Government plans are underway to establish 1,000 new industrial projects. Mona El-Fiqi reports Both the government and private sector have started to take concrete steps to build 1,000 new factories, as a part of President Hosni Mubarak's electoral campaign programme. The new industrial projects should be established within the coming six years, at a cost of LE200 billion. The Industrial Development Authority this week thus approved the location of lands upon which will be established six new cement factories. These will operate with a total annual production capacity 1.1 million tonnes. Some LE4.5 billion and 1,860 feddans are needed as an investment for the factories that are to be built in Aswan, Sohag, Al-Wadi Al-Gadid, Suez and Minya. Minister of Industry and Foreign Trade Rachid Mohamed Rachid announced that the factories will help provide some 3,526 job opportunities. He added that as an additional result, current cement production will also be raised by 30 per cent, leading to an increase in the cement sector's export potential. Rachid also said that the Industrial Development Authority has approved the location of 4,000 feddans to establish a giant complex for chemical industries in Fayoum, with a total cost of $500 million. The complex will be financed by Kuwaiti investors, and is expected to provide 5,000 job opportunities. The move to establish new industrial projects comes as part of a government plan to boost the industrial sector, and raise the economy's growth rate from the current five to nine per cent. The plan also seeks to provide 1.5 million job opportunities by the year 2011. According to the report recently presented by Rachid to Prime Minister Ahmed Nazif, 113 factories will be set up during fiscal year 2006/2007. A total of 90 factories has been built in the past year. Efforts to establish new factories are also being undertaken by the private sector. The latter's role is growing, with its share of GDP reaching 78 per cent, and with some 12 million workers, compared to 400,000 workers in the public sector. On another front, the Federation of Egyptian Industries (FEI) in cooperation with the Industrial Modernisation Centre (IMC) last week signed a protocol with the Federation of Egyptian Banks in order to facilitate the funding of new industrial projects. Mohamed Barakat, chairman of the Federation of Egyptian Banks said that according to the protocol, the banks are committed to provide LE75 billion out of LE200 billion (the total costs of 1,000 factories). These will be used to finance the new industrial projects in the coming six years. Barakat asserted the Egyptian banks' capability to provide LE75 billion, during this period. The banks' overall investments in industrial projects last year amounted to LE9.5 billion, according to Barakat. But he also blamed some industrialists for having created an atmosphere of mistrust versus the banks. Barakat said that some investors did not use bank loans for the purposes for which they were intended. This often resulted in the failure by such investors to repay their bank debts. During the protocol-signing ceremony, Rachid agreed with Barakat that a real problem of mistrust beleaguers relations between the Egyptian industry and banks. Both agreed that manufacturers have had a bad experience with banks, which have been facing a major problem of defaulted loans in the past few years. One negative impact suffered by the industrial sector as a result of this situation has been the lack of financing. This is a problem that is particularly faced by small and medium enterprises. Rachid explained that in order to boost the industrial sector, investors must be committed to repay their banking loans. This in turn will help create an atmosphere of trust between investors and the banking sector. Since funding tops the list of investors' problems, the FEI has formed a financing committee which includes representatives from the banking sector, the IMC and the FEI members. The committee will study investors' credit problems, and work as a mediator between investors and banks officials. The committee will look into investors' complaints, amongst which are the lengthy and diversified list of documents needed to be presented to the banks in order to obtain loans. In a step towards helping resolve this problem, the committee agreed upon a unified documentary formula of credit files which would be acceptable to the Federation of Egyptian Banks. This would at the same time be easily collected by investors. The committee also found out that spreading the credit culture among investors is a must, so as to facilitate the obtaining of bank credit. A particular programme geared to this end has been set in place by the Banking Institute, which is affiliated to the Central Bank of Egypt. This programme which is implemented in cooperation with the FEI, CBE and IMC includes two parts. The first pertains to credit, and the second to legislation. The IMC will pay 80 per cent of the training programme's costs. These include 40 hours of training courses in credit culture and on how to deal with banking procedures. The programme will be held for six weeks, in the governorates of Cairo and Giza. Barakat also announced that a Credit Bureau has been established will soon start its functions. The bureau also aims to disseminate the credit information culture amongst investors. This would facilitate dealing with the banks, especially on the part of small and medium enterprises.
