Egyptian Economic Performance (10/4/2007)   A.     The Increase in the Egyptian Exports    1-     According to the latest report issued by the Ministry of Trade and Industry, Egyptian exports-including petroleum- reached 19bn USD in 2006, thus marking an increase of 5bnUSD compared to 2005. Accordingly, the total corporate credit offered for export purposes reached 974 million USD.    2-    Moreover, the report pointed out that as a result of the QIZ agreement, there has been a remarkable increase of 154% in the number of companies exporting to the US in 2006 versus 2005, to read 137 companies. The overall exports from the Qualified industrial zones reached 164.7million USD in 2006, with an increase of 167% compared to 2005.    3-    Meanwhile, the report projected the rising trend of exports to continue in the current year. This is mainly attributed to the expansion of export projects and the successful marketing policies in the foreign markets, especially in Africa and Asia, as well as applying the new quality standards which resulted in increasing the competitiveness in some sectors namely engineering industries, whose exports increased by 60% in 2006, chemicals and fertilizers, whose exports increased by 64% and ready-made garments exports, whose exports increased by 88%.    4-    On a similar note, the government has undertaken several measures aiming at  promoting exports, mainly; ·    Increasing the resources allocated to the Export Development Fund by more than 600 million EGP  to support new export sectors. ·    Undertaking the revision of the export and import law for the aim of offering more facilities to exporters and combating smuggling.    5-    The report stated that a new system has been launched for the establishment of specialized industrial in the weaving and textile sector, accordingly new projects are to be established in AlMahla Alkobra and Kafr ElDawwar. 6-        B.     Incentives for vehicle-feeding industries    1-      The Ministry of Trade and Industry has launched a number of incentives aiming at encouraging local vehicle feeding industries and promoting its exports. These incentives will be implemented in the specialized industrial zones that will be established during the current year in cooperation with Russia, Germany and China. These are expected to attract investments in that sector amounting to 1bn USD  and exporting products amounting to 1.5bn USD during the next 5 years.    2-      The incentives include providing a long-term land lease up to 40 years. Additionally, the Center for Modernizing Industry will contribute to the cost of training the workers by 80% and the company will pay for the rest. Moreover, the Export Support Fund will support the vehicles industry and the feeding industry for 5 years with subsidies amounting to 10% of the value of these exports during the first 2 years and gradually reduced to be 8% in the third year and 7% in the fourth year and 6% in the fifth and final year.    3-      The agreement for creating a Russian industrial zone for vehicle spare parts will be signed during the visit of the Russian minister for industry to Egypt on April 11th.    4-      Regarding the German industrial zone, it will be built on 2 million square meters with German Egyptian investments and will include a center for technology and development transfer and a number of centers for training workers. Its production will mainly be exported to the European Union since the European market produces around 30% of the global vehicle production.    5-      It is worth mentioning that the vehicle feeding industry in Egypt enjoys a number of comparative advantages on top of which are the low labor wages and the availability of trained staff in addition to the geographic proximity to Europe and the trade agreements that Egypt has concluded with Europe and Turkey.                              C.       Development in The Energy sector    1-      Within the framework of the national plan for extending the natural gas network to cover 6million housing units in the coming 5 years, the Minister of Petroleum assured the provision of the NG service in 1.4 million housing units. He pointed out that the Upper Egypt NG network- which is the longest in Egypt starting from Beni Suef until Aswan- is under construction and will be completed by the end of 2009. Meanwhile, NG service has been provided in a number of new cities, including Mahla, Talkha and Sadat, and is to be provided in 8 more cities in Monofia, Kaliobia and Gharbia.    2-      On the other hand, with more than 77 thousands cars working by natural gas and 112 NG fuelling stations, an integrated plan has been set for the expansion of using natural gas as vehicle fuel.  Accordingly, the first public bus NG station is currently under construction in Alexandria.   D.     Developments in The Petrochemical Industry    1-      On April 3rd, a consortium of four banks, including  Commercial International Bank (CIB The National Bank of Egypt (NBE), Banque Misr and NSGB, has finalized a deal with the Egyptian Propylene and Polypropylene Company (EPPC) to finance $450 million for the establishment of a new processing plant in Port Said.    2-      Construction of the plant is due to begin this year for the plant and will begin production by 2010. With a capital of 200 million USD, expected to increase to 240 million USD, it is expected to produce 700,000 tons of propylene and polypropylene annually, thus becoming the leading player in the local market as well as directing part of its production for export.    3-      Upon completion, the plant will become the first in Egypt to implement steam active reforming in producing propylene and polypropylene, thus participating significantly in developing the petrochemical industry in Egypt.   E.     Developments in the Communications Sector    1-      On April 3rd, the Prime Minister witnessed the signing of the third memorandum of understanding between the Egyptian Ministry of Communications and Information Technology and "France Telecom", according to which, the French company will increase its investments in Egypt to 20 million USD per year in the value added services.    2-      According to the memorandum, the company plans to recruit more than 500 Egyptian engineers in "Orange Business service In Cairo, thus the total number of employees is to reach 1500 by the end of the current year.