Investment in the Russian industrial zone in Egypt will reach $7 billion

MOSCOW, 8 Aug. /TASS/. Russian industrial zone in Egypt, a project which is now developing in Moscow and Cairo, will require investments in production and infrastructure in the amount of $6.9 billion This estimate TASS announced in the Ministry of industry and trade, supervising the project from the Russian side.

According to forecasts of the Ministry, the residents of the industrial area by 2026 will be able to produce products at $3.6 billion annually.

“It is expected that the project implementation period RPZ [Russian industrial zone] will be 13 years and will be divided into three stages. The projected volume of investment of residents in production, as well as investors and management company in infrastructure will be about $6.9 billion”, – told in the Ministry. This $6.4 billion is investments residents and investors, and the rest of the management company in infrastructure. It is expected that the volume of investments in infrastructure through the budget is not more than one-third.

Industrial “enclave”

The Russian industrial zone – a territory with a special tax regime for the Russian companies and their partners – will be located in the special economic zone of the Suez canal. Promising the Russian side considers the area of 525 hectares, located in Eastern Port said, entrance to Suez canal from the Mediterranean sea.

Currently, Moscow and Cairo are working on the final approval of the placement of the industrial zone. The Russian delegation visited Cairo and held the substantive negotiations on the draft in 2016. Now Egypt is finalizing all regulations, and final agreement the parties plan to sign before the end of this year, said TASS in the Ministry of industry. The draft agreement, the Russian side has prepared and delivered to Egypt in March.

According to the draft, the Russian residents of the industrial zone will receive rent holidays, the deadline of which is now negotiated, preferential tariffs for energy resources, a special preferential tax regime, as well as pre-prepared site. It is expected that the Egyptian side will make preparations for the industrial area, its restoration, and down to its limits utilities. Moscow, in turn, funded the creation of internal infrastructure of the first phase of the industrial zone, that is about 100 hectares, where will be prepared by the infrastructure held by utilities and rebuilt a number of ready industrial buildings.

Investors will also get a multi-function centre with hotel rooms, a Convention center, offices and common areas. Some preferences, including on import duties on components are now in the discussion stage.

Companies participating in the project will also receive access to the port infrastructure of the Suez canal, say in the Ministry of industry and trade. “The Suez canal has all the necessary port infrastructure and is one of the key infrastructure projects on the African continent. According to the statements of the Egyptians and our own observations, East Port said has the potential in 5-7 years to become one of the largest international logistics hubs”, – underline in the Ministry.

The attractiveness of Egypt as an investment direction and the location of the Russian industrial zone is due primarily to its advantageous geographical position at the crossroads of major trade routes linking the middle East, Africa, Gulf countries and Europe, said the Ministry of industry and trade of the Russian Federation.

To date, Egypt has trade agreements with more than 70 countries of Europe, Africa and the Middle East. Key existing trade unions are the Association agreement with the European Union, an agreement with the European free trade Association, a pan-Arab free trade area and free trade agreement with Turkey. The advantage of these agreements is that under them the products manufactured in Egypt are exempt from import duties.

“Now the Egyptian side of the active negotiations on the signing of free trade agreements across the African continent, which will facilitate access to markets in more than 20 countries,” – noted in the Russian Ministry. In addition to the duty-free exit in these countries, the interest for the Russian producer is himself Egyptian market, whose population in the year 2015, over 90 million people, indicate in the Ministry of industry.

Residents of the industrial zone

The Ministry believes that about 60 companies can be the investors of industrial zones in Egypt, and now is negotiating with them. The Ministry has also identified several key areas in which investors would be able to get the greatest benefit from the placement sites in Egypt: machinery and technical products and components, energy and other engineering, building materials, engineering, wood processing and pharmaceutics.

Companies interested in working in the industrial area, pay a visit to Egypt in the composition of delegations and conduct the business of the mission. In the latest of the delegation, who visited Cairo, was “KAMAZ”, “GAZ” group, “AVTOVAZ”, “UAZ”, “Transmashholding”, “Rostselmash”, “Metpromstroy” and pharmaceutical company “GEROPHARM”, “Veropharm”, “Generium”, “Biocad”, “pharmasyntez” and others.

Russian automakers have refrained from detailed comments on their plans for the development of industries in Egypt. In “KAMAZ” TASS announced that keep interest in this project and continue to expect its economy. The GAZ group said that developing the supply of equipment to Egypt, and remain interested in the project industrial area. “But at the moment there still remain a number of open questions about the conditions of the project, therefore while to speak about future plans is premature,” added the company.

In “AVTOVAZ” and “Rostselmash” was unable to immediately provide a comment.

Among pharmaceutical companies plans to develop business in Egypt, there is a manufacturer “Biocad”. “We are considering opening a representative office in Egypt with an eye on the whole market of the Middle East. In addition, we are now busy building logistics in the region and in this regard, considering various options. The question of localization in the region is also open, so we with great interest watch development of this project. Now, we are working in several countries in the region”, – told TASS Vice-President of marketing and sales “Biocad” Oleg Pavlovsky.

According to him, the company can earn on the Egyptian market of about $60-70 million until 2022. “This is the minimum that we expect,” – said Pavlovsky. At this stage, according to him, the company is ready to invest “several million dollars” in the region of Africa and the Middle East. “If the motion is in the direction of production will continue, this figure could be increased,” – said Pavlovsky.

The Ministry noted that in accordance with the project agreement, the resident will be a legal entity registered on the territory of Egypt and concluded with the managing company of the industrial zone sublease the land or the tenancy. “Thus, as residents will be able to speak of a company with foreign capital”, – said the Ministry. It is planned that a key performance indicator for Russian industrial zone will be the location of the companies use in their products of Russian components

The first residents, according to calculations of the Ministry of industry and trade, will be released on the platform simultaneously with the construction of the industrial zone. “The planned timing of the start of construction – second half of 2019. Before that about a year will be designing the facility and obtaining all necessary approvals for construction in Egypt”, – said the Ministry of industry and trade.