Privatization

Minister of Public Enterprise to Wafd Newspaper "No Privatization of Pharmaceuticals Companies, Priority for Anchor Investor Sales". The Wafd opposition party paper has conducted an interview with Dr. Mokhtar Khattab, the Minister of Public Enterprise. When questioned on the role of the World Bank in the privatization program, Khattab responded by saying that the WB had no role to play in Egypt's privatization program, not even a consultative one, since the Bank's role ended officially in 1998. As for the privatization program's philosophy regarding the sale of PE companies, Khattab stated that the main focus is on long-term foreign investment in the country, and this is the reason behind the importance given to anchor investor sales, whether Arabs or foreigners.

El Wafd, October 24, 1999, Page 6

42% Increase in Company Profits Following Privatization. Profits in public enterprise sector companies which have undergone privatization, have increased by 42%. A study conducted by the Ministry of Public Enterprise, which targeted several companies as a sample, has indicated that 23 companies have seen a 25% increase in profits, whereas 14 companies have seen profits increase by more than 100%. Profits in the sample companies (39 companies after sale) reached LE 1.4 billion, compared to LE 900 million in the year prior to sale. The PE study indicated that the sectors which had contributed the most to profitability increases were the chemicals, fertilizers, housing, contracting, engineering industries, cement and milling sector companies. As for the distribution of this profitability increase according to sale methodology, the study indicated that profits in five companies sold to anchor investors increased by 100%, profits in six out of ten companies sold to employees witnessed an increase, and 18 out of 24 companies sold through the stock exchange witnessed an increase in profits by 75%.

Al Alam El Youm, October 27, 1999, Page 5

Atef Ebeid, "Use of Modern Technology to Develop Mills". Prime Minister Atef Ebeid held a cabinet meeting yesterday, during which a discussion was held concerning the development of a plan of action for the modernization of mills and bakeries, and increasing their efficiency through the use of modern technology. Ebeid stated during the meeting that subsidization of bread for low income families would be maintained. The annual cost of subsidization is LE 2.8 billion. Egypt produces six million tons annually of wheat and consumes approximately 11million tons.

Al Alam El Youm, October 27, 1999, Page 5

Workers are Partners in Privatization and Economic Reform Program. Dr. Atef Ebeid, Minister of Public Enterprise, discussed yesterday, during his meeting with the General Syndicate for Egyptian Labor Unions, and the chairmen of Egyptian labor unions, a number of important legislative measures that are currently under preparation, with the aim of realizing comprehensive care for workers. Ahmed El Ammawy, the Minister of Manpower and Immigration, stated following the meeting that a draft unified labor law is currently being prepared and is under review by the Ministry of Justice, preparatory to its submission to the Peoples Assembly. El Ammawy indicated that there are also several draft laws pertaining to workers benefits, at the forefront of which is the draft health insurance law and its amendments, and the draft social insurance law.

Al Akhbar, October 27, 1999, Page 8

LE 3.7 Billion in Cotton Company Debts to Banks. Prime Minister Dr. Atef Ebeid, stated that the level of cotton company debts to the banking sector is currently LE 3.7 billion, and that these debts have accumulated through the past 20 years because of the enforced sale of cotton by farmers to the State. Ebeid stated that these debts have been classified up till last December preparatory to their liquidation as part of a three-year program. The Prime Minister stated following his meeting with the Ministerial Cotton Committee, that Egypt's economic performance is strong, domestic debt is LE 147 billion, 52% of GDP, which Ebeid considers to be within safe boundaries.

Al Akhbar, October 28, 1999, Page 1

Sayed Rashed: "Early Retirement Problems to be Resolved by Next Year". Sayed Rashed, the head of the Egyptian Labor Syndicate has stated that all problems relating to the implementation of the Early Retirement Scheme in public enterprise sector companies, should be resolved by next year. In statements to the press following his meeting with the Minister of Public Enterprise, Mokhtar Khattaab, Rashed stated that the Labor Syndicate would be holding 16 meetings with holding company chairmen, in order to discuss problems standing in the way of productivity improvements in these companies. Rashed indicated the Egyptian Labor Syndicate's rejection of the implementation of the ERS for workers below the age of 48, indicating that this age was the maximum acceptable age. Rashed added that the unavailability of financial liquidity stands in the way of implementing the ERS in public enterprise sector companies.

