Red tape slashed for industry as permits act passes; set to slash approval time to a max of 30 days from 600

Our misery index has hit a new post-2011 high, ringing in at 45.60, the Wall Street Journal’s Daily Shot (graph below) tells us. The index is simply the sum of the unemployment and inflation rates and is the brainchild of Arthur Okun, an adviser to US President Lyndon Johnson in the 1960s. It assumes “that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index.” If you’re reading Enterprise, we’re comfortable assuming you agree the effects of inflation are transient and should be fading by the time (a) we hit November and (b) we fully digest the subsidy cuts from earlier this summer sometime in September. And unemployment is actually dropping, if slowly. But wow, does it make for an ugly graph.

President Abdel Fattah El Sisi kicks off a four-country tour of Africa today during which he will visit Tanzania, Rwanda, Gabon, and Chad. Regional security and trade will top the agenda for the trip, according to an Ittihadiya statement picked up by Al Masry Al Youm.

The House of Representatives’ Transportation Committee is holding an “urgent” hearing today to discuss Friday’s fatal train collision, committee chair Saeed Teima said yesterday, Ahram Gate reports. Transport Minister Hisham Arafat Has been asked to attend the session (We have more updates on the story in the Speed Round, below. And as a general note: It can be urgent that a hearing be held, but the hearing itself cannot —semantically— be “urgent.” Same applies to meetings. Just saying.)

The Ikhwan claim they are planning “to stick to peaceful activism” in marking today’s anniversary of the dispersal of the Raba’a sit in. Acting Ikhwan supreme guide Mahmoud Ezzat says maintaining “peaceful struggle” will ensure its members don’t “fall prey to violence and desperation.” The Interior Ministry has nevertheless stepped up security nationwide to secure public areas and tourist hotspots ahead of the anniversary.

<RANT>STOP COMPLAINING about garbage in the streets and do something about it. As a kid growing up, one of us had summer and after-school jobs. Chalk it up to parents who felt it would be character-building and teach us something about business and the world outside our cosseted home. We started at the bottom of the ladder as a lackey to a crusty, lovable old apothecary who owned a small chain of shops. The first thing we had to do each shift? Sweep the sidewalk around the (very long) downtown store that occupied the corner of a city block. And no pushing the trash onto the next guy’s stoop — it was bagged and tossed.

Now imagine if you taught your household staff to do the same. If you taught or otherwise incentivized your bawab / gardener / driver not to drop your trash / lawn clippings / whatever around the corner from your place. If you tipped your parking dude to police the area of trash. If one of your office manager’s KPIs was to keep the area around your building tidy. Or, should you own a shop or a chain of them, if you followed the example of the grumpy old pharmacist and ensured the areas outside your places of business were free of orange peels, empty bottles, rotting garbage, wrappers from everything under the sun, and things we cannot describe in a family-friendly newsletter…

How much better would your day be if you could walk around without traipsing through filth? How much more livable would our amazing city be?

It’s called taking personal responsibility — and taking action to clean things up and change attitudes where government has failed. We don’t think it’s much to suggest, and we’ll be putting our money where our mouths are starting this morning. Join us?</RANT>

The central bank’s monetary policy committee meets on Thursday to decide on interest rates. Pharos Holding expects the central bank to keep rates on hold and believes it is “too early to start monetary easing in August.” Tap here to read the full research note (pdf).

The Ismail cabinet is expected to approve executive regulations to the Investment Act when it meets on Wednesday, according to statements from Trade and Industry Minister Tarek Kabil.

Word on the street is that the Antiquities Ministry plans to add its own projects to the c. 600 already on the government’s Investment Map, of which we have yet to hear an update. The map was expected to go to the House Economics Committee last week.

Will the never-ending foot dragging that is the rollout of 4G actually take place this week? Sources from the National Telecommunications Regulatory Authority appear to think so. We’re not holding our breath.

Suez Canal Economic Zone boss Mohab Mamish will announce unified port fees next Tuesday. Mamish and Transport Minister Hisham Arafat had agreed on the unification of the fees last month to reduce competition between domestic ports.

President Abdel Fatah El Sisi is going to attend a financial inclusion conference in Sharm El Sheikh slated to be held September 13-15. The conference of central bankers and finance types will include 800 representatives and officials from 95 countries, including Central Bank of Egypt Governor Tarek Amer.

