El Sisi to meet Clinton, Trump in New York today

GASC wants to buy wheat — from just about anyone. State wheat buyer GASC is floating a tender to import wheat today, Supply Minister Mohamed Ali Elsheikh, Al Mal reports. He said the tender is for wheat “of any origin,” removing the restriction that Egypt source cargoes only from one of the 13 “approved” countries of origin. Elsheikh did not specify the size of the tender. Traders speaking to Al Borsa were skeptical that GASC would receive any offers under the current zero tolerance policy on ergot, adding that the risk of rejection upon inspection for ergot is enough to turn away any potential shipments. The tender is for delivery between 16-26 October, Reuters’ Arabic service says. GASC’s last wheat import tender was on Friday and closed with no offers.

El Sisi to meet Trump, Clinton: President Abdel Fattah El Sisi is scheduled to meet with US presidential candidates Donald Trump in New York today, Reuters reports, citing Walid Phares, “a foreign policy advisor to Trump.” Hillary Clinton’s campaign had announced last week that she would meet El Sisi, who is in NYC for the 71st UN General Assembly Meeting. The story leads the front page of state-owned Al Ahram today. The Associated Press’s Hamza Hendawi writes that “Authorities in Egypt are pulling out all the stops to ensure that President Abdel-Fattah El-Sissi’s visit to New York for the U.N. General Assembly is a diplomatic success despite growing criticism of the country’s human rights record under his rule.” El Sisi arrived in New York yesterday and has already met with Saudi Crown Prince Muhammad bin Nayef, Youm7 reports. The president stopped in Venezuela on the way to New York for a meeting of theNon-Aligned Movement (yes, it still exists…). Al Ahram has a full transcript of the president’s remarks.

(That Trump advisor, Phares, claims to have been in Egypt recently for meetings with Sheikh Al Azhar and the “religious affairs” minister — we’re presuming he means the Minister of Awqaf.)

The two-day Euromoney Egypt conference, held at the Semiramis Intercontinental, kicks off this morning. Finance Minister Amr El Garhy will deliver the keynote this morning starting at 9:10am, while International Cooperation Minister Sahar Nasr will be on stage for a “conversation with Euromoney” immediately after El Garhy’s remarks wrap at 9:50am. Tuesday gets underway when Trade and Industry Minister Tarek Kabil takes the stage for a 40-minute chat starting at 9am. The latest agenda (pdf) does not include Prime Minister Sherif Ismail, who was originally scheduled to speak tomorrow. Also off the list: Investment Minister Dalia Khorshid.

Arqaam Capital’s MENA Investors Conference 2016 gets underway today at the Park Hyatt Hotel in Dubai; Deputy Finance Minister Ahmed Kouchouk will give a keynote. Also this morning: Bank of America Merrill Lynch will hold its Global Consumer and Retail Conference in London.

Public service announcement: You’re on the hook for VAT for any invoice issued on or after 8 September. Call your auditor and your advisory firm. The VAT has been the law of land since it was published on the Official Gazette on 8 September, a copy of which ran on Al Borsa. Today. Advertising is now VAT-exempt: The list of goods and services exempt from the VAT has risen to 57 from the original list of 56 approved by the House of Representatives with the addition of advertising yesterday. The Finance Ministry has also released the new model tax return filings form

Shameless iSheep video of the day: We’ll blather on about the iPhone 7 / 7 Plus in the Weekend Edition this coming Friday, but in the meantime: Apple’s released three videos yesterday promoting the device. They’re all good, but one is absolutely killer. (watch, runtime: 0:31).

