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Ban on US beef dropped Egypt will resume importing beef and beef products from the US, effective immediately, after a ban that lasted for almost two years. The lifting of the ban, which was implemented to prevent the import of beef tainted with BSE, or “mad cow disease,” is only applicable for beef and products from animals less than 30 months of age. Certificates for age and origin verification are required under the USDA Beef Verification Program. Prior to the ban, Egypt imported more than $30 million worth of beef and beef products from the US, with liver accounting for nearly 65 percent or $19.5 million of total sales. Fund to support non-QIZ companies Minister of Foreign Trade and Industry Rachid Mohamed Rachid will create a special fund with a tentative budget of £E 100 million to support textile exports to the US by companies that lie outside Egypt’s seven qualifying industrial zones (QIZs). The agreement, reached late last year, allows products manufactured in designated zones to access the US market quota- and duty-free provided they contain 11.7 percent Israeli content. The designated zones are Shobra Al-Kheima, Nasr City, 10th of Ramadan City, 15th of May City, Southern Giza, Al-Amereya and Port Said. Companies outside these zones had complained that they were not receiving the same trade advantage. IMF gives Egypt big thumbs up The International Monetary Fund (IMF) gave Egypt’s economic
reforms a glowing review following a fact-finding mission’s
visit to Cairo in February. IMF delegates were dispatched to assess
the country’s implementation of Article IV of the IMF agreement,
which deals with the domestic enforcement of the concepts of economic
openness and the international monetary system. The results of the consultation will be included in the regular report prepared for the next IMF executive board meeting. Air traffic controllers stage sit-in Egyptian air traffic controllers staged a national sit-in demanding salary increases and annual social allowances. The sit-in, started by air traffic controllers in Cairo, quickly went national as one by one controllers from Hurghada, Sharm Al-Sheikh, Taba and Luxor airports joined in. The strikers claimed that they were not receiving their annual social allowances and called on the authorities to improve their financial situation. It is not clear if the strike is considered legal under the law, but strikers say they aren’t concerned about the possibility of arrest. Air traffic in Egypt was not affected by the protest, the government said. Gov’t. to sell stakes in petrochemicals Egypt is planning to sell shares in state-owned petrochemical firms as part of its privatization program in a bid to attract foreign direct investment (FDI). Minister of Investment Mahmoud Mohieldin announced that the government
will sell 25 percent of its shares in Alexandria Mineral Oils Co.
(AMOC) and 20 percent in Sidi Krir Company for Petrochemicals. OT in row over Tunisia, Algeria deals Egyptian mobile operator Orascom Telecom (OT) will seek arbitration to resolve a dispute over its bid to acquire 20 percent additional stakes in its Algerian and Tunisian mobile phone subsidiaries. OT was to acquire shares from the Palestine Investment Fund (PIF) for an undisclosed amount of money. The company had already paid for and received the shares in the Algerian operation when a dispute arose after the PIF failed to meet its obligation in the Tunisia part of the deal. The Egyptian company says it will seek arbitration through the International Chamber of Commerce’s International Court of Arbitration. If the deal had gone through, OT’s stake in its Algerian operation, Djezzy, would have risen from 62.14 percent to 85.21 percent, and from 22.47 percent to 44.5 percent in Tunisiana, the Tunisian operation. New company to upgrade ports A newly formed company, Alexandria International Container Terminals (AICT), has been formed to provide the Port of Alexandria with modern container terminal facilities. The company, which is a joint venture between the Alexandria Port Authority (APA), Hutchison Port Holding (HPH), Arab World for Port Development and Saudi Arabia’s Al-Balagha Group, was established with £E 500 million. AICT will build a terminal in Alexandria and another in Dekheila and operate them for 25 years as BOTs. Currently, there are only four container terminal berths at Alexandria Port, which handles about 75 percent of Egypt’s external trade. In 2003, the port reported throughput of 541,000 TEUs. Dekheila is a much smaller port facility built in the 1980s to compliment Alexandria Port. Forex firms allege discrimination Not everyone is pleased with the new banking