Thursday, 25 September 2014

Enterprise, Issue 1

25 September, 2014
WHAT WE’RE TRACKING TODAY
  • El-Sisi seeks seeks rotating UN Security Council seat for Egypt in address to 69th UNGA: http://bit.ly/1rbZ23r
  • Emerging markets join the rest of the world looking ahead to impact of the sidelining of China’s current reformist central bank head, expected to take place next month.
  • Don’t Forget: Clocks fall back one hour at midnight tonight

MORNING MUST-VIEW

  • CBS This Morning released an excerpt from Charlie Rose’s interview with El-Sisi, the president’s first televised interview in America. Running time: 1 minute 51 seconds, https://www.youtube.com/watch?v=OSJHR4K3myI

ICYMI

  • Last week Al Arabiya columnist Hesham Melhim argued in Politico that the world is presently witnessing nothing less than the complete disintegration of Arab civilization, The Barbarians Within Our Gates: http://politi.co/1r9mNt0

The Overview

An excerpt of Egyptian President Abdel Fattah El-Sisi‘s interview with Charlie Rose is already making waves as viewers attempted to ascertain just what, if any assistance would be forthcoming from Egypt in strikes against ISIS. The deeper the other pockets of the region descend into chaos, the greater the confidence the president exudes in his uncompromising approach to Islamists and security.

At the UN Climate Summit, El-Sisi called on developed states to invest in renewables in the MENA region. the news came as Egypt set aside new land for solar projects and announced tax exemptions for the industry. Climate news and analysis site Responding to Climate Change provides a useful cheat-sheet as to the 7 areas where agreement has been reached at the UN Climate Summit.

Also making news this morning: China is apparently now Egypt’s largest trading partner, the EGP sags to a four-month low against the USD as economic growth spurs demand for the greenback, and low-income housing is back in the spotlight with USD 1 bn in backing from the World Bank.

The fight over Jordan’s Arab Bank financing of terrorism looks far from over as Jordan’s central bank said on Tuesday that it was confident the ability of Arab Bank, its leading lender, to defend itself against what it said was an “unjust” verdict after a ruling by a U.S. jury on Monday.

ENERGY, RENEWABLES & SUBSIDY REFORM
El-Sisi Calls on Developed Countries to Invest in Region’s Energy Projects
Ahram Online | Online – News | 23 Sep 2014

In his first speech in the US as Egypt’s president, Abdel-Fattah El-Sisi called on developed countries to invest in renewable energy projects in the Middle East to help the region shift to a more environmentally friendly business model. Speaking at the UN climate summit on Tuesdayin New York, El-Sisi linked regional environmental and economic conditions.

7 Areas of Climate Action at the UN Climate Summit
Responding to Climate Change | Online – Policy | 23 Sep 2014

Climate news and analysis site Responding to Climate Change summarizes the seven key issues where businesses, governments and nonprofits have pledged action at the UN Climate Summit: food security, forests, finance, short-lived pollutants, renewable energy, sustainable transport and cities.

Government Plans to Issue Tenders for 2 Million Feddans for Renewable Energy Projects
Al Mal | Print – Front Page | 24 Sep 2014

The government plans to issue offer 2 million feddans to solar and wind energy investors. The lands will be offered in long-term leases and are hoped to be used to generate 35 gigawatts of electricity. Most of the lands are located in the Gulf of Suez, Northeast of the Nile Delta and Aswan. The government is taking several measures to increase the share of renewable energy to 20% of power produced by 2020.

Sales Taxes and Custom Fees Waived for Renewable Energy Components
Al Borsa | Online – Energy | 23 Sep 2014

A new draft law is set to encourage the use of alternative fuels to generate electricity, exempting components of renewable energy facilities from sales taxes and custom fees. However, to be exempt, each facility must be able to generate at least 500 kilowatts of electricity using renewable sources. The law also forces transportation companies to compensate renewable energy producers for unused energy.

