Analysts have identified the development of the Suez Canal Zone (SCZone) the land alongside the waterway as the major project of substance that came out of Egypts Economic Development Conference (EEDC) in March 2015.
If successfully executed, the scheme has the potential to transform Egypt and diversify its economy, igniting the industrial growth the country badly needs following years of political and economic instability.
The new investment laws will allow the SCZone to act as a single window able to deal with investors directly, without having to redirect them to other government bodies. It aims to reduce the level of bureaucracy often associated with trying to do business in Egypt.
The economic zone will be made up of six ports and totally independent from all cabinet decisions the board of directors all the authority. This independence allows us to create a flexible environment for investors, says Ahmed Darwish, chairman of the General Authority of the Suez Canal Economic Zone (GAESC).
The economic area will be split into three zones, Western Kantara, for agriculture, food and technology. East Ismalia and Sokna, which will be for heavy industries such as oil and gas and petrochemicals.
The SCZone will also entail a raft of infrastructure projects, including 6GW of power schemes, water and wastewater treatment plants and desalination facilities. There are plans for a freight railway linking East Port Said to the new dry port at 10 Ramadan City.
Passenger services are envisaged between Suez City and Ain Sokhna, and between East Ismailia and East Port Said.
A motorway linking East Port Said to the regional network, and six new road and rail tunnels, to increase cross-canal connectivity, are also included in the masterplan, which was developed by the Beirut-based Dar al-Handasah.
Spread over 500 square kilometres, the development corridor is intended to be home to firms involved in shipping, logistics, information and communications technology (ICT), and energy services.
The zone will be centred around six ports along the Suez Canal, with the aim of driving 9 per cent of global seaborne trade through the zone by 2030.
Darwish tells to MEED the level of interest received for investment in the zone has come despite Egypts economic woes and foreign currency crisis it is currently battling. We are also seeing ourselves attractive to anchor industries such as motor industries if we get one big car manufacturer we can create a snow ball effect and all the other components will follow.
We are aware of the currency problem, but companies that are coming to invest are looking three to five years ahead and want to get in early, says Darwish.
We are getting interest from investors who are betting on the future. The cash problem is highly related to the tourism situation but foreign currency reserves grew from $14bn to $35bn when tourism was going good, says Darwish, before going on to explain that some areas within the zone wont be ready for three to five years.
Investors are eying the future they are seeing the problems now but not likely to be there in the long run.
The investment needed is estimated at $50bn, with $15bn for infrastructure and utilities, $15bn for enhancing ports, and $20bn in industrial and other areas. The project will see major industrial zones developed around the cities of Ismailia, Port Said and Ain Sokhna, all under one investment authority.
Darwish tells MEED of his and the authoritys investor roadshow that consists of trips to both the Japanese and South Korean business council as well as GCC equivalents in the coming months.
So far Egypt has received interest from French firm Bollore. In December MEED reported that the firm was looking to develop a number of transportation and logistics projects in the East Port Said area. Further to this, according to a statement released by the chairman of the Egyptian Industrial Development Authority (IDA), Ismail Gaber, the Russians have also expressed interest in the proposed industrial area, which is set to make up a large portion of the proposed Suez Canal masterplan.
Cairo-based Industrial Development Group (IDG), an industrial arm of Egypt-based construction firm Samcrete, are also is set to sign an agreement to develop an industrial zone in East Port Said area within the first quarter of this year. IDG will be the first Egyptian-based firm to take part in the development of the East Port Said area. The company has already started infrastructure work.
Darwish says both local and international companies are encouraged to invest, he also goes on to point out that local companies will not be given different treatment, although he admits incentives are being offered to firms who begin negotiations in the coming months.
Transforming Egypts economy
If the right level of investment is brought into the area then Darwish believes this can be enough to transform the economy.
Investment into Egypts Suez Canal Economic Zone (SCZone) is more valuable that cash deposits to the central bank, says Darwish.
Darwish tells MEED that Egypts economy requires diversification that can only be achieved by the development of industrial and logistics projects in the newly created economic zone.
Of course we have a foreign currency reserves issue, which the central bank is working on solving. But for me and the zone, we believe if we can attract the right type of investments into the zone, this will be more valuable for the wider economy at the moment, says Darwish.
The zones ability to work as an independent body means that many beurocratic processes that have become synonymous with doing business in Egypt are expected to be eliminated. Darwish explains that all the land in the zone has been released from government bodies and the armed forces and is available to investors on a long-lease basis.
Darwish insits the SCZone is ready for business and is encouraging investors from across the world to contact him directly.