Business

CAIRO — Egypt's agricultural exporters are seeing a surge in demand and finding new foreign markets only months after the currency was floated, with many rushing to expand capacity to keep up.

Egypt's pound has roughly halved in value since the central bank abandoned its peg of 8.8 to the dollar on November 3, making Egyptian fruit and vegetables look cheap and attractive to foreign buyers, exporters said.

"Demand has doubled, with every product gaining one or two markets," said Mostafa Al Naggari, chairman of Fresh Fruit Co., which recently signed deals to ship to China and is finalising others with Australia, New Zealand and Korea.

The currency flotation helped Egypt to secure a $12 billion IMF loan to support a wide-ranging reform programme aimed at restoring foreign inflows and reining in the budget deficit.

A series of tax increases and subsidy cuts, along with the currency depreciation, have driven inflation to record levels in a country where millions live a pay cheque away from hunger. But amid the pain of government austerity, local manufacturers and exporters are reporting a pick up in activity.

Egyptian politicians have blamed the import-dependent country's ballooning trade deficit, which stood at $42.64 billion in 2016, for putting pressure on the pound. Along with a sharp reduction in imports, a rise in agricultural exports could help narrow that gap.

Exports of Egyptian vegetables, fruits and legumes amounted to $2.2 billion last year and would likely rise by about 15 per cent in 2017 as a result of the float, Abdel Hamid Al Demerdash, the head of Egypt's Agriculture Export Council, said.

The main vegetable exports include onions and artichokes, and fruits include oranges and strawberries.

The growing interest follows a turbulent year for Egyptian produce, with a Hepatitis A scare in North America linked to Egyptian strawberries and a temporary ban of Egyptian fruits and vegetables in Russia, one of Cairo's top buyers.

But traders say growth now comes down to how quickly they can expand to meet demand.

Japan Food Solutions (JFS), a fruit and vegetable exporter, is working to double its planted area this year to meet an expected 20-30 per cent increase in demand on the back of new orders from markets in Europe and North America, senior managing director Emad Said said.

"I see this as a golden opportunity for Egyptian produce to compete more aggressively ... The clever ones will seize this opportunity to enter new markets," he said.

PICO Modern Agriculture Co., another exporter, has seen its demand from Gulf Arab countries jump by about 50 per cent in the last two months, chief executive Alaa Diab said.

"The flotation has been very tempting and very helpful. It opened the eyes of many importers to come look at Egypt where they can get much more competitive deals," Diab said.

ATHENS — Greece said Thursday it intends to reach “a political agreement in principle” with its creditors on Monday, in order to unblock loans required by the cash-strapped country to repay its debts.

For months, Athens and its European and International Monetary Fund (IMF) lenders have failed to concur over the terms of the latest review of Greece’s 86 billion euro bailout.

Eurozone finance ministers meet on Monday in Brussels to discuss the deadlock with hopes that the different sides can at least achieve an outline of a deal. 

This is the aim of “all the stakeholders” in Greece’s recovery programme, government spokesman Dimtris Tzanakopoulos told a press conference.

“The political conditions are there for such an agreement,” he said.

A senior eurozone official in Brussels said that a broad sketch of a deal was the “best case scenario” for the ministerial talks on Monday.

This would allow the creditors to send teams to Athens in order to “crunch the numbers” and hammer out the final deal, the official said.

The row is centred on whether Greece can deliver on budget targets that the IMF says are based on overly-optimistic economic forecasts.

The eurozone has demanded that Greece deliver a primary balance, or budget surplus before debt repayments, of 3.5 per cent of GDP, but the IMF has said only 1.5 per cent is feasible.

The Washington-based fund insists more tax hikes and pension cuts are needed for Greece to meet its targets — something the leftist government in Athens flatly refuses.

A compromise is required to sign off on a second review of the bailout programme and unblock a tranche of loans Greece needs for debt repayments of seven billion euros this summer.

According to Tzanakopoulos, the challenge for Monday’s meeting is to “bridge the differences” in the post-2018 forecasts between Greece and Europe on the one hand and the IMF on the other.

European Commission Vice President Valdis Dombrovskis warned that “time lost in reaching an agreement will have a cost for everyone”.

“The agreement is within reach, provided that all sides show political will,” he told Greek economic portal Euro2day.

Top EU economics official Pierre Moscovici, considered an ally of Greece, visited Athens on Wednesday in a bid to end the standoff.

“We have a few key days, let’s concentrate now to finish all these talks. The parameters are on the table, everybody knows them,” he told reporters.

