FTA Negotiations to Begin Next March Source: Al Ahram, November 24, 2005
Minister of Foreign Trade and Industry, Rachid Mohamed Rachid is expected to bring Egypt’s negotiations regarding the Free Trade Agreement (FTA) with the U.S. to a close during his visit to the US next week, according to the US Ambassador to Egypt, Francis J. Ricciardone.
Moreover, he announced that FTA negotiations are expected to start in March 2006 and that these negotiations usually take a year. That came during the meeting held by the Egyptians Businessmen’s Association (EBA) (link here).
Moreover, he stressed on the fact that Egypt is still U.S.’ biggest aid receivers and that next year comprises non military aid that accounts for $0.5 billion, of which $200 million is in cash and the rest in the form commodities and programs.
Textile Exports to the U.S. reach $1 Billion After QIZ Source: Al Ahram, November 26, 2005
Egypt's exports of ready-made clothes to the United States have increased to one billion dollars this year after the implementation of the Qualified Industrial Zones (QIZ) agreement (link here).
The exports of ready-made clothes are projected to exceed one billion dollars by the end of this year compared to $850 million in 2004, according to a report by the Council of Ready-Made Clothes Exports (CRCE).
The report further predicted that exports would increase next year by 60 % or $1.6 billion.
CRCE Chairman Magdy Tolba said that the Ministry of Industry and Foreign Trade (link here) is planning to increase exports of ready-made clothes to the United States to $3.5 billion over the coming four years.
He said that government economic policies and the QIZ have attracted more foreign ready-made clothes companies, noting that 13 foreign companies operating in Egypt have increased their business by 263% this year.
As an example, Tolba stated that the American trademark GAP (link here) has increased their imports from Egypt from $55 million in 2004 to $93 million in 2005.
For further information on Egypt-U.S. Relations (click here).
For AmCham’s latest research on textiles and clothing (click here).
Egypt and Russia Agree on setting up Free Trade Zone Source: Info Prod, November 23, 2005
Minister of Foreign Trade and Industry Rachid Mohamed Rachid paid a visit to Russia, which started on Monday, November 21 to discuss the prospects for establishing a free-trade zone between the two countries in the 5th session of the joint Egyptian-Russian committee.
Rachid led a delegation of senior officials from different ministries and authorities concerned with promoting relations with Russia in the field of import and export as well as the establishment of joint ventures. The delegation also comprised businessmen interested in the Russian market.
During the visit, Rachid started negotiations on concluding an agreement on the establishment of a free trade area, noting that Russian officials welcomed the acceleration of such an agreement as soon as possible.
The volume of trade exchange between Egypt and Russia doubled from $417 million in 2003 to $834 million in 2004.
Russian exports to Egypt are estimated at $385 million, while imports reached $58.2 million.
Russia is currently investing in 12 projects in the engineering, chemical, petroleum and minerals industries.
Egypt and Russia have agreed on setting up a free trade zone between the two countries with the aim of doubling the flow of Egyptian exports into Russia.
The two countries will continue bilateral trade talks as a prelude to Russia's bid to join the World Trade Organization (link here). The two sides signed a protocol in this respect.
The past 16 months witnessed two Egyptian-Russian summits, the first in April 2004 in Moscow and the second in April 2005 in Cairo. Added to this, is the visit of the Russian Prime Minister to Cairo, which marked the first of its kind in more than 20 years.
EU Grants Euro110 Million in 2005 Source: Info Prod, November 27, 2005
The European Commission (EC) (link here) announced that Egypt would continue to be one of the main beneficiaries of the MEDA program. In 2005, the MEDA allocation is Euro110 million, which brings total funding under MEDA since the year 2000 to Euro463 million. The main beneficiary of the 2005 package is the water sector, which receives Euro80 million for its reform program.
The aim is to support institutional and legal reform of a sector, which is a key for the future development of the country. In addition Euro25 million has been made available in support of the implementation of the Association Agreement concluded between Egypt and the EU, with a view to the upgrading of the institutional capacity of the Egyptian administration in dealing with all aspects of the EU-Egypt Association Agreement (link here).