What about first Emmy for you, he3? What about that. Big congratulations are in order for Egyptian-American actor Rami Malek, who won his first Emmy for Outstanding Lead Actor in a Drama Series for his role in the hit show Mr. Robot at last night’s 68th annual Primetime Emmy Awards. We’d first noted the television series, headed by Egyptian-American executive producer Sam Esmail, as our Worth Watching in our 6 July 2015 issue, about a week and a half after the series premiered. Esmail had said at the time that the inspiration for the show was in part from his “personal experience with the Arab Spring, specifically in Egypt.” Watch Rami Malek accept his Emmy award from last night’s ceremony. The young woman in the necklace in the audience filming him is his cousin. Forgive the video quality. (Watch, running time: 1:34) (Warning: The video could disappear at any time due to copyright restrictions, but it’s worth the risk to give the link a tap.)

GERD contract this week? Irrigation ministers from Egypt, Ethiopia, and Sudan are reportedly set to sign contracts with French consultancy firms BRL and Artelia for impact studies on the Ethiopian Grand Renaissance Dam during their two-day trilateral summit in Khartoum, which gets underway today, Ahram Online reported citing state news agency MENA. Of course, the Ethiopians have never paused construction as a sign of good faith and announced just last Saturday intentions to raise an additional c.USD 58 mn for the dam’s construction in the current fiscal year, the Ethiopian Herald reported, primarily through their lottery, bond sales and proceeds from live music and sporting events.

Interest rate watch: The US Federal Reserve’s FOMC will set interest rates on Wednesday; conventional wisdom seems to be for a hike in December. The Central Bank of Egypt will set interest rates on Thursday.

4G decision day: 4G decision day: Thursday is the deadline for existing mobile network operators to accept final terms for 4G mobile broadband network licenses.

Learn more about the New Administrative Capital: N Gage Consulting will hold a workshop (agenda) on the New Administrative Capital, also on Thursday.

El Garhy: We have the funding the IMF wants, facility approval by 9 October: Finance Minister Amr El Garhy confirmed that Egypt has lined up the USD 6 bn in funding required to release the first tranche of the USD 12 bn IMF facility. The executive board of the International Monetary Fund should approve the loan either at the end of September or following its annual meeting, which will take place between 7-9 October, he tells Al Mal. IMF Director of Communications Gerry Rice had said last Thursday that talks that will see China and Saudi Arabia provide Egypt with additional funding took place on the sidelines of the G20 summit, Al Masry Al Youm reports.

The Agriculture Ministry, having put us in the jackpot in the first place, has established a “high-level” committee to try to patch things up with Russia, the Ministry announced yesterday, Reuters reports. As we noted yesterday, Egypt’s rejection of a Russian wheat shipment for failing to meet Egypt’s zero ergot policy saw Moscow retaliate with a ban on import of Egyptian fruit and vegetables for “sanitary” reasons. The Agriculture Ministry committee will meet with Russia’s ambassador in Cairo — who has already met Trade and Industry Minister Tarek Kabil — to discuss the Russian import ban and to "avoid any obstacles" to solving the issue. Reuters notes that “Moscow has a history of using threats and limiting imports in trade disputes, but Cairo’s policy over the ergot fungus has created a headache for all of Egypt’s wheat suppliers, who say guaranteeing zero ergot in shipments is impossible.” Egyptian technical committee, which will include staff from the agriculture and trade ministries and the head of the Agriculture Export Council Abdel Hamid El Damardash, will visit Moscow on 26 September to discuss Moscow’s ban, the council’s former head Ali Eissa said yesterday.

This thing has the potential to snowball: Egyptian-Russian Business Council chief Shamel Mikhail Orlov is already escalating it to the head-of-state level, calling for Vladimir Putin and Abdel Fattah El Sisi to discuss the standoff. Orlov is also calling for the creation of a joint Russian-Egyptian committee to inspect the quality Egyptian produce exports, Al Borsa reports.

Newly-appointed Supply Minister Mohamed Ali Elsheikh sacked the Chairman of the General Company for Silos and Storage (GCSS) and the head of the Internal Trade Development Agency, Reuters reported yesterday. Replacements have yet to be announced. While the ministry’s official line was that move was taken to inject new blood, the GCSS and its former head Mahmoud Abdel Aziz have been front and center of the scandal that drove former minister Khaled Hanafy to resign. The GCSS has been attacked by the House of Representatives committee investigating allegations of fraud in the 2016 wheat harvest, saying the company relied on the private sector extensively and contracted the private silos it blames for the alleged fraud. The GCSS also failed to launch phase one of the Blumberg Grain shounas program.