Friday’s fatal deadly accident dominated debate on the airwaves again last night.

The head of Egyptian National Railways (ENR) handed over his resignation on Thursday, before the accident, but it was only accepted today, Transport Minister Hisham Arafat told Masaa DMC’s Eman El Hosary. Plans to overhaul the sector are ongoing and have been presented to President Abdel Fattah El Sisi, he added. Arafat said that operational trains will be rotated out of service in the months ahead for maintenance works (watch, runtime 13:07).

The injured are being treated at the government’s expense and the families of victims will be paid EGP 50,000 compensation, Alexandria Governor Mohamed Sultan told El Hosary (watch, runtime 5:13).

Transport Ministry aide on tunnels, railways, and roads Amr Shaat claimed initial findings suggest the collision was the result of a mixup in signalling on the rail lines. Shaat was speaking with Yahduth fi Misr host Sherif Amer on MBC and stressed that the investigation was ongoing.

Amer also spoke to MP and House Transport Committee member Mohamed Badawi, who said that he is ruling out the possibility of the rail disaster having been caused by a technical problem. Badawi also ruled out earmarking new funds for ENR, saying it just isn’t feasible.

Over on Hona Al Asema, substitute host Dina Zahra covered the newly-issued executive regulations to the Industrial Permits Act. Industrial Development Authority head Ahmed Abdel Razek told Zahra that the IDA is the sole authority concerned with issuing industrial licenses under the act, instead of 11 before. (We have more on the story in Speed Round, below.

A profile of another government-funded low-income housing project (watch, runtime 25:21) and the latest on the relocation of low-income citizens from the Maspero Triangle (watch, runtime 4:10) also cropped up last night.

The executive regulations of the Industrial Permits Act were issued on Sunday and published in the Official Gazette, making it the law of the land. At a press conference announcing the regs, Trade and Industry Minister Tarek Kabil reminded us why the long-awaited act — a key component of the government’s reform agenda — was important, Ahram Gate reports. Investors will now have to deal with one government agency only as opposed to 11 before the act.

The law will effectively cut the wait-time to receive approval for permits to seven or 30 days (depending on the licensing track) from a previous average of 600 days, Kabil added according to Al Masry Al Youm. As we have previously noted, the law would grant permits in one of two tracks: One for heavy industry that carries significant environmental, health, safety, or security risks, and another for smaller, lower-risk manufacturers. Licensing fees and wait times will vary by track, with the heavy industry / higher risk tracking being more expensive and demanding a 30-day approval cycle. Read a refresher on the key points of the law here.

No conflict with the Investment Act: There is no conflict between the Industrial Permits Act — which will be implemented in investment zones for the first time — and the Investment Act, Kabil said at the conference, though he did not elaborate, according to Ahram Gate. The Investment Act had done away with the “one stop shop” requirement for privatizing land for the Trade and Industry Ministry and the ICT Ministry.

New mandatory minimum wage coming to private sector? Manpower Minister Mohamed Saafan said his ministry is considering imposing a mandatory monthly minimum wage of EGP 2,000 per month on the private sector, Al Shorouk reports. Saafan also said the ministry will help train the nation’s youth to better prepare them for jobs in the private sector. He did not provide a timeline and mechanism for the implementation of the proposed minimum wage, but we wouldn’t be surprised to see it included in the upcoming House debate of the Labour Act. The current minimum stands at just EGP 1,200 — raising it is one of the few issues on which we find ourselves in agreement with the crypto-commies at the Union of Egyptian Investor Associations.

Could the automotive directive come to pass by November? The automotive directive could be issued by November, House Industry Committee Chair Ahmed Samir tells Al Borsa. The committee aims to pass the bill — which will offer incentives to encourage local assemblers to move further up the value chain into manufacturing — during its upcoming legislative session, after having held more than a dozen meetings with auto industry players recently to discuss and resolve their issues with the directive. The Trade and Industry had also said in July that it would be hiring a German consultant to assist with the drafting of the directive, which has been in a deadlock for several months now due to opposition from car importers and the EU.