More Trade Planned between Egypt and France Source: Ministry of Investment, November 17, 2005
Egyptian-French bilateral cooperation topped the agenda at a meeting between the Minister of Investment, Dr. Mahmoud Mohieldin and a French delegation, headed by Madame Clara Gaymard, Chairwoman of the French Agency for International Investments (AFII) (link here). The meeting was held to improve cooperation and build stronger trading links between the two countries.
The simplified investment procedures provided by the one-stop shop were hailed by Gaymard during her visit to the shop.
The Ministry of Investment (link here) approved the establishment of the Active Investment Management (AIM) program in the Mediterranean countries.
The meeting reviewed potential approaches used by regional and international institutions in supporting investment in Egypt. These include institutional support schemes, training and experience transfer program, networking among the Mediterranean and EU (link here) investment institutions, and creating new mechanisms to attract foreign investments to Mediterranean countries. This will feed into more foreign projects and new jobs.
China’s Eximbank Explores Prospects of Investing in Egypt Source: The Egyptian State Information Service, November 22, 2005
Minister of International Cooperation Fayza Abul-Naga, and visiting President of the Export-Import Bank of China (Eximbank) (link here) Li Ruo Gu discussed on Monday, November 21 the bank's loan policies and the possibility of opening a branch of China's "Eximbank" in Cairo in the near future.
The meeting followed the signing of a deal to overhaul and develop a polyester plant of the Egyptian Holding Company for Cotton, Spinning and Weaving.
Abul-Naga expects the bank to sign a soft loan agreement to finance an Egyptian project to refurbish Cairo International Conference Center (CICC) (link here) and construct a hotel to be annexed to it.
The President of the Export-Import Bank of China highlighted the special relations between Egypt and China as well as China Eximbank's willingness to extend more soft loans to Egypt.
The deal signed between the state-owned Chinese bank and Egypt was the conclusion of a framework agreement that was inked by Abul-Naga during a meeting with Chinese Deputy Trade Minister Xilai Bo late in 2004 in which the Chinese government promised to offer Egypt two soft loans through the bank. The first is valued at $16.3 million to repair the Egyptian polyester plant; the second at $20 million, to develop the CICC and build its hotel.
Green Passage Initiative Between Egypt and Italy Will Be Put Into Action Source: The Egyptian State Information Service, November 15, 2005
The plan of the "Green Passage" initiative, signed earlier between Egypt and Italy, will be put into action next month. The initiative aims at opening the European markets (especially in Italy) to Egyptian agricultural exports.
The plan was signed in mid-August. The initiative will help increase the flow of Egyptian agricultural exports that do not compete with the Italian products, or out-of-season products to the Italian market and the European markets via Italy.
The initiative includes encouraging both parties to conclude agreements between the Egyptian and Italian private sectors to establish joint companies for producing and exporting high-quality Egyptian products adequate for the Italian market.
This could be achieved through the transfer of Italian technology and expertise to Egypt.
New Fiscal Year Budget Estimated at LE235.7 Billion Source: Al Ahram, November 19, 2005
The New Budget aims at raising standards of living and increasing economic growth rate to 7% instead of 6%. Minister of Finance, Dr. Youssef Botrous Ghali issued a circular and distributed it to all departments of the state's administrative, economic and service bodies as well as public sector companies to set their estimations and views for the fiscal year 2006/2007 budget and refer them to the Ministry of Finance to prepare the state's new public budget.
The Ministry mentioned a number of methods to prepare the budget, foremost of which are controlling and rationalizing of public expenditure, developing public resources and collecting taxes according to their timetable.
The circular defined the draft budget's aims which are represented in meeting the needs of citizens especially low-income brackets, subsidizing commodities and services, encouraging investment, boosting exports, increasing payments and combating unemployment.
The initial estimates for the state's budget of the fiscal year 2006/2007 amounts to LE235.7 billion.
Total Foreign Investment in Egypt Worth $3.8 Billion in 2004/2005 Source: The Egyptian State Information Service, November 21, 2005
According to the Central Bank of Egypt (CBE) (link here), Foreign Direct Investments in the country amounted to $3.873 billion in 2004/2005.