MNOs and the government have so far failed to reach agreement on how mobile recharge cards should be subject to the value-added tax. The Finance Ministry, mobile network operators and the National Telecommunications Regulatory Authority (NTRA) have been locked in on how the VAT will be reflected in the pricing of recharge cards for mobile phones. Yesterday’s meeting failed to reach an agreement on the total VAT rate on the cards, how much the prices of the cards will increase as a result of the VAT, and the methods the MNOs will use to implement the price hikes, AMAY reports. As the cards are subject to a 13% VAT as well as an 8% fixed tax applied on “non-essential goods,” the price increase should not exceed 6%, or the difference between the old 15% sales tax and the 21% VAT framework, the Tax Authority chief Abdel Moneim Mattar said. Discounts on production inputs in the VAT could also see that tax fall to 18%, said Deputy Finance Minister Amr El Monayer.

Sticking points between the government and MNOs appear to be the operators’ insistence on making the end user absorb the full cost of implementing the VAT, while the NTRA wants the MNOs to carry at least part of the burden. Operators and the government also discussed how to prevent price gouging by retailers..

Arbitration for phase two of feed-in tariff (FiT) projects will be seated outside of Egypt, while the venue for arbitration hearings will be in Egypt. Setting aside the legalese, we take that to mean that the international arbitrator will have the final ruling on the case and will be subject to the laws of the location in which it is seated. The venue — Cairo — is merely the setting for procedures of the case, according to a note clarifying the rules of the FiT phase two program sent to investors by the Egyptian Electricity Holding Company. This flies in the face of previous reports that international arbitration will be invoked only if one party should wish to appeal the results of arbitration in Cairo. Also not mentioned when the FiT phase II rules were first announced: Projects in the second phase will be subject to a foreign funding after all, but it will fall to 70% — that’s not far off the highly contentious 85% figure mandated for phase one projects. Companies that want to switch solar projects to phase two have until 28 October 2017 to reach financial close. The deadline for all phase one companies to decide whether to convert to phase two is 7 October. Shahid Law Firm has published the highlights of the note in English.

Cement giant LafargeHolcim is considering withdrawing from “several markets,” Chairman Beat Hess said, in an effort to make its merger a success, according to Reuters. Lafarge merged with Switzerland’s Holcim last year to form the world’s largest cement group. "We will be present in less countries for sure … Either we succeed in strengthening these operations through targeted investments or we have to see whether other owners could do better,” Hess reportedly said without mentioning where the company might exit. Lafarge has been an investor in Egypt since 2008, employing about 2,500 people, according to the company website.

In other news involving Lafarge: The Egyptian Council of State’s Tax Commission has recommended appealing a decision by the Tax Authority’s Appeals Committee to exempt Orascom Construction from paying back taxes on its USD 12.8 bn sale of its shares in Orascom Cement to Lafarge back in 2007, Al Borsa reports. The commission is recommending that Orascom Construction pay the EGP 7.1 bn it settled with the Tax Authority back in 2014.

The Suez Canal Economic Zone (SCZone) is going forward with plans announced last month to make companies pay electricity and water utilities bills in USD to recoup the FX it needs to service its debts, SCZone chief Ahmed Darwish told Al Borsa. The CBE-sanctioned plan will be enforced on companies exporting 70% or more of their goods and will exempt those that produce for domestic consumption, Darwish added. The SCZone wants to amend already-signed contracts to include the provision. Darwish claims that companies in the zone have accepted the change, despite reports we noted last month that many have refused to settle utilities in USD. The CBE has assured the foreign firms that they will be able to repatriate USD profits.

