TL;DR

Economic legislation passes committee, but civil service act fails. (Speed Round)

CBE’s Amer says import restrictions will save Egypt c. USD 20 bn this year. (Speed Round)

EGX slides 4.0% on broad selloff, Brent crude falls below 30, but UBS says equities will “still end the year higher in the U.S. and globally.” (What We’re Tracking Today, By the Numbers)

Gov’t, international institutions and banks to discuss USD 6 bn in financing for renewable energy projects. (What We’re Tracking Today)

“Automotive directive” due to his House of Representatives soon? (Speed Round)

Europe looks to tap Zohr, other East Med gas finds, top EU official says. (Speed Round)

By the Numbers + CBE’s initiative should support SMEs, prop up bank margins

WHAT WE’RE TRACKING TODAY

The EGX plunged 4.0% to 6,205 points yesterday, driving the bourse to a 25-month low as foreign funds sold. The index is already down 11.4% since the start of the year. Foreigners were net sellers for the fourth day straight. We have a bit more in our By the Numbers section and will be keeping a close eye on market chatter today.

Brent crude strengthened slightly to USD 30.08 per barrel as of 5:20 CLT, after dipping below USD 30.00 yesterday, its lowest level since April 2004, on speculation of a boost in Iranian shipments.

For a rather more moderate point of view than that offered earlier this week by RBS with its “sell everything” research note: UBS says its outlook for 2016 has deteriorated, but equities will “still end the year higher in the U.S. and globally.” UBS Wealth Management’s Jorge Mariscal, who oversees USD 1 tn in AUM, said that it’s “undeniable that the amount of risk in the market has changed” since his first-of-the-year pronouncement that “the fundamental [global] economic backdrop has not changed.” Speaking with Bloomberg Markets, Mariscal said: “China is one aspect [of the change], oil is another one, so is some weakness in U.S. indicators. We think that at the end of the year, equities will be higher in the U.S. and globally, but it’s time to be cautious in the short term.” (watch, run time 6:26) Key takeaways:

• Chinese manufacturing continues to be weak, but the services economy is “doing relatively well and and holding up the economy overall. [The Chinese economy] continues to slow down, but it’s not collapsing.”
• The change in China’s exchange rate policy to a basket of currencies from the USD “is hurting … and the market is having a hard time understanding how this works.”
• On oil: The fundamental problem is on the supply side, but “there are some demand-side issues.” Mariscal worries about the impact of stress from low prices on Russia, Venezuela and Mexico.
• “There are concerns about global growth hitting all commodities.”

Government, international institutions and banks will meet today to discuss how fund Egypt’s USD 6 bn backlog of renewable energy projects. Ahead of the meeting, the Electricity Ministry said it will now buy wind power at a rate of 4.06 cents per kW, according to a ministry source speaking to Al Borsa. The move is crucial in establishing a feed-in tariff system. The Electricity Ministry is due to sit down with nine international finance institutions to begin sorting out a financing strategy renewable energy projects expected to generate 4 GW of energy. The meeting will include the African Development Bank, the European Bank for Reconstruction & Development and local banks such as CIB and NBE, Head of the New and Renewable Energy Authority Mohamed El Sobky tells Al Mal. Meanwhile, we’re keeping an eye on the government’s response to industry demands that it scrap a 10% sales tax on equipment and capital goods for renewable projects. Feed-in tariff operators are calling for rebates and other tax breaks, according to Al Borsa.

China’s TEDA is expected to announce the launch of its USD 233 mn development on the North West Gulf of Suez Economic Zone at a press conference held today.

** Our popular Weekend Edition returns tomorrow after our holiday-season hiatus. Look for us in your inbox or online before 9:30am CLT.

WHAT WE’RE TRACKING THIS WEEK

On Saturday, a media campaign on the dangers of counterfeit goods is expected to launch. The campaign will be inaugurated by Prime Minister Sherif Ismail.

ON THE HORIZON

The Central Bank of Egypt is meeting next week with NBE and Banque Misr to discuss methods of supporting distressed borrowers. The meeting was originally scheduled for this past Monday, reports Al Borsa, but was postponed in anticipation of the CBE’s announcement of SME-supporting regulations.

