TL;DR

RBS warns “sell everything,” saying “it’s about the return of capital, not return on capital.” (What We’re Tracking Today)

Ittihadiya-appointed fact-finding committee lashes embattled corruption watchdog Hisham Genena. (Last Night’s Talk Shows, Speed Round)

House appoints committee chairs: Moselhy gets Economy, Mortada (yes, Mortada) gets Human Rights. (Speed Round)

Finance Ministry reportedly sets value-added tax cutoff at EGP 500k. (Speed Round)

Ethiopia is running down the clock on the Grand Ethiopian Renaissance Dam. (Speed Round)

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

WHAT WE’RE TRACKING TODAY

The sky is falling… The sky is falling… The U.K.’s RBS, which warned clients of trouble ahead of the 2008 global financial crisis, is again telling investors to “sell everything” as it advises them to brace for a “‘cataclysmic year’ and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel,” The Telegraph reports. “The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. ‘Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,’ it said in a client note.” China, it says, has set off a major correction “and it is going to snowball.” The only safe haven: high-quality bonds. The Telegraph appears to have been out first with the story, which has since been picked up by everyone from Business Insider (with additional quotes / commentary) to the Guardian.

The WSJ adds that plenty of other research houses and ratings agencies are feeling almost as bearish as the year gets underway. The piece has a solid list and adds that “the year will be spent focusing on how to exit positions that have benefited from long-running QE, including emerging markets, credit and equities.”

ON THE HORIZON

Chinese leader Xi Jinping kicks off a series of stops in the region next week. The president visits Cairo on 20-21 January and Tehran on 23 January, Tasnim news agency reports. The open question: Is KSA on the list? The Chinese Foreign Ministry has yet to confirm an itinerary for Xi’s regional trip, which was postponed in 2015.

The World Economic Forum holds its annual meeting in Davos on 20-23 January, running in tandem with Xi’s Middle East tour.

LAST NIGHT’S TALK SHOWS

A fact-finding commission’s conclusion that the Central Auditing Organization’s (CAO) report on corruption was exaggerated was hands down the topic du jour last night. (The CAO is one of the nation’s two most powerful anti-corruption watchdogs; we have more on this story here and in Speed Round, below.)

Lamis El Hadidy was on the attack. “Any number has to be backed up by evidence, and accusations like that can’t be simply thrown about without regard for their consequences,” said of CAO head Hisham Genena, who has alleged that corruption robbed the state of some EGP 600 bn since he assumed office.

Rania Badawy and Amr Adeeb were just as peeved on Al Kahera Al Youm. Adeeb became worked up as only he could, calling for Genena’s resignation. Badawy demanded that Genena be prosecuted if he cannot back his report up with evidence. “Why didn’t he tell Mohamed Morsi about the corruption that has existed since 1976?” she asked. Red herring, anyone?

“All the numbers are exaggerated,” Wael Oweida, a member of the fact-finding commission and self-identified “strategic management” expert, called El Hadidy to say. According to Oweida, the report lists the petroleum sector’s EGP 160 bn debt as an example of corruption, when in fact the debt payment was deferred by the foreign partners due to the economic challenges the nation has faced. “The numbers aren’t alarming, they’re actually funny,” he said.

Minister of Housing Mustafa Madbouly joined the party, calling El Hadidy to defend himself from the Genena report’s claim that he is still operating a private business: “I never had a private office in my life,” he told her.

Prime Holding CEO Mohamed Maher called in to say the report would have a negative impact on investor sentiment. “This is not disclosing information — this is scandalizing,” he added.

Ignore the shaky economy, sinking tourism numbers and the fact that the House of Representatives has over 300 laws to approve, Rep. Elhamy Agina had something far more important on his mind when he called El Hadidy last night: a parliamentary dress code. More specifically, Agina scolded female MPs for wearing boots and leather jackets: “There is a difference between going to the club or a wedding and going to the House of Representatives.” He then proposed a ban on male MPs greeting each other with a kiss hello. “I kiss my wife, my children, but why would I want another man to kiss me?”

