Industrial Workers of World Day: Celebrating SCZone, RIZ

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Wed, 27 Jun 2018 - 01:25 GMT

FILE - Suez Canal Economic Zone

FILE - Suez Canal Economic Zone

CAIRO – 27 June 2018: On the day celebrating Industrial Workers of the World, Egypt Today celebrates Suez Canal Economic Zone, an industrial zone set to bring billions of Egyptian Pounds into the country and substantially decrease unemployment levels.

Previously, in a meeting between then Prime Minister Sherif Ismail and Chairman of the Suez Canal Authority (SCA) and the General Authority For Suez Canal Economic Zone (SCZone) Mohab Mamish to review available investments in the economic zone, Ismail pointed out the importance of the zone to the national economy and its role in creating jobs for youths.

In comments during the meeting, Mamish assured that demand from foreign investment is high and that sources of investment are diverse and numerous, suggesting that the zone will be able to positively contribute towards the national economy.



In detail: SCZone

The Suez Canal Economic Zone (SCZone) is a world-class free zone and trade hub along the banks of the newly-expanded Suez Canal, strategically located on the main trade route between Europe and Asia, with more than 8 percent of global trade passing through every year.

According to the SCZone’s official website, the vision of the project is: “To become a leading world class economic hub and a preferred destination for investment,” bringing together businesses from all over the Middle East, Africa and Asia, as well as internationally.

Egypt’s ability to become the new economic and energy hub, something that it currently on track to become, is supported by its access to regional markets and talents, as well as its vast labor pool, which, according to the zone’s official website, is “the largest labor pool in the region. … The workforce includes experienced accountants, lawyers, ICT specialists, engineers, technicians and designers, all available to work for SCZone companies at competitive prices.”

The flotation of the Egyptian pound has also played a positive role in securing relatively cheap labour for companies looking to come into the economic zone; the devaluation of the Egyptian Pound in the face of other currencies has made Egyptian labor and salaries even cheaper on a global scale, making it more competitive and attractive.

The Suez Canal Economic Zone (SCZone) covers 461 kilometers squared. Within the zone, there are: two integrated areas, Ain Sokhna with Ain Sokhna Port and East Port Said with East Port Said Port; two development areas, Qantara West and East Ismailia; and, four ports, West Port Said Port, Adabiya Port, Al Tor Port and Al Arish Port.

“Each integrated and development area provides investment opportunities in industrial and commercial enterprises, infrastructure and real estate development, logistics, amenities and state-of-the-art technology,” reads the zone’s official website.



Russian Industrial Zone (RIZ) in SCZone

During the signing ceremony where Egypt and Russia signed an agreement for a $7 billion RIZ, then-Minister of Trade and Industry Tarek Kabil explained that this 50-year agreement will give Russian companies rights to develop a 5.25 million square meter stretch of land in the Suez Canal Economic Zone into an industrial zone for Russian companies that will be built over three phases, giving them a solid, strategically-located base in Egypt to export to the rest of the Middle East and Africa.

RIZ will be established in the East Port Said region.

Industrial projects and buildings will be built over a space of 2.8 million square meters, while the rest of the land will be used to build residential units as well as commercial and entrainment facilities for the zone’s staff. Stretching over 461 square kilometers, the zone extends through the three Suez Canal governorates of Suez, Port Said and Ismailia, and will include six maritime ports, to be completed by 2045.

Manufacturing air conditioners, motors, construction equipment, glass, ceramics, electronics, medical supplies and plastic are among the industries targeted by the RIZ.

Russian Deputy Minister of Industry and Trade Georgy Kalamanov said in July that the RIZ will act as a platform for Russian products to enter the Egyptian and African markets. “I see it as a hub. I believe it is a first stage in shaping basic platforms for spreading Russian goods in African countries, “ Kalamanov had announced.

Building on Kabil’s comments, Denis Manturov, Acting Minister of Trade and Industry of the Russian Federation, stated, “The signing of this agreement comes as a culmination of intensive discussions between the two ministries of industry and trade in the two countries over the past two years.”

RIZ is expected to give Russian companies an edge over other international companies, as it will be easier and less costly for them to export to the Region, meaning that their prices are likely to be more competitive on a global level; they will also take less time to arrive at the intended importing country and will leave less carbon footprints.



Development works of the first phase, involving 1 million square meters, will start this year and will be carried out by a Russian developer who will also work on attracting Russian investors and companies during 2018 and 2019. This phase will create 7,300 jobs in the construction field, decreasing unemployment rates in Egypt.

The second phase will develop 1.6 million square meters and will be finished by 2022, creating 10,000 jobs, while the third phase will develop 2.65 million square meters and generate 17,000 jobs, once again, decreasing unemployment rates in the region.

The three phase is expected to be finished by 2031, when Russian companies will start operations, providing some 35,000 direct and indirect jobs, the statement said.

The Egyptian and Russian sides have agreed to establish a company under the name of Moscow Economic Zone to be responsible for the zone’s operations and construction works. The project, which will be supervised by the two governments, will be funded by the Russian Direct Investment Fund (RDIF) and a number of Egyptian banks.

