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Egypt, Italy: Strong relation supported by multi-billion euro trade exchange

Global Arab Network - - Gamal Ragay

Monday, 17 May 2010 22:39

Egypt, Italy – Strong relation supported by multi-billion euro trade exchange

The trade exchange between Egypt and Italy reached five billion and 153 million euros in 2008. Italy ranks fifth in respect of foreign investments in Egypt, where Italy is one of the largest countries, which participate in investment projects in Egypt. There are about 199 Egyptian-Italian joint projects with a total capital of about EGP 1.1 billion according to the internal investment system.

Cooperation between Egypt and Italy covers a number of areas including transfer of Italian technology to Egypt in various industries such as furniture, leather, food and chemical industries, and support of technical and industrial training programs. Also, there are several Italian investments in the banking, petroleum, communications and tourism sectors. The Egyptian-Italian cooperation in the fields of cotton, cotton textiles and weaving witnesses a considerable development where the Italian investments can be directed to establish factories operating with cotton spinning under the supervision of Italian experts. The Italian side participated in the preparation of the Egyptian youths to the new labor market locally and abroad through supporting the technical schools and upgrading skills of young students to enter the technical labor market required by Egypt and Europe in the future.

Within the framework of the cooperation protocol with Italy and Italian debt swap program, the second phase of the Egyptian-Italian program was approved where it included components to improve Siwa environment, support decision-making for water resources on the basis of ecological balance, support Wadi Al-Rayan reserve, support Elba Mountain reserve, integrated management of solid waste in Menya, support the cultural heritage in Saqqara and Fayoum, in addition to activating the memorandum of understanding with the Italian Ministry of the Environment and Egypt's Ministry of State for Environmental Affairs to support areas of potential building, eco-tourism, climate change and better utilization of water resources.

Trade exchange
Egypt pays attention to develop its economic and commercial relations with Italy as one of the G-8 (major eight industrialized countries). Italy is Egypt's Number One trade partner in the European Union. Since 2007, Italy became the world's first importer of the Egyptian petroleum and non-petroleum products.

The volume of trade exchange between Egypt and Italy witnessed a significant and steady increase during the period from 2005 to 2008, where the volume of trade between the countries increased from 2.649 billion euros in 2005 to 5.153 billion euros in 2008. The value of Egyptian exports to Italy increased from 1.265 billion euros in 2005 to 2.247 billion euros in 2008, while Egypt's non-petroleum exports exceeded one billion euros to reach 1.86 billion euros in 2008 which reflects diversity of the Egyptian exports and their ability to compete other exports in the Italian and European markets.

Investments
Italy occupies 5th place among European countries with investments in Egypt (€10 billion: industrial companies; Bank of Alexandria acquisitions; petroleum and natural gas projects). Meanwhile, Egyptian-Italian joint ventures have exceeded €25 billion.

Italian investments in Egypt have reached 636 projects broken up as follows:
• 237 industrial projects
• 6 financial projects
• 164 service projects
• 146 tourist projects
• 56 construction projects
• 20 agricultural projects
• 7 communications and IT projects
located in the free zones or within the country.

Egyptian-Italian Innovation & Technology Centers
Egypt decided to develop industry and support its competitiveness in export markets, and established a series of technology centers. Accordingly, it established 14 technology and innovation centers including 7 with Italy alone:
Leather industries technology center, leather tanning technology center, marble and quarries technology center, furniture technology center, engineering industries technology center, fashion and design technology center, jewels technology center. These 4-years-old centers represent an important mechanism to achieve the industrial developmental objectives. During this period, these centers succeeded to serve 5000 industrial companies and form a new class of young designers and innovators. They played a key role in improving quality of production and cadres' preparation according to requirements of the labor market.

Egyptian-Italian Business Council
According to the agreement signed in January 2006, the Italian-Egyptian Business Council is a non-for-profit, non-governmental organization formed to facilitate and develop economic relations between Italy and Egypt under the auspices of the Italian Minister of Productive Activities and the Egyptian Minister of Trade and Industry.

The Business Council functions as a forum for discussion on strategic issues, economic policy recommendations, facilitation of new investments and solution for investment hindrances and is held at least twice a year, alternatively in the two countries. Each Business Council reunion consists of the Business Council “Board Meeting” and an open “Forum”, which may address issues of a specific “Industry” particularly relevant to the economic relations between the two Countries. The Business Council Board is composed of a selected number (about 10/15) of business leaders per country.

Tourism
The volume of Egyptian tourism is one of the most important indicators which reflect the strong ties between the two countries, where Italy ranks fourth in the list of countries exporting tourism to Egypt, after Russia, Germany and England. The Italian market represents about 10 percent of total international tourism to Egypt.
Italy occupies 4th place on the list of countries exporting tourists to Egypt (Italians represent 10% of tourists flowing into Egypt) .

Agreements signed
• A cooperation agreement between the general federations of trade Unions to train Egyptian workers in Italy.
• A cooperation agreement between the Italian Railroads Authority and the Egyptian Ministry of Transport on the restructuring and upgrading of Egyptian railroads.
• An agreement of cooperation in field of wind power generation.
• A debt swap agreement by virtue of which Egypt trades US$100 million in debt installments with the financing in local currency of development projects as specified by the government of Egypt (June 2007).
• A MoU establishing a 2-phase credit line to finance Egyptian exports to Italy in 2006 (€50 million) and small and medium-size projects (€50 million).
• A MoU in field of medical training.
The balance of trade between the two countries, in 2007, was tipped in Egypt’s favor. A surplus of €636 million was recorded. Egypt’s non-petroleum exports also exceeded €932 million.
An opportunity is available at present for increasing Egypt’s exports to Europe through the Green Corridor via Italy.
- A Memorandum of Understanding was signed between the port of Ravenna and port of Damietta to exchange facilities, information and visits between the two sides.
- Italy is interested in cooperation with the project of paving and duplication of the land route between Marsa Alam and Edfu for making Nile tours to the archaeological sites between Luxor and Aswan.
- The project of renewable and alternative energy where an Italian company is investing in the field of generating electricity from wind energy in Jabal-el-Zeit area in Zafarana with estimated investments of US$ 400 million as well as investments in solar energy.

Environment protection
Phase II of the Egyptian-Italian program devised under the umbrella of the cooperation protocol and the debt swap program has been ratified. The program seeks to upgrade the environmental components of the Siwa Oasis, improve decision-making with respect to water resources, protect the preservations of Wadi ar-Rayan and Gabal Elba, manage solid waste in Minya and protect the cultural heritage of Saqqara and Fayyum.

Plans have also been devised under the MOU signed between the Italian Ministry of Environment and the Ministry of State for Environmental Affairs on capacity-building, Ecotourism, climatic changes, and the optimal use of water resources.

Education
An Egyptian-Italian university for post-graduate studies will soon be established. 2009 has also been proclaimed an Egyptian-Italian Year of Science and Technology.

Global Arab Network

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Last Updated on Monday, 17 May 2010 22:50

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