Chinese leader Xi Jinping is visiting Cairo next week.

LAST NIGHT’S TALK SHOWS

The Central Auditing Organization’s (CAO) corruption report was once again on the national talk show agenda. While Lamees El Hadidy was off last night, Khairy Ramadan took up the baton on Momken: “[CAO head Hisham] Genena was appointed in 2012 and yet did not make a single statement during the Muslim Brotherhood’s year in power […] and now he is making statements left, right and center,” Ramadan said.

Former CAO deputy head Assem Soliman also told Youssef El Housseiny on Al Sada Al Mohtaramoun that Genena’s “performance deteriorated day by day … whoever holds this position should have political intelligence, eloquence, political experience and courteousness, all of which he lacks,” he said.

Over on Al-Kahera wal Nas, Ibrahim Eissa chimed in to say Genena should have already resigned. The host then went on to speak with financial and legal expert Hani Sarie El Din to comment on Egypt dropping five spots to number 131 on the World Bank’s 2016 Doing Business ranking, published last October. Sarie El Din’s insight was interesting. “Our ranking compared to Arab countries is shocking because the only countries below us in the region were those suffering from civil wars like Iraq and Syria,” Sarie El Din commented. “The UAE is ranked number 30 and we are ranked number 131; even Palestine was ranked above us.” The West Bank and Gaza were ranked number 129 — two spots above Egypt.

Sarie El Din said some of the import-related decisions made recently would affect our ranking and push it further down. “We have an issue in the decision making process; decisions are always made in closed rooms and without discussion with stakeholders,” he said. “This creates a state of uncertainty and so investors hold back because they don’t know what to expect.”

Sarie El Din also analyzed the 10 standards used in the ranking, saying the ease of forming limited-liability companies was strongly affected by the failure to implement the ‘one-stop-shop policy.’ “Not a single state body abided by the one-stop-shop policy, and not a single entity cooperated,” he explained. Sarie El Din added that while obtaining licenses to build factories entails 20 procedures and takes between 180 days and three years in Egypt, the UAE has only eight procedures completed within 40 days. “I know of cases that have been waiting for the license for 13 years and operating on temporary ones,” he added.

And now back to our ever-entertaining House of Representatives. Amr Adeeb was off today, which no doubt played a part in why none of the anchors mentioned Mortada Mansour’s inexplicable appointment as head of parliament’s Human Rights Committee. Al Qahera Al Youm co-host Rania Badawi was more interested in the potential resignation of all 65 MPs from the Free Egyptian Party. Head of the party Alaa Abded threatened a group resignation if the Support Egypt bloc does not change its ways. Legal expert Shawky El Sayed called in to say that if the resignations are accepted, elections would just be held again to fill the seats.

Resident modesty police constable … er, Rep. Elhamy Agina struck again yesterday, calling in about the parliamentary dress code, seemingly in response to a complaint lodged against him by 89 female MPs. Over at Momken, Housseiny cheered them on, saying “It seems this parliament will be a women’s parliament, and the women’s performance will beat that of their male counterparts. Their statements to Al Masry Al Youmshow they have courage, strength and knowledge.”

SPEED ROUND

The Economic Committee of the House of Representatives approved almost all economic legislation passed by President Abdel Fattah El Sisi while he held legislative power. What passed? The Investment Act, Capital Markets Act, Income Tax Act, Competition Protection and Anti-trust Act, Insurance Supervision Act, Joint Stock Companies Act, Real Estate Finance Act, Insurance Supervision Act and Moveable Assets Act.Both Al Masry Al Youm and Youm7 report that the committee signed-off on all economic legislation, but Al Bowaba says the Chambers of Commerce Board Membership Tenure Act failed to win approval. The committee is set to compile a report ahead of bringing all laws before the House for a vote.

