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We are studying ways to improve national economy: head of Industry Committee  - Daily News Egypt

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We are studying ways to improve national economy: head of Industry Committee 

The mineral wealth contracting issues to be opened with two companies, which have not utilised two of their mines for 10 years

There are several legislations and issues the parliament’s Industry Committee is studying. Those aim to support the national industrial system in a way that contributes to increasing the growth rates of the national economy.

The economic management in the country is working to create the appropriate investment environment and improve production and the local industry, especially that the industry is the most effective mechanism in achieving sustainable growth in jobs.

Daily News Egypt met with the Head of the parliament’s Industry Committee Ahmed Samir to look into the most important legislations that the committee will be working on during the current legislative term.

What are the most important issues the committee is currently looking into?

The parliament will be reviewing the contract of the Egyptian General Authority for Mineral Resources with two companies whose contract for the utilisation of two locations will end mid 2018.

The two companies have received the sites 10 years ago without any utilisation or production there, and the committee will work on looking for the reasons there is no production from these sites.

Can you reveal the names of the two companies?

I refuse to disclose the name of the two companies.

I would like to note that the current legislative term will be for the issue of mineral wealth in Egypt, and we cannot let the percentage of the sector reach 0.5% of the total GDP. According to that percentage, it is better to leave this sector for the future generations to utilise it in a more efficient manner and provide the value added to the local products. President Abdel Fattah Al-Sisi demanded developing the mineral wealth sector and increasing the state’s revenues, which do not exceed $1bn annually.

The sales of one of the companies in the mineral wealth sector is equivalent to Egypt’s revenues, which is something that should not continue in protection to the economy and providing a real income to the state treasury.

The parliament wants to know whether the current legislations in the sector are responsible for the weak revenues, requiring a legislative intervention.

The committee will work on meeting with the Mineral Wealth Authority and the specialised mining companies in order to add a real value. The economic reform taking place requires optimal utilisation of all the available resources in Egypt.

What about the rest of the legislations the committee is currently considering? 

The current legislative term has many legislations we are working on. There is a draft law of the car-manufacturing strategy and another to deepen the local component in the different industries. The third law focuses on the mineral resources authority and the Federation of Egyptian Industries (FEI).

Regarding the car manufacturing strategy, the government contracted with one of the international bureaus to formulate a strategy, and it will be done late October.

The government will complete the car-manufacturing strategy law before the end of this year and pass it to the parliament. The amendments will be made by the international bureau, which designated similar strategies to other countries. They included financial amendments with the aim of reducing the pressure on the dollar proceeds.

Head of the parliament’s Industry Committee Ahmed Samir

Could you reveal the most prominent amendments to the strategy of car manufacturing?

I refuse to disclose these amendments. The committee will meet again with the car manufacturers association, however.

We should keep in mind that economic reforms aims to create a more attractive climate for capital and a work environment more attractive locally and internationally.

The Minister of Investment and International Cooperation, Sahar Nasr, said in an earlier statement that Egypt targets foreign direct investments worth $10bn by the end of fiscal year (FY) 2017/18.

Will you play a role in the file of companies’ offerings in the EGX, especially public companies?

The business sector file will have a role in this legislative term, especially with the state’s trend to offer some assets in the EGX. This intervention will be legislative in some aspects and regulatory in others in order to follow up on the development plans taking part in some companies.

During the last fiscal year, the indexes of some companies turned red after several years of losses.

There is a plan to develop a sector like textile and weaving. This development plan will start in late October. We will be closely watching them. In addition, we want to know the basis according to which the state-owned companies will be offered in the capital market sock exchange and whether the offered shares are minor or major.

The textile sector suffers from several problems and obstacles, including the aggravation of indebtedness and the inability of companies to achieve a tie between their revenues and expenditures, which creates a loss.

The fact is that the government continues to finance the salaries of textile and weaving companies from the treasury through the Public Sector Restructuring Fund.

Deputy Finance Minister for Finance and Finance Ahmed Kojak said in a press statement that the government targeted revenues of EGP 6bn from the introduction of some companies in the stock market during the current fiscal year.

Are you and the government cooperating on how to increase export subsidies?

Reforms are aimed at increasing export earnings during the current fiscal year, as each pound is provided to support exports, which in turn yields $2.

But the fact is that the support of exporting companies must be linked to the added value created by these companies. It is unacceptable that an export company is supported in return for importing production components of about $10m and issuing $11m. Which depends on the proportion of a larger local component in export-oriented production.

The Minister of Trade and Industry, Tarek Kabil, said that Egypt’s non-oil exports have achieved remarkable progress over the past eight months, recording $15bn compared to $13.5bn, an increase of 11%. Imports also declined from $45.508bn to $35.13bn, a decline of 23%.

The Industrial Development Authority (IDA) has been responsible for providing industrial land for industrial developers in the coming period and to facilitate procedures for it. “The proceeds of the sale of land to this body will be transferred to the new project approved by the committee last week and will be considered by the parliament in a future plenary session.”

Do you have details of the sector that caused the increase in exports?

In fact, according to the Foreign Trade Data Warehouse report on foreign trade performance indicators for January-August 2017 compared to the same period of last year 2016, the top eight sectors recorded an increase of 44.3% in exports of chemical products and fertilisers, clothing by 10.6%, construction materials by 8%, yarn and textiles 6%, engineering 5.8%, food industries 5.4%, agricultural crops by 3.8%, and finally 1.6% upholstery.

What about the sectors that pushed imports down?

The top 10 sectors that pushed imports down are ready-made garments (55%), books (49%), leather products (39%), engineer products (33%), home décor fabrics (32%), food industries (29%), textiles (29%), furniture (27%), chemical and fertilisers (12%), medical (8%), and finally handicrafts (5.7%).

The top 8 importing countries of Egypt’s products witnessed a significant increase in their imports, namely Spain by (67%), Italy (47%), Turkey (45%), Germany (25%), Lebanon (18%), Jordan (9.5%), the United States (6%), and Britain (4.6%).

The exports of the top 8 exporting countries to the Egyptian market declined collectively by 18.3%. Turkey topped the list by (32%), followed by Germany (24%), China and India (22% each), France (18%), Italy (17%), the United States (13%), and Brazil (9.4%).

This decline in imports contributed to the increase in the production capacities of the Egyptian industry, which replaced the imported products and positively reflected on the expansion of the production sectors and the creation of new jobs for young people.

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