Also on the committee’s agenda for the fall is legislation to encourage local manufacturing by promoting both vertical and horizontal integration across different industries, Samir tells the newspaper. The bill will aim to find ways reduce manufacturers’ reliance on FX and imported inputs and, in the long run, is expected to help regulate market prices. The act for mineral resources is also on the fall roster.

Could the House of Representatives really postpone next year’s presidential poll? A proposal to extend President Abdel Fattah El Sisi’s term to six years from four via amendments to the constitution appears to be gaining traction in the House of Representatives, after the majority Free Egyptians Party publicly endorsed it, Al Shorouk reports. The news raises the specter of the House pushing the idea when it gets back to business in September. As we noted yesterday, the idea of extending the president’s term has already been dismissed by none other than Amr Moussa, the former foreign minister who led the drafting of the current (2014) constitution.

Youth unemployment has hit 26.7%, according to a report from CAPMAS on Saturday. Some 37.7% of unemployed young people hold university degrees. Those aged 19-29 make up 23.6% of the population. Egypt’s overall unemployment rate for 1Q2017 stood at 12%.

Alwaleed to invest in Egypt, promotes tourism: Globally prominent Saudi businessman Alwaleed bin Talal has a message for the world this morning: “Egypt will remain safe for tourism and investments.” The 62-year-old Saudi investor and prince demonstrates it — by leading people up hills. In volleyball. In waterskiing. On a bicycle ride. Quite often while shirtless. Alwaleed, an original if ever there was one, posted the video to his personal Twitter feed (watch here, run time: 4:35)

Egypt plans on buying just 80 LNG cargoes in FY2017-18, down from 118 in FY2016-17, Oil Minister Tarek El Molla said, according to Reuters. The initial projection for FY2016-17 was to buy 154 LNG cargoes, but an increase in domestic production drove the actual purchases down to 118, he says. Egypt expects natural gas production to reach 6.2 bcf/d by the end of FY2017-18 as Eni’s supergiant gas field Zohr begins production. First gas from Zohr is expected by the end of the year.

ENR head resigns, prosecution detains drivers and assistants pending further inquiry into Friday collision: The Head of the Egyptian National Railways (ENR), Medhat Shousha, was relieved from his duties on Sunday, Transport Minister Hisham Arafat told the press, according to Reuters. The minister told talking heads that Shousha had submitted his resignation last Thursday, before the accident, but that he signed it on Sunday. The announcement came after prosecutors ordered the detention of the train drivers and other staff involved in the fatal collision near Alexandria over the weekend that claimed more than 40 lives. Investigators have taken urine and blood samples from one of the drivers to test for the presence of banned substances.

Railway lines have not been “truly developed” since 1969, Arafat had said yesterday, but around EGP 6 bn worth of upgrade work is already underway and should conclude by 2019. The government is also in the process of acquiring 1,000 new locomotives, he said. China could be key to modernizing and developing the sector as a whole, Mohamed Shehata, the head of the Egyptian Transport Association, an NGO, tells Xinhua. “China does not decide the companies that will carry out the projects. It also provides finance through generous loans from Chinese banks… The whole network and trains should be modernized and I believe that we need a pioneer partner like China to make a leap in our railway system,” Shehata says.

Separately, six Health Ministry medics were reprimanded and punished by being “transferred to the western Siwa oasis” after taking a “selfie” by the deadly train wreck. It was “inappropriate conduct,” says the Health Ministry’s director of emergency services, according to the AFP.

Scapegoating following a train crash is just business as usual: The accident topped the conversation among opinion writers yesterday, with many choosing to focus on scapegoating. It has become business as usual to fire or arrest Transport Ministry officials following a train accident, writes Abbas El Tarabeely for Al Masry Al Youm. This, however, has done nothing to help reduce accidents or improve the railway network, making it a futile PR exercise. Al Shorouk’s Emad El Din Hussein concurs, stating that an overhaul of the entire system is what’s needed. Meanwhile, Suleiman Gouda takes the “off with their heads” argument to whole new levels, suggesting in AMAY that we should consider just surrendering the ministry to outside experts since we have failed so bad at running the railway systems. Separately, Hussam El Sokary takes to Al Shorouk to demand a detailed accounting of the bns of loans that Egypt has borrowed to fix the railway lines.