The EGP weakened in the parallel market yesterday, with greenbacks trading at EGP 12.78 per USD 1, according to Al Borsa, sliding from the average rate of EGP 12.60 recorded last week. A spike in demand for USD is typical following the Eid El Adha holidays, traders tell the newspaper.

Qalaa Holdings is reportedly looking for buyers for the 85% stake it controls in Kenya’s Rift Valley Railways (RVR), according to Daily Nation. “Sources familiar with the developments say there have been exploratory talks with firms from the US, Russia and South Africa” as RVR refused to comment. The paper speculates that RVR could be worth USD 250 mn.

MOVES- Civil Aviation Minister Sherif Fathy appointed Bassem Samy Abdelkarim as a media advisor, Amwal Al Ghad reported.

Veteran US diplomat John Buzbee dies at 50. John Buzbee, a prominent US diplomat with long MENA experience known to many Enterprise readers for his stints in Cairo handling economic and cultural affairs, has “died of complications from metastatic colon cancer,” the Associated Press reports in an extended obituary. Other readers may remember Buzbee as the husband of Sally Buzbee, who was from 2004-09 the AP’s Mideast boss based out of Cairo. His blog, quoted by the AP in its obit, is here.

CLARIFICATION- Regarding our piece yesterday on Domty’s GDR program, the conversion of 10 mn shares (representing c. 3.5% of share capital) was an undertaking by the major shareholder at the request of the EGX. Under current regulations on Egyptian GDR programs, Domty shareholders can convert up to 21.67% of the company’s current outstanding share capital to GDRs (based on Domty’s current free float of c. 43%). Under EGX regs today, companies are allowed to issue or convert GDRs equivalent to a maximum of 33% of their outstanding share capital provided that the percentage of GDRs outstanding does not exceed the percentage of shares in free float on the EGX. H/t Marwan S.

News of the preparations Egypt has made ahead of President Abdel Fattah El Sisi’s visit to New York to participate in the 71st United Nations General Assembly, along with his planned meetings with Donald Trump and former Secretary of State Hillary Clinton, are the focus of the foreign media’s reporting on Egypt last night and going into this morning.

Leading the coverage is the Associated Press, which notes that aside from a delegation of “two dozen loyal lawmakers and media figures,” accompanying El Sisi with a mandate to seek to improve the country’s image, (we’re not sure if those are necessarily the right people to do that, but ok). “Coptic leaders in the United States have distributed leaflets urging their community to rally in support of el-Sissi. They are lining up buses to ferry people from churches in New Jersey to New York City.”

On El Sisi’s meetings with presidential hopefuls Clinton and Trump, Politico’s take by Nahal Toosi from last night is a bit dated at this point, as while Trump’s people didn’t get back to them to confirm their candidate’s meeting with El Sisi, the Reuters piece in the Speed Round had cited one of his campaign advisers. The piece also opens with the cryptic “Donald Trump has apparently taken Hillary Clinton’s bait,” an assertion Toosi never actually expands upon.

Toosi’s characterization as to why former Secretary of State Clinton is viewed unfavorably among many in Egypt is also wildly dated. Toosi blames Clinton’s “perceived closeness to Mubarak’s family and seeming slowness to embrace Egypt’s Arab Spring democratic movement” for making her an “unpopular figure among many Egyptians.” While that statement may have been true for a number of months in 2011, as nearly the entire country’s perception of the uprising soured, and as the Brotherhood rose to power, many in Egypt viewed Clinton as either sympathetic to the Islamists are even had a hand in their ascension — while Trump’s claim that US President Barack Obama and Sec. Clinton helped to create Daesh has gained currency with the Hezb El Tante crowd here at home. The Brotherhood, on the other hand, believe their ousting was part of an intricate plot backed by the Americans. It’s never a question of the glass being half empty or half full; the glass is just completely empty.

Al Ahram columnist Farouk Goweda asks if the new Supply Minister with a military background can help re-set the relationship between retailers and consumers. Goweda blames rising prices on the government’s pull-back from both manufacturing and distribution. He also points to its “failure” to regulate the market, as it once did when mandatory pricing was imposed and enforced. Welcome to the salad days of Gamal Abdel Nasser, y’all.

