EGYPTIAN EXPORTS TO US ON THE RISE Source: Al Akhbar, October 28, 2006
Egyptian exports to the US have more than doubled during the first half of 2006. Trade and Industry Minister Rachid Mohamed Rachid announced that exports to the US market soared to $ 1.5 billion between January and June 2006 compared to $ 925 million during the same period last year at a 56% increase. According to Rachid, Egyptian imports from the US have also increased by 28% during the first six months of the current year to reach $ 1.8 billion compared to $ 1.4 billion during the same period of last year. The hike in non-petroleum exports to the US market reflects the competitiveness of Egyptian products on foreign markets.
A study prepared by Egypt's International Trade Point (EITP) (link here) showed the Qualifying Industrial Zones (QIZ) agreement as boosting Egyptian textile exports to the US market. According to Rachid, QIZ exports in the period from January to June of 2006 increased to $347.9 million, which accounts for 24.1% of Egypt’s total exports and 41.8% of Egypt’s total non-petroleum exports in the same period.
EGYPT SEES $7.5-8 BILLION FDI Source: TradeArabia, Reuters, Al Ahram, October 16, 2006
Egypt expects foreign direct investment (FDI) to climb to between $7.5 and $8 billion a year by the end of June 2007 from $6.1 billion a year ago, Investment Minister Mahmoud Mohieldin reported.
'The 2006/07 year will be unprecedented in the terms of FDI in Egypt despite all the major obstacles still standing in the way of investment,' he added.
He said that among the biggest deals to boost foreign investment in the current fiscal year was the sale of Egypt's third mobile network in July to Etisalat (link here) for LE 16.7 billion ($2.91 billion).
The government has also finalized the privatization of up to 80% of Bank of Alexandria (AmCham Member) (link here) to Italy’s Sanpaolo (link here).
Mohieldin said the non-energy sector made up 70% of FDI in the year to the end of June 2006, compared with 33% in the previous year. The contribution of the non-energy sector was set to rise again in 2006/07, Mohieldin said.
One of the major foreign real estate projects was the acquisition by the Emaar Properties (link here) of a strip of prime luxury tourism real estate on Egypt's Mediterranean coast for $175 million.
Mohieldin, one of a core group of economic reformist ministers who took office in mid-2004, said it was an uphill struggle to draw investment to Egypt.
Until the current cabinet took office, Egypt's privatization program had slowed to almost a halt. But the government launched a reform program that has been applauded by analysts for keeping FDI rising despite a number of militant attacks on tourist resorts.
Mohieldin said the steady rise in investments helped the Central Bank (link here) boost its foreign reserves, which in turn has kept the Egyptian pound stable on the foreign exchange market. Egypt's reserves stood at $24.07 billion by the end of September.
The government said the gross domestic product growth increased to 6.9% in the 2005/6 financial year from 4.6% in the previous year.
Moreover, according to the latest IFC report on Egypt’s economy, the government reform measures to improve the economy since 2004 have certainly improved Egypt’s economic performance and achieved an economic growth by 6.8% in 2005/2006, which is considered to be Egypt’s highest growth levels in the last 15 years.
SUEZ CANAL REVENUES RISE Source: TradeArabia, Reuters, October 16, 2006
Egypt's revenues from the Suez Canal climbed to $332.3 million in September 2006 from $293.5 million in September last year.
The number of vessels passing through the waterway rose to 1,585 in September from 1,581 in August, and from 1,535 in September 2005.
Canal revenues were $334.2 million in August.
AVERAGE CEMENT PRICES DROP 15% AFTER GOVERNMENT IMPOSED Source: Nooz, October 18, 2006
The Minister of Trade and Industry said on Tuesday, October 17, that seven local cement producers complied with a government decision to curb cement prices at factory ground to LE 295 and LE 302.5 per ton.
“The move led to a 15% drop in cement prices at the marketplace to LE 340 per ton in most parts of the country by the end of the week,” the minister added. This compares to an average price for consumers of LE 380 per ton before the government’s decisions aimed at regulating the market in August 2006.
