By Ahmed El-Adly
In December 2013, TEDA Investment Group signed a contract with the General Authority for the Development of the Northwest Gulf of Suez (SE Zone) to develop a new 6 sqkm North West Suez Canal zone. However, TEDA has yet to deliver the lands to start the project.
Daily News Egypt interviewed Wei Jianqing, the CEO of Chinese TEDA Group, to discuss the reasons behind the delay, the last negotiations between TEDA and Egyptian officials, the expected time to start the construction of infrastructure, how many companies will be inside the zone, and the sectors that will work in it.
TEDA signed a contract in December 2013 to develop 6 sqkm in the North West Suez Canal zone. What is the reason behind delaying the project?
TEDA already signed a contract with the General Authority for the development of the Northwest Gulf of Suez (SE Zone), and the Minister of Investment also signed the final additional clause to develop 6 sqkm of the North West Suez Canal zone during his visit to China in 2014; however the project didn’t start yet.
First of all, I want to say that TEDA already finished the construction works and the marketing of the 1.3 sqkm project, considered the first one for TEDA in Egypt. Secondly, for the 6 sqkm project, we already finished registration as a special economic zone, 100% of our company capital is already here, and we already finished the master plan. Nearly everything is finished and now we are waiting for the Egyptian partner to transfer the land to end these negotiations that have lasted for more than five years.
Another reason that prevents the developing process starting is the idea of the “special economic zone”, which is a new thing for the Egyptian government. That’s why they didn’t have much experience, and such zones are needed alongside so many regulations, also the philosophy of treating those zones is different between Egypt and China.
Another thing is that we are still undertaking negotiations with the Egyptian government around the final prices of electricity, water and gas to reach the rates involved in the contract. If the prices are too high, we cannot do the marketing, and the customer will not come to the zone. That’s why we are holding the negotiations.
What is deadline to deliver the lands?
There is no specific time to receive the land, but we expect to take 2 sqkm as the first phase by the end of this month, or during the next month, as the process is in three phases, with each phase including 2 sqkm.
What is TEDA’s role in those 6 sqkm in North West Suez Canal zone?
TEDA’s scope of business as an international company covers regional development and real estate, public utilities, the manufacturing industry, financial industry and modernservice industry etc. We develop industry zones for the manufacturer with 18 wholly owned subsidiaries internationally.
What is the total investment TEDA will put in the 6 sqkm construction works, and the total investment expect to be attracted?
Our total investment in the infrastructure constructions is nearly $223m. Regarding the whole investment for the zone from different sectors, we expect $80m as an initial investment, and $2bn total investment in seven different sectors. We are also targeting to attract 100 companies to invest inside the zone, and to create nearly 40,000 job opportunities for locals.
How many companies wanting to invest inside the zone have made inquiries, and what are the sectors you target?
We target seven manufacturing sectors, like energy, transportation, mechanic industry, petrochemical industry, electronics, automotives, light industry, and a section for the SMEs industries. We received 20 requests from companies wanting to start businesses in the region, but all of them have delayed the decision as we are still waiting for the executive regulations of the investment law, and the amendments on Law 83/2003 regulating investment inside special economic zones. They are also waiting for the final prices of electricity, gas, and water.
How many subsidiaries companies are there under TEDA Group in Egypt?
TEDA is a Chinese company owned by the Chinese government, and it has three subsidiary companies. The first is the Egypt TEDA Investment Company, with a total capital of $100m – this company was established for developing the first 1.3 sqkm project. Its shareholders are the China-Africa TEDA Investment Co. Ltd with 75%, the Egyptian Chinese JV Company for Investment with 20%, and TEDA Investment Holding Co with 5%.
The second company is Egypt-TEDA SE Zone Development Co established last January, with a total capital of $223m, and the shareholders are the China-Africa TEDA Investment Co. Ltd with 90%, TEDA Investment Holding Co with 5%, and Egypt TEDA Investment Company with 5%.
The third company is specialised in services for TEDA projects in the North West Suez Canal zone.
The Minister of Investment announced the rate of income tax on companies will rise from 10% to 22.3%, including companies inside special economic zones. What are your views on this?
Special economic zones should get preferential treatment from governments, tax incentives and low customs. That is the agreed procedure internationally. If the government has any intention to increase the taxation on the manufacturer inside special economic zones, I think it will have a negative impact on the investor and on TEDA also.
You announced that you will build an industrial park the in the North West Suez Canal zone – what is the difference between this and the traditional industrial zones?
According to the master plan of the 6 sqkm project, we will establish an industry park which is very different; it includes entertainment services beside the manufacturing activities, including an amusement park, a hotel, restaurants, and cafes.