Diversifying the activities of the Suez Canal region is a major project intended to transform the already strategic waterway into a global economic zone.

The General Authority of the Suez Canal Economic Zone (SCZone) is heading this project that is benefiting the economy by collecting transit fees and transforming the region into an international trade hub encompassing maritime, logistical, industrial, and urban sectors with a view to doubling revenues and boosting the Egyptian economy.

The Ain Sokhna Port is one of the key areas in the project, and its development is meant to encourage local and foreign investors to establish projects in the SCZone and create job opportunities.

The government has been taking major steps to facilitate the establishment of businesses and streamline work in the region. “The General Authority of the SCZone has created an optimal investment climate, starting with the digitisation of one-stop procedures and services. In collaboration with the European Bank for Reconstruction and Development [EBRD], the first phase of this has been completed, with work on the second phase currently underway,” Walid Gamaleddin, chairman of the authority, told Al-Ahram Weekly.

“The authority has also launched a digital platform for customs and logistical services, which will help ease such procedures and services for investors.”

“It has focused on providing incentives, including competitive land pricing in this important location. It has made significant progress in collaborating with major consulting firms and international experts to conduct in-depth studies on 21 targeted industrial and service sectors,” Gamaleddin said, adding that “these sectors have been identified to meet the needs of Egypt and the region.”

Gamaleddin identified some of the targeted sectors, which include medical equipment, pharmaceuticals, electrical batteries, semiconductors, automotive components, automobile manufacturing, metal casting, tyres, textiles, building materials, agribusiness and food processing, fuel and green hydrogen production, logistics activities, data centres, petrochemicals, and complementary industries such as electrolysis, solar photovoltaic energy, wind turbines, and reverse osmosis membranes for water desalination.

Vocational training centres focused on the green fuels industry are being established.

“One of the crucial factors contributing to the authority’s success is its openness to partnerships with the private sector,” Gamaleddin said, lauding the effective role played by the 14 local and foreign industrial developers working with the authority.

“This collaboration integrates with the authority’s promotional efforts aimed at attracting investments compatible with the strategic location of the SCZone, which serves as a gateway for trade and investment and an integrated manufacturing and logistics centre at the heart of global commerce, catering to over a billion targeted consumers worldwide,” he added.

“The authority is working with the government and both parliamentary chambers to enact legislation that will introduce new investment incentives, particularly in targeted industrial sectors, most notably the green energy sector,” Gamaleddin explained.

“The zone has already attracted 144 projects from companies that have obtained final or initial approvals, with total investments amounting to $3.22 billion in 2023-2024 up until the end of March 2024. This success follows a series of promotional tours across various European and Asian countries. The authority aims to attract even more investments during upcoming promotional tours, particularly targeting the BRICS countries following Egypt’s accession to the bloc,” he said.

Meanwhile, the authority is developing the Ain Sokhna Port to become the most important in the region and serving as a gateway to Africa and a link between East and West.

“The port development includes the extension of the second basin, featuring a ro-ro dock covering 880,000 square metres with a berth length of 1,060 metres and a passenger terminal covering 60,000 square metres with a berth length of 685 metres to enhance tourism. A container terminal with an area of 1.5 million square metres and a berth length of 1,900 metres is also being developed,” Gamaleddin said.

 “Work on the third basin extension includes a liquid bulk terminal covering 420,000 square metres with a berth length of 1,180 metres and a dry bulk terminal covering 445,000 square metres with a berth length of 730 metres. The fourth basin will include a container terminal covering 815,000 square metres with a berth length of 1,090 metres and a general cargo terminal covering 545,000 square metres with a berth length of 935 metres.”

Gamaleddin said that the fifth basin development work includes a “hazardous goods terminal covering 615,000 square metres with a berth length of 1,400 metres and a multi-purpose terminal covering 755,000 square metres with a berth length of 2,075 metres. The sixth basin work includes a container terminal covering 1.5 million square metres and a general and multi-purpose cargo terminal covering 1.3 million square metres with a berth length of 3,970 metres.”

The development work at the Ain Sokhna Port “aims to add 18 km of berths, bringing the total to 23 km upon completion. The expansion will accommodate a multi-purpose berth, a liquid bulk terminal, and a dry bulk terminal, and increase the depth of the basin to 18 metres, up from 17 metres,” he said.

INDUSTRY: Regarding the authority’s strategy to localise the green hydrogen industry, Gamaleddin said that “the strategy is based on manufacturing green fuel, such as green hydrogen, green ammonia, and e-methanol, providing complementary industries to green hydrogen, such as electrical transformers, solar panels, and turbines, and supplying ships with green fuel through the ports.”

