CAIRO: The Minister of Trade and Industry, Rachid Mohamed Rachid, announced that industrial investments reached LE 15.0 billion during 2005.
Workers, 115,000, were hired and 3,200 new companies were granted establishment licenses. He also added that a draft consumer protection law will be presented to the Peoples Assembly shortly for discussion.
According to the quarterly report of the Ministry of Finance, growth in GDP reached 5.3 percent in Q1 05/06, compared to 4.8 percent for the same period last year. This growth was attributed to new economic polices, in addition to giving a lead role to the private sector, according to the ministry.
The numbers indicate that industrial growth is just starting to take off. In fact, the minister held a meeting with the chairmen from 15 banks in which they declared their willingness to provide a loan portfolio of LE 175 billion for the industrial sector, thus giving the sector a financial boost.
This is not, however, a short-term strategy; the minister also revealed a new industrial development strategy for 2005-25. It includes the launch of a new Industrial Development Authority to be set in place to develop the policies and plans needed for deepening local industrialization and increasing local components in Egypt s products. The new authority’s mandate will also include increasing competitiveness of local industries. In addition, the minister stated that a fund will be established to subsidize land prices for new industrial projects.
While positive industrial investment figures are just now appearing on the radar, this has been a long time coming. Early as 2002, the Ministry of Trade and Industry has been hard at work, collaborating with the other ministries to improve old and execute new regulations and laws to encourage and support industrial trade growth.
In a few years time, many changes have taken place. The Egyptian tariff structure has been liberalized, custom procedures were simplified and bans on apparel and textile imports were lifted. The 2003 inauguration of the Model Customs and Tax Center (MCTC), a one-stop-shop where taxpayers can settle income taxes, sales taxes and customs, provided the necessary incentive for citizens and businesses alike to pay their taxes and establish offices.
Egypt’s Intellectual Property Rights (IPR) protection program also showed a marked improvement. In June 2003, the executive regulations dealing with patents, trademarks and botanical varieties were issued. Most recently, the ministry issued the executive regulation to implement import and export law 118/1975, as well as inspection and control procedures of imported and exported goods.
As a result of such a regulation, in 2005 Egyptian exports to Italy reached 1.2 billion Euros, and imports reached 1.6 billion, taking trade between the two countries to 2.8 billion Euros, as reported by Al Ahram weekly.
In that same year, a free-trade agreement was also signed between Turkey and Egypt during President Ahmet Necdet Sezer’s two-day visit to Cairo.
In 2005, several zones were added to Egypt’s Qualifying Industrial Zones (QIZ) Protocol 6, while in 2006 the QIZ Joint committee met and approved an additional 31 companies for QIZ Treatment to reach a total of 548 qualified companies.
The signing of the Qualified Industrial Zones is significant for Egypt. It is consistent with our government efforts to open up the economy, increase growth rates, enhance job creation and promote exports, Rachid said of QIZ developments on the Web site.
As a result, trade and investments has increased. Egypt s exports of ready-made clothes increased to $1 billion dollars in 2005, after the implementation of the QIZ agreement, compared to the $850 million reached in 2004, according to a report by the Council of Ready-Made Clothes Exports (CRCE). The report predicts that exports to the U.S. are projected to exceed $ 1.6 billion over the coming year.
Implementation of the first Egyptian Canadian, $620 million investment project, to produce methanol in Egypt, will start production in 2009 in the Mubarak Complex for Gas and Petrochemicals at Damietta, and will provide 2500 job opportunities, according to Egyptian State Information Service (SIS).
European Investment Bank (EIB) also stated that they will finance many projects in Egypt, especially in the field of energy and natural gas. The bank has offered grants worth 3.4 million Euros in technical assistance to the small-scale projects and signed an agreement worth 280 million euros to modernize EgyptAir.
Egypt and Italy signed the Green Passage initiative, which aimed at opening the European (especially Italian) markets for Egyptian agricultural exports besides encouraging Egyptian and Italian private sectors to establish joint companies for producing and exporting high-quality Egyptian products, according to SIS.
An Egyptian-Turkish joint venture project of readymade clothes retail trade worth $5.7 million has also been launched.
Egypt and Sudan signed 13 cooperation agreements in the fields of tourism, higher education, telecommunications, health, population, youth, sports and the environment. They stressed the need for going ahead with the meat deal concluded between the two countries for upgrading trade exchange, which currently stands at LE 200 million ( $34.78 million), according to a monthly economic and commercial report for November 2005 for Egypt, made by India and Ahram Weekly.
Egypt has also inked a deal with China by which Chinese Eximbank offered Egypt two soft loans, one valued at $16.3 million to repair and develop a polyester plant of the Egyptian Holding Company for Cotton Spinning and Weaving. The other, at $20 million, is to refurbish the Cairo International Conference Centre (CICC) and to construct its hotel.
Egypt and Russia have agreed on setting up a free trade zone between the two countries with the aim of doubling the flow of Egyptian exports into Russia. Russia is currently investing in 12 projects in the engineering, chemical, petroleum and minerals industries, according to an AmCham report.
While recent trade developments give evidence to the rosy state of the ministry, at a 2005 conference hosted by the Egyptian Center for Economic Studies entitled Rethinking the Role of the State: An Assessment of Industrial Policy in Egypt, Mustapha Nabli of the World Bank argued that the MENA region does not need more industrial policy but better, more sensible industrial policy.
He stressed that the challenge for MENA is to recognize that the kinds of industrial policy needed in the current international setting are very different to the traditional reforms of inward-looking paternalistic-state industrialization strategies of the past.