In more mentally sound news, the House’s Deputy Speaker, Soliman Wahdan, told El Hadidy during a phone interview that 19 committees were formed yesterday and some have already started working on the laws the House has to approve.

Adeeb was still not over over the decision to stop airing parliamentary sessions live, accusing the Support Egypt bloc of masterminding the move. Legal and Parliamentary Affairs Minister Magdy El Agaty called in to cool Adeeb’s jets, saying that no official decision has yet been made on the matter.

Ibrahim Eissa was equally annoyed, saying the decision points to the House’s “fear of being scandalized […] and an old trick that will not work.”

Adeeb and Eissa, apparently on the same wavelength last night, both wondered where the electronic voting system that the state “spent millions on” went. Ask Genena — we bet he has an answer for you, Adeeb.

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SPEED ROUND

How does it feel to be under that bus, Mr. Genena? Hisham Genena and the Central Auditing Organization (CAO) are misleading the public and inflating the extent of corruption in Egypt, a fact-finding committee with a mandate from Ittihadiya said yesterday. The committee was formed by presidential decree on 26 December 2015 and was given two weeks to assess claims made by Genena and the CAO, one of the nation’s two top anti-corruption watchdogs. The committee’s findings were covered widely by the local press after they were announced during a televised press conference. They also dominated last night’s talk shows, as we report above. Inaccuracies were not the only problem, the committee alleges, saying it also questioned the policies and intentions of Genena’s institution, hinting that his corruption allegations were arrived at after some measure of consultation with “foreign entities.” The Ittihadiya committee’s arguments rest on five main points:

• The imprecise definition of corruption, along with multiple instances of double counting instances of alleged corruption.
• The scope of Genena’s analysis, with the committee accusing him of using examples from “tens of years” ago.
• The CAO’s “deliberate” overlooking of issues raised and addressed in previous years.
• The issue of classification, with the committee refusing to categorize instances of delayed payments to IOCs, for example, as corruption.
• The fifth reservation was essentially a rephrasing of the first.

The assessment will now be sent to parliament for review. Genena’s first reaction was to rebuff the committee’s claims entirely, according to Al Ahram. “Corruption has amounted to EGP 600 bn” since he assumed his role as the head of the CAO, Genena insists, adding that a detailed response to each claim will be presented after 25 January. The extent to which this story has legs is yet to be seen, but we’ve been reporting on the clash between Ittihadiya and Genena since last fall.

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House of Reps appoints committee chairs. We’ll get the, uhm, ‘comedy’ out of the way first: Pillar of decency and all around humanitarian Mortada Mansour was chosen to chair the House Committee on Human Rights due to his “seniority,” Al Masry Al Youm reports. His most recent contribution to the cause was to threaten journalists with physical harm if they spoke out against “their masters in parliament.” Al Borsa has what it identifies as the full list of committee members here. Among others tapped to take a chair, according to AMAY (here and here) and Al Mal:

• Economy: Ali Moselhy, Mubarak-era head of Egypt Post and one-time minister of social solidarity
• Budget and Planning: Kamal Ahmed, who un-resigned yesterday
• Legislation: Bahaa Abu Shaka
• Foreign Affairs: Mohamed El Araby
• Secretary General: Ahmed Saa’d El Din

Finance Ministry sets value-added tax threshold, leaves other questions unanswered: Businesses earning more than EGP 500k per year will fall into the VAT system, a move meant to ensure that the tax burden falls squarely on the highest income bracket, Al Borsa quotes Mahmoud Ali, an advisor to the finance minister, as saying. The Finance Ministry had reportedly not made up its mind on this feature of the act, which we noted earlier this month. Businesses that don’t meet the requirement are still encouraged to register, but if they don’t, the government is, at worst, expected to lose only 3% of projected tax revenue from the VAT, according to Finance Minister Hany Dimian, who spoke at a conference on the tax yesterday.