Price gouging retailers: El Watan’s Mahmoud Khalil says the shortage of mobile phone recharge cards in the market is a replay of the hoarding and price gouging in which retailers engaged in the run-up to the hike of cigarette prices last week.

Researchers make bombshell discovery that sugar industry secretly funded Harvard scientists in the 1960s to shift blame on heart disease from sugar to saturated fat: A study published last Monday by University of California researchers based on only recently released internal documents shows that despite evidence of links between heart disease and sugar consumption emerging as early as the 1950s, a US-based sugar industry group, then known as the Sugar Research Foundation, paid three Harvard scientists to publish a 1965 study downplaying the link between heart disease and sugar and instead shifting the blame to saturated fat and cholesterol. It’s actually a little astonishing that this story is not getting the attention it deserves.

The source of funding of the study had never been disclosed until the publication of the study last week. Not only was the study incredibly influential on shaping thinking about nutrition and heart disease, the sugar industry was able to further “derail the discussion about sugar for decades,” according to one of the study’s researchers quoted by the New York Times. Meanwhile here at home, we continue to subsidize both the sugar that ruins people’s health as well as all the health bills that arise later in life as a result. (Read ‘How the sugar industry paid scientists to shift blame to saturated fat’ in the New York Times and / or the full study published last week on the 1965 report)

Egyptian Paralympian Ibrahim Hamadtou, photographed here playing table tennis at the 2016 Rio Paralympics. Photo credit: Pilar Olivares, Reuters. While he may not have won, his attitude and grace have earned him well-deserved praise around the world, as noted in this Slate piece, featuring an embedded video (2:43) of Hamadtou from 2014 that has so far amassed 3 mn views.

Ever wish you could clone a beloved pet dog or cat? South Korea’s Sooam Biotech will do it for you for USD 100k. As Vice’s Motherboard notes in their 2015 award-winning documentary, while the rest of the world is slowly grappling with the bioethics of cloning and gene editing tool CRISPR, cloning is a booming business in South Korea. While Sooam’s cloned pets have visually distinctive markers indicating that they are clones, in the form of bioluminescent claws that glow in the dark, the firm’s major project is to bring back the woolly mammoth, using a supply of frozen mammoths sourced from Siberia and an Asian elephant as its surrogate mother. (Watch ‘The mission to resurrect the woolly mammoth,’ running time: 22:02)

The European Commission spokesperson said freezing the assets of human rights activists and NGOs adds pressures on Egypt’s civil society. It adds that the move “is not in line with Egypt’s commitments to promote and respect human rights and fundamental freedoms as guaranteed by its Constitution and enshrined in the EU-Egypt Association Agreement, which is the basis for our partnership. Neither is it helpful for the stability, the security and the prosperity of Egypt that we all seek.”

Cairo is set to host the second Egyptian-Tanzanian Business Forum in mid-October, Trade and Industry Minister Tarek Kabil said following a meeting with Tanzanian Ambassador to Cairo Mohamed Hamza Al Masry Al Youm. The meeting also discussed bolstering economic relations under the trade bloc agreements.

Fins in town to talk investment opportunities? A delegation led by the Finnish Foreign Trade and Development Minister Kai Mykkänen is expected in Egypt between 26-29 September, head of the Federation of Egyptian Chambers of Commerce Ahmed El Wakil told Amwal Al Ghad. Meanwhile, the Finnish Fund for Industrial Cooperation has agreed to return Egypt to the list of countries in which it backs development programs. Its emphasis will be on energy, environmental, sewage, and the SME sectors, Al Shorouk reported.