OIL & GAS
Investment in Petroleum Sector Linked to Egypt’s Political Orientation: Former Minister
Daily News Egypt | Online – Interviews | 23 Sep 2014

In a long read, former petroleum minister Osama Kamal and former EGPC vice president Medhat Youssef sat down to speak with Daily News Egypt about the problems in Egypt’s petroleum industry. They stated that the petroleum sector faces many problems that have accumulated over the years, including an exacerbation of debts owed to foreign partners and poor technical conditions for many refiners as a result of outdated facilities and decreasing oil and gas production rates. A renewal of foreign companies injecting investments into the petroleum sector is linked to Egypt’s political situation, as well as the government’s orientation, said Osama Kamal former minister of petroleum. He commented on the fact that some foreign partners working in Egypt have sold their shares in oil fields affiliated with other companies, explaining that this is not considered an exit from investing in the petroleum sector. Youssef said that Egyptian refineries with simple technology include El Nasr, Cairo, and Assiut, which have suffered losses of up to USD 5-7 per barrel. These refineries do not achieve profits for fuel oil production in light of a decline in fuel oil prices when compared to those of crude oil, Youssef said. In a related context, Youssef said that Suez Oil Processing, Amreya, and Alexandria Petroleum Company are quickly becoming obsolete, and must be completely updated in terms of infrastructure in order to avoid long-term losses. Simple refineries are also suffering financially, although not to the same extent, as losses per barrel are equivalent to USD 3 – USD 5 according to Youssef. MIDOR is the only facility in Egypt that rivals global deep conversion plants, as the only refinery achieving large profits in Egypt. Youssef requested that the government purchase crude oil at global prices in order to sell production on the same global basis.

BASIC MATERIALS
Al Ezz Dekheila Steel About to Reach an Agreement on Resupplying Natural Gas
Arab Finance | Online – News | 24 Sep 2014

Al Ezz Dekheila Steel (IRAX) said on Wednesday that its about to reach an agreement with Egyptian Natural Gas Holding Company (EGAS) to resume supplying its plants with natural gas starting from second week of October. The firm said that this would lead to the resumption of regular plant operations. However, the full impact cannot be determined until 30 September 2014 after closing third-quarter financial results.

HOUSING & REAL ESTATE
World Bank to Offer Egypt USD 1.5 bln for Housing, Sanitation Projects
Arab Finance | Online – News | 24 Sep 2014

World Bank officials have agreed to grant a USD 1.5 billion concessional loan to the Ministry of Housing, Utilities and Urban Communities to fund low-income housing and sanitation infrastructure at the village level in the Delta and part of Sinai, Housing Minister Mostafa Madbouly said on Tuesday. The announcement came after Madbouly’s visit to the United States this week to meet with World Bank officials, a Tuesday statement from the ministry said. Madbouly stated that Egypt will obtain a concessional loan with the value of USD 500 million for the social housing program, over several years, with around USD 100-120 million annual installments. The World Bank will also participate in a project involving the establishment of sanitation networks for 760 contaminated villages in northern Egypt; the project is valued at USD 1bn and will be implemented over a period of three years.

Lafarge Egypt Weighs in on Low-Income Housing
Zawya | Online – News | 24 Sep 2014

As part of its commitment to the Egyptian market and efforts to promote its “Build Egypt 2030” campaign, Lafarge was one of this year’s sponsors for the Euromoney Egypt 2014 conference. Attended by a select group of government officials, company executives, and industry leaders, the two day event addressed a number of important economic issues. Lafarge participated in a session which focused on housing, construction, and real estate, where panelists discussed the importance of real estate financing, the use of technology to build green cities, and the importance of using environmentally friendly materials. Speakers in the session agreed that the action of the Egyptian government is encouraging the real estate sector growth, specifically in the social housing segment. Mansi highlighted great opportunities for the private sector to invest in building social houses to help the government meet the increasing demand. He noted that demand for social housing in Egypt is greater than demand for expensive luxury houses as the latter is currently in the surplus numbers and growing. In 2011, LaSalle estimated that the shortage of affordable housing in Egypt is approximately 1.5 million units.

EGYPT ECONOMICS + POLITICS
Committee Makes Recommendations to Solve 20 Land and Tax Disputes: Justice Minister
Daily News Egypt | Online – Politics | 23 Sep 2014

The Dispute Settlement Committee has put forth solutions for 20 disputes between investors and government agencies concerning lands and tax breaks, according to Minister of Justice Mahfouz Saber. “The recommendations made by the committee will be presented to the cabinet in the coming session so that they may make a final decision regarding the settlements according to the law of investment guarantees and incentives,” said Saber.