Beat of war drums against import controls quiets down until after 25 January: The Federation of Egyptian Chambers of Commerce is planning to delay any “escalation” in its fight to reverse import restrictions until after 25 January, according to sources speaking to Al Mal. The decision follows a meeting on Tuesday of the chambers of commerce at which members expressed concern about potential protests around the fifth anniversary of 25 January. The chambers and other investor associations have been sounding the war drums on the CBE’s restrictions, including raising EGP deposits to cover imports and limits on USD deposits, in addition to the Trade Ministry’s new registry for import goods, which some have accused of being illegal.

Striking a balancing act between securing energy needs and eliminating fuel subsidies will take 10 years, Oil Minister Tarek El Molla said at an AmCham gathering. Reducing subsidies — a five- to six-year plan — will be married to a five-year plan to increase efficiency in energy use by 12%-15% to shave between USD 6 bn and USD8 bn per year off the government expenses, he adds. El Molla also says IOCs investments in Egypt’s oil and gas sector reached USD 7 bn in 2015. He spun a positive note on arrears owed to IOCs by praising Egypt’s “accomplishment in reducing” them to USD 3 bn, failing to note that they had increased from USD 2.7 bn last November.

Ethiopia might be running down the clock with the Grand Ethiopian Renaissance Dam, Al Monitor’s Ayah Aman suggests. The most recent discussions ended with the participants agreeing only “to keep trying to reach an agreement,” he writes. An anonymous Egyptian official tells Al Monitor that Egypt is “facing a great dilemma, since Ethiopia is insisting on continuing construction of the dam without taking any political pledge to comply with the studies’ recommendations, which may be difficult to implement after the dam is complete and operating.” Ethiopia has already rejected a host of Egyptian proposals, including one “to increase the number of lower water gates to secure a daily flow in the event of any malfunction or maintenance of the main gates or the associated tunnels.”

The Tahya Misr fund will unveil its financial position and outline its future plans at a press conference to be held in early February, Al Mal quotes its Managing Director Mohamed Ashmawy as saying. Ashmawy adds that Tahya Misr, which was inaugurated by President Abdel Fattah El Sisi, has already spent around EGP 400 mn on supporting the agricultural drainage networks in Alexandria and El Beheira. Earlier this week, the fund allocated EGP 167 mn to finance a youth project called The Taxi of Governorates, likely under the umbrella of the SME financing mandated by the president.

The CBE guarantees that foreign-currency-denominated deposits at Egyptian financial institutions belonging to Egyptians resident abroad are protected, says Immigration Minister Nabila Makram Ebeid. According to Al Borsa, the CBE will also guarantee the rights of Egyptian expats to repatriate their deposits without any restrictions. This follows a decision by the CBE to allow Egyptians abroad to repatriate any investments they inject in Egypt.

BP to cut 4,000 jobs in face of falling oil prices: BP will cut 4K jobs, with 600 of those from its North Sea operations, the BBC reported. The North Sea job cuts are set to take place over a two-year period, but it is unclear if the rest of the cuts will take place over the same timeframe. The piece notes the 70% collapse in oil prices necessitating layoffs across the industry. The cuts, however, do not seem to impact BP’s operations in Egypt, with the firm having purchased an additional stake in the West Nile Delta project, as we mentioned last month.

The longlist for the International Prize for Arabic Fiction (the Arabic Man Booker award) for 2016 was announced yesterday. Egypt and Palestine lead the nominations with three each. Egypt’s candidates are Ibrahim Farghali for “The Temple of Silken Fingers”, Mohamed Mansi Qandil for “The Black Brigade” and Mohamed Rabie for “Mercury.”

A suspected member of Daesh has killed 10 people and wounded 15 others in a suicide bombing at a central square in Istanbul yesterday, according to the Istanbul governor’s office, reports CNN. According to an unnamed Turkish official, at least nine German nationals were among the victims of the explosion, which went off at the Sultanahmet Square, the tourist hub where The Blue Mosque and Hagia Sophia are located. BBC reports the Turkish Prime Minister as saying: “We have determined that the perpetrator of the attack is a foreigner who is a member of Daesh.” Turkey’s Deputy Prime Minister Numan Kurtulmus said earlier: “It has been identified that the suicide bomber is Syrian and his connections are being investigated,” according to BBC.