MOVES- Former local development minister Ahmed Zaki Abdeen was appointed Chairman of the New Administrative Capital Company for Urban Development, Al Borsa said yesterday, citing an Ittihadiya statement. The retired military general was head of the Armed Forces Engineering Authority and had previously served as governor of Beni Suef and Kafr El Sheikh.

EARNINGS WATCH- Arabian Cement Company reported a consolidated net profit after tax in 2Q2017 of EGP 12 mn, down from EGP 109 mn in 2Q2016, according to the company’s financial statements. Revenues for 2Q2017 fell to EGP 541 from EGP 574 mn during the same period last year.

Porto Group reported 1H2017 consolidated net profit after tax of EGP 178 mn, up from EGP 43 mn in the same period last year, according to a regulatory filing (pdf). The company posted 1H2017 revenues of EGP 1.2 bn, up from EGP 422 mn in 1H2016.

US companies doing business with Qatar will not be punished by countries leading a boycott of the tiny Gulf state, sources told Reuters. Saudi Arabia, the UAE, Egypt, and Bahrain sent a letter to US State Secretary Rex Tillerson “in July reassuring him that US companies would not be discriminated against as part of the boycott, according to sources with knowledge of the letter.” Reuters adds that the EU was given similar “official … verbal assurances” by the UAE. Despite moves by some companies to have their Qatari operations not report to the regional head office, which is often located in Dubai, a source says “there have been no known incidents of a U.S. company being discriminated against by the four Arab countries because of the dispute with Qatar.” However, the Financial Times is noting that a number of hotels in the UK, including Claridge’s, the Connaught and the Berkeley, which have been the beneficiaries of Qatari investments, have been subject to an unofficial boycott by GCC dignitaries.

This comes as half of Qatar’s traditional investor base has reportedly cut ties with the country, according to Bloomberg. Qatari banks, including Qatar National Bank QPSC, Commercial Bank QSC and Doha Bank QSC, are considering funding options that include loans, private placements or USD bonds to make up the shortfall. Analysts expect that the lenders will need to up their yields to factor in the instability.

Uber board fighting getting nasty: A group of minority shareholders in Uber delivered a petition to majority shareholder Benchmark Capital yesterday asking that it sell at least 75% of its stake and step off the board. The petition is the latest act “in a boardroom drama that threatens to tear apart Silicon Valley’s most highly valued private company,” says the Financial Times. Business Insider also has the story. This comes just a day after Benchmark — which owns 20% of the ride-hailing service — filed a lawsuit against former Uber CEO Travis Kalanick for fraud. The rest of the Uber board signed a letter urging the two sides to reconcile quietly. Fortune has more.

The MENA region’s entrepreneurial ecosystem looks set to rapidly flourish, with key investments from major international players and a move towards a more diversified product offerings, according to Forbes Middle East. Some 3,000 new startups were reportedly launched during the previous year, garnering around USD 870 mn in new investments, according to TechCrunch. Among the key M&As driving growth is Amazon’s acquisition of Souq.com for USD 800 mn, in addition to the acquisition of food delivery service Talabat by Germany’s Delivery Hero’s. Egypt and the UAE are taking the lead on this, with the latter holding 50% of the region’s top-funded startups. Changing attitudes are also helping push this proliferation further. 73% of Egyptians find entrepreneurship a top career choice, according to the Global Entrepreneurship Monitor Report 2017.

Egypt’s disabled lending a helping hand: The Coptic Evangelical Organization for Social Services — an NGO that creates jobs for disabled people to manufactures products for the use by other disabled folks — is receiving plenty of props from Reuters, and rightfully so. The organization has a factory that produces between 1,000 and 1,500 mobility devices such as wheelchairs and crutches each year and a mobile van service to deliver their products free of charge — and to provide routine maintenance for users.

Egypt is facing a direct threat from climate change and rising sea levels, Jane Arraf writes for NPR. In Alexandria, “all along the waterfront, the government has erected barriers to counter increasingly fierce winter storms. There’s no beach on this part of the shore. The sand washed away years ago… Some historic buildings are already crumbling, as salt water seeps into the bricks. Entire neighborhoods could be submerged,” Arraf writes. The threat of rising sea levels is impacting the Nile delta, as “with rising sea levels, sea water is seeping into Nile water used for irrigation.” One villager told Arraf: “Last winter was the worst … he sea swallowed up some of the land and got closer and closer to the village. We’re seeing things we never saw before, in a way that could make us believe this is anger from God on the village and its people.”

