9th Egyptian Side Meeting Egypt- korea Business Council Sunday, 1st of November 2015

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9th Egyptian Side Meeting

Egypt- Korea Business Council

Sunday, 1st of November 2015
The 9th Egyptian side meeting of Egypt – Korea business council was held on the 1st of November 2015, the meeting was headed by Dr. Sherif El Gabaly, Chairman of the Egyptian Side of Egypt –Korea Business council, Mr. Kim Eung Joong Economic Counselor, Embassy of the Republic of Korea in Egypt, Mr. Rho Jungmin Deputy Director KOTRA, as well as Ambassador Amin Meleika Deputy Assistant Minister for Foreign Affairs for East Asian Affairs , Dr. Noha Ahmed Salah, first secretary , Egyptian commercial service and Mr. Mohamed Mohy Eldine , and Marwa Hussein from the General Authority for investment and free zones.
Dr. Sherif El Gabaly, Chairman of the Egyptian Side of Egypt –Korea Business council, started by mentioning that the last joint business council meeting was held in Cairo in august 2014 and since things are improving now in Egypt as we are now in the process of electing a new parliament which is considered the last step in forming our political institutions after the 30th of June Revolution. He aslo added that during the Sharm El Sheikh Economic Conference a lot of major mega projects were announced through the PPP and that he believes that for sure Korean investors can play an important role in these projects.
He added that we are planning to visit Seoul in order to hold the “9th Joint Egypt-Korea Business Council Meeting” and consultations are ongoing to decide on the date of the visit.
Dr. Gabaly also said that there are a lot of room for mutual cooperation especially in the new and renewable energy, the Suez Canal development project and the PPP projects recently announced by the ministry of Finance.
Dr. Gabaly also added that in order to rebuild the investors’ confidence and to support the government efforts towards a roadmap for investment and business climate reforms, Egypt Korea Business Council has extended an invitation for the Korean companies in Egypt to attend this meeting where we were supposed to discuss the challenges that face the Korean Investors in doing business in Egypt in order to open up channels of dialogue with governmental officials, and serve as a mediator between the Egyptian authorities and foreign companies. Unfortunately, they were not present, but we still offer our services as a catalyst to facilitate their business experience in Egypt.
Mr. Kim Eung Joong the Economic Counselor, Embassy of the Republic of Korea in Egypt, started by thanking EBA and the council for the invitation and said that the Egypt Korea relations are long term ones, and that since President Sisi started his presidency, the Egyptian society is moving forward on the political social and economic fronts even though mounting challenges are being faced. He also added that Korea has passed through a similar experience where the main problems were national security, economic development as demand for democracy.
Ambassador Amin Meleika Deputy Assistant Minister for Foreign Affairs for East Asian Affairs, highlighted on the exceptional relations between Egypt and Korea based on excellent ties of mutual understanding and cooperation. He also mentioned that the diplomatic relations has this year reached 20 years.
Ambassador Meleika, added that a lot of important visits were done during the past period namely:

  1. Prime Minister of Korea (November 2014)

  2. Vice Minister of Trade attended the Sharm El Sheikh Economic Conference

  3. Minister of Oceans and fisheries was also here during the inauguration of the new Suez Canal in August 2015

  4. President Sisi was expected to visit Korea, but it was postponed due to parliamentary elections.

  5. The presidential expected visit will be preceded by a visit from the Egyptian Minister of Foreign Affairs.

Ambassador Meleika , also mentioned that there are now important projects under discussion between the two side:-

  1. Nuclear Power Plant in Daba’a (the Korean side has prepared a valuable feasibility study for this project ,knowing that they have background experience as they have built a similar project in UAE in 2009)

  2. Egyptian – Korean University for Science & Technology (the project was supposed to be in Damietta, but now there are discussions to move it to Beni Sueif where Samsung Plant already exists. The project is supposed to start in 2016 and be ready in 2022)

  3. Development of Alexandria Port (there is a MOU between the two ministries of transportation in this regard)

  4. Development of Traffic Lights between Nagaa Hamady and Luxor (118 KM)

  5. Establish a power station to Produce Photovoltaic energy with the capacity of 20 megawatt in Hurghada.

  6. Establish a power station to produce new and renewable energy (biomass) using waste to energy recycling techniques.

  1. Start the second phase of enlarging the automatic control over the distribution network in Cairo

Ambassador Meleika , also added that there is an expected visit from the Korean Vice Minister of Finance from the 16th to the 18th of November 2015 to discuss the financing possibilities in some projects.