A Turkish court moved to deport 12 Egyptian citizens arrested in Adana province, according to an Arabic statement from Egypt’s Foreign Affairs Ministry. The Egyptians were arrested attempting to cross into Syria to allegedly join Daesh, the AP reports. The MoFA’s statement makes no indication as to whether the Turkish court ruled on the family’s culpability.

US President Barack Obama delivered his final State of the Union address at 04:00 CLT, 9 pm ET. The video to the full address may be found here. The full planned text of the address was published before the live address here. Obama seemed to take an implicit jab at Republican frontrunner Donald Trump early on in the speech, saying “America has been through big changes before… Each time, there have been those who told us to fear the future; who claimed we could slam the brakes on change, promising to restore past glory if we just got some group or idea that was threatening America under control.” Obama posed four questions facing the United States’ future: how to give everyone a fair opportunity in the ‘new economy;’ how to make technology work for Americans, especially with regard to climate change; how to keep the United States safe and lead globally without becoming the world’s policeman; and how to make politics reflect the best rather than the worst in Americans.

Other international headlines this morning that either carry implications for Egypt or that are simply worth noting in brief:

• The UAE quashed yesterday Nigeria’s talk of an early OPEC meeting to revisit the cartel’s strategy, with UAE Energy Minister Suhail bin Mohammed al-Mazroui saying the “current OPEC strategy is working,” Reuters reports. OPEC’s next scheduled meeting is on 2 June.
• “U.S. Exports First Freely Traded Oil in 40 Years,” the WSJ notes this morning, saying, “two tankers filled with freely traded U.S. oil have pulled out of Texas ports in the past two weeks, with more shipments expected.”
• Shares of Saudi commercial real estate developer Al-Andalus begin trading on the Tadawul yesterday morning, the first listing in the Saudi real estate sector in six years. The listing raised c. SAR 378 mn. Riyad Capital was financial advisor, lead manager and bookrunner for the transaction. The prospectus for the offering is here (pdf).
• Picking up where we left off yesterday: The Saudi Arabian Monetary Agency (SAMA) said in a statement yesterday that “recently volatility in the USD / SAR forward market [is] due to the mispricing linked to market operators’ misperception about Saudi Arabia’s overall economic backdrop,” noting that it will defend the peg of SAR 3.75 to USD 1. Deutsche Bank agrees with SAMA, telling clients to “Stay away from the Saudi riyal peg trade,” Bloomberg adds.

SPOTLIGHT on the impact of last Monday’s CBE decisions

The banking community is still digesting far-reaching policy changes announced earlier this week, industry sources told Al Borsa is a run of stories yesterday.

Some 20 banks are expected to liquidate EGP 11.2 bn in money market funds as a result of the CBE’s decision to cap the sector’s allocation to the funds to 2.5% of their total deposits in local currency, down from 5%. Half of the EGP 11.2 bn will belong to NBE and Banque Misr, Al Borsa reports. This will cause a gradual 50% decline in fund size, says Ahmed Abu al Saad, Managing Director at Rasmala, which manages NBE’s second Export Development Fund.

Larger banks, including NBE, Banque Misr and CIB, are expected to be the hardest hit by the CBEs decision to reduce their single obligor limit, the maximum amount banks can lend to a single client, to 15% of their Tier-1 capital (from 20%). The newspaper notes that significant portions of their credit portfolio are concentrated in large-scale syndicated loans. As these loans have been primarily doled out to the petroleum, power and construction sectors, the new guidelines by the CBE are expected to negatively impact large-scale projects reliant on these loans, according to banking sources speaking to Al Borsa. The central bank expects the single obligor rule changes will both reduce concentration risk and free up funds that would allow the banks to lend more to SMEs.

