Egyptian Economic Performance

A. Egypt to Host the Regional conference for Investment Authorities :

 1. Egypt has obtain...
fluctuations in the economy in a more realistic manner and to facilitate the
     implementation of transparency rules and...
inaugurated by the end of 2005 through the construction of a factory for the
      production of Acrylic fibers and will l...
already bought Alexandria Commercial and Maritime bank and is looking to buy the
    Arab Investment bank.
 3. It is worth...
Authority for Investment and the publication of the first of two guides on corporate
     governance for public and privat...
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Egyptian Economic Performance.doc

  1. 1. Egyptian Economic Performance A. Egypt to Host the Regional conference for Investment Authorities : 1. Egypt has obtained the approval of hosting the regional conference for the World Association of Investment Promotion Agencies (WAIPA) to be held in Sharm El Sheikh next November, the decision came after South Africa withdrew its application. Egypt also succeeded in winning a seat on the managing board of directors as it is the regional chair for the African group. 2. Egypt’s hosting of this conference is considered a good means of promoting its plan for improving the investment climate and cements its image as one of the most successful African countries in attracting foreign direct investment (FDI). 3. 60 representatives from different authorities on investment promotion and 10 representatives from international organizations and multinational companies will attend the event. The conference will discuss various internationally applied methods of promoting investment as well as issues such as the creation of workshops for the service of investors, the one-stop-shop, various investment promotion methods and the validity and applicability of bilateral investment agreements. 4. It is worth noting that the organization comprises 198 international members and is considered one of the most important international organizations dealing with national authorities interested in international development. B. Online Stock Market Exchanges in Egypt : 1. During a conference organized by the Capital Market Authority in association with the US AID program, the Chairman of the Egyptian Capital Market Authority stressed that new Egyptian standards for accountability are to be implemented henceforth representing a major step forward in the development of the capital and stock markets as part of a complete plan that includes the launching of a comprehensive new portal on the world wide web to increase the level of transparency in stock trading. 2. The conference’s main agenda was the upgrading of financial services, and in that regard the chairman stressed that the online web portal will include a special section to inform the potential investor about all various methods of investing in the stock market and would supply valuable information in the form of newsletters, reports or news updates about the firms registered on the Egyptian stock exchange. 3. On a similar note, the Capital Market Authority also announced that it will publish a monthly report that includes an analysis of the performance of the capital markets in Egypt, the Arab countries and in foreign nations as well as well as information regarding price fluctuations and market trends. The authority will also publish a new guide to promote companies to promote bonds and futures. 4. In connection with the aforementioned, the chairman of the Egyptian Brokerage Company announced that his company has obtained a license to verify electronic signatures. The proposed online trading system would allow the client to register his own requests thus solving the problem of trading via paperwork. 5. Significantly, the Minister of Investment issued the directive to replace the International Accountability Standards with Egyptian standards so as to reflect local
  2. 2. fluctuations in the economy in a more realistic manner and to facilitate the implementation of transparency rules and corporate governance by local companies. C. Energy Sector Developments : 1. The Ministry of Petroleum signed on the 17th of July two agreements regarding gas concessions of Mediterranean Sea coast at North Sidi Krir, the first concession was signed with British Gas for the drilling of 3 wells in the coming eight years to be concluded and ready for production by 2008. BG holds a 50 % stake in the Delta fields and provides for 40 % of the Natural Gas produced in Egypt, the remaining stake in the field is owned by Petronas of Malaysia . 2. The second concession was signed with the REW company from Germany in a separate deal concerning the Amiriya fields that includes the drilling of four well during the coming nine years. 3. On a separate note, the Egyptian Minister of Petroleum discussed with his American counterpart, during their meeting in Cairo on the 19th of July, the historical development in the activities of American companies investing in Egypt in the oil & gas sector. American companies have been active in both upstream and downstream operations in Egypt for 40 years specifically in the areas of seismic exploration and oilfield services. 