Egypt Says No Restrictions on Turkish, Qatari Investments
Mubasher English edition | Online – News | 23 Sep 2014

Egypt’s Minister of Investment Ashraf Salman said the government will not impose restrictions on the Turkish and Qatari investments in Egypt. Salman added that Egypt targets local direct investments worth EGP 330 billion in FY14/15 and foreign direct investments of USD 10 billion, to achieve a growth rate of 3.5% compared with 2.1% in the previous year. The minister also indicated that the global companies such as Coca-Cola and Pepsi are concerned about the added-value tax, but the Egyptian officials are still studying this tax and its impact on the community.

China Egypt’s Biggest Trade Partner?
Arab Finance | Online – News | 24 Sep 2014

The Director General of China Foreign Trade Centre Wang Zhiping said trade relations between Egypt and China are witnessing growth in the recent years, Al Ahram Gate reported. “China became the favorite destination for Egyptian important” said Zhiping. The statements came in a press conference on Tuesday held by the China Foreign Trade Centre in cooperation with the Chinese embassy to launch canton fair. The economic and trade relation between the two countries saw a noticeable growth in the last 3 years, and China became the number one trade partner for Egypt in 2012 with a USD 9.5 billion trade size, up from USD 8.8 billion in 2011, he added. In 2013, Trade rose to USD 10.2 billion, which represents 8% of the total Egyptian trade, Zhiping revealed. Trade between the two countries is expected to exceed what was achieved in 2013, due to the increase in trade in May till July 2014 according to Chinese customs data.

Egypt Business Startups Grow to 719 Companies in August: GAFI
Arab Finance | Online – News | 23 Sep 2014

Egypt’s business startups grew to 719 companies in August, up from 477 companies y-o-y. The data, published in a report by the General Authority for Investment and Free Zones (GAFI) showed a growth of 242 companies and a total investments worth EGP 1.41 billion which created 5752 new jobs. Companies established in the industrial sector was 193, Service sector were 294, 102 in construction,  57 in telecommunication and information technology, 52 in agriculture, 20 in tourism, and 1 company in the finance sector, according to the report.

EGP 7 Billion Expected from Phase 1 of Unified Telecommunications License
Al Aswaq | Online – Markets | 23 Sep 2014

The National Telecommunications Regulatory Authority (NTRA) expects to receive EGP 6.9 billion in exchange for providing unified communications licenses. The Head of NTRA explained that, under a unified license, companies such as Mobinil, Vodafone Egypt and Etisalat Egypt will be able to provide landlines, internet services and international calling, while Telecom Egypt will be able to offer mobile services.

Egyptian Economist: Inflation Nearing 40-Year Levels
Al Aswaq | Online – Markets | 23 Sep 2014

A prominent economist [who goes unnamed in the article] said he expects inflation rates to return to levels not seen since the 1970s. Many experts are fearful that increased government spending on development and mega projects, increased fuel prices and stable interest rates will enhance demand levels and put pressure on prices. Additionally, taxes on various products will also add to price pressures.

Egypt Pound Drops to Four-Month Low as Growth Spurs Dollar Need
Bloomberg Businessweek | Online – News | 23 Sep 2014

The Egyptian pound weakened to the lowest level in almost four months in the black market as companies taking advantage of an improving economy demand more dollars for imports. The currency retreated in unregulated trading to EGP 7.442 a dollar, according to the average of four money changers surveyed by Bloomberg today. That’s the lowest level since May and represents a 4.1% premium to buy dollars over the interbank rate, which is managed by the central bank. The pound’s official exchange rate is EGP 7.1501, unchanged against the dollar since 29 May.

Egypt Asks U.S. to Expand its War on Terror; Sisi States Egypt Will Not Participate Militarily
Al Masry Al Youm and CBS This Morning | Online – News | 23 – 24 Sep 2014

President Abdel Fattah El-Sisi said Egypt supports the US in its war against ISIS, adding that he would like the war on terror to encompass all militant groups in the region. However, El-Sisi told The Wall Street Journal that, while Egypt supported the US, it would not get involved militarily in the war against ISIS. Meanwhile, the Egyptian president met with former Secretaries of State Henry Kissinger and Madeline Albright, former National Security Advisor Brent Scowcroft and several members of Congress, as reported by Al Masry Al Youm. This statement was echoed in what appears to be part of a longer interview with Charlie Rose. CBS This Morning posted an excerpt of the interview where Charlie Rose specifically asks President Sisi if Egypt will contribute its own fighter jets to the ISIS offensive. Sisi asks in return if the United States needs Egypt’s help, to which Rose replies in the affirmative so that the war does not appear to be exclusively America versus Muslims. Sisi agrees with the sentiment, and replies that if symbolism is what is needed, Egypt’s endorsement and involvement in the coalition in ISIS is enough.