The USA came first with investments put at $2 billion, followed by France at $335 million, the Netherlands at $219 million, Portugal at $117 million, the Sultanate of Oman at $70 million, Japan at $60 million, Britain at $50 million, Germany at $42 million, the United Arab Emirates at $41 million and Switzerland at $40 million.
The Sultanate of Oman topped the list of Arab countries followed by the United Arab Emirates, Saudi Arabia, Lebanon, Kuwait, Qatar, Jordan and Libya.
Spanish investments in Egypt were valued at $5 million according to CBE figures.
TE Launches Egypt’s Largest Telecom IPO Source: Financial Times Ltd., November 29, 2005
Telecom Egypt (TE) (link here), the state-owned fixed-line monopoly provider, launched on November 28, what will be the largest ever share offer brought to the Cairo and Alexandria Stock Exchanges (CASE)(AmCham Member) (link here).
TE will put up more than 341.5 million shares, equivalent to 20% of its total shares for sale. The IPO, which will be divided into two tranches - half for small investors and half for institutions - has led a flurry of activity on the Egyptian market as retail investors have shed other stocks in anticipation that TE shares will rise steadily.
Public subscription is set to close Wednesday December 7. Some of the shares will be listed on the London Stock Exchange (LSE) (link here) as Global Depositary Receipts (GDRs), a company statement said.
The maximum public subscription is put at 10,000 shares and the minimum at 100 shares with a book value of a maximum LE14.8 per each. Moreover, the maximum for private subscription is 17 million shares with a minimum 1 million. Pricing would be determined according to the number of subscriptions received.
Trading of shares on the CASE and of GDRs on the LSE will commence on or around December 14, 2005.
A team of Credit Suisse First Boston (link here) and the local EFG-Hermes (AmCham Member) (link here) is the global coordinator and bookrunner for the Ministry.
The government has no immediate plans to relinquish its majority and, for now, is prohibited by law from doing so.
A prior attempt to partially privatize the company was scrapped in 2000 because of the global downturn in the telecom markets.
This time, the IPO coincides with rapid growth in Middle Eastern telecom markets as well as heightened competition between the region's burgeoning service providers.
Analysts in Cairo said the IPO followed a period of improved management, in which the company had seen steady growth in subscribers as well as impressive profits despite bloated staff numbers of more than 50,000.
Telecom Egypt is the sole fixed-line provider in a country with penetration of only 14.3%, low by regional standards. The brokerage arm of HSBC (AmCham Member) (link here), in a report released on November 28, expected this would rise to 20% by 2009.
The telecom sector is one of the fastest growing parts of the Egyptian economy with revenues rising from 1.8% of GDP in 1998 to 3.5% in 2004.
TE had 10.3 million fixed-line subscribers as of September 30, 2005, making it the largest provider of fixed-line services in the Arab World. It owns a 25% stake in Vodafone Egypt (AmCham Member) (link here), the country's second largest mobile phone operator.
TE participates in the Egyptian market for Internet and data services, through its 93.3% interest in TE Data (AmCham Member) (link here), furthermore, it holds a 50% interest in Consortium Algerien De Telecommunications (CAT). The company won the license to become the second fixed line operator in Algeria.
Telecom Egypt reported net profit before tax reached LE1.6 billion in 2004, an increase of 195.5% compared to 2003.
Banks Prepare Offers for EAB Sale Source: Middle East Economic Digest, November 25, 2005
Banks are preparing to submit offers on November 30, for the purchase of a 74.7% stake in Egyptian American Bank (EAB) (AmCham Member) (link here) from Bank of Alexandria (BoA) (AmCham Member) (link here) and American Express (Amex) (AmCham Member) (link here).
At least two banks – Calyon (AmCham Member) (link here) and HSBC (AmCham Member) (link here) – are understood to be eyeing the transaction, for which Credit Suisse First Boston (CSFB) (link here) was appointed by BoA and Amex to act as financial adviser. BoA, the country’s fourth largest state-owned bank, is due to be privatized as part of a larger privatization and consolidation program for the local banking sector. It is being advised by Citigroup (AmCham Member) (link here).