A senior official at the Ministry of Trade and Industry (link here), however, said that four cement manufacturers, controlling 32.4% of the market, failed to comply with the government decision which puts a price cap of LE 290 per ton at the factory ground and LE 330 per ton to consumers. The four companies include Alexandria Cement (ALEX.CA), Ameriyah Cement, Assiut Cement (AmCham Member) (link here) and Misr Beni Sueif Cement Company (MBSC).
The official said that six cement companies have complied with the government’s price cap. These companies include Sinai Cement, Qena Cement (link here), Al Kawmia, Suez Tora and ASEC Cement, which combined control 67.7% of the market.
STEEL REBARS PRICES DROP 10% IN 30 DAYS Source: Nooz, October 18, 2006
Prices of steel rebars in the Egyptian market recorded a remarkable decline of nearly 10% in the last month Sept. 15 to Oct. 15, when the average prices ranged from LE 2,980 to LE 3,500 per ton.
Mohammad Hanafi, general manager of the Mineral Industries Chamber, said that the decline in the prices of billet, which accounts for 85% of the steel rebars production inputs, has contributed to the drop in prices in addition to the falling demand for steel rebars in the month of Ramadan.
He added that the slight drop in oil prices recently has had its impact on the prices of commodities such as iron, copper and aluminum.
“But we cannot speculate about the prices of steel rebars after the end of Ramadan, as its prices are largely dependant on the international prices of inputs, such as the billet and scrap prices,” Hanafi said.
Ezz Steel Company (AmCham Member) (link here) controls as much as 62% of the local market and the remaining portion is divided over a number of small manufacturers.
He ruled out that the drop in prices was a result of anti-trust investigations in the steel rebars market, attributing the decline exclusively to the prices of production inputs.
CHAMBERS OF COMMERCE TO HOST ONE-STOP COMMERCIAL LICENSE SHOPS Source: Al Ahram, October 19, 2006
The Federation of Egyptian Chambers of Commerce (link here) will set up one-stop shops in each of its branches to facilitate commercial licensing for small investors and small and medium enterprises (SMEs). This follows a decision by the Trade and Industry Minister to open commercial registry branches in chambers of commerce. The new one-stop shop units will host representatives from the government agencies that businessmen need to deal with, such as finance, customs and social insurance. Under the ministry’s trade modernization plan, the units will be fully established in all chambers of commerce within a year, said the federation’s chairman, Mohamed Al-Masry.
TEA EXPORTS TO EGYPT RISE AFTER DUTY CUT Source: The Financial Express, Yahoo! News, Reuters, October 20, 2006
Indian tea exports to Egypt have surged after it slashed import duties, a senior Tea Board official said.
India, the world's largest producer and consumer of tea, exported just 70,000 kg of the commodity to Egypt last year, but in the first six months of 2006 sales zoomed to 1 million kg, Indian officials said.
"We are expecting to increase exports to Egypt to 10 million kg in a couple of years," Basudeb Banerjee, said the chairman of the Tea Board.
India is looking to boost sales in Asia and Africa and is a major CTC tea producer, Cairo cut duties recently for imports from countries outside Africa after lengthy lobbying by countries like India, almost leveling the playing field with major producer Kenya.
Total tea exports from India rose by 6.63% in August from the same month a year earlier, reaching 15.91 million kg from 14.92 million kg in August 2005, Tea Board officials said.
Exports rose 26.89% in July as traders sold large amounts of tea from last year's stocks, and August's smaller increase was largely due to drought and then heavy rains at the wrong time, Banerjee said.
TEA EXPORTS TO EGYPT RISE AFTER DUTY CUT Source: The Financial Express, Yahoo! News, Reuters, October 20, 2006
Indian tea exports to Egypt have surged after it slashed import duties, a senior Tea Board official said.
India, the world's largest producer and consumer of tea, exported just 70,000 kg of the commodity to Egypt last year, but in the first six months of 2006 sales zoomed to 1 million kg, Indian officials said.
"We are expecting to increase exports to Egypt to 10 million kg in a couple of years," Basudeb Banerjee, said the chairman of the Tea Board.
