Egypt Weekly Newsletter June 2014, 1St Quarter
Total Page:16
File Type:pdf, Size:1020Kb
EGYPT WEEKLY NEWSLETTER JUNE, 2014 (1ST QUARTER) CONTENT 1. Political Overview………..........01 2. Economic Overview……..….…..02 3. Finance..…………………………..….03 4. IT & Telecom………………………..03 5. Energy……………………………….…04 6. Industry…...…..……..………………05 7. Automotive……………………….…06 8. Real Estate……………………..……06 9. Projects…………………………..…..07 10. International Relations ……..07 11. Special Annex of Libya……..…08 Compiled by Thai Trade Center, Cairo POLITICAL OVERVIEW El-Sisi sworn in as Egypt president Source: Ahram Online, June 8, 2014 Former field marshal Abdel-Fattah El-Sisi takes the presidential oath in front of judges the Supreme Constitutional Court in Cairo. Abdel-Fattah El-Sisi has been sworn in as the eighth president of Egypt at a ceremony in Cairo. He took the presidential oath at the Supreme Constitutional Court at an event attended by former interim president Adly Mansour, Prime Minister Ibrahim Mahlab, Al-Azhar Grand Imam Ahmed El-Tayib and Coptic Orthodox Pope Tawdaros II. The ceremony started with verses from the Quran followed by short speeches by head of the constituitional court Maher Samy and its charges d'affaires Anwar Assay. The inauguration will continue on Sunday afternoon with ceremonies at the Ittihadiya and El-Kobbeh presidential palaces, which will be attended by foreign representatives and Egyptian public figures. The former army chief won a landslide in the 26-28 May presidential election, gaining almost 97 percent of the vote. Mohamed Morsi was the first Egyptian president to be sworn in at the Supreme Constitutional Court. Morsi, who was ousted by the army amid mass protests in July 2013, swore the presidential oath in Tahrir Square among thousands of supporters, then at the court and finally at a ceremony attended by public figures and foreign guests at Cairo University. Egypt Weekly Newsletter 1 Thai Trade Center, Cairo June, 2014 (1st quarter) Sherif Yehya ECONOMIC OVERVIEW GAP NARROWS BETWEEN EGP OFFICIAL AND BLACK MARKET RATES Source: Reuters, June 8, 2014 Egypt's Central Bank allowed the EGP to weaken further at a USD sale on Wednesday after the currency slid to an all-time low in the official market last week, narrowing the gap between official and black market rates. The central bank said it sold USD37.6 million at a cut-off price of EGP7.1150, weaker than the EGP7.1068 at its last sale. Gap between Egypt pound official, unofficial rate widens Source: Egypt.com, June 7, 2014 The gap between the Egyptian pounds official and unofficial exchange rates widened on Wednesday, with the pound slipping against the dollar in the black market and remaining stable at a central bank dollar sale. The dollar changed hands in the black market at a rate of 7.35/37 on Wednesday, weaker than a day earlier when the dollar was offered for around 7.25 in the morning and 7.32 pounds in the evening. The pound had strengthened in the black market after the election victory last month of former army chief Abdel Fattah al-Sisi, who was sworn in as president on Sunday. Traders had predicted a temporary appreciation in the parallel market following the election, citing hopes of new investment and aid from Gulf Arab countries which have already given billions in aid to help stave off an economic collapse. The pound had traded at around 7.50 pounds to the dollar before the elections. The central bank said it had sold $37.6 million at a cut-off price of 7.1402 pounds on Wednesday, unchanged from its last sale on Monday. It had offered $40 million. Forex traders and economists have described the central banks decision to allow the pound to gradually weaken since March as a managed depreciation. The central bank has not said why it has been letting the currency weaken. Business leaders have cited clarity on the direction of the currency as a condition for further investment. The rates at which banks are allowed to trade dollars are determined by the results of the central bank sales, giving the bank effective control over official exchange rates. Egyptian billionaire Sawiris sets up investment firm Source: Boomberg, June 9, 2014 Egyptian billionaire Nassef Sawiris, whose family owns the Orascom group of companies spanning construction to telecoms, has set up an investment firm to tap into Egypts growth opportunities. Sawiris's investment firm, Nile Holding Investments, has investors from the Arab Gulf, Europe and the United States. Egypt's economy has stagnated since tourists and investors fled the Arab worlds most populous nation after the ousting of Hosni Mubarak in 2011. Newly elected president Abdel Fattah al-Sisi is under pressure to restore confidence and attract investment. The Sawiri's family is among the wealthiest in Egypt. Sawiriss brother, Naguib Sawiris, has made an offer to buy a 20 percent stake in one of the Middle Easts biggest investment banks EFG Hermes. Nile Holding will give financial backing Egypt Weekly Newsletter 2 Thai Trade Center, Cairo June, 2014 (1st quarter) Sherif Yehya to a Duet-CIC