Tanjong to Buy Egypt Power Generation Assets Source: Business Times (Malaysia), November 30, 2005
TANJONG Public Ltd Co. (link here) is buying EDF International SAE's (EDFI) (link here) power generation assets in Egypt for $307 million.
Tanjong said Kuasa Nusajaya (L) Ltd (a subsidiary of Tanjong) would acquire from EDFI two power-generating companies, EDF Suez Gulf Power SAE (Suez Gulf) and EDF Port Said East Power SAE (Port Said), and a common operating company for both, EDF Egyptian Operating Co SAE (EEOC).
EDFI is the wholly-owned international power arm of Electricite de France SA (link here). .
Both plants are already operational and each is governed by a 20-year power purchase agreement (PPA), which commenced in 2003, with the state-owned Egyptian Electricity Holding Company (EEHC) (link here) as the sole off-taker and EEHC's payment obligations guaranteed by the Central Bank of Egypt (CBE) (link here).
Payments under the PPA and the Central Bank of Egypt guarantee are both denominated in US dollars.
For Amcham’s Banking Sector Developments in Egypt New (click here).
ZTE Corporation (link here) said it has been selected by Telecom Egypt (TE) (link here), the country's single state-run wireline operator, to build the second phase of its telecom network expansion project in the capital city of Cairo, using the CDMA WLL technology.
ZTE will also provide the CDMA equipment for 100,000 telephone lines needed for the expansion project, the company said in a statement. However, the company did not disclose the value of the contract.
ZTE also built the first phase of Telecom Egypt's network project and supplied its CDMA equipment requirements.
It said that its CDMA telecom products have been deployed in about 60 countries.
Egypt Opts for IBM Solution in Kindergartens Source: Trade Arabia, November 23, 2005
Egypt is the second Arab country that has opted for Kidsmart solution, a program that utilizes IT as a teaching tool in kindergartens. It is currently ongoing in 50 countries around the world.
Dr. Tarek Kamel, Minister of Communications and IT, Dr Ahmed Gamal el Din Moussa, Minister of Education, and Hans Ulimerky, president of IBM Europe, Middle East and Africa, witnessed the launch of the program.
The program aims to integrate IT and communication to deliver the special educational content for this early school phase, as well as introduce the young children to the IT tools.
It is the first time this technology is used in public schools and for students in this age group. The program comes as part of the efforts being exerted to build a knowledge-based society in Egypt and educating an IT-savvy generation, a spokesman said.
The program involves providing 50 specially designed computers that are in a colorful housing made by specialized toy manufacturers, which are designed to be especially appealing to children.
The units are designed to allow two or more children to work together, and learn using a problem-solving approach driven by special educational software.
The software, which has been translated into Arabic, covers basic skills in mathematics, science and creative writing and thinking through using applications and games as a teaching method.
The program also provides continuing education opportunities for pre-school teachers.
Indian World Leader IFFCO Invests in Egypt Source: The Indian Express Online Media Ltd., November 23, 2005
Indian Farmers' Fertiliser Cooperative (IFFCO) (link here) on Tuesday, November 22 announced the launch of Indo-Egyptian Fertiliser Company (IEFC), a joint venture with Egypt's El Nasr Mining Company (link here) for setting up a phosphoric acid plant in Egypt. IFFCO will have 76% in the $ 325-million equity; El Nasr will hold the balance 24% stake in the joint venture company. The project will be financed with a debt equity ratio of 70:30 and is expected to go on-stream in early 2009.
Phosphoric acid is the basic raw material for manufacture of Di-ammonia phosphate (DAP). With this, the cooperative major will have assured supply of about 1 million ton bulk phosphoric acid for its Kandla plant leading to an additional DAP capacity of the IFFCO 2 million ton and it will not depend on imports for production of DAP.
Egypt's largest rock phosphate mining company will supply rock phosphate, the basic raw material for the project while IFFCO will buy back the entire phosphoric acid to feed its DAP plant at Kandla in Gujarat.