India is looking to boost sales in Asia and Africa and is a major CTC tea producer, Cairo cut duties recently for imports from countries outside Africa after lengthy lobbying by countries like India, almost leveling the playing field with major producer Kenya.
Total tea exports from India rose by 6.63% in August from the same month a year earlier, reaching 15.91 million kg from 14.92 million kg in August 2005, Tea Board officials said.
Exports rose 26.89% in July as traders sold large amounts of tea from last year's stocks, and August's smaller increase was largely due to drought and then heavy rains at the wrong time, Banerjee said.
HOLDING SELLS 83% OF AL ARABIYA STEELWORKS SHARES Source: Al Alam Al Yom, October 23, 2006
The National Egyptian Metallurgical Holding is poised to sell 83% of Al Arabiya Steelworks' shares. The project is part of the Egyptian government's plan to privatize a number of state-owned industries. "The Al Arabiya deal will be announced at the end of the month. This will enable investors to evaluate a business which has collected a considerable debt in recent years. Al Arabiya still produces high-quality steel for the car and railroad industries," said Zaki Bassiouni, the holding's President. Bassiouni however underlined that Al Arabiya steelworks offers good services, and exports a great deal of products towards Western Europe. Its annual earnings amount to approximately LE 350 million, or around $61 million.
METRO CASH & CARRY PUMPS 300 MILLION EURO INTO EGYPTIAN ECONOMY Source: ANSAmed, October 27, 2006
The International Metro Cash & Carry (link here) supermarket chain is poised to pump fresh investments estimated at 300 million euros into Egypt to launch a food and farm products marketing chain. Investment Minister Mahmoud Mohieddin met few days ago with a delegation from the chain, which operates in 28 countries worldwide, when they visited Egypt to explore investment opportunities, according to a press release of the Egyptian Investment's ministry. A senior official at Metro Cash & Carry expressed the company's interest in the Egyptian market and unveiled plans for investments of 300 million euro in marketing food and farm products that could boost Egyptian exports to Europe. Metro Cash & Carry, is the largest division of German retail giant Metro, with total sales of 28 billion euros as of 2005.
MINISTRY OF FINANCE TO ANNOUNCE NEW BILL ON PENSIONS IN Q1 2007 Source: Noozz, October 30, 2006
The Minister of Finance Yousef Botrus Ghali announced on Sunday, October 29, that a ministerial committee has prepared a new bill on pensions, which is currently being reviewed by concerned government agencies.
“The new bill will create a high commission for pensions with representatives from the Ministry of Finance (link here), the Ministry of Investment (link here), the Ministry of Social Solidarity, the Ministry of Manpower and Emigration (link here), and officials from the Capital Market Authority (link here) and the Egyptian Insurance Supervisory Authority (link here),” Ghali added. “This commission will supervise regulations and performance of pension’s authorities independently from the Ministry of Finance.”
He pointed out that the new system on pensions will stand on specific criteria that insure adequate pension, stable financial sources, sound management performance, efficient and transparent investment of pension funds, and development-oriented pension management that takes into account distortions in the labor market.
The bill will keep intact the present pension system, but will create a parallel system for new subscribers, who will pay 17% of their monthly salaries in subscriptions. The minister of finance explained that 12% of subscribers’ salaries will be deposited in non-tradable treasury bonds, and 5% of salaries will be invested in financial assets.
The bill will provide relatively lower pensions for every citizen aged 65 and above through the Social Solidarity Scheme. Additionally, temporary workers will be allowed to subscribe in the pension funds under the new bill’s regulations.
EGYPT TO SEEK CHINESE AID ON NUCLEAR PROGRAM Source: Yahoo! News, October 28, 2006
Egyptian President Hosni Mubarak will seek Chinese help for Cairo's planned civil nuclear program during a visit to Beijing next month, Foreign Minister Ahmed Abul Gheit reportedly said.
"The possible aid which China could give to Egypt over its civil nuclear program to generate electricity will be one of the subjects of talks," said Gheit.
Mubarak heads for China after a November 1 to 3 visit to Russia. He will be in Beijing for a summit on Sino-African cooperation after which his visit will become an official one to the country on November 6 and 7.
