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Thursday, 2 June 2022

Cabinet to establish automotive policy committee + fund for sustainable transport

A new automotive policy committee and changes to the law governing the Sovereign Fund of Egypt (SFE) were approved during the weekly cabinet meeting yesterday, cabinet said in a statement. The automotive committee will be tasked with setting a policy framework for legislative and administrative reforms in the industry, as well as building relationships with foreign countries regarding auto manufacturing.

We were expecting an announcement on the government’s long-delayed automotive strategy last month: Prime Minister Moustafa Madbouly had said that the government’s strategy to localize the industry would be unveiled before the end of May but we’re still waiting on an announcement. The strategy aims to increase local assembly, grow the component manufacturing industry, up the sector’s competitiveness to become a regional manufacturing hub, and bolster export volumes.

A sustainable transport fund: A new fund will be established to channel finance into environmentally-friendly transport, according to the statement. It will also fund research and development centers and design incentives to stimulate the local industry, it said.

Provisions of the law governing the SFE have been tweaked: The Cabinet approved a number of amendments to the Egypt Fund Law, which set up the Sovereign Fund of Egypt (SFE) in 2018:

  • Sustainable development is now an explicit priority: The law now says that the SFE “aims to contribute to sustainable economic development.”
  • The fund can now hold financial assets: The SFE is able to acquire a broader range of assets after the cabinet expanded its definition. Previously, the rules defined assets as “fixed and movable,” but this has now been changed to “financial instruments, securities, and property transferred to and owned by the fund.”
  • Feasibility studies: The SFE will now have to conduct feasibility studies and forecast the ROI on assets before it can acquire them.

Also approved yesterday: The cabinet approved incentives that will be offered to the Orascom Construction-Engie-Toyota Tsusho for the new Gulf of Suez wind farm. The companies last year signed contracts to develop, construct and operate a 500-MW wind farm in Ras Ghareb. Cabinet did not disclose details on the incentives.

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