Suez Canal Zone to drive diversification

25 May 2015

Egypt’s expansion of the Suez Canal and the plans to develop land along the waterway are aimed at kickstarting the diversification of the economy

On 17 May, MEED reported that the expansion of the Suez Canal is set to open earlier than scheduled. Originally planned for completion on 6 August, it is now expected to be finished in late July.

A few days later, it was revealed that Egypt’s Finance Ministry had pushed through the final draft of proposed investment laws to set up a new economic authority to oversee the development of the land around the canal.

It comes as no surprise that Egypt is steaming ahead with its plans for the Suez Canal.

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 Egypt’s Economic Development Conference (EEDC) in March.

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.

Development masterplan

During the EEDC, the consultant for the project, Lebanon’s Dar al-Handasah, revealed the preliminary masterplan for the SCZone.

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.

Mohab Mameesh, chairman of the Suez Canal Authority has said the project has the potential to create more than 1 million jobs over the next 15 years.

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.

Key fact

The investment needed for the Suez Canal Zone is estimated at a total of $50bn

Source: MEED

As part of the SCZone project, two dry ports are proposed to be built at 10 Ramadan City and in Ismailia to promote the movement of goods between the zone and the domestic market. The dry ports will relieve the pressure on the gateway ports of East Port Said and Ain Sokhna. The 10 Ramadan City site will build upon existing facilities.

The Ismailia facility will have a particular focus on the agribusiness sector and the export of produce.

Infrastructure development needs

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.

Later on, 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.

The masterplan outlines Ismailia as the administrative centre of the zone with specialised clusters for ICT and renewable energy programs in Ismailia city and East Ismailia. Part of Ismailia’s improvement will include the construction of mixed-use urban developments to host up to 350,000 residents.

People are much more interested in the project now they have seen the work that has been done

Yehia Zaki, Dar al-Handasah

Elsewhere, a 4,000-hectare industrial city will be developed in East Port Said with investment areas earmarked for light and medium manufacturing (including automotive assembly, textiles, pharmaceuticals, and consumer electronics), and commercial and business activities. The new city will have the capacity to support more than 80,000 jobs.

At Ain Sokhna, near Suez City, there will be an expansion of existing ports and facilities to support maritime-related activities, including bunkering, ship-building and repairs, in a bid to create more than 70,000 jobs.

There are also plans to build communities in Ain Sokhna and New Suez City for more than 260,000 residents.

Sources close to the project tell MEED that the masterplan is still subject to approval, however, once the SCZone authority is set up, it is expected to be get the green light without change.

“People are much more interested in the project now they have seen the work that has been done and after they have seen the investment incentives and the creation of an entity that will take care of the development,” Yehia Zaki, director of operations for Egypt at Dar al-Handasah told MEED on the sidelines of the EEDC.

Triggering interest

While the legislation has been slow to be drawn up, the news of the laws entering the final stages of ratification is hoped to trigger the interest shown during the conference to turn into investment pledges.

A spokesperson from a Cairo-based private equity firm, which is focusing on the industrial zone, has told MEED that several clients have shown strong interest in developing plastics and logistics hubs along the canal. But they have been waiting for the laws to be finalised before making any commitments.

During the EEDC, the Investment Ministry and the Suez Canal Authority signed a memorandum of understanding (MoU) to help boost confidence in the new zone. The ministry will provide consultancy services to the authority.

Despite the progress, Egypt is still faced with a reputation of lengthy and often dysfunctional bureaucratic processes that have in the past put off investors. This is why the recent developments with the streamlining of investment through a single investment body for the Suez Canal area could prove pivotal.

If the authorities can find the balance required to offer a business-friendly environment, interest from foreign and local investors is bound to increase, considering the strategic geopolitical significance of the canal and the surrounding area.

The Suez Canal Zone’s six ports will aim to drive 9 per cent of global seaborne trade through the zone by 2030

Port Said

  • Development of East Port Said into a major transshipment hub and gateway port with a dedicated multi-modal logistics facility, generating more than 105,000 jobs
  • 4,000 hectares for light and medium manufacturing, commercial and business activities supporting more than 80,000 jobs
  • New urban areas at East Port Said and Bardawil City, hosting up to 250,000 residents


  • The administrative centre of the SCZone.
  • Specialised clusters for research and development activities in ICT and renewable energies in Ismailia City and in East Ismailia
  • Agri-processing and related logistics centre, dry port and other light manufacturing activities supported at Qantara
  • Development of urban areas at Qantara and New Ismailia City with capacity to host 350,000 residents

Ain Sokhna – Suez

  • Expansion of the ports and logistics facilities at Sokhna and Adabiya, and establishment of maritime-related activities including bunkering, ship building and repairs to support over 70,000 jobs
  • Industrial development of 16,250 hectares supporting light, medium and heavy manufacturing activities, as well as commercial and business activities. Capacity to host over 85,000 jobs
  • Planned new integrated communities at Ain Sokhna and new Suez City for more than 260,000 residents

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