Umbrella insurance A NEW holding insurance company, bringing together the three public insurance companies and the Egyptian Reinsurance Company, will be created according to a presidential decree issued last week. The move comes as part of a vast restructuring plan in the insurance sector in preparation for the privatisation of some or all insurance companies. A statement released by the Ministry of Investment noted that the umbrella holding company will facilitate the financial restructuring of the companies, in order to achieve capital and management efficiency. Moreover, the new holding company will facilitate coordination with companies involved in related activities such as real estate investment. Egypt's three major state-owned companies, Misr Insurance, Al-Sharq Insurance and Al-Ahlia Insurance, dominate the sector in terms of the rights of insurance policy holders. Their stake stood at 75 per cent of the market in 2003/2004, and 70 per cent of overall investments in the sector. The three companies have combined assets of LE17 billion. Fast taxes THE ONE stop shop is a new system recently adopted by the newly formed Egyptian Tax Authority (ETA) to facilitate procedures and save time. The system, being tested at a number of tax offices in Cairo, allows taxpayers to deal with only one tax officer and conclude their business on the spot. The initiative received a warm welcome from taxpayers, who often complained about tedious procedures spread over several offices. If efficient, the new system will be used across the country. The Sales Tax Authority (STA) and the Income Tax Authority merged into one entity in Spring, and the ETA is currently led by Mahmoud Mohamed Ali, the former chairman of STA. The merger was considered a drastic measure to facilitate procedures and eliminate duplication in the tax system. The ETA also formed 13 specialised teams whose task is to transform the vision and philosophy of the nascent authority into practical, ready to apply solutions and programmes to serve the interests of taxpayers. These include the taxpayer service team, the training and development team, another for IT, one for small and micro enterprise taxation, as well as the tax inspection team. Meeting market needs MINISTER of Trade and Industry Rachid Mohamed Rachid announced earlier this week that the first shipment of imported chicken will be available on the market within a fortnight. A 17-year-old ban on frozen chicken imports was lifted recently, and the cabinet decided to go a step further and exempt the imports from customs duty. Rachid explained that the decision aimed to bridge the gap between supply and demand on poultry, since local production was nearly wiped out by an avian flu outbreak last February. He added that the ban on chicken imports could be restored as soon as the domestic poultry industry is able to cover consumer needs. Also, and in preparation for the holy month of Ramadan, Rachid held a meeting with importers and producers of food commodities recently to ensure the availability of essential foods on the market at reasonable prices. According to the minister, food commodities that are in high demand during Ramadan -- such as sugar, cooking oil and nuts -- are available in large quantities and at reasonable prices. Meanwhile, Prime Minister Ahmed Nazif announced last week that the government will allocate an additional LE1 billion to be paid directly to mills and bakeries across the country, in order to maintain the quality of subsidised bread. The government's decision aimed to benefit low income families, and raise the total subsidy for bread to LE9 billion annually. Corridor rate unchanged FOR THE SECOND month running, interest rates on deposits and loans for one night between Egyptian banks, known as the corridor rate, will remain at eight and 10 per cent, respectively. The decision by the Central Bank of Egypt's (CBE) Monetary Committee comes in line with expert projections after the Federal Reserve Bank decided to maintain the rate on dollar deposits at 5.25 per cent. The corridor rate is an important indicator of the direction of interest rates on short-term deposits in local banks, since any change in it is usually followed by a similar change on local interest rates. The CBE move came less than two weeks after introducing new deposit certificates with an interest rate of seven per cent, a move initially aimed at encouraging commercial banks to increase their rates on short-term deposits. The average interest rate in local banks on deposits of the same duration does not exceed six per cent. However, the low demand on the new certificates during the first two weeks of their introduction reduces this possibility. The low interest rate on local currency accounts, which dropped two percentage points in less than a year, is feared to cause another spree of "dollarisation" by which individuals convert their savings in Egyptian pounds into dollars. As interest rates on local currency drop, the economy could suffer from a higher demand on the dollar because of its higher returns. Nonetheless, CBE said it has enough foreign reserves to protect the market from the possible return of dollarisation. South cooperation THIS WEEK the Egyptian-Sudanese Higher Committee met in Khartoum for three days on 14 August to consult on cooperation between the two countries. The meeting was headed by Minister of International Cooperation Fayza Abul-Naga and her Sudanese counterpart El-Tijani Saleh. Topping the committee's agenda were issues related to promoting commercial exchange rates and raising cooperation in the fields of transportation, electricity, education and scientific research. The reconstruction of South Sudan, which is a priority for Khartoum, was also discussed, as was the establishment of new development projects in Sudan. Promoting transportation via the River Nile to facilitate and raise trade and investment between both countries was also on the agenda. The two sides also conferred on recent measures by Cairo to pay Egypt's share in the Sudan Reconstruction Donors Fund, which is estimated at $10 million. A part of this sum is paid in cash, while the remainder will fund projects in the fields of agriculture, education, electricity, health and human development.