During the visit, the two countries will sign several agreements covering economic and technological fields, said the Egyptian minister.
In late September, Cairo announced it was relaunching its civil nuclear program after a halt of 20 years following the Chernobyl nuclear accident in 1986.
EGYPT TO BEGIN NEW WORLDWIDE ADVERTISING CAMPAIGN Source: Egyptian Tourism Authority, October 25, 2006
The Egyptian Tourism Authority revealed its new worldwide television advertising campaign titled 'The Gift of the Sun'.
Launching this month, The Gift of the Sun campaign, is to be rolled out across Asia, Europe, and North America over the next 24 months, building on the success of the Red Sea Riviera and other campaigns, which were key factors in helping Egypt welcome a record 8.6 million visitors in 2005.
Egyptian Minister for Tourism, Zoheir Garranah, commented "We are very excited to be launching a new global advertising campaign which we believe truly reflects the many wonderful experiences Egypt has to offer its visitors. We believe the new campaign is our most creative and dynamic yet, and we look forward to welcoming more international visitors to Egypt for many years to come."
INTEL LAUNCHES TEO IN EGYPT Source: AMEinfo October 16, 2006
The Intel Corporation (AmCham Member) (link here) has launched its Teach Essentials Online program. Designed in Arabic specifically for the region, Intel, in collaboration with the Egyptian Ministry of Education (link here), has agreed to launch TEO in Egypt as a pilot for other emerging markets worldwide. The objective of TEO is to offer teachers methodologies and tools to help them integrate technology into their regular national curriculum.
MOBINIL SELECTS FOLLOWAP FOR MOBILE INSTANT MESSAGING Source: Agencies, October 18, 2006
Mobinil (AmCham Member) (link here) has selected Followap (link here), the leader in mobile instant messaging (IM), presence and interconnect solutions to power its own brand of instant messaging services.
Subscribers to Mobinil's operator IM service will be able to enjoy the benefits of real time communications on their mobile device through Followap's Instant Messaging Service Center (IMSC).
Market trends indicate that operator branded IM is quickly becoming one of the most important real-time communication services across the globe, and is an important Groupe Spéciale Mobile Association (GSMA) (link here) initiative.
"Mobinil's plans to rollout mobile instant messaging is another example of the growing momentum behind this exciting communications service," said Alex Sinclair, the chief technical officer of the GSMA, the global trade association for mobile phone operators. "The GSMA is working with the industry to ensure their technology is fully interoperable so that users can exchange messages across networks and a factor that has been instrumental in the enormous success of text messaging."
VSNL SIGNS MOU FOR UNDERSEA CABLE SYSTEM Source: Moneycontrol.com, Telegeography.com, October 25, 2006
India’s Videsh Sanchar Nigam Ltd (VSNL) (link here) has signed a Memorandum of Understanding (MoU) with global telecom service providers including Etisalat (link here), Saudi Telecom Company (link here), Telecom Egypt (link here) and Telecom Italia Sparkle (link here) for the construction of a new submarine cable system linking the country with Europe, Africa, Asia and the Middle East. The India, Middle East and Western Europe (I-ME-WE) cable system will be ready for service by mid-2008, VSNL said, with construction contracts expected to be awarded by the end of the year.
The cable project will connect the major countries in the region including India, the UAE, Kingdom of Saudi Arabia, Egypt, Italy and France. The cable will leverage the strength of these major carriers and provide interconnection facilities with several existing and emerging systems in the regions. It is expected to be commissioned by mid 2008.
The cable system will be built using DWDM (Dense Wavelength Division Multiplexing) technology, with a proposed design capacity of at least 2.56 Terabits per second. The network, upon its commissioning, will provide high-speed connectivity to the Asian, West Asian, North & East African and Western Europe regions, and meet their exponentially growing bandwidth requirements.
MICROSOFT EXPANDS COOPERATION WITH GOVERNMENT Source: Daily Star Egypt, October 19, 2006
Microsoft (AmCham Member) (link here) CEO Steve Ballmer praised Prime Minister Ahmed Nazif's government on Wednesday, October 18, for developing "clear social and economic reform plans" and said his company will continue to increase its presence in Egypt to develop the IT infrastructure necessary to implement those plans.
