Investment in a year
THIS week, the first report on the performance of the Egyptian economy was issued by the Ministry of Investment. The report underlines a number of positive indicators related to the performance of the stock market including the flow of foreign direct investment (FDI), the number of newly established companies and the proceeds from privatisation.
According to the report, the issued capital of new companies and the further expansion of existing companies has totaled LE30.7 billion. Some 4,383 new companies have been established since July 2004.
Measures taken by the government to encourage more FDI seem to have also paid off. According to Minister of Investment Mahmoud Mohieddin, FDI to Egypt has doubled to reach $1 billion for the year 2004/2005 compared to $407 million the previous year. The ministry expects FDI to reach $1.5 billion by next year.
A look at the privatisation process over the past year shows other positive indicators. The proceeds from the selling of 28 companies last year totaled approximately LE5.5 billion. The report notes that this "figure surpasses all the proceeds earned through the privatisation process carried out during the past four years."
Moreover, the volume of FDIs flowing through the asset management programme has thus far reached about LE 3.5 billion for 2004/2005.
For further information check the ministry Web site: www.investment.gov.eg
And trade in a year
A SIMILAR report was issued by the Ministry of Foreign Trade and Industry revealing developments in areas overseen by the ministry in the last 12 months. The report cites that Egyptian exports have achieved the highest growth in five years reaching LE50.3 billion for fiscal year 2004/2005, a 20.6 per cent increase over the LE41.7 billion of last year.
Industrial exports also rose from LE17.3 billion to LE21.1 billion during the same period.
The report also showed that 730 new industrial projects at an investment cost of LE7.2 billion began their operations providing 30,000 jobs. Moreover, 2,109 new industrial entities are being established.
Minister of Foreign Trade and Industry Rachid Mohamed Rachid, speaking at a press conference held to review the findings of the report, also gave out the latest figures on companies operating within the framework of the Qualified Industrial Zones (QIZ) protocol. The figures show that 54 QIZ companies have so far exported to the US market, at a value of $62.1 million.
WHILE waiting for a total and comprehensive reform of the present sales tax law to be completed, the business community has been engaged in several discussions with the sales Tax Authority to introduce minor amendments to the current law in the hopes of improving the business climate.
This week for example, an important decision was made by the authority by virtue of which interest rates on commodities bought by a bank for a third party, a company for example, are tax exempt. "A bank pays the full price of the commodity, adds the interest rate and then sells it in installments. In this case, the interest rate imposed by the bank is tax free," said Mamdouh Omar, Head of the Research Administration at the authority.
This will hopefully lift some financial burden off of companies and will encourage more equipment purchases through banks.
THE EURO-Mediterranean Committee recently approved some LE770 million for Egypt's 2005 National Financing Plan. The funds will go towards financing three programs. The first is the "water sector reform" programme at a total of LE560 million, the second is the "support to the Association Agreement" programme with LE175 million and the third is "Democratisation, human rights, civil society and good governance" funded with LE35 million. The funds to the water sector will go to supporting the institutional and legal reform of the water sector to promote sustainable water use and decentralised management. The support to the Association Agreement aims to upgrade the overall institutional capacity of the Egyptian administration to deal with all aspects of the agreement and the European Neighborhood Policy. The third programme will provide training to middle management at the Ministry of Interior and the Ministry of Justice, and will support the establishment of an ombudsman's office at the National Council for Human Rights and the replication of the ombudsman's office at the National Council for Women.
Last week the cornerstone of the first Chinese factory to be built in Egypt was laid at the south entrance of the Suez Canal. Sahar El-Bahr reports
The factory is for spun-bonded non-woven fabric and it will be built by The China Textile Machinery Group (CTMC) which is a Chinese state owned large-scale cluster of enterprises engaged in multiple management, integrating research and development, manufacturing, marketing, investment, trade finance and real estate.
According to Sun Wei Min, General Manager of CTMC, the Suez Canal area has been chosen for the set up of the factory because of its unique geographical location. Additionally he noted that Egypt has an abundance of electricity, high quality cotton, cheap labour and there are no restrictions on exporting. He pointed out, however, that China suffers from a shortage in electricity and restrictions on exporting.
Built at an investment cost of $12.5 million, the factory is scheduled to produce 6,000 tonnes of non-woven fabric that will be exported to the Middle East and Europe as well as the US. The factory is expected to create some 800 jobs and will facilitate the transference of Chinese technology.
Chinese investments in Egypt currently stand at only $7 million. However, according to Zhong Manying, Deputy General Director of the Department of West Asian and African Affairs at the Ministry of Commerce, her ministry will launch promotional campaigns in the coming period aimed at boosting Chinese investments in Egypt. She added that 10 more factories will be established in the same area during the coming three years.
The complete production line for cotton spinning and weaving, chemical and non-woven fibers developed and manufactured by the CTMC dominate the Chinese domestic market and are exported to more than 50 countries worldwide.
Non woven fabrics have many applications in the medical, agricultural, industrial and household fields.