Silk Road revival paves way for trade bonanza
An integral part of the Egyptian government's overall economic development strategy is substantial spending on modern transport infrastructure to improve the movement and flow of people and goods.
The showcase project is undoubtedly the long-awaited $8.2-billion expansion of the Suez Canal, which has seen the construction of a 72-kilometer waterway parallel to the existing canal. This expansion means vessels can now travel both ways along the length of the canal.
In addition to almost halving transit times, the doubling of the canal's daily capacity will generate vast revenues for the government, perhaps as much as $13.5 billion per year by 2024.
To optimize the expanded canal's additional potential, public and private-sector enterprises are investing huge sums in new trade and manufacturing bases, including the China-Egypt Suez Economic and Trade Cooperation Zone. Once finished, the zone will have consumed $2 trillion in investment in sectors such as manufacturing, logistics and agricultural goods processing.
The zone supports proposals for the Silk Road Economic Belt and the 21st Century Maritime Silk Road that complements the economic corridor strategy for the widened Suez Canal. Known as the Belt and Road Initiative, the goal of the initiative is the creation of an integrated logistical and financial trading network that stretches thousands of kilometers from eastern China to Western Europe. It is envisaged that the Maritime Silk Road will stretch from the Indian Ocean via the Red Sea and into the Mediterranean from the Suez Canal, thus making Egypt a vital partner in this challenging project.
Since 2006, Chinese enterprises have invested more than $5 billion in Egypt and generated at least 10,000 jobs. Improved trade access to vast consumer markets in most regions of the world has further enhanced the country's reputation as the perfect place to establish business operations. Foreign enterprises are assisted locally by entities including the Egyptian Businessmen's Association, headed by Chairman Hussein Fayek Sabbour.
Khaled Hanafy, minister of supply and internal trade, said that by regaining the confidence of the international community, Egypt had elevated its status among Egyptians.
"This confidence encourages Egyptians to do business in Egypt and to invest in Egypt," Hanafy said. "Once Egypt became more stable, investors started to return. We treat obstacles as opportunities here. We do not occupy more than 6 or 7 percent of our land, and this is both a problem and an opportunity. Because we have an abundance of land, there is great potential for investment; utilizing not only the strategic location, but also the land. Whoever comes here with capital to invest will enjoy relatively high returns on their investment."
Win-win collaborations
"We are approaching a strategic alliance between Egypt and China," Hanafy added. "When we talk about the Silk Road, Egypt is a great stop, it is a hub, so it is very important for China. China is a very important destination for Egyptian products and also a source, so we will have many win-win collaborations."
Future Pipe Industries is a leading manufacturer of durable fiberglass pipes for use in construction and civil engineering projects. Driven by the ever-increasing need for energy and water resources, the global pipe market is growing rapidly, and the switch to fiberglass is the main driver of this growth.
The company estimates the pipe market is worth approximately $130 billion with an estimated growth rate of 5 percent per annum. With the demand for fiberglass outpacing traditional pipe materials, 2015 forecasts put the total global pipe requirement at 31 billion meters. Given the scale of Egypt's infrastructure investment program, FPI is well placed to take advantage of the many opportunities created by the fresh capital expenditure.
"There is still work to be done by the government to provide sewerage services in villages because the population keeps growing," said FPI managing director, Saad H. Elkhadem. "All these projects will need our pipes."
InFocus provided this story.
(China Daily 06/03/2016 page7)
