One of Spain's top industrial park developers makes Egypt its first investment destination beyond Spanish borders, Niveen Wahish reports Egypt's private sector is fast becoming a partner in the establishment of industrial zones. This trend is being encouraged by the government, in an attempt to increase the number of areas available for industrial development purposes. Within this framework, an agreement was signed this week for the set-up of Pyramids Zona Franca Egypt, a new industrial park in the 10th of Ramadan city. The new park will be established through a partnership between Pyramids Industrial Park (PI Parks), a private sector Egyptian company specialising in industrial park development and El Consorci de la Zona France de Barcelona, a Spanish public sector company, which has a solid track record developing industrial parks in its home country. Pyramids Zona Franca Egypt will be established over an area of 1.5 million square metres. Zona Franca will provide the operational, design and logistical consultancy and marketing support services to the project. And it will play a role in attracting Spanish companies to invest in the area. Meanwhile, PI Parks, established in 2007 and already operating another two million square metre park under its own name, is contributing the land, infrastructure as well as the legal, administrative, technical services and local market knowledge. "We are in need of new industrial parks," said Minister of Trade and Industry Rachid Mohamed Rachid at the signing ceremony. "Between 10 to 12 million square metres are needed to meet demand for industrial land," he added, explaining that the government cannot meet that demand as fast as the market requires. Rachid went on to say that private sector involvement helps the government direct whatever funds it has towards establishing industrial parks in areas which the private sector might view as less attractive. For Zona Franca this is the first investment beyond Spanish borders. Manuel Royes, chairman of the executive committee of Zona Franca, told reporters at a press briefing that his company -- given that it is a publicly owned Spanish company -- is not in Egypt for profit, but rather to make a contribution towards helping Egyptian and Spanish companies alike. Royes added that the company started looking into this project two years ago when it first attained the mandate to invest outside Spain. He added that during the past two years the company had thoroughly studied the project, and that now is a good time to tap into the Egyptian market. In fact, he believes the crisis is the best time to start work. "By the time the park is ready, the crisis will have passed, and it can really take off," Royes said. To date, the private sector has helped establish 18 million square metres of industrial land. The government plans for this to grow to 35 million square metres in seven years. According to Rachid, the government gives the land to private sector developers at no cost, except that of extending infrastructure to the borders of the park. After developing the land, the private sector in turn sells it just adding the cost of the infrastructure extended within the park. According to Nehad Ragab, chairman of PI Parks, that price has a ceiling of LE180 to LE200 per square metre. Rachid added that the private sector developer can profit through the services it provides within the industrial park such as logistics, leasing office space or cargo services. In the meantime, head of the Industrial Development Agency Amr Assal, also speaking at the press briefing, said that these new well equipped industrial parks could eventually replace tax free zones. He explained that "taxes in themselves are not an issue to investors, but it is the ease of doing business that matters most." Within that framework, Assal also said that the government is developing a unified law for industry which it will present to parliament by the end of the year. The law, together with the development of new industrial parks, ought to complement each other and eliminate bureaucracy in the sector by 2011, Assal said. In the meantime, until the law is passed, ministerial decrees that no longer suit today's economy are being cancelled. Minister of Trade and Industry Rachid Mohamed Rachid this week annulled 422 ministerial decrees, which no longer suit industrial needs or conflict with other laws governing the sector. Among those were decrees banning the establishment of new factories producing everything from soap to textiles, molasses and refrigerators, without prior consent from the Ministry of Trade and Industry. This brings to 505 the number of decrees annulled, representing 50 per cent of 1010 decrees which regulate industry in Egypt. Rachid also said that there are 83 more decrees awaiting annulment. The latter were issued between 1958 and 1983 and are no longer useful.