On that front, Suez Canal Bank, Misr Iran Development Bank and the Housing and Development Bank have begun forming standalone SME financing departments. Among the larger banks, Banque Misr hopes to see its SME portfolio grow to 5% of total loans this year, from its current 3%, Al Borsa reports.

And even more bank regulations are on the way: The CBE has reportedly prohibited banks from extending retail loans with monthly installments exceeding 35% of the borrower’s net income, Daily News Egypt reports. The percentage has reached 50-60% at some banks, the CBE says, which greatly increases risk and could potentially harm portfolio quality in the medium term.

EGYPT IN THE NEWS

Human Rights Watch (HRW) published an article listing what it believes the new House of Representatives needs to tackle going forward titled, “New Parliament Should Fix Abusive Laws”. HRW Deputy Middle East and North Africa Director Nadim Houry says “Egypt’s new legislators should embrace their role as a check on the harsh powers the country’s leaders have wielded since 2013.” HRW are primarily referring to the Protest Act, the Military Courts Act, the Counterterrorism Act, the Foreign Funding Act and the Pretrial Detention Act, which were issued by decree since the ouster of former President Mohamed Morsi.

German magazine Spiegel has two German-language pieces on Foreign Minister Sameh Shoukry in light of his state visit to Berlin. One is a piece jokingly focused on how physically exhausted FM Shoukry must be in rushing from lengthy meetings in Riyadh, which the magazine speculates as being an emergency meeting to discuss Iran, followed by his trip to Berlin, in The indefatigable Mr. Shoukry. FM Shoukry also sat down for an interview with Spiegel (Read in German, paywall).

WORTH READING

Why Amazon’s Data Centers Are Hidden in Spy Country: “The fact that northern Virginia is home to major intelligence operations and to major nodes of network infrastructure isn’t exactly a sign of government conspiracy so much as a confluence of histories… Today, up to 70 percent of Internet traffic worldwide travels through this region… In 2012… startup DeepField estimated that on average, one-third of all daily Internet usage accesses a site running on AWS [Amazon Web Service, yes, that Amazon]… Amazon is the largest hosting company operating today, projected to exceed USD 8 bn this year alone… According to Amazon lore, few within the company really anticipated the scale and impact of the service when it launched—they were mostly trying to solve an internal company problem, namely speeding up deployment of new applications and services.” (Read in The Atlantic)

DIPLOMACY + FOREIGN TRADE

FM Shoukry meets with German National Security Adviser, Interior Minister and Bundestag majority leader: Foreign Minister Sameh Shoukry met with German National Security Adviser Dr. Christoph Heusgen on Monday, according to a brief statement by the MoFA. The readout indicates the two spoke on regional security issues, including Libya, Syria and the recent escalation of tensions between Iran and Saudi Arabia.

On Tuesday, FM Shoukry met with with the majority leader of the Bundestag, Volker Kauder, DNE reports, where again the two discussed the same regional issues. Further details on the meetings were scarce. Also on Tuesday, FM Shoukry met with German Minister of the Interior Thomas de Maizière, where the two reportedly discussed “efforts to combat terrorism,” and “issues of illegal immigration,” according to the MoFA. Also on the agenda: “Germany’s aspiration for further cooperation with Egypt in the field of security, in supporting the capacity of Egypt in the fight against terrorism, and in strengthening security measures at airports, which would significantly help expedite the return of German and Western tourism.” De Maizière will reportedly visit Egypt in March during a tour of the region.

Egypt’s political parties pander to North Koreans: On Friday, the Ministry of Foreign Affairs expressed concern over North Korea’s alleged hydrogen bomb test which took place last Wednesday, despite experts dismissing the claim, saying the resulting blast was too small to have originated from even a “miniature” hydrogen bomb, as the DPRK described it. The MoFA’s statement called the test “a new threat to the nuclear non-proliferation system,” saying further that “the persistence of such violations increases tensions, fuelling the nuclear arms race and instability in the Korean peninsula.” Just days later, the North Korean ambassador to Egypt, Pak Chun II, met with a number of Egyptian political parties who, unsatisfied with solely acting as sycophants here at home, embarked on an ambitious campaign to outsource their groveling to other nations. The head of Egypt’s Tayar Istiklal is quoted as saying that North Korea has not used the test to threaten anyone, which is easily falsified as the North Koreans specifically threatened to wipe out the United States in their statement. Ahmed Hassan, General Secretary of the Nasserist Party, decided to give everyone a history lesson about the first use of the A-bomb. (Watch in Arabic via DNE, running time: 2:11)