4. The two ministers discussed ways of upgrading and expanding the operations in the different fields in the oilfield and the petrochemicals industry as well means of attracting new American firms in light of the developments that are taking place in the oil industry in Egypt. The Minister indicated that the upcoming period will witness an increase in the market share of American companies in the Egyptian crude oil production market specifically after the recent discoveries in the Western desert which would undoubtedly lead to the addition of new reserves. The meeting also discussed ways of upgrading and increasing Egyptian exports of Liquefied Natural Gas (LNG) and high quality petroleum products that have both contributed greatly to the improvement of the trade balance between the two nations. Exports of Egyptian LNG to the US since January of 2005 have amounted to 892 million USD. 5. The Minister of Petroleum has also conveyed an invitation to his American counterpart to attend the roundtable that will be held in Egypt in the coming November in association with the World Energy Forum. This conference will aim at creating a dialogue between energy producing and energy consuming countries and OPEC in order to reach ways to stabilize oil prices and formulate a future plan for the global oil and gas industry. D. Major Projects in the Petrochemicals Sector : 1. The Egyptian Minister of Petroleum announced a plan to complete the first phase of the National Plan for Petrochemicals industry that includes the construction of 8 major projects with total investments reaching 5.3 billion USD. This initial phase was
  3. 3. inaugurated by the end of 2005 through the construction of a factory for the production of Acrylic fibers and will last until 2009. 2. The first phase is expected to produce of 3.5 million tons of petrochemicals with investments of 1.6 million USD by means of constructing 190 new factories that would provide for 39 thousand job opportunities either directly or indirectly. Amongst these projects are the production of Methanol from the Mubarak complex for gas and petrochemicals in Damietta with a total production capacity of 1.3 million tons yearly with total investments of 750 million USD and a project for the production of industrial timber, solvents, medical accessories, repellants, paints and adhesives as well as foodstuffs. The total production capacity of the first phase will cover the local demand and the remainder will be exported. 3. The Ministry of Petroleum’s strategy includes the dependence on the production of the basic elemental components of the petrochemicals industry. The long term plan should cover a period of 20 years, include three phases and constitute 24 projects with investments exceeding 10 billion USD to supply an aggregate production of 15 million tonnes of petrochemical products with an estimated cost of 7 billion USD and in the meantime provide for 100 thousand direct and indirect job opportunities 4. In this initial phase, another facility will be established for the production of Ammonia / Urea in Damietta with a capacity of 1.2 million tons per year of Urea and Melamine and Artificial timber. A different project will produce Propylene and Polypropylene in Port Said with a total capacity of 350 thousand tons per annum and investments totaling 520 million USD. 5. The long term plan also constitutes the establishment of a number of projects in Alexandria, one concerning fibril Alkyl Benzene with a capacity of 100 thousand tons and investments amounting to 450 million USD, a second project for the production of Acrylic fibers with a capacity of 18 thousand tons per annum and investments amounting to 70 million USD, a third project to produce Polystyrene with a capacity of 200 thousand tons per annum and investments totaling 150 million USD, a fourth project for the production of Polyvinyl chloride PVC with a total capacity of 120 thousand tons per year and investments reaching 350 million USD, and finally a complex to produce Ethylene and Polyethylene Olefins with a capacity of 750 thousand tons per year of with total investments reaching almost 1 billion USD. 6. It is worth mentioning that Egypt’s gas reserves (which is an integral part of the petrochemicals industry) amounts to 67 trillion cubic feet covering the local demand 34 years ahead. E. Increased Foreign Interest in the Egyptian Banking Sector : 1. During the last couple of months, multiple delegations from the following international and Arab banks have concluded visits to Egypt: Deutsche Bank of Germany, Abu Dhabi Commercial Bank, Qatar Islamic Bank, Al Ahly Bank of Kuwait, and a number of Lebanese banks such as Byblos, the Canadian Lebanese Bank, and Francebank, in addition to Greek Banks such as Euro Bank and Alfa Bank. 2. On a similar note, Standard Chartered bank has already expressed interest in buying the Bank of Alexandria that is to be privatized and the Etihad Bank of UAE has