Chairman of the Suez Canal Authority (SCA) Mohab Mamish said in the statement that the RIZ would help cover East Port Said’s needs for industries as well as the needs of the domestic market. He further added that the zone would serve as a gateway for Russian companies to European and African countries.

Mamish added that the land granted for the RIZ is on a usufruct basis and the condition for establishing projects and industrial complexes inside the Suez Canal Economic Zone is that 90 percent of the workforce is Egyptian. This would help the economic zone realize its target of creating 1 million jobs, according to the sustainable development strategy “Egypt Vision 2030,” Mamish said.

In October, Mamish announced that negotiations between Egypt and Russia on the industrial zone have been successful. Trade between Egypt and Russia increased to about $2.5 billion in the first seven months of 2017, from about $2.2 billion in the same period of 2016.

The project is part of ongoing efforts to encourage foreign and domestic investments in the Suez Canal Economic Zone, which is set to include an international logistics hub and areas for light, medium and heavy industry, as well as commercial and residential developments.



In statements to Sputnik news agency Wednesday prior to the signing of the agreements, Kabil said, “Post the signing today they will start developing the contract between a Russian developer who will manage the development of the area and the economic zone of the Suez Canal. So that contract will include the details of the construction and power required, very nitty-gritty details. So probably I would expect in the neighborhood of six months to finish the contract and the approval of the parliament. After that then the developer is free to start preparation.”

Kabil further pointed out that he had the chance of meeting some 60 Russian companies who are interested in investing in the RIZ, including some big companies like Kamaz. “Between the developer and the companies, there are many companies who said yes we are interested. The good thing is that they’ve already studied the Egyptian market, the export opportunities out of that particular area. So it would be premature for companies,” stated Kabil.

The Russian Investment Zone is expected to be the first of many other zones established around the Suez Canal, with negotiations on-going between the Egyptian government and their Chinese and Italian counterparts.



Agility Logistics Company to establish a logistic center in East Port Said Governorate

The Suez Canal Authority signed a Cooperation protocol with Agility Logistics Company to establish a logistic center in East Port Said Governorate, investing up to $100 million.

The protocol was signed by Chairman of the Suez Canal Authority and the Suez Canal Economic Zone, Mohamed Mamesh, and Vice Chairman and CEO of Agility Tarik Sultan.

The protocol stipulates that Agility will establish a logistics hub in the current expansion of East Port Said Port, with industrial and logistic infrastructure promoting the import and storage of raw materials, and the export and distribution of cargos through the Suez Canal axis.

Agility will also work on providing international solutions for Egyptian customs, so as to contribute to the rapid circulation of goods, strengthen supply chains in a fast and secure manner, and to increase the value added.

Mamesh said that the establishment of this project in East Port Said area comes in line with the vision of Egypt 2030, and achieves Egypt's development goals by attaining sustainable and integrated economic growth through increasing the value added, creating new jobs and enhancing the status of the Suez Canal as a commercial and industrial center.

“The protocol aims to study investing in the development and promotion of logistics areas as well as the industrial zone, in addition to establishing an environmental green logistics center for value added services, and applying technological customs solutions to facilitate trade movement,” Mamesh announced.

For his part, Sultan said that Egypt's privileged location facilitates reaching the region's markets and trade routes and qualifies it as a regional distribution hub, adding that his company has invested in the African market due to the increased demand to access this promising market.

Sultan added that the existence of the economic zone of the Suez Canal and the work in the East Port Said area will enable companies to obtain high quality infrastructure and fast, easy and efficient logistic and customs services.

“The protocol aims to study the establishment of a partnership between the Economic Authority and Agility,” Deputy Chairman of the Economic Authority of Suez Canal for the Northern Sector, Abdel Kader Darwish said.

He clarified that the first stage of work between two parties includes the preparation of feasibility studies for the development of a logistics center and the provision of customs technology services for eight months.

The second stage includes the preparation of the detailed plans and the final and master plans of the logistic project, besides providing technical and financial studies of technological services for six months, while the third stage includes the establishment of a joint venture within six months.



On the right track

Egypt’s President Abdel Fatah al-Sisi met May 26, 2018, with Chairman of the Suez Canal Economic Zone (SCZone), Mohab Mamish, in the presence of the acting chief of the General Intelligence Service, Abbas Kamel.

During the meeting, Mamish said that the Suez Canal revenues increased 13.4 percent year-on-year in the first five months of 2018.

The international waterway's May revenues were the highest ever, recording 16 percent, compared with the same period a year earlier, he revealed.

Sisi issued directives to persist with the efforts exerted by the Suez Canal Authority and the General Authority for the Suez Canal Economic Zone (SCZone) with the aim of developing and improving the capabilities of the Suez Canal Authority, presidential spokesperson Bassam Radi said in a statement.

The president also underscored the importance of rallying the state institutions’ efforts in order to help complete ongoing projects in the SCZone and swiftly finalize infrastructure projects in the area.

Meanwhile, Mamish reviewed the latest developments with regard to developing the SCZone, Sokhna and Port Said ports, and building new tunnels under the canal, noting that the world's top-notch companies are keen to invest in the SCZone.

He also pointed out that Egypt and Russia signed on Wednesday an agreement to establish a Russian industrial zone on an area of 5.25 million square meters at the Suez Canal Corridor.

Additional Reporting:

Hanan Mohamed




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