Hardhat: East Port Said Industrial Zone
In this week’s edition of Hardhat, Enterprise had a chat with East Port Said Development’s (EPD) commercial director Shahira El Fiky after news that Banque Misr has signed a partnership agreement with EPD to work with companies at the high-profile industrial zone, to which President Abdel Fattah El Sisi has pointed as a flagship national project. East Port Said is being built on 16 mn sqm at the northern end of the Suez Canal Economic Zone and is being pitched to global manufacturers and domestic enterprises alike as a gateway to 2 bn consumers.
El Fiky told us the facility will take 10 years to fully build out and that it will create as many as 400k jobs as it becomes home to some 1.2k factories. Egyptian SMEs will have a place in the industrial zone, providing services and production inputs to the large-scale foreign and domestic manufacturers it is targeting as anchor tenants. Edited excerpts of our discussion:
Enterprise: Where are you in the construction cycle now?
Shahira El Fiky: The infrastructure work for the first phase of the project has been ongoing for the past month and is almost 50% complete. We should be ready to launch the first factory by 30 June 2020.
E: Tell us about your recent agreement with Banque Misr. What exactly are you offering?
SF: The agreement will see Banque Misr provide SMEs with access to discounted banking services, which include things like legal advice and assistance with accounting, as well as EGP-denominated capex loan facilities. It will also administer workshops to help them navigate the financial sector, international trade and export procedures, and the central bank’s recent initiative to support manufacturers. We are also negotiating to sign similar protocols with more banks on the market to offer similar services to our customers.
The other thing that we want to make sure of is that our larger tenants are aware of the business activities of our resident SMEs. This is why we will have quarterly meetings where they can market their products, and connect directly to potential buyers and sources of finance. This would eliminate a big logistical barrier and enable SMEs to become established in feeding industries.
E: What services do you offer investors who set up shop in East Port Said Industrial Zone?
SF: Right now what we're doing is taking a piece of the desert and making sure it has the utilities, commercial facilities, services, and labor housing necessary to host hundreds of businesses. We provide a one-stop-shop where we sort out all the permits, maintenance, security and communications links, but the services differ from one tenant to the other depending on their experience and what they're looking for.
We are collaborating with the right service partners to ensure we can take care of all the headaches for our clients. For SMEs, this is why we go with the legal advice, legal accounting, and financing, since they lack the experience of how to do business and they lack the support necessary to grow their business. For larger companies specifically, we provide vocational training for the workers from entry-level all the way up to supervisor levels, as well as staff motivation programs.
E: How is this different from what other industrial zones offer?
SF: Other industrial zones in the region offer only part of the services we have for investors. What we offer is an integrated ecosystem that includes an inhouse training facility, a medical facility, fire brigades, and even a daycare center. Other services — such as help with recruitment, transportation, and logistics — are designed to ensure that manufacturers are focused on their work and investing in future growth.
E: What kind of investors are you targeting?
SF: We are trying to attract investors and labor from all over the country. We are already talking to the Federation of Egyptian Industries, and import and export councils, and we have a very strong relationship with the chambers of commerce. In terms of sectors, we have room for casting, automotive, railway accessories, pharma, textiles, and building material manufacturers.
E: Have you closed agreements with any international investors yet?
SF: It is still early: We are still in the midst of preparing the industrial zone as we speak. I can tell you that we have reservations, and those reservations then convert into contracts. We’re in talks with a number of multinationals — Egyptian and global — but today our reservation book are all domestic manufacturers and exporters who have an eye on the African market and hopes to become a link between the Asian, US, and European spaces. Half of the reservations we have are SMEs and the other half are composed of major corporates.
E: Has the outbreak of the covid-19 virus impacted your business?
SF: Absolutely it did, in both good and bad ways.
E: Let’s start with the bad.
SF: Our plans with investors from Southeast Asia, East Asia, China, and South Korea have been delayed on the back of the virus outbreak, but the biggest impact came with its spread to Italy. We were supposed to be in Milan today, but because of the virus we had to change our plans. We did, however, receive a delegation from the General Confederation of Italian Industry, with whom we will be developing partnerships. But again, the outbreak has put these plans on hold.
E: And the good?
SF: We are seeing more Egyptian investors coming in with hopes to fill the gap left by the falling imports of Chinese goods. Egypt is well-positioned right now to capitalize and the East Port Said zone is particularly appealing since we provide an integrated community that cuts red tape for investors and facilitates access to foreign markets.