Egypt Opportunities Fund, a private equity fund with up to $300 million of committed capital to invest in consumer and consumer-related industries, the firm said in a statement. "Nile Holding Investments envisions contributing up to 25 percent in Duet-CIC Egypt Opportunities Fund investments, provided they do not conflict in any manner with the current and future activities of any of the Orascom companies," it said. The firm has also completed a second investment in the healthcare sector valued at 400 million Egyptian pounds ($55.94 million) and is evaluating several new opportunities along with strategic and private equity investors, it said. Egypt's reserves dipped to a critical low last year and its budget deficit swelled to 14 percent of gross domestic product. FINANCE EGYPT WILL EXEMPT BONUS SHARES FROM A NEW 10 PERCENT CAPITAL GAINS TAX Source: Reuters, June 9, 2014 Egypt will exempt bonus shares from a new 10 percent capital gains tax on profits made on the stock market, the country's Finance Minister Hany Dimian said. Dimian said Egypt had approved the introduction of the tax, part of the first phase of income tax reforms it expects to bring in 10 billion Egyptian pounds ($1.4 billion). "Distributions of bonus shares will be exempt from the taxes," Dimian said after a meeting with government finance officials. Profits from the stock market are currently tax free, and Dimian has said the new tax will not be retroactive. Egypt is eager to encourage investment but is also trying to find additional revenue sources after more than three years of economic and political turmoil since a popular uprising toppled President Hosni Mubarak in 2011. FAISAL ISLAMIC BANK TAKES PART IN CBE’S MORTGAGE FUNDING INITIATIVE Source: Amwal Al Ghad, June 10, 2014 Faisal Islamic Bank of Egypt decided to take part in the Central Bank of Egypt’s mortgage finance initiative. Faisal revealed the launch of its mortgage finance product to finance low-income housing projects as pursuant to the Shariah- compliant finance Murabaha. CBE announced in February that it had allocated EGP10 billion (USD1.44 billion) to finance low-income housing projects, with the aim of boosting the construction and real estate sectors. The money will be sent to banks, in the form of deposits, over a period of 20 years at low interest rates (3.0- 4.5%). Low-income citizens who qualify to benefit from the programme will be able to borrow at a yearly interest rate of 7-8%. IT & TELECOMMUNICATION NTRA SETS WORKING GROUPS FOR NATIONAL ROAMING PRICES Source: Al Mal, June 9, 2014 The National Telecommunications Regulatory Authority (NTRA) has created two working groups with the aim of setting prices for local roaming for both mobile and Egypt Weekly Newsletter 3 Thai Trade Center, Cairo June, 2014 (1st quarter) Sherif Yehya fixed services in cooperation with the existing telecom operators, said the NTRA’s Executive President, Hisham El Alaily. El Alaily added that negotiations between all parties are still ongoing with regards to service pricing following the unified license awards. EGYPT TO ISSUE 4G LICENCES IN FY2014/15 Source: Argaam, June 10, 2014 The Egyptian government plans to issue 4G mobile licenses in FY2014/2015 to help reduce its budget deficit, according to Finance Minister Hany Kadry, Middle East News Agency (MENA) reports. The Ministry of Communications and Information Technology and National Telecommunication Regulatory Authority had announced in April that 4G licenses are due for issuance in FY2016/2017. MOBINIL CONSIDERING CAPITAL INCREASE, ASSET SALES TO REDUCE DEBT Source: Al Borsa, June 8, 2014 Mobinil is considering four options to reduce debt, quoted from the company’s CEO, Yves Gauthier, as saying. Options include selling unutilized fixed assets and conducting a capital increase, while the last option to raise funds would be a stake sale in the stock market. Mobinil will be in a stable financial position in 2014 and 2015, Gauthier added. TE DATA MAINTAINS INTERNET MARKET LEADERSHIP WITH 63% OF SUBSCRIBER MARKET Source: Al Borsa, June 9, 2014 Telecom Egypt's (TE) TE Data has maintained its internet market leadership at the end of 1Q2014 with 1.667 million subscribers (63% market share, up 5.4% Q-o-Q), according to data from internet providers and the Ministry of Communications and Information Technology. Mobinil subsidiary LinkdotNet remained in second place with 605,000 subscribers (23% market share, up 10.5% Q-o-Q), while Vodafone Data witnessed a decline in subscribers to 215,000 (8% market share, down 12.5% Q-o-Q). Etisalat Group's Etisalat Internet finished last with 144,000 subscribers (5.5% market share, up 5.2% Q-o-Q). ENERGY SIDPEC ANNOUNCES FIVE-DAY SHUTDOWN IN JUNE ON MAINTENANCE WORKS AT GASCO’S GAS SUPPLY COMPLEX Source: Al Mal, June 10, 2014 Sidi Kerir Petrochemical Company (SIDPEC) has announced that its facility will be shut down fully for a period of five days starting 1 June due to the Egyptian Natural Gas Holding Company (GASCO) undergoing maintenance works at its western desert gases complex.