Al Alam El Youm, October 28, 1999, Page 1

Forty-Three Companies to be Offered for Sale for Completion of the Privatization Program by 2001. The Ministry of Public Enterprise is preparing to offer 11 companies operating in the spinning and weaving industry for sale, within the framework of its targeted sale of 43 companies for completion of the privatization program by 2001. A MPE report also indicates that six cotton and international trade affiliated companies are to be offered for sale, and five engineering companies during 2001. Also five mining companies are to be offered ,two chemical industries companies, three contracting companies. During 2001, the General Nile Company for Automotive Repairs and the Alexandria Shipyards Company are to be offered for sale.

Al Ahram, October 28, 1999, Page 5

Economy

International Finance Corporation Increases the Level of its Activity in Egypt. IFC officials are expecting an increase in the level of IFC participation in Egypt during the coming three years . The IFC currently has a participation of LE 350 million in Egypt used to finance projects in the electricity, tourism, and industrial sectors. The IFC vice chairman, who recently visited Egypt as part of a Middle East tour, stated that the coming stage would witness increased IFC focus on the development of the banking and financial sector in order to attract more local investment. The IFC vice chairman stated that the IFC's focus on the financial and banking sector is based on its conviction that the need exists for long-term financing tools for the local investor, and that government legislation is required to facilitate the development of such tools.

The IFC vice chairman stated that investment in tourism and infrastructure projects are the main areas of interest for the IFC during the coming period, in addition to electricity distribution companies following privatization and small and medium scale businesses.

Al Alam El Youm, October 25, 1999, Page 9

Egypt Calls on the World Bank to Apply New Measures in Presenting Soft Loans. Dr. Ahmed El Darsh, Egypt's Minister of Planning and International Cooperation, criticized the measures used by the World Bank to provide soft loans to countries, these measures are centered in the measurement of the per capita income in these countries. During his meeting with Khaled Ikram, the World Bank resident representative in Egypt, El Darsh stated that Egypt' per capita income levels had exceeded the level required to obtain these soft loans. The Minister stated that this measure was incorrect, and that the measure to be employed should be the poverty level. El Darsh stated that in many countries in which per capita income is above the level decreed by the World Bank, there is a large percentage of the population living below the poverty line. The World Bank representative has reportedly shown his understanding of the Minister's viewpoint.

Al Alam El Youm, October 27, 1999, Page 6

World Bank Expects $2 Billion of Direct Investment Flows to Egypt During the Year. The annual World Bank Development report stated that Egypt has succeeded through its Economic Reform Program in creating an investment friendly environment, which has been reflected in the foreign direct investment flows into the country. Since 1995 FDI flows have increased from $400 million to $800 million in 19996, and $1.2 billion 1997. The report expects FDI flows to reach $2 billion in 1999. The report which is being discussed today in Cairo with World Bank experts, also expects that Egypt will increase exports to external markets in the event that it is successful in reforming the structure of its external trade, customs system, and port liberalization.

Al Ahram, October 28, 1999, Page 1

BOT Projects

Private Sector to Execute the Third Stage of the Egyptian Underground System. Dr. Ibrahim El Domeiry, the Minister of Transport, stated that the Ministry is currently studying the offer of the third stage of the Egyptian underground network to private sector investors, for the first time in Egypt. The third stage would be offered under the BOT system, and calls for the private sector's participation in the construction and management. The Minister stated that the third stage would connect the Imbaba area and Salah Salem Route, and will be extended until Cairo Airport. El Domeiry stated that the Ministry is examining the possibility of implementing the third stage through government allocations or through the BOT system, and that the decision would be made based on available government funds.

In a statement to the press, El Domeiry indicated that the Ministry is also looking into maximizing railroad services revenues through relying on private sector expertise in operating some activities that generate high returns such as transportation of goods through railroads, and utilization of overnight railroad carriages and catering services by the private sector.

Al Alam El Youm, October 27, 1999, Page 1

Reliance on British and Canadian Expertise for Protection of Electricity Consumers. Dr. Aly El Saeedy, the Minister of Electricity and Power, has requested that advanced Canadian and British expertise be sought our in setting up a consumer protection agency and the organization of the electricity utility, preparatory to taking executive action to establish such an agency in Egypt. This agency will be responsible for the protection of 15 million subscribers to the electricity distribution companies from against price hikes, as well as protecting against monopolistic actions after the entry of the private sector into investment in electric power plants under the BOOT, and the sale of electricity generation company shares on the stock market. Saeedy indicated that the Canadian government had approved an additional 15 million Canadian dollar grant to training and develop human resources in the electricity sector until 2000. The minister added that Britain had also provided a grant for the establishment of a training center in Alexandria, as part of five centers to be established by USA, Britain, France, Sweden and Germany.

Al Akhbar, October 26, 1999, Page 8

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