IFFCO will put in $100 million in the project and the discussions with international financial institutions for syndication of about $220 million loan are in progress.
IFFCO is ranked first in the world by sales volume and by being regarded as the safest fertilizer producer.
Thinc Destini Links Up in Egypt Deal Source: Centaur Communications Ltd., November 24, 2005
Thinc Destini (link here) has formed a partnership with overseas property and tourism expert Think Egypt Ltd. to provide finance and advice for UK buyers moving into the Egyptian property market.
Think Egypt chairman Ian Marsh says he is working with the Egyptian government on the project that uses Thinc Destini as the exclusive supplier of finance.
Marsh says the idea came about when he bought a second home in Egypt and found difficulties with the process. He wrote to the Egyptian government with suggestions for improvement.
This led to Marsh being invited to present his ideas in Cairo and the delegation that he brought included Thinc Group chief marketing officer Gregg Taylor.
Think Egypt is an agent of Thinc Destini, offering an expert service in residential tourism.
“This is a wonderful opportunity for UK advisers, particularly in light of the forthcoming residential property rules for Sipps”, according to Marsh.
Savola to Invest in Egypt Source: Reuters, November 26, 2005
Saudi food group, Savola (link here) will seek to invest outside its domestic market, mainly in Egypt, after EU (link here) reforms are implemented, company officials said.
The group supplies Saudi Arabia, the Middle East and North African countries with edible oils, sugar and dairy products, and says it owns the largest retail food chain in the Middle East -- the Azizia Panda supermarkets.
Middle Eastern sugar manufacturers will have a great opportunity to expand in the region and export to some European countries, after the EU reforms are implemented, the sugar market will become more stable and EU sugar output will be limited, which would provide a great chance to expand the company’s operations and exports to more countries in the region,' company officials said.
EU agriculture ministers struck a landmark deal recently to overhaul the bloc's subsidy-laden sugar policy, slashing prices by more than a third and offering generous payoffs to farmers willing to abandon beet growing.
Analysts believe Europe's sugar industry will shrink after the EU reforms are implemented as only the most efficient producers will survive.
The company is building a refinery in Ain Al Shukhna in Egypt's Suez City, which will be completed by the end of 2006. The refinery's capacity is projected to be 750,000 tons per year and will cost around $107 million.
Around 50% of the refinery's production will cover some of the sugar deficit in Egypt, which now stands at 880,000 tons.
The rest will be mainly exported to countries like Jordan Syria, Iraq and some North African countries.
PM Opens Readymade Clothes Group Source: The Egyptian State Information Service, November 18, 2005
Egypt’s Prime Minister Dr. Ahmed Nazif opened an Egyptian-Turkish joint venture of readymade clothes retail trade on Wednesday, November 16. The $5.7 million project will provide 200 job opportunities and is expected to secure earnings of $100 million for Egypt in the form of taxes and customs.
HSBC Builds Maadi Base Source: Middle East Economic Digest, November 25, 2005
Athens-based Consolidated Contractors International Company (CCC) (link here) has received a letter of award for the contract to build a new headquarters building for HSBC Bank Egypt (AmCham Member) (link here) in Cairo.
The contract will be signed by the end of November after a final price, expected to be just above LE100 million ($18 million), has been agreed. CCC will carry out all works except for furnishings on the project. The 10-storey building will include a basement car park and will be located in Cairo’s Maadi district. A total of eight prequalified local and international contractors had submitted bids for the contract on August 7. The project manager is Davis Langdon Egypt (link here). The local Engineering Consultants Group (link here) is carrying out engineering works.
More Time for Cairo “Line 3” Bidders Source: Middle East Economic Digest, November 18, 2005
Consultants have been given an additional four weeks, until December 10, to submit proposals for the two consultancy contracts, which cover the evaluation of technical offers for the main construction packages and works supervision on the first phase of line 3 of the Cairo metro project.
