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Plans to bring Proton assembly plant to Egypt underway, says minister
Published in Daily News Egypt on 07 - 01 - 2009

CAIRO: Malaysia's Proton auto brand may soon get labeled "Made in Egypt after Egypt's trade minister said company executives were mulling over establishing a car assembly plant in Egypt.
"Company officials are keen on investing in Egypt's automotive and feeder industries, and a large delegation will visit Egypt in March to discuss means of cooperation, said Rachid Mohamed Rachid, Egypt's minister of Trade and Industry during his three-day visit to Malaysia, which ended Wednesday.
Rachid, who met with executives from Malaysia's national carmaker Proton Holdings, said the company was eyeing an Egyptian partner to establish a car assembly line as well as develop an Egyptian state-run auto company to manufacture Proton cars in Egypt.
"I understand that they have in mind one or two possibilities [as part of the entry strategy] and that will be announced in the next few weeks, he added.
In December, Proton first unveiled plans to assemble its cars in Egypt to tap its growing consumer market. The company, which operates in vehicle manufacturing, assembling, trading, and engineering, first launched Waja and Wira models in Egypt in 2001 and later brought in the Gen.2 hatchback in 2006. It has sold more than 5,000 cars in Egypt so far, according to Malaysian reports.
As of last September, Malaysia's investment in Egypt leapt to $175 million.
"Countries like Egypt have an organically sustainable demand, which has even surged following a strong economic recovery that boosted consumer confidence levels and created a recent consumer boom, pointed out Menatallah Sadek, consumer goods analyst at investment bank Beltone Financial, in a research note.
She explained that even if the project is "temporarily put on hold due to the scenario of a global slowdown, it will remain on the long-term agenda.
Rachid also said that Proton executives showed interest in the ministry's initiative to establish an auto feeder industrial zone in Egypt. The minister visited last Monday the Malaysian capital where he held trade and investment talks with the Malaysian prime minister, ministers of international trade and industry as well as domestic trade and works.
"In light of the current international economic crisis, it is becoming clear that growth over the coming 12 months will come from the emerging markets, Rachid said in a press statement. "I believe that countries like Egypt and Malaysia have the potential of walking away from the current economic crisis with positive results. That is why it is important for us to work together to strengthen our trade and investments.
Based on ministry records, bilateral trade surged to $585.1 million in 2007, up from $398 million in 2006. In the first nine months of 2008, bilateral trade stood at $572 million.
Egypt's exports to Malaysia, which include crude fertilizers, minerals, and inorganic chemicals, almost doubled in 2007 to $88.9 million from 49.6 million a year earlier. In the period from January to September 2008, exports hit $92.1 million.
Meanwhile, imports from Malaysia grew to $496.2 million in 2007 up from $348.4 million in 2006. From January to September 2008 imports recorded $479.9 million. Egypt mainly imports processed oils, industrial machinery, wood, as well as textile yarn and fabric from Malaysia. Egypt is Malaysia's second largest trading partner among African countries.
"There is an opportunity for us to really push bilateral trade as well as investment to a new level, Rachid told reporters in Kuala Lumpur, explaining that trade agreements signed between both countries could further boost trade.
"Egypt could act as a gateway for countries in Africa and the Middle East. . Malaysia could give Egyptian products access to other markets in Asia. So the potential is huge.
The two countries announced the formation of a Malaysia-Egypt Joint Trade and Investment Committee (JTIC) to promote trade, investment and economic cooperation.
Rachid said Malaysian companies had a big opportunity to participate in Egyptian projects, especially those related to infrastructure.
"One of the new areas of bilateral cooperation between our countries is through public-private projects, of which Malaysia is a leading country, he explained.
He said Egypt is opening up its infrastructure sector to public-private arrangements, including roads, airports, ports, as well as utilities like water, sewerage and electricity.
Egypt announced an LE 15 billion ($2.73 billion) economic stimulus package for the 2008/09 fiscal year ending June 2009, out of which a big portion will be spent on infrastructure projects.
Rachid said this money would be spent by June and the government would assess the economic situation in April to decide if further measures were needed for the second half of 2009.
Malaysia's investment in Egypt amounted to $60.6 million in 2007 up from $16.9 million in the preceding year, mostly in manufacturing and mining industries.
"We see the Egyptian market as being very well positioned to benefit from consumer demand upon its recovery from the global crisis and hedged by the export potential as it emerges as a 'manufacturing hub' for the region, Sadek explained.
"Egypt's low labor costs, various free trade agreements, and its geographical location support this new trend which we believe will be revolutionary for Egyptian industries.
Egyptian investments in Malaysia as of last November totaled $6.19 million in six approved projects in the manufacturing sector, namely plywood, wooden furniture, and giftware.


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