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Tourism up 13%

A record 9.7 million tourists visited Egypt during FY 2006-07, a 13-percent increase over FY 2005-06, tourism minister Zohair Garanah has announced. The visits generated $8.2 billion compared to $7.2 billion over the previous year, a 14-percent increase. European tourists represented the lion’s share of visitors, accounting for 60 percent, with 1.03 million tourists from the UK alone, followed by Russia and Germany with under a million tourists each. Egypt also proved very popular with US tourists with a 16-percent increase to reach 228,165, compared to 195,800 the previous year.

Poor yet to reap fruits of economic growth

Poverty is on the rise despite overall economic growth, a UN Development Program (UNDP) official has announced. James Rawley, head of the UNDP in Egypt, argued that while Egypt was recording impressive numbers in terms of foreign direct investment (FDI) and cumulative real growth, “structural problems” were preventing these gains from benefiting the poor.

A UNDP survey showed that while GDP growth is speeding along at 7.1 percent, the absolute poverty rate has risen from 16.7 percent in 2000 to reach 19.6 percent in 2005. One in five Egyptians cannot meet their “basic living needs,” he stated, adding that poverty is concentrated in Upper Egypt, where two-thirds of the country’s poorest citizens live.

Proposal to revise real estate taxation

Homeowners will be required to pay taxes on unoccupied properties if a new tax law proposed by the Ministry of Finance passes. Currently, a property tax is levied only when the property is generating income through rent. The draft law aims to increase the number of apartments on the rental market and to expand the tax base. The People’s Assembly will vote on whether to approve the measure.

Cairo governorate threatens to seize airport

Cairo Governorate has sent an official letter to the Holding Company for Airports & Air Navigation claiming that the state company owes LE 18 million in royalty installments for use of Cairo International Airport. The governorate is threatening to confiscate the airport if the outstanding amount is not paid.

According to the holding company’s president, Ibrahim Manaa, the governorate has no legal claim as, according to Law 203/2002, government bodies and ministries are exempt from paying royalties. Yet it is unclear whether a state-owned holding company is classified as a government body or a company that turns profits. Manaa stated that he will seek legal arbitration on the matter.

Egyptian pound muscles in on the dollar

The Central Bank of Egypt (CBE) purchased an estimated $500 million in an attempt to halt the slide of the dollar against the pound. The move came on October 25, after the dollar lost 200 basis points in early interbank trading. The buying appeared to work, as the dollar closed at LE 5.526, up slightly from the day’s low of LE 5.50.

Over the past two months, the Egyptian pound gained 2.8 percent against the dollar. The US Federal Reserve slashed interest rates by 50 basis points last month, which, coupled with high local interest rates, record oil prices and a boom in Egypt’s tourism sector, has caused the pound to surge against the US dollar.

Some analysts believe comments by finance minister Youssef Boutros-Ghali to a weekly magazine that the US dollar would shed around 4 percent against the pound by the end of 2007 to settle at LE 5.30 exacerbated the decline. Boutros-Ghali denies making such a statement.

Baby milk supply dries up

The Ministry of Health is investigating allegations of a shortage of subsidized baby milk. Citizens in several Cairo neighborhoods have complained that subsidized milk has been impossible to find during the second half of October. This comes despite a decision to increase the amount of subsidized milk from 9 million boxes to 12 million boxes distributed by the ministry.

According to the ministry, there is no shortage in quantities. The problem, according to one official, is that pharmacies licensed to sell subsidized milk are buying it from the ministry at a subsidized price and are reselling it to confectionary stores and supermarkets for a profit. The Pharmacists’ Syndicate has vehemently denied the allegation, stating that the shortage is a result of lack of supply from the Ministry of Health.

Labor strike in Delta ends

A week-long strike of 27,000 employees at Misr Spinning & Weaving Company in the Nile Delta town of Mahalla Al Kobra ended on September 29 with workers securing better wages and working conditions. Following negotiations between the workers and state-controlled Egyptian Trade Union Federation (ETUF), the company’s management agreed to pay the workers an immediate bonus of 70 days’ pay and a future bonus of 60 days’ salary. The workers’ longstanding demands to impeach local union officials were not met.

Labor unrest was also felt in the capital last month. On October 21, an estimated 2,000 civil servants from the Real Estate Tax Office held a demonstration in front of the Ministry of Finance in Cairo demanding salary increases.

More gas bound for Jordan

Egypt will increase its exports of natural gas to Jordan, Jordanian energy officials have said. The announcement comes after five months of rumors that Egypt suspended its natural gas exports to Jordan over a pricing dispute.