AMMAN — Royal Jordanian (RJ) and Turkish Airlines Technic, Inc. sealed an agreement, whereby RJ will receive Line Replaceable Units (LRU) components pool support and spares for V2500 engines installed on RJ’s A320 family aircraft.

The services and spares that will be provided within the framework of the agreement will be based in Turkish Technic’s Istanbul base and supply stations throughout the world.

The contract will serve to enhance the business relationship between the two parties and will be a sustainable step for Turkish Technic in the Middle East region. Stressing the trust in the services provided by Turkish Technic, Royal Jordanian President/CEO Suleiman Obeidat said: “We are pleased to cooperate with a pioneer MRO company in the region, Turkish Technic.

We believe their contributions and technical services will back our endeavors to provide a continued on-time, efficient operation, all for an enhanced passenger satisfaction.” Turkish Technic has reached a fleet size of about 800 aircraft in the component pool market with the signing of this agreement.

Tokyo — Tokyo stocks jumped on a weak yen Wednesday as Federal Reserve boss Janet Yellen signalled that US interest rates could rise at any time, but Toshiba tumbled again as it warned of massive losses.

Yellen presented an upbeat view of the world's largest economy in her testimony to Congress, noting labour market conditions continue to improve and inflation is inching up to the Fed's 2 per cent target.

She confirmed another rate increase was on the way, which leaves open the possibility of a move at the March 14-15 policy meeting.

That propelled the dollar to 114.35 yen from 114.27 yen in New York and sharply up from the 113.40 yen in Tokyo earlier Tuesday. 

A weaker yen is good news for Japan's exporters as it makes their products more competitive overseas and inflates repatriated profits.

Tokyo's benchmark Nikkei 225 index rose 1.03 per cent, or 199 points, to close at 19,437.98, while the Topix index of all first-section issues finished 0.95 per cent, or 14.57 points, higher at 1,553.69.

Wall Street's three main indexes set records for a fourth straight session Tuesday after President Donald Trump's promise last week to unveil "phenomenal" US tax reforms soon.

"In principle, the Trump rally continues," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities. 

"Yellen seemed so positive" towards hiking interest rates, he told AFP.

Mobile carrier SoftBank jumped 1.58 per cent to 8,670 yen after it announced it will buy US asset-management firm Fortress Investment Group for $3.3 billion in cash.

Toyota tacked on 0.57 per cent to 6,491 yen while camera and copier maker Canon rose 1 per cent to 3,323 yen.

Toshiba sank 8.74 per cent to 209.7 yen, extending Tuesday's 8 per cent selloff. The drop was sparked by growing fears about the firm's finances as it issued a grim preliminary earnings forecast Tuesday.

The company said it was on track for a net loss of 390 billion yen in the fiscal year to March, hit by a writedown topping 700 billion yen at US nuclear division Westinghouse Electric.

Toshiba's chairman quit his post as it delayed the release of formal financial results and also revealed it was investigating possible misconduct by senior executives at the division.

A whistleblower had complained top executives had exerted "inappropriate pressure" over accounting at the US firm, Toshiba said.

The revelation comes less than two years after Toshiba — one of Japan's best-known companies — was hammered by an embarrassing profit-padding scandal.

AMMAN — Prime Minister Hani Mulki on Tuesday stressed the importance of considering alternative routes and working out ways deemed appropriate to facilitate the flow of goods between Jordan and Turkey, according to the Jordan News Agency, Petra. 

 The premier made the remark during a meeting with a Turkish delegation, chaired by President of the Turkish Union of Chambers and Commodity Exchanges Rifat Hisarciklioglu, currently on a visit to the Kingdom.

Mulki said through using alternative crossing points, Jordan and Turkey can increase their joint commercial exchange volume. Turkey may also benefit from the various investment opportunities available in the Kingdom and at Aqaba Special Economic Zone, in particular, the premier told the visiting delegation, stressing the strong relations between both countries.  

In April 2015 because of the Syrian conflict, Jordan had to close Jaber crossing which served as a major trade route, providing an outlet for Jordanian goods and a conduit for inter-regional trade between Turkey, Europe and the Gulf Cooperation Counties, according to news websites.

Mulki also expressed hope that the Jordanian-Turkish free trade agreement, which came into force in 2011, could contribute to increasing trade exchange and investments. He also highlighted other free trade agreements that Jordan signed with other countries, encouraging Turkish investors to benefit from them.

Commending the ongoing reform process in Jordan, Oglu noted that the two countries have similar challenges, in terms of their geopolitical position.