ENERGY

Dana Gas to cut costs, slash workforce by 40%
UAE-listed Dana Gas will cut its head office workforce by 40% and slash general and administrative costs by half between 2015 and early 2016, according to comments made by CEO Patrick Allman-Ward. The company will continue to invest in Egypt “and sees its production in the country increasing,” he said. Dana Gas produces 34,000 bbl of oil equivalent per day in Egypt, and its Balsam 1 and 2 fields in the Nile delta came on stream in 2015, Reuters notes. The Balsam 3 field will begin production in mid-2016, Bloomberg adds, also also noting that Dana Gas still awaits payment for USD 1.98 bn that it and two other energy companies were awarded in a dispute over development rights in Kurdistan.

Five fields to come on stream by 2021 with USD 35 bn in investments
The Oil Ministry is intensifying efforts with IOCs to begin production at newly discovered fields in the Mediterranean by 2021, says Oil Minister Tarek El Molla. The discoveries in the pipeline include Zohr, North Alexandria, Atol, Salamat and Phase 9B in the West Delta Concession. The total investment value of the projects is USD 35 bn and new discoveries will add an estimated 6 bcf daily when they reach full production capacity, he adds. (Read in Arabic)

INFRASTRUCTURE

Arab Contractors begin first phase of Cairo University area developments
Arab Contractors will begin the first phase of a project to develop the area surrounding Cairo University within the week, says Cairo Governorate Housing Authority head Ali Zein El Abideen. The phase will require EGP 268 mn in investments. The project, which includes three tunnels connecting the university to nearby main roads to alleviate traffic, carries a total cost of EGP 650 mn. The first phase covers a two-way tunnel connecting the Corniche to Al Nahda Square. The development project is designed by ACE Consulting Engineers. (Read in Arabic)

EGP 130 mn allocated for El Tor port development
Some EGP 130 mn has been allocated to develop the El Tor port, International Cooperation Minister Sahar Nasr announces during a visit to South Sinai on Tuesday with a delegation of Arab development funds, according to Al Shorouk. The delegation arrived on Sunday and have pledged to loan a combined USD 1.5 bn to Egypt for Sinai-based projects. Under the auspices of the ministry and the South Sinai Governorate, the Al Tor project is expected to be financed by the funds. Additionally, Nasr and the delegation reps inspected the site of a university currently under construction in Kamin El Sahel and several other development sites. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

HyperOne begins building three new branches this year
Egyptian retail chain HyperOne will begin building three new branches at an investment cost of EGP 3 bn this year, according to board member Ahmed El Bostany. The branches will be built in Al Shorouk, Badr and Assiut, and the Sulaimaniya branch is scheduled to open this year at a total cost of EGP 1 bn, he adds. The company is currently developing the branches affiliated with the Food Industries Holding Company at a total cost of EGP 5 mn, which includes equipment and training, adds El Bostany. (Read in Arabic)

HEALTH + EDUCATION

10 drugs account for 7% of sales in Egypt — IMS Health
Only 10 drugs made up 7% of market sales in Egypt during the first 11 months of 2015, Al Borsa cites a report by IMS Health as saying. GSK’s antibiotic Augmentin generated the largest volume of sales revenues at EGP 333 mn as of November 2015. Novartis’ anti-inflammatory Cataflam came second, with revenues worth EGP 259 mn. (Read in Arabic)

REAL ESTATE + HOUSING

Palm Hills signs planning agreement with SWA Group
Palm Hills Developments signed an agreement with planning and urban design firm SWA Group to develop the master plan for a 2.1 mn sqm co-development project with NUCA, according to an emailed statement from the company. The press release did not note the financial value of the agreement.

