The Association of Southeast Asian Nations (ASEAN) announced after its annual meeting on Thursday that it is considering investing in water and energy facilities in Upper Egypt, the country’s poorest region.
Egypt’s economic stability and liquid banking sector make it an attractive place for investment, as does its 20 per cent tax rates, which are "among the lowest in the world," according Mohamed Hosny, chairman of the Upper Egypt Red Sea Investment and Development Cooperation.
“The government focuses on Upper Egypt because it is one of the poorest areas in Egypt," said Amr Hosny, managing director of the Red Sea Company. However, he says, Upper Egypt also boasts a large potential in the mining sector, "as it is one of the richest areas in the world in its limestone reserves, producing 1.2m tons annually in Mount El Geer.” Hosny adds that production in Upper Egypt will face a worldwide demand, whether in Central and North Africa, or the Gulf region, and the cement industry “could be enhanced by moving the factories in Helwan, an urban region, nearer to the limestone quarries in Upper Egypt.”
Investors from the ten-nation association (ASEAN) have been invited to take part in the Upper Egypt Red Sea Highway Project, which will replace the current toll road connecting the Nile to the Red Sea with free throughway, facilitating trade in and out of Egypt via Safaga port.
ASEAN’s total investment pot is $211m, represented by 149 companies, according to the press release issued at the end of the meeting.
The companies have detected opportunities for investment in food industries and housing, encouraged by the cheap cost of land in the landlocked area.
Agriculture has already attracted Asian investors such as the Japanese Company for Food Industries, Agriculture Resources (Kote Bussa), back in 2006 in cooperation with the ministry of agriculture.
"Agro-business project in Egypt, took off by purchasing 300 hectares," said Masato Nakato, chairman of Japanese Company for Food Industries. The company’s goal was to cultivate non-traditional crops like garlic and green beans, so as to decrease Japan's dependence on the company’s China-based farms. "The Japanese dining table will welcome food with the name of Egypt on it, more than any other country," said Nakato.
"The undeveloped infrastructure in Upper Egypt is waiting for the private sector to improve it," Mohamed Hosny stated, predicting that profits from any investment will be in the "billions of dollars."
"Solar energy, water and sewage, are the perfect solution for the Egyptian dessert," Hosny commented. "The water shortage Egypt is facing from the Nile basin countries leaves Egypt with no choice except the dislocation of water."
Among the government incentives offered to encourage the private sector to invest is the Public Private Partnership’s (PPP) central unit, working under the umbrella of the ministry of finance with a convenient legislative framework and state guarantees for the introduced funds.
"Around 38 projects are in the pipeline, with a capital cost equal to $9bn," said Rania G. Zayed, senior adviser to the director of the PPP’s central unit.
Upper Egypt suffers from low per capita income, deteriorating education levels, and persistent inequality. "The area makes up 30 per cent of Egypt's population, with severe financial obstacles in the way of small businesses," said Amr Hosny.