But one of the centerpieces of the Sisi administration’s reform agenda failed at committee: The Civil Service Act was unanimously voted down by the House Committee on Manpower, and other committees are taking issue with it, too, according to Al Borsa. that doesn’t mean it couldn’t pass in amended form, said Rep. Khaled Youssef in a chat with Al Masry Al Youm. This is the first major piece of the government’s reform program to be rejected by parliament. The law was extremely unpopular throughout the civil service, with bureaucrats protesting it in 2015 and clamoring to be declared exempt from the act. What its failure at committee means to the rest of the reform agenda is anyone’s guess: Was it a move by the administration to sacrifice an unpopular law as the price of passing the rest of the legislation it needs to get through before the 15-day deadline? Or a sign that we’re going to have a less lap-dog-like parliament than many had expected?

The acid test of the House’s willingness to challenge the Sisi administration (or at least the Ismail government) will be the value-added tax bill. On that front, it now seems it could ring-in high as 14%, and a 3% surtax on sales to businesses not registered for the VAT, according to Al Mal. This would mean VAT, which is overdue, could hit further delays. The government could possibly circumvent the objections by amending some unpopular features of the act before presenting it to the House. It could also also use the appointment of former Tax Authority Chief Ashraf Al Arabi to parliament as a Trojan horse to expedite deliberations on the VAT, a view shared by Egyptian Tax Society member Abdel Al Rasool Abdel Hady.

CBE Governor Tarek Amer says he is saving Egypt around USD 20 bn this year through the measures to curb unnecessary imports. Interviewed by Bloomberg’s Ahmed Feteha, Ahmed Namatalla and Tarek El Tablawy, Amer explained “the largest demand for foreign exchange comes from imports, so these measures are a quick fix to improve the balance of payments … Egypt has been flooded with cheap, low-quality goods and we are trying to regulate this market.” Import controls aside, Amer touts his success in “restoring confidence in the domestic market” by paying back investors. However, he doesn’t explain how the payments were made without affecting reserves. Amer also believes the economy is performing better than the official data suggest. “Just look at the size of real estate construction that has taken place throughout the past five years … Egypt has big potential and is a very attractive market,” he said. Looking ahead, Amer told Bloomberg that the Coordination Council is “setting a comprehensive economic vision for Egypt.” Ahmed Sheeha, head of the Importers Division of the Chamber of Commerce, disputes this figure in Al Borsa, stating that the goods being blocked by import restrictions only represent 15% of total imports amounting USD 60 bn.

Whitewashing? Egypt’s Suez Canal revenues increased 3% y-o-y in 2015 to EGP 39.8 bn, according to the Suez Canal Authority, reports Al Ahram. EUR-denominated revenues also increased during the year, the authority says. The canal’s planning manager tells Al Borsa that the revenues are the canal’s largest ever, a claim that’s somewhat misleading as it leans on the drop in the EGP’s value. Suez Canal tolls are mostly calculated in special drawing rights (SDR), a basket of currencies that act as supplementary foreign exchange reserve assets that are defined and maintained by the IMF. Effectively, however, the revenues are recorded in a “real” currency, the USD. Granted, SDR-denominated revenues have increased y-o-y in 2015, but the SDR, similar to the EUR and EGP, depreciated against the USD throughout the year. SDR-denominated revenues increased 2.7% in 2015, but the depreciation against the USD during the same period was 4.55%. Revenue data for the canal are only available for the first 11 months of 2015 so far, but given it registered USD 5.47 bn in revenues in 2014, the Suez Canal is bound to have recorded lower revenues in 2015, in USD terms, unless December’s toll intake is 166.6% higher than the year’s monthly USD-denominated average — an extremely unlikely feat. The canal recorded USD 4.75 bn in the first 11 months of 2015.

Economics analysis firm Capital Economics projects a slowdown in Egypt’s GDP growth to 3% this year from 3.5% in 2015 on the back of the FX crunch, further EGP devaluation and the downturn in tourism, according to a report cited by Al Borsa. However, the report is also projecting an upswing in growth in early 2017, approaching 4%. Capital Economics expects the devaluation to reach EGP 8.5 in 2016 and tourism revenue to drop EGP 3.5 bn, factors which could lead to a 3 bps jump in inflation, which stood at 11.1% as of December. The government is targeting a 5.5% GDP growth in FY2015/16, according statements by Planning Minister Ashraf El Arabi in December.