He pointed out that his accompanying delegation comprises 50 businessmen, representing leading Turkish companies who are interested in boosting joint Jordanian-Turkish investments. 

The meeting was attended by several Jordanian ministers and representatives of business entities, as well as Turkey’s Ambassador to Jordan Murat Karagöz.

DOHA — Hundreds of drivers with ride-hailing service Uber in Qatar went on strike on Monday for the second time in a year to protest against fare cuts.

The US-based company, which started operations in Doha in 2014, has in recent months cut fares by 15-20 per cent for passengers amid growing competition from local firms.

Uber drivers in Doha stayed home on Monday to protest the cuts and an "upfront" service launched by Uber in November that allows passengers to view the total fare before their journey.

"The upfront isn't fair. If you get stuck in traffic or the passenger makes extra stops during the journey, we receive nothing for that," said John, an Ethiopian driver who declined to give his second name.

"If they don't raise fares and treat drivers better we have many other platforms we can go to. I have a family to support," he said.

Uber has tried to drive down taxi fares to win customers from local rivals in Qatar like Careem which has a larger market share than Uber in most of the 32 cities in the Middle East, North Africa and Pakistan region in which it operates.

An Uber spokesman in Dubai said the company was "committed to dialogue with partner drivers" and had made improving their experience a priority.

"We are very proud of the high quality service they offer to riders who want to get around Doha with a safe, efficient and affordable ride," said the spokesman in a statement.

Thousands of Ethiopians, Indians and Nepalis work as Uber drivers in wealthy Qatar where unions and labour protests are banned and authorities penalise dissent with jail terms or immediate deportation.

Some drivers say they have struggled since an oil slump in mid-2014 that has squeezed state finances and last year saw Doha raise the domestic price of gasoline by 30 per cent.

CAIRO — Egyptian chocolate spread maker Swifax has doubled its sales and is struggling to keep up with demand since the pound currency dived in November, forcing shoppers traditionally "obsessed with everything foreign", to ditch pricy imports and buy local.

"People started changing their habits," Swifax's Commercial Director Mohamed El Gammal told Reuters. "We could sell even more ... but we have a problem with our capacity."

The pound's flotation and an ensuing increase in tariffs on more than 300 products shipped from abroad have hit importers hard, but have been a boon for domestic manufacturers such as Swifax.

Once shunned in favour of prestigious foreign brands perceived to offer higher quality, Egyptian-made products are much more affordable for customers who are increasingly price conscious as inflation has shot above 28 per cent.

The bonanza began when Egypt abandoned its peg of 8.8 pounds to the dollar on November 3. Since then, the currency has roughly halved in value to around 17.75.

Sitting in his office next to a glass cabinet crammed with varieties of the sandwich-filler popular with sweet-toothed Egyptians, Gammal said sales have jumped from 2 million pounds ($112,700) a few months before the flotation to 4 million, as rival imported brands become unaffordable to many.

A 350-gramme jar of Swifax's high-end spread, Moltobella, costs 36 pounds, while its budget brand costs around 17 pounds. Its main imported competitor sells for about 70 pounds a jar.

Floating the pound helped Egypt to secure a $12 billion IMF loan in return for a reform programme that includes tax increases and electricity subsidy cuts, driving up inflation in a country where millions live a pay cheque from hunger.

Egypt also raised customs tariffs on many luxury goods to over 50 per cent, plugged customs loopholes and tightened quality controls in an effort to rein in a trade deficit the central bank blames for depressing the currency.

Importers criticised the increases, saying local producers do not have the capacity to fill the gap left by declining sales of foreign goods.

According to Emad Maher, manager of hypermarket chain Samy Salama, switching to local products has increased by 90 per cent, mainly because of the price difference.

"In some products, you can compare the local and imported and not find much difference [in quality]. But Egyptians are obsessed with everything foreign," he said.

At Covertina, another chocolate-maker, business is also booming. Chief Executive Mostafa Sayed Salam said production had risen 19 per cent in 2016 from the previous year. "After the flotation of the currency, it became hard for importers to sell the chocolate at the old prices," he said. "My market share has increased from 50 per cent to 65-70 per cent."

Narrowing the deficit

Multinationals are taking notice. Nestle, the packaged food giant, said in January it had signed a deal to acquire Caravan Marketing Company, an Egyptian instant coffee maker that had increased its domestic market share due to competitive pricing.

With Egypt long dependent on imports, the trend suggests the government's efforts to narrow a big trade deficit and boost domestic industries are starting to work.