Ballmer's first trip to Egypt lasted just 24 hours during which he attended the graduation ceremony of 40 government officials from seven ministries trained over the past year in the Microsoft-sponsored Government Leaders Academy. He also participated in opening the company's second academy, the NGOs Academy.
"I think the Egyptian government has a clear plan for what its social agenda is," says Ballmer. "The notion that information technology can help that agenda is truly remarkable on a worldwide scope."
As the country's potential to develop as an IT hub has been publicly promoted by Nazif's government, Ballmer said "a strong base of technical talent" gives Egypt an advantage, but declined to comment specifically on the government's development efforts in the sector.
The Smart Village (link here) is home to one of Microsoft's two Innovation Centers for Applied Research outside of the United States. The other center is located in Germany. Ballmer says the company does not hold plans for software production in Egypt but will continue to rely on the center to conduct software research that can then be applied to product development internationally.
Microsoft has partnered with the Egyptian government on several initiatives since 2000, including the Ministry of Communication and Information Technology's (link here) "PC for Every Home" campaign in 2002. The initiative was one of the first embarked on by the then newly created MCIT, but has proved one of its least successful ones, at least in terms of numbers.
Despite the initiative's success in increasing the number of computers in Egyptian households from 300,000 in 2002 to almost 700,000 by the end of 2005, according to Microsoft figures, it has failed to keep up the pace necessary to reach MCIT's then-stated goal of putting computers in 7 million households by 2009.
MCIT relaunched the initiative earlier this year with the hope of increasing private sector involvement, while amending the initiative's original conditions of operation to better address the problems it faced. The amendments included requiring new distributors to operate maintenance centers in at least seven governorates, toughening requirements on distributor selection, lowering prices and setting strict standards on the quality of PCs to be sold.
The reformed initiative will offer the public personal computers ranging in price from LE 1,585 to LE 3,300 compared with the old range of LE 3,000 to LE 5,000.
EGYPT AND CHINA TO BEEF UP OIL COOPERATION Source: Arabicnews.com, Reuters, October 19, 2006
Egypt's Petroleum Minister Sameh Fahmi announced that Egypt and China have agreed on stepping up cooperation in the oil and natural gas domains through signing three agreements.
The first agreement includes the establishment of an Egyptian-Chinese company to manufacture oil rigs for oil and natural gas prospecting purposes. The new company, which will be 50% Egyptian and 50% Chinese, will start production with three rigs in 2007, rising to seven in 2008 and 20 a year in 2010, he said. He added that the company will meet the local market's growing needs.
Fahmi said the second agreement was signed with China's Chinook Company for oil exploration. According to the agreement, the company will take part in international tenders offered by Egypt in the oil domain and will be partner with Egyptian oil companies, including Enppi (AmCham Member) (link here) and Petrojet (AmCham Member) (link here) projects in neighboring countries and Africa.
The third agreement was signed with China's Sinopec Company (link here) for drillings inside and outside Egypt, he said.
FOCUSING ON OIL AND GAS EXPLORATION IN UPPER EGYPT Source: ANSAmed, October 26, 2006
According to Egyptian Minister of Petroleum, Sameh Fahmi, there is a growing interest in exploration for oil and gas in Upper Egypt and he recently said that seven oil agreements with Canadian, English, American and Australian companies have been signed, while five more agreements are underway. "Works have started for a project regarding the Upper Egypt gas line which will provide gas to southern governorates. It will be carried out in three stages", Fahmi said as quoted by the local press. Meanwhile, Chairman of the South Valley Petroleum Holding Company, Hassan Akl, said that 22 exploratory wells will be dug in the Upper Egypt region under the seven signed agreements and, with the other five agreements to be signed, the exploratory wells will reach 46 well.
GAZPROM AND EGYPT SIGN MEMORANDUM Source: Moscow Times, Reuters, October 16, 2006
Russia’s Gazprom (link here) and the Egyptian government have signed a memorandum of understanding on cooperation in Egypt's gas sector, Egypt's trade and industry minister said Friday, October 13.
