Ahmed Darwish, chairperson of the General Authority for the Suez Canal Economic Zone (SCZone), sat down with Daily News Egypt for an interview to discuss the completion of pricing lands in the SCZone by the end of the current year.
What is the update regarding the request for the Maritime and Port Authority of Singapore to manage the southern berth of East Port Said port?
Representatives of the Maritime and Port Authority of Singapore (MPA) will visit Egypt from 9 to 11 October to complete the negotiations with the board of the SCZone regarding managing and operating the southern berth of East Port Said port.
The two parties have concluded negotiations that create the legal framework and business management plan to be carried out by each party.
The next phase of negotiations will deal with the partnership ratios between the two parties, and the franchise rights. I expect to reach an agreement with the MPA by the end of November.
The East Port Said port’s southern berth expands 5 km with three births allotted for containers, two berths for cars, and another berth for public use. Two container berths and the car berth are expected to be operational before the end of 2018.
When will the SCZone complete civil works for berths?
The completion of civil works for the six new berths will be completed in February at a total cost of EGP 10bn, however operators may need another year and half to complete the installation of cranes in each.
What are the areas, which have priority in the land pricing process?
The SCZone uses three companies to price lands for investors in the Suez Canal Area Development Project. The companies are Misr Capital, AL Nour Consulting Group, and Global Appraisal Tech.
The lands that have the highest priority in the pricing process are located on a 4m sqm area in East Port Said for the Integrated Development Company. The company is expected to sign a final contract with the developer this month. The second priority area in terms of pricing is an area located on 5m sqm, which has been allocated for the establishment of oil refinery.
When will the companies complete pricing the SCZone lands?
The completion of pricing lands in the SCZone will occur by the end of the current year and the completion of pricing port areas will be during the first quarter of 2017. We give priority to three regions.
How many requests does the SCZone received recently?
We have received many requests about investments in Suez Canal Area Development Project and the SCZone. The authority’s board is keen to allocate lands for the applicants along the East Port Said area. The SCZone is adopting this approach to the East Port Said area in hopes of fostering a competitive atmosphere among industrial developers in the region. Requests are greater than the available lands so we must choose the most important industries for the Egyptian market.
Some of the developers who have submitted requests to invest in the East Port Said area are the Russian government, who requested the allocation of 2m sqm, Barcelona Alliance, an Egyptian-German alliance, and British-German alliance.
What is the biggest investor in the Ain Sokhna region?
The TEDA Investment Holding Company is the biggest investor in the region. It has developed 7.2m sqm for light and medium industries. It is followed by a Saudi industrial developer, which acquired 6.2m sqm for establishing a gypsum board factory that is mainly for local use rather than exports.
Does the foreign currency shortage affect the investment in the SCZone?
No, it does not. The investment approach that the SCZone seeks for application in the region is based on a 30-70% or 20-80% model, which means that all investing companies inside the region should allocate about 70% or 80% of their products for exports and the remaining percentages for the domestic market.
As long as the companies follow that approach they can easily obtain hard currency and will not be treated like companies that sell their products in Egyptian pounds. Egyptian companies are required to exchange the value of their profits from Egyptian pounds to US dollars in order to transfer or to buy materials according to the Central Bank of Egypt’s (CBE) instructions.
There is no item in the CBE law or in the instructions issued by the CBE reports that says that a foreign company operating in US dollars with a known source is prevented from converting their profits into US dollars.
What is the update regarding the memorandum of understanding that was signed with Russia on the industrial zone?
Russia applied for the acquisition of 2m sqm to establish a Russian industrial zone. Russia demanded some exceptions, including reducing the tax rate, but the SCZone rejected it. They also requested training for workers who will work in the zone and we are ready to meet this requirement.
The tax rate in the SCZone is often compared to other economic zones, such as Dubai’s Jebel Ali port, in which companies are exempt from taxes for 50 years. Will the SCZone reduce or amend the corporate income tax of 22.5%?
Parliament is the only one has the right and final decision to modify the tax rate, not the cabinet nor the SCZone’s board of directors.
However, if we conducted studies regarding a revision to the tax rate we can go to parliament to present them because the final decision rests with them.
I agree with you that the rate of the corporate income tax inside the SCZone is high compared to other areas, but a tax is not the first thing that investors worry about.
We also have to differentiate between corporate income tax rates imposed on companies who were established before June 2015 and the companies that have been established after this date. Before June 2015, the SCZone law had a tax rate of 10%. It is difficult now to impose the new amended tax on these companies because they adopted their budget and conducted their feasibility studies according the 10% tax not 22.5%.
What are the updates regarding the business of Saudi company Josour?
The Saudi company Josour is now conducting feasibility studies for a number of projects to present to Saudi investors and will decide on a project to start on in this coming period.