  4. 4. already bought Alexandria Commercial and Maritime bank and is looking to buy the Arab Investment bank. 3. It is worth mentioning that these German, Lebanese and Gulf banks have expressed interest in consolidating their presence in Egypt through the purchase of majority stakes in the private banks in light of the current attractiveness of the Egyptian market for investments. F. Economic Courts to be established in Egypt : 1. The Egyptian government has finalized a proposed new law for the establishment of economic courts for the first time in Egypt. The courts would house a number of arbitrators and judges specialized in economic, financial and investment affairs. These new courts would be responsible for the rapid issuance of decisions regarding Investment and Commercial disputes as a means of encourage local investors and to attract foreign capital to invest in the Egyptian market. 2. The proposed law stipulates the creation of a separate body of courts to be collectively called - the “ Economic Courts “, that would constitute a separate body branching from each primary court to be called an “ economic court “ chaired by a significant figure from the Court of Appellation specialized in economic affairs. These courts would also comprise separate bodies to look into commercial misdemeanors and felonies and the appeal of sentences related to commercial crimes. 3. The new law delegates to the Minister of Justice the creation and monitoring of training programs for judges as well as various rules of conduct. The selection of the judges will be made according to their performance in these training programs each in his relative area of expertise. 4. The responsibility of the economic courts consists of looking into disputes involving the capital market exchanges, loans, funds and deposits, the trading of stocks and bonds, cases involving mortgage financing, the protection of intellectual property rights, monopolization and the protection of consumer rights. G. The Fourth Euro-Med Conference in Milan : 1. The Minister of Investment attended the fourth Euro–Med conference that was organized in Milan during the period from 16 -18 July with the participation of 300 members from business associations and investors from the Mediterranean region. 2. The Minister called on Italian businessmen and chairmen of banks to invest in regional small and medium-sized opportunities as a means of boosting the level of investment and trade among regional countries. The minister stressed the fact that the Barcelona process has not lived up to expectations in terms of its benefits to regional countries and in upgrading the economic position of the South Mediterranean countries and improving trade especially regarding agricultural goods. 3. The minister gave a detailed account of the main improvements that have occurred in the Egyptian economy during the past two years by stressing the reform process undergone by the government and the highly improved investment climate and highlighting the customs and tax reforms and the restructuring of the General
  5. 5. Authority for Investment and the publication of the first of two guides on corporate governance for public and private firms. 4. The minister also reiterated the importance of good economic and trade relations between Egypt and Italy noting that it has improved during the past three years as Italy is now considered the number one trade partner for Egypt on the European level and it occupies the fifth position in terms of Foreign Direct Investment (FDI) in Egypt. 5. In a meeting with the chairman of San Paolo Bank, he presented the recent improvements in the financial sector in Egypt in light of the recent positive fiscal developments in the mortgage and insurance sectors. The minister highlighted the abundance and diversity of investment opportunities currently available especially in the oil & gas sector, the manufacturing sector, infrastructure and tourism. 6. It is worth noting that the availability of a skilled workforce in Egypt that is trained and capable of attracting Italian employers will render itself highly receptive of Italian expertise in the field of on-the-job training. 7. In a separate meeting with the Chairman of the Milan stock exchange, the Minister gave a brief account of the recent developments in stock market reform during the past two years as well as the increase in the number of registered firms in the stock exchange and the doubling of the invested capital from 33 % in July 2004 to 70 % by July 2004. Other topics discussed were the means of cooperation between the Egyptian and Italian stock exchanges by means vitalizing a memorandum of understanding that was previously signed by the two sides. 8. The Minister of Investment also met the chairman of the Italian investment authority in Milan whereby the two discussed the different ways of activating another MOU signed by the two respective authorities on Investment. He gave an account of the different investment opportunities in Egypt in textile manufacturing and the ready- made clothing industry as well as the services and financial sectors. It is worth mentioning that Italy has created a 45 million Euro fund for the micro-financing of small and medium sized enterprises for the benefit of South Mediterranean countries.