Automotive directive soon to hit the House of Reps? Automobile industry insiders are urging parliament to swiftly adopt the government’s strategy on developing a domestic automobile manufacturing base when it votes to approve the Ismail government’s agenda in the coming weeks, according to Al Mal. The strategy, which is undergoing a final review by the ministries of industry and finance, will impose a 10% tariff on all imports and a new 30% tax on all cars sold in Egypt. The strategy would see grant tax breaks going to companies based on size of their manufacturing base in Egypt and exports. Nour Darwish, who heads the Auto Division of the Chamber of Commerce, supports the so-called “automotive directive” saying the domestic assembly industry has stagnated for 13 years as a result of protectionist policies. Domestic assemblers want protection against what they say is unfair competition from Turkish, Moroccan and European Union imports. The industry has been advocating a system whereby output from domestic assemblers is given tax breaks not enjoyed by importers in return for upping their domestic content requirement by going further into manufacturing.

Europe could import gas from newly found deposits in the Eastern Mediterranean as it looks to diversify supplies while keeping prices down, AP quotes Vice President of the European Commission Maros Sefcovic as saying on Tuesday. The Zohr field is estimated to hold enough gas to meet Europe’s annual energy needs (400-500 bn cubic feet) for eight years, he says. The field has reserves that are estimated at approximately 30 tn cubic feet, and Egypt’s Oil Minister estimates output will begin in 2017.

Meanwhile, Edison has completed the seismic mapping for its concession adjacent to Eni’s supergiant Zohr field, an Oil Ministry source tells Al Borsa. The source expects a major discovery in this specific area and an increased number of new discoveries in the Mediterranean in general.

Implementing the Universal Health Insurance Act will cost the state EGP 90 bn, says Health Minister Ahmed Rady, adding that 60% of Egyptians pay out of pocket for healthcare, Al Borsa reports. The 2014 constitution mandates spending on health be at least 3% of GNP. As we noted before, the government hopes the new bill will provide improved universal health care by 2030. Some experts speaking to Al Ahram suggest the bill will open the door for foreign investment, with foreign bodies expected to provide consulting services and ratings to various health institutions as hospitals move to better their services under the law.

Like dangling a keychain in front of a baby to distract it from crying: Swiss Attorney General Michael Lauber will head a delegation on a visit to Cairo on Saturday, 16 January, Al Mal reports. Lauber will meet with a number of Egyptian officials regarding issues relating to funds transferred to Switzerland by the Mubarak family. The visit follows the former president’s conviction in a financial corruption case. Because “Mubarak’s Billions” will solve all of our national economic problems, starting with the FX crisis…

Electro Cable has reached an agreement with Pioneers Holding to acquire its stake in Giza Power, Mubasher quotes Electro Cable board member Abdul Rahman Abdul Ghani as saying. Pioneers owns 55% of Giza Power and Electro Cable the remaining 45%. The deal will be self financed, says Ghani, adding that Electro Cable is looking to raise production capacity at Giza power by 30% after the acquisition. (Read)

MOVES – Chris Hearne, formerly CFO of Erin Energy, a post he held for 3 1/2 months, has been appointed CFO of UAE’s Dana Gas, along with other new management appointments.

The Ismail cabinet held its weekly meeting yesterday, Al Mal reports. Among the decisions announced afterward:

Economic Policy

• Increasing the payment to State Grid Corporation of China for building and installing 1,210 km of 500 KV power lines by 15%;
• Approving the Egyptian Electricity Holding Company’s MoU with Alstom Grid for installing smart-grid technology and developing power transmission stations;
• Allowing the Electricity Ministry to form a national company to develop black sand resources;
• Legalizing Shaq El Teban factories, workshops and quarries, which mostly produce granite and marble;
• Granting the Industrial Development Authority 1,012 feddans to establish an industrial zone in Luxor;
• Contracting Atlas General Contracting, Al Giza General Contracting, El Saeed for Contracting, Rolan General Construction and El Abd Egyptian Contracting to build 124 social-housing units in Moqatam for EGP 515 mn and developing utilities for them for EGP 65 mn;
• Incorporating state land into the 61k feddan land reclamation project in Beni Suef.

Legislative Decisions

• Criminalizing the possession and distribution of terrorism- or hate-related articles/symbols and propaganda, with violators facing jail time and fines of up to EGP 30k if convicted.

