EGYPT WEEKLY NEWSLETTER DECEMBER, 2013 (1st QUARTER) CONTENT 1. Political Overview……….......…01 2. Economic Overview…………....02 3. Finance…………………………..…..03 4. Investment……………..…………..03 5. Tourism…………………………...….04 6. Agriculture.………………………….04 7. Energy..…….………..…..……....…05 8. Industry……………………………….06 9. Construction…..…………………..07 10. Projects………………………..……07 11. IT & Telecom……………………..08 12. Retail Trade……………………...09 13. International Trade…………..09 14. International Relations …….. 10 POLITICAL OVERVIEW NASL sources say will not take part in constitution referendum Source: Egypt Independent, 4 December, 2013 National Alliance Supporting Legitimacy (NASL) has expressed rejection toward the new constitution saying it instead supports the 2012 constitution. It has refused to participate in the referendum to approve the new amended constitution. During a meeting with European Union delegation, sources from the alliance said it called on the union to take stance against “military coup and massacres committed against people.” They added that European delegation demanded response over the alliance participation within the referendum on constitution. The sources added that the alliance insisted on rejecting calls for political appeasement, participation in referendum or engagement in any political process so as not to give any legitimacy to the current regime. They added that they will sue it internationally. Mohamed Abu Samra, secretary general of the Islamic Party, told Al-Masry Al-Youm , “We agree on meeting with foreign delegations because we have legitimacy. If we belonged to opposition, we would reject meeting the delegation.” He added that the meeting tackled the roadmap proposed by the Muslim Brotherhood which includes forming committee to amend the constitution, forming government that enjoys consensus among all political groups, empowering youth and issuing code of honor. Amr Farouq, Wasat Party Spokesperson, said in a statement, “the meeting tackled possibility of regime opponents’ participation in referendum on constitution.” He added that their participation depends on the atmosphere of the referendum regarding available freedom for media professionals and intellectuals, the referendum publicity and finding constitutional solution for the ongoing crisis. Magdy Qarqar, NASL figure, said “we accepted to meet in order to respond to the inquiries and clarify issues.” He also expressed the alliance’s rejection toward Egypt Weekly Newsletter 1 Thai Trade Center, Cairo December, 2013 (1st quarter) Sherif Yehya intervention within Egypt’s local affairs. Muslim Brotherhood figure Mohamed Ali Beshr said they heard the European delegation’s point of view and expressed the alliance’s view regarding political incidents. He assured that the alliance has not decided yet about participation in the constitution or not. ECONOMIC OVERVIEW ITALY PROVIDES USD66 MILLION GRANT TO DEVELOP SUPPLY SECTOR Source: Beltone, 2 December, 2013 Italy has allocated a grant worth USD66 million for Egypt to develop its supply sector, according to an official statement from the Ministry of Supply and Internal Trade. Italy allotted USD45 million to build grain silos in the Giza governorate. The Minister of Supply and Internal Trade noted that USD21 million has been assigned to develop bread bakeries in Sheikh Zayed. Minister Abu Shady met on November 21 with Italy’s ambassador to Cairo Maurizio Massari to discuss joint cooperation projects between the two countries in the field of sustainable development. The parties agreed to create a joint committee made up of the ministry’s experts and embassy’s technical office to develop a plan for the projects’ implementation. EUROMONEY TO HOLD EGYPT-GCC INVESTMENT FORUM IN CAIRO Source: Ministry of Investment, 1 December, 2013 Euromoney Conferences announced that it will return to Cairo on the 4-5 December for the inaugural Egypt/Gulf Cooperation Council (GCC) Investment Forum. This timely event will bring together key Egyptian and GCC investors, financiers and partners to debate and discuss the significant investment opportunities present in Egypt’s economic restructuring, according to the press release. This unique forum will focus on fostering ongoing strategic partnerships between Egypt and the GCC as both parties look towards a future of continued collaboration and increased economic stability in the region. Through a series of targeted workshops this forum will look closely at the main industry sectors. Topics will include: renewable energy, housing and real estate, agriculture and food, hydrocarbons, IT and telecommunications, transportation, infrastructure, and tourism. The Egyptian Ministry of Investment and the United Arab Emirates in partnership with Euromoney will welcome to Cairo distinguished