Worth noting in brief this morning

• Egyptian-born Rasha Rushdy pens a heartfelt piece in the Huffington Post about the truths of being a “third culture kid” and their desire to “belong” in a “simple, uncomplicated, one-dimensional way.”
• Egypt’s first female dolphin trainer, Nesma Rafet, is stepping things up and possibly launching her own training program, Amira Sayed Ahmed writes for Al-Monitor.
• Former presidential candidate and politician Ayman Noor, and others, talk about their flight from Egypt after Mohammed Morsi was drummed out in 2013, in a piece by (surprise) Turkey’s Anadolu.
• Islamists could grow in popularity in Egypt, writes Brent Nagtegaal for some random publication called The Trumpet in an attempt to plug a booklet.

One step closer to the Star Trek Universal Translator (that thing that makes countless aliens speak English)? Condé Nast Traveler is running a feature on Bragi’s wireless DashPro earpiece that helps translates spoken conversation. It is still, however, not at a level of having your own personal UN instant translator: The earphone will need to sync with a translation app on the phone, which will read out a translation of what you said in a language of your preference. The phone will then relay the response to the earpiece in your language. While we are excited at the prospect of the end of clueless travelling, translation technology has historically not been that great. But we’ll definitely be eying developments there (watch, runtime: 1:15).

President Abdel Fattah El Sisi’s African tour comes as the Eastern Nile Technical Regional Office plans to establish the Nile Basin Commission to “enforce demands of equitable utilization of the Nile river’s resources,” according to Sudan Tribune. This commission will be established soon after Ethiopia, Tanzania, and Rwanda ratify the Nile Basin Initiative’s Cooperation Framework Agreement. While Egypt has attempted to re-engage with the Nile Basin Initiative, it has, along with Sudan, yet to completely reverse its opposition to the framework agreement. South Sudan, Burundi, Kenya and Uganda have accepted the agreement and are in the process of ratifying it.

US envoys’ planned trip to the Middle East to try and broker peace between Israel and Palestine is “welcome, as always,” Israeli Prime Minister Benjamin Netanyahu said, i24 News reports. “US President Donald Trump’s special Middle East envoy Jason Greenblatt, Trump’s son-in-law Jared Kushner, and deputy national security adviser Dina Powell, are due to arrive in the region in the coming weeks.” The delegation is set to meet with leaders from Saudi Arabia, UAE, Qatar, Jordan, Egypt, Palestine, and Israel.

Guinean Foreign Minister Makali Kamara headed a delegation to Cairo yesterday for a two-day visit, Al Shorouk reports. On the agenda are meetings with Foreign Minister Sameh Shoukry on cooperation and counterterrorism.

Shoukry has been meeting with the head of the UN’s Libya Support Mission Ghassan Salamé,who is also in Cairo for two days. Egypt’s mediation efforts between Libyan factions and threats to Egypt’s security were on the agenda, according to a statement from the ministry.

The Egyptian Electricity Transmission Company (EETC) awarded Siemens a contract to construct two substations to transmit electricity from the Burullus power plant. The stations will be located in Samanoud and Aboul Matameer and “will enable power delivery to Egyptian homes as well as different industries located in the Delta region.” Under the contract, Siemens will be responsible for the design, engineering, construction, supply, installation, and commissioning of the two new 500/220 kV substations on a turnkey basis. The project “includes gas-insulated switchgear; power transformers; control systems as well as protection and telecommunication equipment.” “The two news substations will not only deliver more electricity to more homes, located near Alexandria and Kafr El Sheikh Governorates, but also … feed power to cement, oil and gas and petrochemical facilities as well as ongoing infrastructure development projects in the Delta region,” Siemens Egypt CEO Emad Ghaly says.

The EGPC is issuing a tender for oil exploration in the Eastern Desert, Reuters reports. “The areas open for exploration include Wadi Dara, with a total area of 50 sqm, and block G in West Gharib, with an area of 20 sqm.” Bids for the tender must be submitted before 28 December.