law. Some private foreign exchange companies are suing the government claiming that the new law’s requirement that they raise their paid-in capital to £E 10 million is unconstitutional. The companies claim that forcing them to raise their paid-in capital, which was originally set at £E 1 million, to any larger sum is illegal because it discriminates between them and other private sector companies. The cabinet has proposed to lower the paid-in capital for foreign exchange bureas from £E 10 million to £E 5 million but the companies still rejected the offer and will pursue their law suit. Court trashes garbage fees Three months since the Supreme Administrative Court decreed that the addition of garbage collection fees to electricity bills is unconstitutional, the Shura Council is scrambling to find a less controversial payment method. Originally, fees were added to customers’ electricity bills as a way of paying for the services offered by private waste management companies in the Alexandria, Giza and Cairo governorates. However, the method of payment was in violation of Law 38 of 1967, which stipulates that garbage collection fees could not exceed 2 percent of a dwelling’s rent. The Shura Council has ruled that residents of governorate capital cities pay fees ranging from £E 1 to £E 10 per apartment. Those residing outside the governorate capitals must pay between £E 1 and £E 4. The sum for shops and commercial units ranges from £E 10 to £E 30. The exact fees and collection method is to be determined by each governorate. Workers strike to protest factory sale A group of Exco Textiles workers in Qalioub have gone on strike to object to the government’s decision to privatize their factory. The 400 workers say they are striking because the government sold their textile mill for £E 4 million to businessman Hashem El-Daghri without consulting them. The employees own 10 percent of the company and did not approve the sale, which they claim is a requirement according to their contract. In September 2003, the government announced that it would lease the Qalioub mill to El-Daghri from March 2004 to March 2006. Then, in September 2004, the workers were surprised to hear that El- Daghri actually bought the mill. The workers are demanding that the company remain in the public sector or for the government to guarantee that the privatization of the factory will not mean layoffs or loss of benefits for the workers. They are also demanding that if layoffs take place, a decent compensation package should be offered to the employees. Thus far, the government has not responded to their demands. Loan defaulter pays up As part of the Central Bank of Egypt’s amnesty deal to encourage businessmen with outstanding debts, Ali El-Safdi, head of the Arab Brother Group and ASEC for Investment, has reportedly struck a deal to repay his £E 500 million in outstanding loans to Nile Bank, United Bank of Egypt and Islamic International Bank for Investment & Development. El-Safdi has already settled more than £E 1.1 billion worth of debt with Banque Misr. He also reached an agreement to reschedule the debts of his company, estimated at about £E 800 million to Watani Bank in exchange for the bank conceding part of the accrued interest. The bank will also gain ownership of several factories and lands owned by the group as part of the settlement. El-Safdi borrowed millions of pounds in loans from banks during the second half of the 1990s – loans he failed to repay. He fled the country in 2000 for four years and returned in the summer of 2004. Bush nominates new USTR US president George W. Bush has nominated Congressman Robert J. Portman (R-OH) as the new United States trade representative (USTR) to replace Robert Zoellick. Portman was first elected to congress in 1993. He has served as a member of the House Ways & Means Committee, which regulates overseas trade legislation. If appointed, Portman will have to advocate Washington’s interests in free trade agreements (FTAs) with countries all over the world, including Egypt. Negotiations for an Egypt-US FTA stalled in mid-2003 shortly after Egypt withdrew its support for a US-backed WTO petition against the EU’s ban on genetically modified foods. Many Egyptians accuse Zoellick of thwarting Egypt’s FTA chances as punishment for the rebuff. The US government has maintained that FTA negotiations were delayed because of slow economic reform – an excuse many don’t see as valid anymore. Egyptian-American tapped for chief headhunter Egyptian-born Dina Powell, the White House personnel director, has been nominated as US deputy undersecretary for public diplomacy and assistant secretary of state for educational and cultural affairs. Powell’s parents immigrated to Texas when she was five. At 31, Powell is the youngest person to hold the personnel directorship at the White House. The nomination of a young, female Arabic speaker for such a high-profile job is seen by many as an indictor of the US government’s preoccupation with its image in the Arab world. Powell, if confirmed, will be in charge of headhunting candidates for senior administration positions. She is also expected to function as an adviser on several issues that pertain to diplomacy, particularly towards the Middle East. Jordanian investors enter paper market Jordan will invest $80 million to establish a new paper factory
