Head of two ministries
RACHID Mohamed Rachid, minister of trade and industry, this week assumed responsibility for the Ministry of Investment. Rachid takes over the ministry in the wake of former minister of investment Mahmoud Mohieldin becoming one of three managing directors at the World Bank. Rachid is in charge until further notice. After the parliamentary elections in November the ministry may be assigned to a new minister or divided up. There is speculation that public sector companies in the ministry portfolio will fall under the jurisdiction of a specialised asset management agency that is still in the pipeline.
The Egyptian Financial Supervisory Authority (EFSA) currently overseeing insurance and mortgage services as well as the capital market, is expected to become an autonomous body under the supervision of the prime minister. As for the Investment Authority, it could follow the fate of EFSA or come under the umbrella of the Ministry of Trade and Industry.
LAST week Prime Minister Ahmed Nazif approved a new system regulating government export support for the next three years. The new regulations, which go into force retroactively from July 2010 by the Export Development Fund, are based on evaluating the financial assistance provided to exports according to the added value of the product. The added value is estimated according to the share of local components used in manufacturing each product.
The new regulations are applied in cooperation with the export councils that determine the maximum price of each product to help estimate the sum paid to these exports.
The new system provides financial assistance ranging from five per cent to 10 per cent to exports according to the added value of each product. It also includes providing 50 per cent of the transportation costs for three years. The latter is an additional support for Egyptian exports to Africa except for Libya and Sudan.
Furthermore, exporters from southern governorates will continue to enjoy extra 50 per cent support for the next three years. Egyptian exports to China, Russia and Kazakhstan will also enjoy 50 per cent as extra financial assistance.
MoU with China
RACHID Mohamed Rachid, minister of trade and industry, this week signed a memorandum of understanding (MoU) promoting industrial cooperation with his Chinese counterpart Li Yizhong, China's minister of industry and information technology.
"There is no denying that China has emerged as one of our main trade and investment partners," noted Rachid. "The MoU opens even more opportunities for Egyptian-Chinese cooperation and helps deepen our bilateral relationship."
The ministers discussed industrial development policies that aim at increasing joint industrial and technological development. They also highlighted the need for more cooperation in small and medium enterprise development and in the need for institutionalising industrial training for workers.
"We are always interested in the lessons learned from the experience of other countries when it comes to development and training," said Rachid.
MIDDLE Income Countries in the Middle East and North Africa (MENA) will need to invest the equivalent of 9.2 per cent of their annual GDP over the period 2008-2015 in infrastructure in order to sustain their economic growth prospects. This represents a total investment effort between $75 billion to $100 billion a year. To date about half of this amount is mobilised by countries across the region. This is how David Craig, World Bank country director to Egypt, Yemen and Djibouti stressed the importance of infrastructure for the region. Craig was speaking at the opening session of a meeting which brought together infrastructure regulators from around the MENA region in Cairo to discuss the establishment of an infrastructure regulatory forum which would enable them to share information and best practices. "Cooperation among infrastructure regulators, dialogue and experience exchange can serve to accelerate reform progress, promote best practices and enhance the harmonisation of policies, rules and regulations and thus promote cross-border trade and investment," Craig stated.
The one-day technical meeting was organised by the Public-Private Partnerships Infrastructure Facility (PPIAF) and the World Bank, in cooperation with the Egyptian Electric Utility and Consumer Protection Agency (EGYPTERA). The meeting builds on the work of the Middle East and North Africa Conference on Infrastructure Reform and Regulation held in Amman in December 2009. "MENA countries do not face the classic infrastructure access gap observed in other developing countries," Craig said. "However, strong demography and rapid urbanisation combined with structural transformation of the economies have resulted in strong demands for infrastructure services that most governments in the region struggle to cope with." Speaking at the opening session of the meeting, Craig cited electricity "whereby the installed generation capacity is estimated to be 20 per cent below the aggregate demand for electricity across countries in MENA."
Deficient or costly infrastructure services according to Craig are also taking their toll on the productivity of firms and competitiveness in MENA. World Bank investment climate assessments show that firms in MENA lose approximately 4.3 per cent of their sales due to power outages compared to 2.6 and three per cent in East Asia and Pacific and Eastern Europe and Central Asia respectively.
Natural resources warning
EXPERTS this week warned against the mismanagement of Egypt's natural resources. "There is a need to ensure long-term sustainability and inter-generational equity," said Magda Kandil, executive director of the Egyptian Centre for Economic Studies (ECES) at a roundtable organised this week by ECES. There is a need to balance between production and exports and meeting domestic consumption while availing foreign receipts, Kandil said.
Entitled "Trade in Natural Resources: A Blessing or a Curse?" the roundtable reviewed the key findings of the World Trade Report 2010, Trade in Natural Resources.
On a similar note, economist Samir Radwan also called for the need to regulate with the aim of conservation of natural resources for future generations.
In 2008 the trade in natural resources was nearly 24 per cent of world trade in dollar value. This share has grown 20 per cent per year in the last decade according to the report.
Participants at the roundtable also discussed trade and domestic policies such as export taxes and consumption taxes that Egypt could employ to ensure a sustainable level of resource extraction that balances the competing needs of present and future generations, hedges against large swings in resource prices, protects the environment and diversifies economic activity.