The Food Industries Holding Company will be centralizing the process of stocking up the state’s retail outlets through a newly-formed committee, Chairman Alaa Fahmy says, according to AMAY. The committee will oversee the purchase of supplies to eliminate price competition between the state’s retail outlets. Fahmy also said that he called for a meeting with private sector operators to discuss selling subsidized goods through their outlets.

Emaar and Polaris are among five firms bidding to build industrial complexes in Upper Egypt governorates, according to Al Borsa. The Industrial Development Authority (IDA) will begin reviewing the offers on Tuesday. The IDA also plans to issue another global tender soon for the automation of its services and facilities, now that the Industrial Permits Act has been issued, head Ahmed Abdel Razek said, according to Youm7.

Local medical supplies companies are targeting investments worth at least EGP 1.5 bn in the next five years, deputy head of the Federation of Egyptian Industries’ medical supplies division Emad Louis tells Ahram Gate. They want to cover 80% of local demand in five years, from 20% currently. The companies’ current investments amount to EGP 4 bn, with exports (which make up 40% of production) reaching USD 250 mn.

173 villas in SODIC’s Villette project are set to be completed before the year is out, according to Moataz Mahmoud, board member of Medcom Misr Engineering Development Company, which was contracted to build them. Medcom plans to complete another 46 villas by July 2018, Mahmoud tells AMAY. Both phases of the project are estimated to cost EGP 240 mn.

Egyptian representatives of foreign charter airlines filed complaints to the Prime Minister over delayed payments from the government under the 2015 charter flights incentives program, Al Shorouk reports. Thomas Cook has not been paid its incentives for two years, according to Egyptian Travel Agencies Association VP Moudy Al Shaer. German tour operator FTI’s Meeting Point is owed EGP 25 mn, CEO Ali Okda says. Separately, the Egyptian Tourism Federation filed a lawsuit against the Finance Ministry to cancel the 20% tax on incentives paid out to charter airlines between 2013 and 2015. Federation head Karim Mohsen told the newspaper that the incentive program exempts charter airlines from taxes. The charter flights incentives program was a crucial component of the government’s tourism recovery plan, and had been updated in 2016 by offering payouts to flights with 50-80% seat occupancy rates from the EU.

The National Bank of Egypt may create a product to finance the purchase of second-hand vehicles, head of the bank’s Retail Credit Risk department Karim Sous says, according to Al Mal. NBE isn’t the only bank getting in on the used car action as the sector as a whole is apparently expanding in this line of business, Federation of Egyptian Industries’ transport manufacturing division VP Samir Allam says. The move comes as sales of new cars has stalled post-float.

BitCoin Egypt is planning to launch Egypt’s first registered bitcoin exchange by the end of August, according to Startup MGZN. The exchange will reportedly start trading between local currency and bitcoin. One of the founders says he believes bitcoin “was still a commodity in the country and technically it was not a subject of any formal regulations.” The central bank had denied allowing bitcoin to be traded through the formal banking system in June, with deputy governor Lobna Helal saying the banking system handles official currencies only.

Investment Minister Sahar Nasr visited North Sinai governorate in a rare appearance there by a senior government official. Nasr inspected work on development zones funded through USD 340 mn in financing from the Saudi Fund for Development (SFD), according to a ministry statement. The Sinai Development Program includes 12 financing agreements with the SFD and other regional finance institutions including the Kuwaiti Fund for Arab Economic Development, which contributed USD 900 mn to the program.

Another 10,000 workers from Mahalla’s Misr Spinning and Weaving Company joined the ongoing strike over delays in the disbursement of a hardship raise for state workers, Al Masry Al Youm reports. The workers are threatening to take their sit-in into the factory and bring family members to join until the government responds to their demands.

Recently signed Amr Warda might be in danger of losing his contract with his new Portuguese club Feirnese after accusations of [redacted] harassment popped up, according to Al Bawaba. The club is considering cutting his loan contract just three days into it.

The first ballet performance to be put on in Minya will be held on Thursday, the Alwanat cultural center announced, according to Egypt Independent. 50 male and female dancers from the first ballet school in Upper Egypt will be performing under the direction of Cairo Opera House soloist and Higher Institute of Ballet professor Mamdouh Hassan. The school was launched last year, with 150 students aged 4-20 years old.