Rachid Mohammed Rachid said Gazprom could help Egypt develop its natural gas production and exports. The memorandum covered exploration, sharing technology, and cooperation in marketing gas, he said. This was announced after a meeting with Gazprom CEO Alexei Miller at the end of a three-day visit to Russia aimed at improving trade ties.
He also said the Egyptian and Russian governments signed a separate memorandum of understanding to begin talks on a free-trade agreement.
Meanwhile, Gazprom and Hungary's Mol (link here) are drafting a plan to extend the Blue Stream gas pipeline, which ends in Turkey, to Austria, announced Hungarian Economy Minister Janos Koka. The draft plan will be ready in six months.
EGYPT SELLS OFF ALEXANDRIA BANK Source: BBC News, Yahoo! News, EFG-Hermes, October 19, 2006
Italian bank Sanpaolo (link here) has won a five-way race for control of Bank of Alexandria (AmCham Member) (link here), the first Egyptian bank to be privatized in a sell off worth 1.6 billion dollars.
The Egyptian government privatized the country's fourth biggest commercial bank in an auction on Tuesday, October 17. Five Arab and European banks had been in the running, with an 80% stake in the bank up for grabs. Together with the BoA, Sanpaolo, which recently merged with Italy's Banca Intesa (link here) to become the third largest bank in the euro zone, will become Egypt's largest private bank.
Egypt's Investment Minister Mahmoud Mohieldin said the sale was the culmination of the current phase of reform to the nation's banking system.
Candidates had included Sanpaolo, Egypt's Commercial International Bank (CIB) (AmCham Member) (link here), France's BNP Paribas (AmCham Member) (link here), a joint venture of Jordan's Arab Bank (AmCham Member) (link here) and Saudi Arabia's Arab National Bank (link here), and a consortium of Dubai's Mashreqbank (link here) and Dubai Investment Group (link here).
The revenues from the sale will be allocated to restructuring Banque Misr (AmCham Member) (link here), Banque du Caire (link here) and the National Bank of Egypt (AmCham Member) (link here).
Large Egyptian private banks have recently been bought by French banks, including MIBank by Societe Generale (AmCham Member) (link here) and Egyptian-American Bank (link here) by Calyon (link here).
The decision to sell BoA, in the largest privatization operation this year in Egypt, was part of the Nazif government's strategy to consolidate the banking sector by reducing the number of banks from 60 to 26.
The privatization program was part of a larger economic reform package introduced by Nazif's government.
A banking law was ratified in 2003, and a series of reforms announced in 2004, which included the integration of small private banks into their parent companies and the reorganization of public banks.
The law also set a strict new capital adequacy requirement of 500 million pounds (87 million dollars) which led to a wave of forced mergers.
In September last year, the government announced the merger of the second and third largest banks, Bank Misr and Bank of Cairo, to make Egypts largest bank in terms of assets, though no time frame has yet been given for the deal.
In January, the government swept away a major obstacle to BoA's sale by repaying seven billion pounds (1.2 billion dollars) in loans owed to the bank by government companies.
BIDS ON FOUR RIVER PORTS UNDER BOT ARRANGEMENT LAUNCHED Source: Nooz, October 22, 2006
The Ministry of Transport is poised to launch bids on four river ports for investors under the BOT arrangements. The four ports include one in Cairo and three in other governorates.
Karim Abul Khair, chairman of the General Authority of River Transport, said the authority was conducting a comprehensive examination of the four ports to prepare to offer them to investors under the BOT arrangement within days.
He pointed out that the authority would undertake the task of marketing the ports and other assets. Unlike the General Railway Authority, we will neither hire a private company nor create an independent operation to market the ports and the assets of the General Authority of River Transports, he explained. The Egyptian Railways Authority had created the Egyptian Company for Railway Projects to manage its considerable reserve of assets.
Abul Khair added that the authority has improved river navigation from Cairo to Aswan with a grant of 8 million euros from the Netherlands, noting that development projects in the Egyptian river transport system have the ability to attract both Arab and foreign investments.
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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