EGPC has paid Royal Dutch Shell, and previously BG Group, a total of USD 480 mn in bank installments due from the Idku liquefaction plant since 2012, a source told Al Borsa. The payment is to cover bank installments owed on a USD 2 bn loan obtained by BG Group to construct the plant. The Idku liquefaction plant was contracted to liquefy 1.13 bcf/d of natural gas, but is currently working at 11% capacity due to supply restrictions. The source says the plant, which is 35.5% owned by Shell, 35.5% by Petronas, 5% by Engie, and 24% by EGAS and EGPC, requires USD 200 mn to repay loans annually. Daily News Egypt says EGPC’s payments resulted in Shell not filing an arbitration case against Egypt.

Siemens and the electricity ministry agreed to begin running in November two turbines with a combined generation capacity of 800 MW at its Beni Suef combined cycle power plant, a ministry source told Al Borsa. The company will also spin up 400 MW in capacity at its Burullus plant in December, the source added. As we noted last month, Siemens will carry out trial runs on its plants in the new capital on 17 September and in Beni Suef on 25 September.

Philip Morris Misr, the licensee for Philip Morris International (PMI) products in Egypt, has announced its new cigarette price list, following the ratification of the VAT law last week, Al Mal reported. A pack of Marlboro or Merit will be sold officially at EGP 27 with lower tier products including L&M and Next at EGP 17 per pack.

Domty has begun trial runs of its new juice factory in Sixth of October City, Al Borsa reports. The factory will later be used to produce baked goods, cheese, and other dairy products.

A consortium of 70 investors are reportedly set to inject EGP 6 bn to reclaim around 7,500 feddans in Alamein in the next two years, said Moustafa El Naggary, member of the Agriculture Export Council, told Al Mal. Editor’s note: There’s not enough salt in the Qattara Depression for you to take with this news…

The Armed Forces’ National Service Projects Organization has selected four companies to distribute 80% of the infant formula it will import to over 65,000 retailers nationally, Al Mal reports. United Pharma, Pharma Overseas, Ibn Sina Pharma, and Multipharma are the four selected companies. State-owned Egyptian Pharma Trading Company (Egydrug) has been sidelined from the distribution process, despite being the largest licensed distributor of infant formula in the country. As we noted earlier this month, the Armed Forces is taking a leading role in importing subsidized baby formula following shortages which has spurred protests.

Egypt has been shortlisted as the outsourcing destination of the year 2016 for the European Outsourcing Association (EOA) awards, competing with Belarus, Fiji, and Sri Lanka, according to a press statement. “Recent years witnessed a shift in the outsourcing landscape in Egypt from low-value to high-value services. BPO, IT and R&D outsourcing services have mushroomed over the last four years, with employees doubling to reach around 50,000 FTE.” The statement also praises Egypt for having “an exceptionally low attrition rate” compared to destinations in Europe and Asia, and “ the country is heavily investing in skills development and talent management. Egypt was awarded the EOA offshoring destination of the year award in 2010.

Trade and Industry Minister Tarek Kabil met with auto industry leaders on Sunday to discuss the automotive directive, which the minister confirmed has been sent to the House of Representatives, said Hussein Moustafa, head of the Egyptian Automobile Manufacturers Association (EAMA). Kabil added that a committee to draw up the law’s executive regulations will be formed once the law it has passed the House. The meeting, which included the chairmen of GB Auto, Bavaria Auto Group and top executives of General Motors MENA and Nissan Egypt, explored the standards which will be applied to car manufacturing, with Kabil informing them that a committee has been formed to set these up. Kabil also divulged the new incentives offered to the industry in the Suez Canal development zone, Moustafa tells Al Mal. EAMA also pushed for a government sponsored program to train industry workers.

The Settlement of Taxation Disputes Act will be in effect for one year following its ratification, said Finance Minister El Garhy in an official ministry statement on the law. The statement does not explain the short proposed life of the law, making it seem as if it’s designed to clear some of the backlog in the system and isn’t meant to reform the manner in which tax disputes are managed going forward, as was previously announced.

Prime Minister Sherif Ismail met with the new Council of Governors yesterday to discuss among other things the local elections and their preparation, Al Masry Al Youm reports. Ismail also urged governors to keep a watchful eye on runaway inflation.