TOURISM

Czech Republic denies raising the level of its travel warning to Egypt
The Czech Republic’s embassy in Cairo denied reports that it amended its travel advice to Egypt following the attack on tourists at the Bella Vista hotel in Hurghada, according to Al Ahram. The embassy confirmed that it was merely reaffirming its announcement that travellers to Egypt should exercise caution. (Read in Arabic)

Target tourists from Ukraine, says South Sinai Investors Association member
Egyptian tourism should look to attract Ukrainian tourists to soften the blow following the Metrojet plane crash and the subsequent travel bans to Egypt, says South Sinai Investors Association board member Atef Abd El Latif. Ukraine did not issue a travel ban on Egypt, Abd El Latif notes. “If we give them special incentives like exempting them from obtaining visas for six months, we can increase Ukrainian tourists to around 1 mn,” he says. 450k Ukrainian tourists came to Egypt in 2014, making the country the third-largest exporter of tourists to Egypt. (Read in Arabic)

TELECOMS + ICT

Chamber of Commerce urges ICT Minister to reverse decision to raise fees on hotlines
The Telecoms Division of the Chamber of Commerce sent a memo to ICT Minister Yasser El Qady urging him to reconsider an NTRA decision to raise fees on having short-digit hotline numbers to EGP 30,000 annually from a one-off fee of EGP 600, Al Borsa reports. The division’s head Ehab Saeed called the decision, which would affect 2,000 companies operating in a variety of sectors, excessive and unnecessary. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

CPA to develop auto market strategy with manufacturers
The Consumer Protection Agency (CPA) held a meeting with the Egyptian Automotive Manufacturers Association to develop a strategy to regulate the auto market industry in favor of the consumer, says CPA head Atef Yacoub. The CPA chief stressed the importance of applying a high standard of “government technical reference”, applying the “10 Egyptian specifications” to imported cars and exempting car security parts from customs. (Read)

EgyptAir owes EGPC EGP 7 bn
EgyptAir’s dues to EGPC have increased to EGP 7 bn as of last November, up from EGP 5.5 bn in mid-2015, an official from EGPC tells Al Borsa. The increase is due to delayed payments for current fuel shipments worth EGP 400-500 mn per month and EGP 25 mn monthly installments on older loans, the official adds. Occupancy rates on flights from Europe are down to 50%, sources within EgyptAir tell Al Borsa, but they are expected to increase to 70% once flight bans from Britain and Russia are lifted. (Read in Arabic)

BANKING + FINANCE

Caps on USD transfers to China from Egypt via Western Union lowered
Daily limits on USD transfers to China from Egypt via Western Union were lowered to USD 3,000 from USD 7,000 previously to limit uncontrolled importing activities and stop importers from bypassing capital controls, a source tells Reuters. “It is in the interest of the banks to transfer funds and benefit from the commission, but they discovered that the transfers to China were made to import products and weren’t regular transfers,” the source explains. Caps on transfers to all other countries were left unchanged at USD 7,000 per day. Western Union provides its transfer service in Egypt through Bank of Alexandria and Arab African International Bank. (Read in English or in Arabic)

Raya Holding, Sphinx to sell stakes in Rameda
Raya Holding Company and Sphinx Private Equity Management have agreed in principle to sell their respective 30% and 17% stakes in pharma company Rameda,Al Mal reports. Raya Holding confirmed to the EGX its intent to sell its stake for EGP 117.3 mn but says the agreement is pending the results of the final negotiation processes and regulatory approvals. Pharos is the sell-side advisor on the transaction and Al Kamel Law Office is the legal advisor. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