The extra time was granted by the client, the National Authority for Tunnels (NAT) (link here), to give the 11 prequalified companies more time to prepare their offers. The two contracts are due to be awarded within two months of submission of proposals. For the five main construction and supply contracts – the civil works, signaling, rolling stock supply, electro-mechanical, and track laying packages – 25 prequalified international and local contractors have until February 1, to submit commercial and technical bids. The first phase is worth an estimated $1,000 million.
Japanese Led Team to Consult on Borg El Arab Source: Middle East Economic Digest, November 18, 2005
A Japanese/Dutch/local consortium has been awarded the consultancy contract on the planned expansion project at Borg el-Arab International Airport, located about 40 kilometers southwest of Alexandria.
Under the contract, Japan Airport Consultants (link here), NACO (link here) of the Netherlands and the local ECG Engineering Consultants Group (link here) will jointly carry out engineering and construction management and supervision on the project and assist the client, Egyptian Airports Company, during the tender process.
The project calls for the construction of a new terminal with capacity to handle 1 million passengers and 4,000 tons of cargo a year, as well as the upgrading of related facilities. Project completion is scheduled for late 2008.
Preliminary designs for the project, which will be financed by a $48 million loan from Japan Bank for International Co-operation (JBIC) (link here), were drawn up by the US’ Aarotec (link here). Funds from the loan will cover building costs and consulting services, involving design, bidding assistance and the monitoring and supervision of the project. Several other airport expansion projects are planned, at Cairo, Hurghada and Sharm el-Sheikh international airports.
ECHEM and Methanex Sign Joint Venture Source: The Egyptian State Information Service, November 17; Middle East Economic Digest, November 25, 2005
State-owned Egyptian Petrochemicals Holding Company (ECHEM) (AmCham Member) (link here) and Canada’s Methanex Corporation (link here) on November 16 announced that their newly-formed joint venture company Egyptian Methanex Methanol Company (EMethanex) held its first formal shareholder and board meetings in Cairo.
The $620 million-investment project will be laid on an area of 700,000 square meters down in Mubarak's complex for Gas and Petrochemicals at Damietta governorate. The JV is set to produce 1.3 million tons a year of methanol from the greenfield plant in Damietta port.
Methanex is expected to take a stake of 60-76% in the project, with ECHEM holding the remainder. The Canadian firm has agreed to off-take 100% of the methanol output. An agreement with Egyptian Natural Gas Holding Company (EGAS) (link here) to provide gas feedstock for the plant has been concluded.
Davy Process Technology (link here) , part of Oslo-based Aker Kvaerner (link here), is carrying out the front-end engineering and design (FEED) contract on the scheme. Davy and the UK’s Johnson Matthey (link here) will provide combined reforming technology.
The project is expected to start production in 2009 and would provide 2500 job opportunities.
New Petroleum Find in South Sinai Source: The Egyptian State Information Service, November 20, 2005
Minister of Petroleum and Mineral Wealth Eng. Sameh Fahmy announced the discovery of a new oil field in South Sinai that was discovered by Balayeem Company.
Initial tests show that its reserves amount to 20 million barrels and its daily production is set at 5000 barrels. It would go into operation within the coming six months.
The new oil field is located in the Gulf of Suez, 31 km south of Abu Ridis in Sinai. It is three-leveled and is 3100 meters deep.
The Cashier of the Health Care Directorate of El Beheira Governorate, issued on November 23 a request of offers for Supply of (a) regular & ultrasonic x-ray instruments, (b) laboratory instruments, (c) dental machines & instruments, (d) one intensive care unit complete & (e) different medical & surgical instruments. The specification fee is LE100. The Bid Bonds are LE59,000, 21,000, 18,000, 27,000 and 60,000. Deadlines for the submission of offers are December 26, 27 & 28, 2005 and January 2 & 3, 2006.
Construction
The Project Management Unit of the Ministry of Higher Education, issued on November 17, 2005 a request of offers from eligible bidders as per the World Bank guidelines to implement the civil works pertaining to the Technical Industrial Institute building in Qena City as part of the Faculty for Technology in the Southern Valley. Job goes under World Bank funding. The specification fee is LE300.The Bid Bond is LE200,000. Deadline for the submission of offers is December 18, 2005.
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