The Jordanian official stated that both sides have finalized price negotiations for the first phase of a new deal under which Egypt will supply Jordan with an addition 550 million cubic meters of gas a year to be used for industry and electricity generation. In an agreement signed in 2004, Egypt agreed to supply Jordan with 2.3 billion cubic meters of natural gas a year for a period of 15 years at preferential prices. Almost 85 percent of Jordan’s electricity is generated by Egyptian natural gas.

Omar Effendi gets a makeover

Department store chain Omar Effendi is undergoing an extreme makeover as part of its development plan under its new owner, Saudi Arabia’s Anwal United Trading Company. The former public sector chain has a new logo and colors, and now goes by the name O.E., an attempt to make it more appealing to a younger generation.

Anwal has streamlined the historic department store chain’s staff and modernized its branches. The company has offered voluntary early retirement packages to 1,250 senior employees worth a total of LE 40 million. It has deployed new computerized systems in 30 of its 80 outlets as part of a LE 20 million IT infrastructure upgrade.

Last February, Anwal finalized purchase of 90-percent stake of Omar Effendi worth LE 744.5 million. The company also made plans to pour in investments amounting to some LE 400 million to settle outstanding debts as well as give the entire department store a facelift.

Newspapers stage one-day protest

More than 20 independent and opposition daily newspapers refused to publish on Sunday, October 7 to protest what they claim is a government clampdown on the press. Eleven journalists have been handed jail sentences recently by courts for their writings about the government despite a promise by President Hosni Mubarak during his 2005 election campaign that journalists would not be jailed for “publishing offenses.” On September 30, a court postponed the trial of Al-Dostour editor Ibrahim Eissa, who is accused of publishing rumors about President Mubarak’s health.

Tighter safety rules for sea ferries

The Ministry of Transportation has introduced new rules intended to improve sea ferry safety. The maximum number of travelers allowed on board was reduced from 2,750 to 1,200. Passengers will also not be allowed to sit on the ferry’s deck, which has often led to dangerous overcrowding.

The need for improved safety regulations was highlighted in February 2006 when the Al-Salam 98 ferry sank in the Red Sea, killing more than 1,000 passengers.

National carrier joins airline alliance

EgyptAir is set to become a member of the Star Alliance group of airlines within the next 18 months, the national carrier has announced. The 17-member global alliance, based around Lufthansa, Singapore Airlines and United Airlines, allows passengers to earn frequent flier benefits, lounge access and fare products. It also expands its members’ network of destinations while cutting costs.

Floods raise level of Lake Nasser

The water level in Lake Nasser has risen significantly due to heavy seasonal rains in Ethiopia. The water volume behind the dam in early October, fed by the most substantial flood since 1946, reached 153.9 billion cubic meters, just 8.1 billion cubic meters short of capacity.

Gates at the Aswan High Dam were opened to allow excess water to be diverted along the spillway to the Toshka depression as well as four other depressions. Although water levels have receded slightly, the heavy inflow is expected to continue until December.

US rapped for cotton subsidies

The World Trade Organization (WTO) ruled in mid-October that the subsidies offered by the US to its cotton growers violated international global trading rules. The complaint was first brought to the WTO by Brazil in 2005, which had claimed that subsidies offered by the US represent a trade barrier to cotton imports from other countries. It further claimed that these subsidies unfairly kept prices down and kept smaller farmers from participating in the international market.

Two years ago, the WTO had ruled that US aid to cotton farmers skewed international cotton trading and pricing. The US revised its policy, but a new WTO panel upheld a preliminary ruling issued last July that the measures taken were insufficient. Cotton-growing countries such as Brazil, India and Egypt stand to benefit from the ruling, which – provided the US dismantles its subsidies – will make the price of their cotton and cotton products more competitive in the international market. American farmers received $3.1 billion in subsidies for the 2005 crop year, according to the US government.

13 drown in Nile ferry accident

Thirteen people drowned in the River Nile after a ferry’s gangplank and railings collapsed in Minya governorate last month during the Eid Al-Fitr holiday. The ferry was docked on the western side of the Nile in the village of Beni Hassan as passengers boarded and disembarked the vessel waiting to travel to the eastern shore. The ramp to the ferry gave way, followed by the boat’s railing, sending passengers into the water. About 50 people were onboard the ferry at the time of the accident.

The river ferry accident is the second in as many months. In August, an overladen ferry carrying a wedding party sank in the Nile near Beni Suef, 200 kilometers south of Cairo. No casualties were reported.