Egypt Takes Over New York City
Egyptian Streets | Online – Tourism | 23 Sep 2014

A newly launched travel campaign in the Big Apple has seen Egypt’s Pyramids take over the streets of New York City. From Times Square to buses and the subway, large advertisements declaring “The New Egypt,” and “Peace, Prosperity and Growth” feature prominently across the city. The campaign appears to coincide with Egyptian President Abdel Fattah Al-Sisi’s visit to the United Nations to attend the 69th Session of the General Assembly.

INTERNATIONAL
Jordan Cenbank Says Fully Backs Arab Bank, Confident in its Compliance
Reuters | Online – News | 23 Sep 2014

Jordan’s central bank said on Tuesday it was confident of Arab Bank, its leading lender, and its ability to defend itself against what it said was an “unjust” verdict after a ruling by a U.S. jury on Monday. The ruling found the bank liable for giving material support to Hamas and said it must compensate victims of two dozen attacks attributed to the Islamic militant group in Israel and the Palestinian territories.

All Eyes On Kenya: The Next Big Oil Exporter
Oil Price | Online – News | 23 Sep 2014

Not even the specter of a spillover of Islamic extremism from Somalia can dampen the atmosphere in Kenya, where commercial oil production is expected to begin in 2016 and discovery after discovery has made this the hottest and fastest-paced hydrocarbon scene on the continent. When it comes to new oil and gas frontiers, today it’s all about Africa. And more specifically, it’s all about the eastern coast, with Kenya the clear darling–not just because it’s outpacing neighboring Uganda by leaps and bounds, but also because despite some political instability hiccups and the threat of militant al-Shabaab, it’s still one of the safest venues in the region.

OTHER NEWS OF NOTE
China Considers Replacing Central Bank Head, Party Officials Say
The Wall Street Journal | Online – China News | 24 Sep 2014

China’s long-serving central banker Zhou Xiaochuan —the face of the Chinese economy to markets globally—may be swept out of office. Chinese leader Xi Jinping is considering replacing Mr. Zhou, say party officials, as part of a wider personnel reshuffle that also comes after internal battles over economic reforms. The discussions occur as Mr. Xi, now two years in office, tries to place more allies into top positions in the government, military and Communist Party, according to the officials with knowledge of the plans. The personnel shifts are expected around a major party conclave to be held next month, the officials said, while cautioning that no final decision about Mr. Zhou has been made. The top contender to succeed Mr. Zhou at the People’s Bank of China is Guo Shuqing, a former banker and top securities regulator who is currently governor of Shandong, a prosperous eastern province, the officials said. President Xi named Mr. Zhou to a third term in March 2013, despite Mr. Zhou having passed the retirement age of 65 for senior Chinese officials. Over the past few months, Mr. Zhou has continued to press for market reforms, including liberalizing interest rates. The Chinese leadership, meanwhile, has become concerned that reforms now will add another burden on an economy that is struggling to meet the government’s target of 7.5% annual growth. Removing Mr. Zhou “could suggest a subtle shift in the balance of power between reformist and reactionary forces, with the momentum for reforms being eroded by the loss of growth momentum in the economy,” said Eswar Prasad, a Cornell University China expert.

BEST OF THE INTERNET
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YouTube

Two days ago, former Alaskan television news reporter quit her job live on television after revealing herself to be the owner of a medical marijuana store. In the space of 2 days the short video amassed over 10 million views. Running time: 34 seconds, profane language – viewer discretion advised: https://www.youtube.com/watch?v=rYcSqIuqkz4

CALENDAR
 25 September 2014, ‘round about midnight: Clocks fall back one hour as daylight savings time ends in Egypt.

29-30 September 2014: Al-Mal / GTM 10th Money & Finance Conference, at which the ministers of finance, investment, transportation, communications, tourism, interior, supply and social solidarity are slated to give speeches.  Venue: Four Seasons Nile Plaza, Garden City.

2 October 2014: GB Auto (AUTO on the EGX) ORdinary General Meeting. Venue: Company headquarters in Abu Rawash at 8:30am.

21-22 October 2014: MENA Mining Show 2014, Dubai

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2018 Enterprise Ventures LLC.