“The goal is to make the SCZone a leading regional centre for this industry, either through the production of hydrogen in the region or by offering facilities with international standards for its storage and distribution.”

Notable achievements of the SCZone in the green economy include the provision of ship bunkering services with green fuels and the issuance of licences to international companies in this field. Additionally, “the zone is working to finalise partnerships with major international alliances to localise the green fuel industry. Specialised centres for vocational training on green fuel projects for technical workers are also being established,” he said.

The SCZone has seen “significant success in this sector, and it has already exported the first shipment of green ammonia to India from Ain Sokhna’s Egypt Green Hydrogen factory. Furthermore, the East Port Said Port hosted the first green fuel ship bunkering operation in the Middle East and Africa in August 2023. Since the start of the service in May 2023, over 1,000 ships have been supplied with 650,000 tons of traditional and green fuel.”

One of the world’s biggest fibreglass factories is also operating in Ain Sokhna. The company owning it is “the world’s first working in the production of raw fibreglass,” Lamis Ismail, the company’s assistant director of public relations, told the Weekly.

Besides the factory in Ain Sokhna, the only one of its kind in the Middle East and Africa, the company has another factory in the US and a third in China, she said.

“The Ain Sokhna factory exports more than 97 per cent of its production to Italy, France, Saudi Arabia, the UAE, Qatar, and various African countries. Fibreglass is prized for its light weight and durability and is used in various industries. Its applications include the manufacture of solar panels, boats, rocket noses, airplanes, wind turbines, and many other products,” Ismail explained.

“The company decided to build its factory in the SCZone in 2012 due to its economic feasibility, supported by the strategic location and manufacturing incentives. These include the flexibility of export and import operations and access to raw materials from local quarries. Although the company laid the foundations of the factory in 2013 and began manufacturing operations in 2014, the investment incentives provided by the SCZone since its establishment in 2015 have enabled the opening of new production lines over the last decade. Production has increased from 80,000 tons to 230,000 tons,” she noted.

Key incentives include customs exemptions, which have saved the company LE50 million annually on imported production requirements. Additionally, the availability of raw materials from quarries in Minya and the Red Sea — fibreglass is produced from white sand and limestone — has been crucial. The proximity of the factory to the port of Ain Sokhna facilitates export operations.

“All these factors have maximised the company’s investments in the region, reaching $162 billion within 10 years,” she said.

Ahmed Suleiman, deputy manager of the company and a mechanical engineer, said he has trained around 2,000 engineers and workers from across the country throughout his career. The company provides housing and meals within the factory complex, and it prioritises hiring from the local community of Suez, offering 650 job opportunities to its residents, he said.

At another factory, Wahid Ateeq, deputy chairman of a pharmaceutical company in the SCZone, told the Weekly that this was his company’s second factory in the region and was built in 2021 utilising third-generation production lines. Aiming to increase production capacity, he explained that the factory has been operating at full capacity since the end of 2022, with a workforce comprised entirely of Egyptian workers.

“Exports have increased to 40 per cent of the factory’s production capacity, generating substantial revenue in foreign currency. This facilitates the procurement of imported raw materials and requirements, which constitute 60 per cent of production inputs, according to international specifications and the standards of the Medicines Authority,” Ateeq said.

Studies are being conducted by his company, in collaboration with another national company, to localise the production of raw materials, he added, stating that “this could reduce the dependency on imported materials to 15 per cent in the near future, positively impacting economic returns from foreign-currency savings.”

Mohamed Labib, commercial director of a made-in-Egypt electronics factory, told the Weekly about the incentives the SCZone has provided for his company, such as “exemptions from customs duties when importing raw materials and exporting manufactured products.”

Labib said that the factory is “the first specialised factory in Egypt, the Middle East, and Africa to manufacture wearable mobile-phone accessories, including smartwatches and Bluetooth headsets, for major international companies. These products cater to the needs of the local market and are also exported to several Arab and African countries.”

 “The factory employs 65 Egyptian workers and is set to provide more than 150 job opportunities in future production stages. It operates three production lines, producing 3,000 pieces per day per line, with a total investment of LE25 million.”

Wael Fawzi Khaled, the owner of a clothing factory, said he had moved his business from Cairo’s Ain Shams district to the SCZone to benefit from the investment incentives it offers. These enable him to “import fabrics, manufacture garments, and re-export them to Gulf countries such as Kuwait, Saudi Arabia, and the UAE.”

The factory employs hundreds of workers from Suez, as well as numerous workers from Cairo. “The relocation has allowed the factory to expand with a brand that can compete in the global fashion market and open production lines for exports to Europe.”

* A version of this article appears in print in the 27 June, 2024 edition of Al-Ahram Weekly