company (GASCO) (AmCham Member) (link here) .
ECHEM and GASCO will hold stakes of 24 and 9% in E-Agrium.
The plant will utilize natural gas in its manufacturing process. E-Agrium's urea production would first serve domestic needs and surplus production would be exported.
Besides being used as component in fertilizers, urea is a raw material in the manufacture of glues and plastics resins. These play a role in manufacture of composites and molded objects and would support creation of new Egyptian enterprises for intermediate and finished products. Agrium (link here) is a major manufacturer of fertilizers with core markets in North and South America.
GASCO operates Egypt's domestic natural gas pipeline distribution network and provides industrial consumers with gas.
Established in 2002, ECHEM is a holding company assigned the task of managing and marketing Egypt's emerging petrochemical industry. ECHEM has a master plan for investing $10 billion over 20 years in three phases to achieve a total national petrochemicals production of 15 million tons per year. The first phase of the master plan is being implemented with allocation of about $2.5 billion for the period up to 2009.
Shell and Centurion Sign Farm-in Agreement For Nile Delta Onshore Blocks Source: Knight-Ridder Tribune Business News, March 21, 2006
Shell Egypt West Manzala GmbH and Shell Egypt West Qantara GmbH (together "Shell") (AmCham Member) (link here) are pleased to announce the signing of a Farm-in Agreement with Centurion Energy International Inc (link here) .
Centurion through which Shell will acquire a 50% interest in two Centurion-operated exploration concessions in the Nile Delta onshore Egypt, namely the West El Manzala and West El Qantara concessions (the "concessions").
Subject to approval from the relevant authorities and successful outcome of exploration, Shell and Centurion would potentially co-operate in developing LNG opportunities if threshold quantities of natural gas are discovered on the concessions. Future development considerations will depend on success of the exploration program.
The farm-out to Shell is subject to obtaining the government approvals for a transfer that are required under the Concessions agreements and upon completion by Centurion of the previously announced agreement to acquire the 25% interest in the Concessions owned by CTIP Oil & Gas s.r.l ("CTIP") (link here) .
The first well in the initial five well exploration program was spudded on February 7, 2006.
Exploration and appraisal wells are planned in the 2006 capital program for the two concessions. The concessions each have an initial three-year exploration term with the option to extend the exploration term by two additional three-year terms.
Egypt Discovers New Natural Gas Field in Sinai Peninsula Source: Associated Press March 7, 2006
The state oil company Petrobel (link here) uncovered the field near the Sinai village of Ramana, 30 kilometers (18 miles) east of the Suez Canal, said Wahbi Abdullah, the director of production in the North Sinai Governorate.
Abdullah described the field as "very large" but could not specify the amount of gas believed to be in the site.
Egypt, which has limited oil reserves, has been dramatically increasing its natural gas production and began exports of liquefied natural gas in January 2005.
Gas production has averaged about 108 million cubic meters per day (3.6 billion cubic feet) and the country's proven reserves are estimated at 2 trillion cubic meters (66 trillion cubic feet), according to the United States government's Energy Information Administration.
In January, Egypt signed a memorandum of understanding with Israel to supply Israel with $2.5 billion (euro2.1 billion) worth of natural gas over the next 15 years.
The Purchases & Stores Department of the Egyptian National Railways Authority has issued on March 20, 2006 a request of international offers to supply spare parts for a Makila branded turbine serving the turbini train. The specification fee is LE1,100, The Bid Bond Euro 7,000. Deadline for the submission of offers is July 16, 2006.
Electromechanical Works
The Cashier of Egyptian Public Authority for Drainage Projects for East Delta Drainage in Ismailiya, has issued on March 25, 2006 a request of offers for the Construction of subsurface [ tile ] drainage networks in the catchment area of Al Rowaad & Al Fath zone serving 4,500 feddans land. Job goes under funding from EIB - European Investment Bank. The specification fee is LE700. The Bid Bond is LE80,000. Deadline for the submission of offers is May 10, 2006.
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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