in Egypt that is expected to export 80 percent of its output. The
project, considered a sign of increased economic cooperation between
Egypt and Jordan, has received endorsement from the leaders of both
countries. Banks loosen grip on dollars For the first time in years, public sector banks are readily selling US dollars to clients without any conditions. At the moment, transactions of between $1,000 and $2,000 can take place without bank branches referring to their head office. Previously, all transactions had to be approved by the banks’ national management. The step comes after the Central Bank of Egypt (CBE) decided that banks should sell dollars to the general public to create reciprocated confidence between the banks and their clients. EU green-lights Israeli-Arab exports The European Union has exempted from import duties goods produced in cooperation between Israel and Arab countries. The EU announced that joint Jordanian-Israeli exports will now be permitted duty-free into member countries with negotiations under way to do the same for joint Egyptian-Israeli products. The elimination of customs would drop the price of these products and improve their competitiveness within the European market. Textiles particularly are expected to benefit from this decision with leather and furniture expected to follow suit. However, the exemption will not be applied to agricultural products. Thus far, the exemption requires that the Arab country partnering with Israel has a free trade agreement with the EU, as Jordan and Egypt do. They also have QIZ agreements with the US, which allow their products to access the US market quota- and duty-free if they include Israeli components. By default, the EU’s exemption will allow QIZ-manufactured products to access the EU market at a more competitive price. The EU is hoping that this exemption will one day apply to joint Israeli-Palestinian products; however, that would require Israel to recognize the EU-Palestinian Authority free trade agreement. Gov’t. to restore deserted palace After decades of neglect, the Baron’s Palace has been earmarked for a much-needed restoration. The Ministry of Housing has purchased the derelict Heliopolis landmark from two Saudi and Egyptian businessmen and ordered its restoration. Belgian industrialist Baron Edouard Empain, who laid the blueprints for Heliopolis in the early 1900s, commissioned the mock Hindu-style palace in 1907 and occupied the exotic villa for several years. The palace was auctioned in the 1950s and fell into a serious state of disrepair under a string of owners whose renovation plans ran into bureaucratic obstacles. The Ministry of Housing reportedly provided the two previous co-owners land in the capital’s New Cairo suburb in exchange for the title to the palace. Oil prices rise Oil prices continued their upward march, approaching a record $58 per barrel at the time of press with no end in sight. Some OPEC members expect the price will soon exceed $60, though the cartel has promised to relieve supply shortages by lifting its 500,000-barrel daily limit. At the same time, the continued targeting of oil in Iraq is not making things any better. While many expected that the occupation of Iraq would increase the country’s oil production and help lower prices, this scenario has not exactly played out as planned. Continued targeting of Iraqi oil refineries and pipelines has contributed to an increase in oil prices. Investments on the rise Investments in all sectors in Egypt have been on the rise, says Minister of Planning, Osman Mohamed Osman. Investments in Egypt increased to £E 32.9 billion during the first six months of FY 2004-05 (July to December), compared to £E 28.9 billion for the same period during the previous fiscal year. Osman estimates that private sector investments accounted for 50 percent of the growth, attributing the rise to the adoption of new economic and fiscal policies that have helped stabilize the foreign exchange rate and push Egypt’s exports up by 33.1 percent |
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