Foreign Policy

• Forming a cooperation committee with the government of Malawi to foster stronger bilateral ties between the the two nations;
• Granting the Saudi government 20 sqm of land in Suez to establish a consulate.

Among the international headlines we’re following this morning: BP will be sued in the UK by families of Algerian gas plant attack victims: Families of two BP employees killed in a 2013 terrorist attack on the oil firm’s operations in In Amenas, Algeria are filing suit, Reuters reports, over failing to take precautions to ensure the safety of its workers. “BP remains deeply saddened by the tragic events at In Amenas … It is the terrorists who are responsible for the deaths and injuries that occurred because of the attack,” according to a company spokesperson speaking to Reuters. Oddly enough, while this may or may not be a quirk of Google, but this writer found a video advertisement for BP’s sponsorship of the Paralympics appear in the middle of the text on Reuters’ article on the lawsuit facing the company.

EGYPT IN THE NEWS

Egyptian Foreign Minister plays down terrorist threat to Egyptian people and tourists: German news outlet DW has an incredibly brief preview of Tim Sebastian’s recorded interview with Foreign Minister Sameh Shoukry, set to air on 20 January. Shoukry is wrapping up his visit to Berlin this week. Sebastian and DW both sound more than a little sensationalist: “Tim Sebastian: Egypt is a war zone, isn’t it? Shoukry: No, hardly.” Then again, what can be expected from going on a show called ‘Conflict Zone’?

The rise of Daesh is complicating “the seemingly contradictory relationships” among Hamas and Salafi-jihadists in Gaza and Sinai, Benedetta Berti and Zack Gold write. The informal tunnel economy between Gaza and Sinai established extensive economic relations along the Sinai-Gaza border. While Hamas has no interest in allowing a Daesh-inspired camp to operate in the area, its “grip on Gaza and on competing armed factions’ freedom of maneuver may relax, while its own rhetoric and support for armed violence may increase.” The relationship with Sinai-based jihadists, however, is more complex. Berti and Gold argue that “Hamas is no fan of the jihadi groups in Sinai.” The group’s seemingly strong relationship with Sinai-based jihadists stems from the pragmatic drive to maintain the economic links and contacts with a Wilayat Sinai leader, whose relationship with Hamas predates the formation of the group. For now, Hamas is avoiding antagonizing “with the far more sophisticated” Sinai groups and working politically to reverse a deterioration of relations with Egypt while maintaining economic ties with Sinai.

DIPLOMACY + FOREIGN TRADE

Germany is committed to supporting Egypt economically and politically, Germany’s Vice Chancellor Sigmar Gabriel told Foreign Affairs Minister Sameh Shoukry, according to a ministry statement. The pair met in Berlin yesterday as part of Shoukry’s visit to Germany. Shoukry presented Germany with a number of investment opportunities and called on facilitating the access of Egyptian agricultural goods to country. He communicated to Gabriel the improved investment climate in Egypt and said investments in the country are high yielding with returns that could “reach up to 28%.”

The Federation of Egyptian Chambers of Commerce is developing a strategy to boost Egypt’s exports, AMAY reports. This multilateral strategy will involve reviewing free trade agreements that are negatively affecting Egypt’s trade balance, such as the Agadir Agreement between Egypt, Jordan, Morocco and Tunisia, and explore how to better boost Egypt’s exports within their framework, such as imposing local content requirements. The strategy will also seek to open new markets for Egyptian goods by sending delegations to target countries. Other key elements include developing Egypt’s logistical capabilities and setting a new standard on quality of products to make them more competitive. The strategy seems to share an element with the Industry Ministry’s new registry policy, as it also calls for restricting the entry of inferior-quality goods.

An Egyptian delegation led by EGPC chairman Mohamed El Masry arrived in Baghdad on Wednesday to discuss bilateral cooperation on petroleum with the Iraqi government, Al Mal reports.

