CAIRO: Minister of Trade and Industry Rachid Mohamed Rachid announced Tuesday a LE 7 billion support package “to maintain the current levels of investments in industry and trade.
In a statement to the press, Rachid said that although Egypt’s banking sector has not felt the ripple effects of the financial crisis, “this does not mean that our industry and trade will be immune to the economic slowdown.
Egypt’s economy grew 5.8 percent in the third quarter of the current fiscal year, which Economic Development Minister Osman Mohamed Osman attributed to an international slowdown.
Officials and analysts are apprehensive about a slowdown in exports as well as tourism and Suez Canal revenues.
To mitigate the impact of the crisis, the Trade Ministry’s LE 7 billion package is “designed to reduce the cost of industrial production in Egypt, to increase the presence of Egyptian products internationally and to stimulate the domestic market, Rachid said.
The Industrial Development Authority (IDA) will receive between LE 400 million to LE 850 million while the Export Development Fund will get LE 2 billion to LE 3.15 billion.
The ministry will also allocate LE 1.1 billion to the development of SMEs by establishing investment funds in cooperation with financial institutions. Another LE 400 million will go to the development of domestic trade; around LE 560 million to industrial modernization; LE 575 million for industrial training and LE 62 million for the technology transfer centers.
“We are working to encourage investment by investing in infrastructure in industrial zones in the Delta and Upper Egypt, said Rachid. The ministry is also working to reduce the cost of production to increase the competitiveness of Egyptian made products.
Other measures include freezing the price hikes of natural gas and electricity for all factories until Dec. 31, 2009, as well as delaying the payment of due installments for industrial land due within 2009 for up to one year.
In an effort to ease the process of doing business, in hopes of attracting FDI, the Trade Ministry focuses on facilitating the issuing of permits and registrations for industry.
Customs duties on imported industrial machinery will be reduced and the ceiling of the support companies can receive from the Industrial Modernization Center (IMC) will be raised.
Of the total amount allocated for the support package, LE 3.15 billion will go to maintain Egyptian exports to traditional markets and securing entry into new ones, and companies looking to export to new markets – particularly in Africa – will receive extra support, said the ministry.
Two companies will be established to develop land allocated for domestic trade, which is expected to receive around LE 400 million.
The ministry will finalize several draft laws regulating the domestic market, namely one that will establish the food safety authority. The framework will be set for the establishment of the Internal Trade Development Authority.
An estimated 14 laws pertaining to the regulation of the domestic market will be modified to better function in today’s market.
The measures are part of a LE 15 billion stimulus package that the government announced last month for the current 2008/09 fiscal year. The majority of the spending in the plan would go to infrastructure projects.
Egypt’s economy is expected to grow between 5 and 6 percent this fiscal year, a drop from last year’s 7.2 percent.
Two of Egypt’s main revenue earners are also expected to be affected. Due to less travel from European and American markets as a result of the financial crisis, Egypt’s tourism industry is expected to see a slowdown.
At the same time, increasing piracy in the Gulf of Aden has prompted vessels to take the alternative route down to the Cape of Good Hope. Less traffic through the Suez Canal will hit one of the pillars of the Egyptian economy, which contributed 3.3 percent of gross domestic product in fiscal year 2007/2008.
Earlier this month, the government announced a stimulus package worth LE 15 billion ($2.71 billion).