Coal usage is in line with environmental standards, Environment Minister says in response to lawsuit
Environment Minister Khaled Fahmy is not worried about a lawsuit filed by residents of the area surrounding Titan-owned Alexandria Portland Cement’s plant for its use of coal, Daily News Egypt reports. The minister “welcomes any lawsuit” filed against him, he told DNE by phone. “Coal use is applied with strict measures, and the ministry strives to enforce those measures on all factories,” says Fahmy. The ministry claims to have sent a committee to the area to examine the issue. The committee’s findings? The pollution was a result of “increased truck traffic on unpaved roads” and not from the plant. Fahmy adds that the ministry had offered the families alternatives to leave the area, but they refused. As we noted yesterday, the previous version of the Environmental Act governing coal usage barred the industrial use of coal without exception, but the clause was reversed by decree. (Read)

LEGISLATION + POLICY

Housing Ministry drafts new sanitation bill
The Housing Ministry has prepared a draft of the Water and Sanitation Regulation Bill ahead of discussing it with the cabinet and presenting it to parliament, according to Al Borsa. The most notable clause bans connections to the national water grid by means other than through the service provider. The bill is meant to regulate the infrastructure market and invite new investments by creating clear guidelines concerning the relationship between the receiver and service provider, says Housing Minister Mustafa Madbouly. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Alexandrian MP resigns, House rejects it
Alexandrian MP Kamal Ahmed submitted yesterday his resignation from the House of Representatives, citing health concerns, Al Masry Al Youm reports. Speaker Ali Abdel Aal rejected Ahmed’s resignation later in the day. To add further confusion, an unnamed source was reported as saying that Ahmed rescinded the resignation anyway. Ahmed refused to make a statement following his on-again-off-again resignation. Fellow Alexandrian MP Mohamed Farag Amer tells Al Shorouk that 40 MPs called on the speaker of the House to freeze Ahmed’s resignation. The newspaper adds that Ahmed’s main qualm — aside from his health, it seems — was the disorganization of the first parliamentary session, which he reportedly sees as “damaging to the image of the country.” Ahmed has since been appointed chairman of the House Committee on Budget and Planning.

The board of the General Authority for Free Zones and Investment (GAFI) decided to form working groups to formulate plans on how to better the investment climate at a meeting chaired by Investment Minister Ashraf Salman, Al Masry Al Youm reports. Discussions also explored the possibility of instituting investment zones with different benefits specific to the investor’s needs, says Salman, who felt the plan would somehow facilitate the ease of buying land and obtaining permits. The meeting, which included Head of the Federation of Egyptian Industries Mohamed El Sewedy, explored the deep frustrations within the business community and their objections to investment policy with regards to GAFI, the Investment Act, land tenders, industrial land development and investment incentives.

Environment Ministry considers topping up supply smart cards as an incentive to sort and collect waste
The Environment Ministry wants to top up supply smart cards to incentivize citizens to collect and sort waste, says Environment Minister Khaled Fahmy. The ministry’s Waste-Management Authority, which is launching a door-to-door waste collection program across the country, is seriously considering the strategy. The authority plans to subcontract individuals to sort trash and set a per-ton rate on trash sorted. Organic waste would then be reused in fertilizer manufacturing or converted to fuel for the cement industry. (Read in Arabic)

NATIONAL SECURITY

State of emergency in North Sinai extended three months
The president extended the state of emergency in North Sinai for another three months, beginning on 27 January, a decision published in the Official Gazette yesterday. (Read in Arabic)

ON YOUR WAY OUT

A train has been derailed in Giza by two explosions, Al Mal reports. No victims have been reported.

Internet licenses will be available for governorates in 1Q2016, says ICT Minister Yasser El Qady at a celebration held by the company that organized the Cairo ICT conference.

Is that fish we smell?: Muslim Brotherhood member El-Aal Al-Ashry (brother of former MP for the Freedom and Justice Party Gamal Al-Ashry) has been arrested in connection with the shooting outside the Three Pyramids Hotel last weekend. Daesh said they were behind the attack in an online statement. Officials claim Al-Ashry received orders from brotherhood leaders in Qatar to undertake “several terrorist operations” before the anniversary of 25 January.

JWT copywriter Eslam Hossam takes issue with Egyptian singers who sing in Arabic with Western tonal inflections. (Watch in Westernized Arabic, running time: 58 seconds)