ENERGY

Emerson to automate Carbon Holdings’ Tahrir plant for USD 150 mn
Carbon Holdings selected Emerson Process Management to provide automation and reliability technologies and services for the Tahrir Petrochemicals Project at Ain Sokhna. According to the press release, the initial scope of work is estimated at USD 150 mn. Upon completion, the project is set to become the largest petrochemical plant in Egypt and the largest naphtha cracker plant in the world. Emerson will provide engineering services and a reliability programme. (Read)

Apache to invest USD 955 mn in discovery wells this year
Apache will invest USD 955 mn during the FY2015/16 year to develop 94 discovery wells, despite plummeting oil prices, says Mohamed Abdel Azim, the head of Khalda (Apache’s partner in Egypt) to Al Borsa. It appears that Apache has deferred these cuts to the following year as its ratified budget for FY16/2017 year shows that its investments will fall to USD 941 mn, according to Abdel Azim. (Read in Arabic)

INFRASTRUCTURE

New Tiba City Authority issues electricity grid tender next month
The New Tiba City Authority will issue a tender to install an electrical grid in the first phase of the social housing section of the city over an area of 620 feddans. The expected cost of the project is around EGP 60 mn, says authority head Ashraf Fathy, and will be executed over 12 months starting March. The project will be funded out of the authority’s budget for the current and next fiscal years. (Read in Arabic)

MANUFACTURING

El Sewedy Electric to pay dividends for 9M2015
El Sewedy Electric will pay dividends for 9M2015, Reuters reports. The company’s shareholders agreed to pay a dividend of EGP 1 per share after recording a EGP 298.95 mn net profit in 3Q2015. (Read)

HEALTH + EDUCATION

No problem with hep C treatment protocol, NCCVH says
The Pharmacists Syndicate is claiming the hepatitis C virus treatment protocol recommended by the National Committee for the Control of Viral Hepatitis (NCCVH) is inadequate. Pharmacists say 46% of treated patients have experienced relapses after the Sovaldi-based treatment course. In response to the Syndicate’s concerns, NCCVH was dismissive, saying that pharmacists’ role is to distribute drugs and not recommend treatment protocols. The Pharmacists Syndicate is accusing the NCCVH of a conflict of interest as some of its members negotiating over Sovaldi are employed as researchers by Gilead, the maker of Sovaldi. However, NCCVH rejects the claims and says it has revised the treatment protocol to include Olysio (the trade name for hepatitis C drug simeprevir) as well seven months ago. (Read in Arabic)

HoldiPharma in talks over EGP 1 bn pharma packaging plant
The Holding Company for Pharmaceuticals (HoldiPharma) is in talks with an Emirati company and a Chinese tech company to build an integrated facility that produces raw materials and packages pharmaceuticals, says HoldiPharma Chairman Adel Abdel Halim. He did not name either of the potential partners. The total cost of the project is estimated at around EGP 1 bn, he adds, and is expected to be executed over two phases before production begins. (Read in Arabic)

Social Solidarity Ministry launches anti-drug campaign
The Social Solidarity Ministry has launched an anti-drug initiative named “Choose Your Life”, Social Solidarity Minister Ghada Waly told Lamis El Hadidy in an interview on Hona Al Assema on Tuesday. Drug usage has reached 10% of the population — double the international rates — Waly told El Hadidy. The interview made headlines yesterday, with Al Mal quoting the minister as saying that “27% of drug users are women.” The campaign is broadly aimed at curtailing drug usage among the youth, with Waly reportedly successfully recruiting Roma footballer Mohamed Salah as spokesperson.

TELECOMS + ICT

Raya lands UNICEF tender in Ethiopia
Raya Information Technology has landed a tender to provide networking tech support for UNICEF in Ethiopia, says Head of Business Development Mohamed Abu Bakr. The project entails providing tech solutions and networking hardware for a 12-month period beginning December 2015, he adds. Raya had completed four technology infrastructure projects for the UN in Ethiopia as of October 2015. The company has also submitted proposals to several African government bodies in the previous period as part of its strategy to expand into African markets, adds Abu Bakr. (Read in Arabic)

BANKING + FINANCE

Emirates NBD renews partnership with Allianz Egypt to provide bancassurance
Emirates NBD has renewed an agreement with Allianz Egypt to provide bancassurance services for five years, reports Zawya. The bank aims to gain EGP 500 mn from new insurance premiums. Bancassurance services provided include term life insurance, lifetime financial planning, education plans, retirement plans and other investment plans. (Read)

