'We awarded the importer the rights to manufacture when it was looking to take over the old facilities, but these have now been withheld [by the government] so it has to build a new site,' says a spokesperson for Germany's BMW. 'It now has government approval and the project will get under way in the next couple of months. BMW may send engineers to give support, but we will not be providing investment.'

Egypt is the fifth largest market for BMW in the Middle East and North Africa region, after Dubai, Saudi Arabia, Abu Dhabi and Kuwait. Despite a sharp drop in local acquisition of new cars, to 55,000 last year from 85,000 in 2000, the country remains an important gateway to the region for CKD business, due to its low labour costs and competitive tariffs.

Bavaria Auto Trading, a consortium of local, German and Qatari investors, was awarded rights for the assembly, import and distribution of BMW cars and equipment in March following the arrest and imprisonment of local businessman Hossam Abul Fotouh, who was sentenced to three years in prison in December 2002 on charges of defrauding a local bank. Fotouh was in May sentenced to another year in gaol for invasion of privacy, following a sex scandal involving the renowned Egyptian belly dancer Dina, and in June to a further five years in prison for the illegal possession of firearms. He is now awaiting trial on charges of securing bank loans without providing sufficient guarantees.

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