Costly cars THE HEAD of the Customs Authority, Mahfouz El-Argawi, shattered the hopes of many this week when he announced that there would be no change to the tariff structure on cars before 2010. Many had mistakenly been expecting all customs tariffs on cars to be abolished in 2005, when all commitments made within the framework of the General Agreement on Tariffs and Trade (GATT) will have to be honoured. What the general public is not aware of is that with less than five months to go before that deadline, Egypt has already honoured its commitments, and that the country does not need to make any new tariff cuts. Ahmed Ghoneim, assistant professor of economics at Cairo University, explained that Egypt has tariff peaks on three items: cars, tobacco and alcoholic beverages: "There is no outside pressure to reduce taxes on these items, unless there is a domestic reform agenda." The tariffs as announced by El-Argawi stand at 40 per cent on cars with an engine capacity of less than 1,000cc. Customs of 55 per cent are charged on cars with an engine capacity between 1,000cc and 1,300cc. Bigger cars with an engine capacity between 1,300cc and 1,600cc carry 100 per cent customs. Higher customs of 130 per cent are charged on cars with an engine capacity between 1,600cc and 2,000cc. Even bigger cars with an engine capacity of 2,000cc bear 135 per cent customs. Cars are further subject to a sales tax on the total value of the car, including customs. A 15 per cent sales tax is charged on cars of a motor capacity of up to 1,600cc. A sales tax of 30 per cent is charged on cars with an engine capacity between 1,600cc and 2,000cc. And a 45 per cent sales tax is charged on cars with more than 2,000cc. TE bonds hit the market A CONSORTIUM of four local banks -- Banque du Caire, Bank of Alexandria, Arab African International Bank and Citibank -- have won Telecom Egypt's LE2 billion bond issue deal. The consortium will be responsible for marketing Telecom Egypt (TE) bonds and overseeing the subscription process. The bonds are scheduled to be put up for public subscription next month. The winning consortium has still to determine the procedures for the bond issue and the number of bonds they intend to keep. They also need to decide whether the interest rate on the bonds will vary according to the loan and discount rates or whether it will be fixed, in which case it is expected to bear a fixed interest rate of 11.25 per cent annually. The revenues of the bond issue will be used to restructure TE's old debts and finance new expansions of the company. Candian support for SMEs TO BOOST small and medium enterprises, the Canadian International Development Agency (CIDA) provides a grant to Egypt, Mona El-Fiqi reports Last week Fayza Abul-Naga, minister of international cooperation, signed an agreement with Michel de Salaberry, the Canadian ambassador to Cairo, in receipt of a $15.5 million value grant. The CIDA grant provides financial support for small and medium enterprises in some governorates aiming at creating more jobs and reducing poverty. The grant will start to finance small and medium enterprises (SMEs) in governorates such as Damietta and Daqahlia where there are strong economic and industrial bases for manufacturing high export potential products like furniture and food commodities. In a press conference held last week, Abul-Naga explained that the policy of the Canadian aid programme with Egypt, started in 1976, was changed to provide only grants since 1990. The Canadian aid programme had already provided financial support to 1,500 social and economic development projects and conducted the feasibility studies of 2,100 projects in four governorates, namely Beni Suef, Daqahlia, Qena and Sohag. "The Canadian government gives priority to provide financial assistance to small and medium enterprises (SMEs) believing that they will help reducing poverty rates by providing more job opportunities," Salaberry explained. Abul-Naga added that due to the strong Canadian belief in the importance of SMEs, nearly 50 per cent of the total value of the Canadian aid assistance to Egypt, which has reached $858 million, went to SMEs. Abul-Naga said that the total value of grant agreements signed between Canada and Egypt from 2002 to 2004 was $45 million. The agreements aimed at providing better services for citizens, improving the educational level of females in selected governorates and reducing poverty rates by creating more jobs. As for Canadian investment in Egypt, Abul-Naga explained that there are currently 73 Canadian investment projects working in Egypt with total capital LE1.2 billion. Abul- Naga asserted that the government has a plan to improve the investment environment to attract more foreign investors. "We are extremely pleased by the trust that had been generated between the Canadian government and Egyptian officials. This trust is extended to Canadian investors who have a great interest in establishing new investments in cooperation with Egyptian partners," Salaberry said. Due to a notable increase of Egyptian exports to Canada, the total value of the bilateral trade in 2003 reached 250 million Canadian dollars. 2004 momentum DESPITE regional political tensions, economies in the Arab world have gained momentum during 2004, according to reports issued by the Arab Monetary Fund and the British Standard Chartered. The jump in oil prices was cited as the stimulant for growth. The Quarterly Report of Standard Chartered noted that the Middle East recorded its highest growth performance in a decade during the past seven months, with Gulf Cooperation Council (GCC) members expanding by 6.8 per cent and Iran by seven per cent. More importantly, the report expects that the growth will be sustained through the rest of the year, with growth rates exceeding seven per cent in GCC countries and Iran and around six per cent in Jordan. On another positive note, a report recently issued by the Arab Monetary Fund stated that high oil prices, driven by strong corporate performance and low interest rates, have boosted the wealth of Arab stock exchanges by more than $100 billion in the first seven months of this year. The combined market capitalisation of the 14 Arab stock exchanges came to $469.3 billion at the end of July compared to $361.8 billion at the end of December. The largest gains were recorded in the Saudi and UAE stock exchanges. The market capitalisation of the Saudi bourse jumped from $157.3 billion to $221.4 billion in the seven-month period. The capitalisation of the UAE's two stock exchanges soared by 30 per cent. Both reports expect an even better performance during the coming year, as oil prices are expected to hover around $35 per barrel. Steel access THE 40 PER CENT anti-dumping tariff on Ukrainian steel exports to Egypt was lifted last week. The decision came after the Anti-Dumping Agency held several discussions with steel companies about Ukrainian steel companies' dumping practices. According to Law 161 for 1998, concerning foreign trade malpractice, anti-dumping tariffs have to be revised if it is proven that the importing country is no longer illegally dumping. Similar tariffs on steel imports from Turkey, Latvia and Romania were also recently abolished in an attempt to stabilise spiraling local steel prices.