CIB launches smart wallet service
CIB, in cooperation with MasterCard, Fawry and the Federation of Egyptian Banks, has launched a smart wallet service, according to Al Borsa. The service is part of the government’s strategy to move toward electronic payments and services, says Head of Global Transaction Services Mohamed Farag. The service allows users to transfer money to and from their accounts into their smart wallet through the bank’s ATM in a cardless transaction and allows users to pay through their mobile devices. (Read in Arabic)

QNB Al Ahli net profit reaches EGP 3.1 bn
QNB Al Ahli reported a standalone net profit of EGP 3.1 bn at the end December 2015, up 38% y-o-y, according to a statement from the bank. Its loan portfolio grew 27% over the period to hit EGP 61.5 bn while deposits gained 27% to EGP 108.8 bn. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

Gov’t takes on counterfeit goods
The government plans to put into effect a strategy to combat counterfeit goods, Al Mal reports. This will involve establishing a database of licensed and trademarked goods to better inform consumers on the difference between these goods and counterfeit ones. The strategy will also see the launch of a media and awareness campaign on Saturday 16 January on the dangers of counterfeit goods. The campaign will be inaugurated by Prime Minister Sherif Ismail who will be joined by Supply Minister Khaled Hanafi and representatives from 500 companies. (Read in Arabic)

ECA to exchange information with Insurance Federation of Egypt
The Egyptian Competition Authority (ECA) has inked a cooperation protocol with the Insurance Federation of Egypt to exchange information, reports Al Borsa. The protocol also allows for the exchange of expertise and organizing joint workshops. The ECA is focusing on sectors that directly influence consumers, as well as expanding studies in the services sector, says ECA Chairperson Mona El Garf. The ECA is keen on holding workshops to educate the business community on the newly amended Competition Act, which levies stricter punishments of up to 12% of the company’s revenues on violators, says El Garf. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

CPF has only an advisory role in Egypt reform, says World Bank economist
Al Mal is reporting that receiving the second and third payments of the World Bank’s USD 3bn development loan is contingent upon VAT being passed, taking an out-of-context quote from a press release from the bank’s Country Partnership Framework (CPF) to support the claim. The newspaper quotes Senior World Bank Economist Ahmed Kouchouk as saying that implementing VAT is critical to achieving structural economic reform in Egypt, but he goes on to say that the CPF, which was adopted by the bank’s board of directors last month, will provide only consulting and technical assistance and would not interfere in fiscal-spending policies.The press release makes no mention of VAT, but does make structural reform a key component of the aid.  International Cooperation Minister Sahar Nasr denied last month that the loan payments would be contingent on passing the VAT.

Increased gov’t borrowing as a result of CBE interest rate hike
The government has been significantly increasing its borrowing from banks to plug the budget deficit and cover the debt service, which has gotten worse as a result of the CBE hiking interest rates by 50 bps last December. This is fueling disputes between the Finance Ministry and other government bodies, with the ministry pushing to collect outstanding payments owed by the bodies, according to former Finance Minister and National Investment Bank board member Momtaz El Said. (Read in Arabic)

New state company will run land tenders for 1.5 mn feddans project
The Investment Ministry approved forming a national company to issue tenders for land that is part of the 1.5 mn Feddan Project, says Water Resources Minister Hussam Maghazy. Private investors can own up to 100k feddans in land reclaimed as part of the mega-project, with the minimal land area an investor can buy being five feddans, according to Al Ahram. The price of land per feddan could reach up to EGP 30,000 in some areas, the minister adds. Maghazy states that investors can pay cash for the land or pay in installments over seven years at a 6% interest rate.

ON YOUR WAY OUT

Flu season is upon us: Three people have died of swine flu at El Arish hospital, Al Masry Al Youm reports. Some sections of the hospital have been placed under emergency lockdown to prevent the spread of disease to staff or other patients.

Oil spill in the Red Sea: A 500 m long oil spill was reported of the coast of Ras Gharib by the Red Sea and is headed toward the coast, stirring warnings by fisheries and wildlife protection groups, Al Borsa reports.