delegates from across Egypt and the GCC. Together we will provide a platform to establish clear solutions for how to progress amidst the challenges of the current economic environment. WORLD BANK AGREES ON FINANCIAL PACKAGE Source: Beltone, 3 December, 2013 The World Bank approved a financial aid package for Egypt aimed at funding several projects. The Minister of Finance Ahmed Galal identified four main projects the World Bank will fund in the areas of social development, education, health, infrastructure, as well as fighting poverty. He did not specify the amount, but said a World Bank mission is expected to arrive to Cairo next week to finalize the details. However, unnamed sources said that the loan is expected to be around USD2 billion, Egypt Weekly Newsletter 2 Thai Trade Center, Cairo December, 2013 (1st quarter) Sherif Yehya with a grace period of seven years and an interest rate of 1% to be paid over 20 years. Galal also said Egypt is negotiating with Saudi Arabia over a new aid package expected to be finalized by the beginning of next month. The amount will be identified soon. However, the sources revealed that the amount could be around USD5 billion in the form of grants for petroleum products and development projects. FINANCE MINISTRY OF FINANCE ISSUES GUIDELINES FOR FY2014/15 BUDGET Source: Beltone, 30 November, 2013 The Ministry of Finance issued guidelines for the FY2014/15 budget. In the guidelines, the Ministry stressed on the importance of social spending in the budget especially on food subsidies, health, and education. It alluded to the importance of abiding by the concept of having the treasury single account (TSA) in the Central Bank of Egypt. It stated that when requesting investment-spending allocation, the ministries should clarify their investment criteria and should abide by these allocations. The guidelines also stated that any new employment in the public sector should be based on actual needs. It reiterated that 10% of monthly revenue of special funds should be transferred to the treasury. It also stressed the importance of rationing government purchases of goods and services and limiting them to only what is extremely necessary. The Ministry of Finance underscored the importance of maintenance work that would save the country’s productive capacity. It finally stated that it is pushing for water and electricity conservation, which will be reflected in spending in the upcoming budget. INVESTMENT Investments plagued with low-qualified workers Source: Financial Times, 29 November, 2013 Egypt is suffering a clear lack of investments, which many businessmen who run factories in various industrial zones across the country have blamed on low-qualified with low production rates. Since the 25 January revolution, investors have looked upon Egypt with caution and some have even chosen to set up shop elsewhere. During Morsy’s one-year in office alone, Egypt saw one of the worst falls in the number of millionaires in the world, losing around 3,000, according to the latest report released by the Credit Suisse Research Institute’s (CSR) Global Wealth. Street violence, unrest and turmoil of course played a large role in investor's withdrawal of Egypt, as investment inflows fell slightly by 12.4 percent, from $2.46 billion in the second quarter to $2.16 billion in the third quarter of the 2012/2013 fiscal year. Meanwhile, the number of Egyptian factories which have closed in recent months hit alarming indices, affecting 613 factories who have halted their operations. Though he says the key reason for a decline in investment is instability, Alaa El-Sakty the chairman of Badr Investors Association (BIA) emphasized that lack of labor in the Egyptian market still plays a substantial role in the withdrawal of investors. “How I can launch a new project if there are no well-qualified workers?” asked Hossam El- Hawary, the owner of a wrought iron manufactures at Badr industrial zone. El- Egypt Weekly Newsletter 3 Thai Trade Center, Cairo December, 2013 (1st quarter) Sherif Yehya Hawary is a small businessman who owns a small factory producing wrought iron products using high leaser techniques. The factory employs a modest number of workers and designers. “The well-trained workers are mostly not available, and besides those few who are trained are very careless and not disciplined,” El-Hawary said, adding that sometimes workers they skip many days of work due to mere apathy. The well-trained workers are volatile, which means after working for a very short time they could leave their post, which has recently pushed some businessmen to force the newly hired workers to sign contracts for a defined period to guarantee the workers stability. “I've felt the crunch for years with 30 workers, who come and go after a