Pound on the rise THE EGYPTIAN pound continued its seven-week upward trend against the dollar this week to reach LE17.35 on Monday, its highest level in two years. The rally, amounting to three per cent since 22 January, started days after Central Bank of Egypt (CBE) Governor Tarek Amer told the Bloomberg News agency that the foreign-exchange market would likely be more volatile in Egypt after the profit-repatriation mechanism was abandoned. The mechanism was introduced in November 2016 amid a dollar crunch in order to guarantee foreign currency for investors exiting the government securities market. Ending the mechanism means that foreign currency inflows will be directly reflected in banking system liquidity and not partially allocated to pay the profits of foreign companies. Investors believe that Amer's statement means that the CBE will lift its hands off the foreign-exchange market, a move that will add to investors' confidence. While Egypt floated the pound in November 2016, experts say they believe the CBE still intervenes through the state-owned banks to balance the market. Many economists as well as government sources have cited the improvement in foreign-currency inflows as one reason that has helped back the pound. Tourism revenues are on the rise, remittances are registering record increases, and Egypt has turned from being a net importer to a net exporter of natural gas. Investments in Egyptian treasury bills have also recovered thanks to the relatively high yield offered on government debt and an improvement in the performance of the emerging markets in general. 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Building new cities EGYPT'S government plans to build 14 new urban communities across the country in a bid to double the land area for inhabitants, Minister of Housing Assem Al-Gazzar said in a Cairo conference this week, reports Nesma Nowar. One of Egypt's main challenges is that “we are living on only six per cent of the land, » Al-Gazzar told the conference called “Scaling Up: Egypt's Real Estate Industry”, organised by the American Chamber of Commerce (AmCham) on Monday. Egypt's “older cities” are no longer capable of offering services to people, Assem said. These new cities will help to accommodate the growing population, Al-Gazzar said, adding that Egypt needs 600,000 residential units a year. The minister said that while providing housing units is not the role of the government, but rather that of the private sector, the government had to start work in the new areas to lay the groundwork for the participation of the private sector. “The private sector will not start with us in the desert. That's why our role has expanded. But this situation will not continue,” Al-Gazzar said. Once the groundwork is in place, the government, represented in the New Urban Communities Authority (NUCA), will stop providing housing units and go back to its role as a regulator. Al-Gazzar said that by 2020, the 14 new cities would be in “good shape”, giving the private sector the opportunity to participate in them. Some experts believe the government's engagement in construction in the new cities is crowding out the private sector because the private sector cannot compete with the government. However, May Abdel-Hamid, CEO of the Social Housing Mortgage Finance Subsidy Fund, said the competition is for the benefit of the customer. She added that the government's intervention in the real estate market had shed light on what the market really needs, such as affordable housing. Meanwhile, Hisham Shoukri, chairman and CEO of real estate company Rooya Group, said competition between the private sector and the government would not be fair. Shoukri said he understands that the government has its reasons to enter the real estate market, such as executing anchor projects to boost growth in new areas so that the private sector can follow, and providing housing to limited-income individuals. However, he said, the trend would not help in attracting foreign investments to the market. “Investors will not invest in a sector in which the government is engaging,” Shoukri said at the conference. 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Suez Canal on track PRIME minister Mustafa Madbouli visited the Suez Canal Economic Zone (SCZone) this week to inspect recent infrastructure developments in the area, reports Nesmahar Al-Sayed. The development of the SCZone will help to boost economic development in Egypt as a whole, Mohab Mamish, chair of the Suez Canal Economic Zone, said during Madbouli's visit to SCZone headquarters. The SCzone had now signed contracts to a value exceeding $1 billion, he said, adding that infrastructure in the area was being developed and new power stations and water desalination projects built. The SCZone is a world-class free zone and trade hub along the newly-expanded Suez Canal. It is strategically located on the main trade route between Europe and Asia, through which more than eight per cent of global trade passes every year, according to the SCzone website. Covering an area of 461 km2, or almost two-thirds the size of Singapore, the SCZone consists of two integrated areas, two development areas and four ports. “There are 192 industrial and service companies in the southern area of the SCZone sitting on some 81 km2 of land, or 39 per cent of the total,” Mohamed Shaaban, deputy chair of the SCZone, said. Shaaban shed light on the main features of the southern area by saying that it included an industrial zone of 209 km2 and the three ports of Sokhna, Adibiya and Tor. Important industrial developers and investors in the SCZone included petrochemicals, textiles and construction, he said. During his visit to the SCZone, Madbouli said that “the development achieved in the southern area of the SCZone is still less than what the government had been aiming for,” however, asking investors to prepare plans for further development after a meeting with them. Madbouli said that requests regarding taxes and VAT would be reviewed thoroughly with the ministries involved and that requests for the construction of a housing district including education and health facilities for workers would be met soon.