He added that EBA and the Egypt – Korea business council can act as a catalyst between the business communities in both countries to take active roles in these projects.
Dr Gabaly added that we have received a proposal from the New and Renewable Energy Authority (NREA) on the importance of activating the local manufacturing and technology transfer from the Korean side in the renewable energy machines.
Mr. Mohamed Mohy Eldine , the General Authority for investment and free zones said that we have a long investment experience with Korea with a lot of success stories such as Samsung, LG , Hyundai ,and we are targeting now to attract more investment from SK group , Kia and in sectors such as petrochemicals and electronic
He added that, a large economic conference for Investment opportunities in Upper Egypt will be held in December 2015.
Mr. M. Mohy Eldine also added that the master plan for the projects in the Suez Canal development will be ready by January 2016.
He added that joining efforts to receive delegation will add more value to the outputs of the events. And confirmed that GAFI will participate in the upcoming business trip to Korea when the date is finally decided.
Dr. Noha Ahmed Salah, First Secretary, Egyptian Commercial Service said that there is a proposed MOU that is expected to be signed between the ministries of trade during the upcoming presidential visit.
She added that the main cooperation sectors are: education and vocational training, technology transfer, shipbuilding, automotive industry

Eng. Mohanad Taha Khaled , Partner BDO Khaled & Co gave a small overview on the latest developments on taxation :

  • Egypt has 52 tax treaties with different countries in the world, one of which is with Korea .

  • After the revolution, there was an increase in the corporate tax rate to be 25% instead of 20% to cover the budget deficit.

  • A new tax was introduced which is the Dividend taxes were also introduced on the dividends distributed from companies to their shareholders.

  • The government after several lobbying voices and meetings announced a reduction in corporate tax rates to become 22.5% fixed for 10 years which is considered as a major change in the mindsets and would lead to more stability.

  • The government has postponed the customs duties on imported capital goods for companies established under the law number 8.

  • Sales tax on capital goods was reduced to 5% instead of 10%. That will be recoverable with the first tax return.

  • An attractive point for investors aiming at exporting, is that the exports are at 0% tax rate.

  • In the current tax law, you are allowed to have an accelerated depreciation for assets by 50% in the first year especially in manufacturing facilities. (Draw back) therefore, the government decided that it will be a non- compulsory depreciation.

  • The introduction of (Value Added Tax) VAT, major step ahead, the draft law in under discussion with business organizations and chartered accounts.

  • Regarding the monetary exchange rate, aggressive decisions are being taken in the Central Bank of Egypt by changing the government, one point that need to be mentioned that Egypt has passed through the same situation in 2004 where the difference between the official exchange rate and the black market was around 1.5 LE , whereas , now the difference is only 50 PT, therefore, it will be resolved by taking some measures in the near future.

During the discussion the following points were raised:

  1. A new feed in tariff will be announced in February 2017 for energy produced from waste, therefore the using the Korean know how in this area would be required.

  2. Requesting a list of the top Ten Korean Companies working in the field on energy.

  3. The cooperation in renewable energy should focus on rural areas to be linked to the national grid

  4. Cooperation in the education sector is crucial for the development of Egypt, and that both governments should support dispatching Egyptian engineers to be trained in Korea especially in the field of new and renewable energy.

  5. Regarding education , not only university exchanges are required but also the cooperation in vocational training and e learning

  6. The trade balance is in Korea’s favor, as we export represent less than 20% of what we import , non-oil exports are only 57 million US$.

  7. Desalination of water using the Korean experience using less costly methods.

  8. Encourage more investments from the Korean side especially in the mega projects.

  9. Other areas of cooperation were suggested as the telecommunication sector, shipping and logistics as well.

  10. Activating the recommendation our the 8th round of the joint council to allocate a special industrial zone for the Mega Korean companies to pump long term, ongoing investments to Egypt.

  11. Recycling of paper, plastic and fibers was also discussed using the Korean know how.

  12. Encouraging incoming Tourism from Korea to compensate for the imbalance in trade.

  13. Applying the (ABC) of value chain approach in exporting value added products not raw materials.

  14. The PPP upcoming projects should be downloaded from the finance ministry web site and sent to the Korean side.

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