Taxpayers respond to ads

The ongoing media campaign to encourage people to pay their taxes is showing results, says finance minister Youssef Boutros-Ghali. Income tax revenue from corporate and personal income tax has risen from 7 percent to 9 percent of GDP. Boutros-Ghali said that 3 million people submitted their tax returns this year, though 7,000 tax evaders are still out there.

The current tax code was passed by the People’s Assembly in June 2005. The provisions for personal income went into effect July 2005, while those for corporate income tax began January 2006. The law closed tax loopholes, reduced tax rates and clarified rules. It also meant to make the taxation administration more taxpayer-friendly.

Blood bag supplier given clean bill of health

A committee formed to investigate Haidylena, a medical supplies company at the center of a blood bag scandal, found that the company’s current operation presented no health hazards. The five-member committee, which included former health minister Ibrahim Badran, concluded that Haidylena’s operations conform to industry standards and are safe.

Haidylena’s owner, Hany Sorour, and six others incriminated in the investigation, are awaiting trial on charges related to supplying hospitals with substandard blood bags. The controversy began in early January after a health ministry employee filed a complaint, alleging that Haidylena had supplied blood bags that did not meet regulation standards. Health officials recalled more than 263,000 blood bags that Haidylena had supplied to hospitals.

Region’s rich getting richer

Three members of the Sawiris family again made Forbes magazine’s annual list of the world’s richest people. Naguib Sawiris, who heads Orascom Telecom (OT), was ranked third in the region, and 62nd in the world. His fortune nearly quadrupled in 2007 to $10 billion after the company’s expansion into Greece and Italy.

Orascom founder Onsi Sawiris stood at ninth in the region and 158th overall at $5 billion. Nassef Sawiris, who currently heads Orascom Construction Industries, was estimated to be worth $3.9 billion. He is ranked 16th in the Middle East and 226th overall.

The region had 65 billionaires. The top-20 richest hail from six countries including Egypt, represent nine industries, and were worth a collective $123 billion as of last March, a 10% increase from last year. Saudi investor Prince Alwaleed bin Talal ranked number one and 13th in the world, with $20.3 billion.

Cement firms face monopoly charges

Minister of Trade and Industry Rachid Mohamed Rachid has accused nine cement companies of monopolistic practices and referred their case to the Public Prosecutor, who will determine whether sufficient evidence exists to warrant a trial. If guilty, the companies face fines up to LE 10 million each.

Cement firms face monopoly charges

Minister of Trade and Industry Rachid Mohamed Rachid has accused nine cement companies of monopolistic practices and referred their case to the Public Prosecutor, who will determine whether sufficient evidence exists to warrant a trial. If guilty, the companies face fines up to LE 10 million each.

In July 2006, Rachid requested that the Egyptian Competition Authority (ECA) conduct market reports on the steel and cement sectors in light of rising commodity prices and huge industry profits. The ECA’s research concluded that the companies had conspired to raise cement prices in violation of Article 6 of the national anti-monopoly legislation. A report on the steel industry is expected by December.

The pending case is the latest attempt by the Ministry of Trade & Industry to dampen cement prices, which reached LE 380 per ton in the local market. Some analysts say demand has outstripped supply, accounting for the price rise. Domestic consumption has risen from 24.45 million tons annually in FY 2003-04 to an estimated 30.23 million tons in FY 2005-06.

Last February, an export duty of LE 65 per ton was levied on cement, and then raised to LE 85 per ton in August. The ministry is also in the process of granting licenses for 14 new cement factories with total investment worth LE 17 billion. The new factories are expected to produce 19 to 20 million tons of cement annually within the next five years, which would contribute to the ministry’s goal of 59 million tons annually in production by 2011.

Meanwhile, the government granted six cement licenses on October 28 to build greenfield cement plants in various governorates as part of efforts to increase domestic supply. Licenses were granted to Nile Valley Cement, El-Sewedy Cement, Al-Arabiya Al-Wataniya, El-Nahda Industries, North Sinai Cement and Egypt-Kuwait Holding Company. Winning bids for the greenfield licenses ranged from LE 22 million to LE 251 million, and brought in a total of LE 801 million. Auctions for two additional licenses were canceled due to a lack of bids.

Assiut Cement and Beni Suef Cement each won licenses to expand their existing production capacity. The two licenses cost LE 202 million and LE 134.5 million, respectively.

Government officials expect cement supply to increase by up to 20 million tons annually within five years after the new plants come on line, and following the expansion of six other existing factories.

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