Even before the float, imports had been falling due to shortages of foreign currency. Egypt had struggled to attract dollars and revive the economy after the 2011 overthrow of president Hosni Mubarak, with subsequent political turmoil driving away tourists and foreign investors.

Official trade figures for 2016 have yet to be released but a government official told Reuters earlier this month that the deficit had narrowed by 17.4 per cent compared to 2015. Imports fell to $62.93 billion from $70.28 billion, said the official, but higher exports also helped to shrink the gap. These rose to $20.26 billion in 2016 from $18.67 billion.

As the unofficial figures suggest, the weaker pound is also helping Egyptian exporters.

Hesham Zahra, chairman of Yasmine cosmetic company, said production had risen 25-35 per cent since the flotation boosted sales both at home and abroad. "Today our prices have become competitive in foreign markets, and we can compete with some countries in exports," he said, adding that Yasmine lotion retails for a quarter of the price of some imported brands.

Trade and Industry Minister Tarek Kabil told Reuters in October that Egypt had produced $4 billion worth of import substitutes since the start of 2016, and aimed to expand domestic industry by 8 per cent in three years.

Food industries were leading the way, he said, but local products were also compensating for a retreat in imported building materials, chemicals, leather and furniture.

"This is a golden opportunity for Egyptian producers," said Abu Bakr Emam, head of research at financial firm Prime Holding. "Local producers used to be unable to compete but now is the right time to go in to compete against imported goods due to the price advantage after the dollar rises."

Rising prices

Still, the pound's dive is a double-edged sword for local manufacturers who largely depend on imported raw materials.

At Swifax, Gammal said the cost of cocoa butter and hazelnut had more than doubled since the flotation. A tonne of hazelnut used to cost 90,000 pounds but now it costs 230,000.

This forced the company to dip into funds that had been earmarked for expansion. This will now take longer despite the more pressing need to raise capacity. "In the end we increased production without the expansion by tripling the shifts at our factories which adds a lot of strain on the machines," he said.

With Egypt aiming to raise economic growth under the IMF programme to 5.5 per cent by the 2018-19 fiscal year from 4.3 per cent in 2015-16, the government can ill-afford large numbers of firms to delay investment like Swifax.

But as prices rise, ever more families are looking to save money. "People right now don't care about the quality, it's all about the price," said once shopper in Cairo who called himself Abu Abdulla. "I walk around the supermarket and just look at the prices," he said as he pushed a trolley piled with seven family-size boxes of Egyptian-made biscuits.

Tapping into the trend, a Facebook group called "Made Proudly in Egypt" lists tried and tested local products, from foods to detergents and even pots and pans.

One of the more than half-a-million members of the group, writing under the name of Om Khaled, said the bargains sell fast. "I used to get [imported] nappies and baby food for my son and now I get local alternatives, but unfortunately the cheap Egyptian products are not always available. I have to look hard for them," she said. 

AMMAN — Jordan Phosphate Mines Company (JPMC) and the government of Bangladesh on Saturday signed a memorandum of understanding, under which JPMC will supply the south Asian country with 270,000 metric tonnes of phosphate and phosphoric acid.

At a total value estimated at $280 million, the company is to deliver these amounts over a period of three years.

The MoU was signed by JPMC Chief Executive Officer Shafiq Ashqar and Chairman of the Bangladesh Chemical Industries Corporation (BCIC) Mohammed Iqbal, in the presence of senior officials from the two countries.  according to a JPMC statement.

JPMC will provide BCIC with 150,000 metric tonnes of rock phosphate and 120,000 metric tonnes of phosphoric acid, used to produce fertilisers.

The company will also look into the possibility of exporting DAP fertiliser to Bangladesh. 

An agreement to be renewed on annual basis for three years, will be signed between the countries soon, to mark the start of the first shipment. 

In the first year, JPMC will export $80 million worth of the quantities agreed on while it will export the remaining $200 million worth of materials in the next two years.  

Speaking to the press, Ashqar said that the relationship between JPMC and BCIC extended for so many years where the company used to be the main supplier of phosphate to the Bangladeshi market.

Iqbal voiced confidence that the deal to import Jordanian phosphate and fertilisers will contribute to the development for his country's agricultural sector.

“It is our pleasure to announce exclusive contract with JPMC which will help to have a long relationship”.

Industry, Trade and Supply Minister Yarub Qudah, Bangladeshi Minister of Industry Mohammad Amir Hossain and JPMC Chairman Amer Majali attended the signing ceremony.

Also on Saturday, representatives of the Amman Chamber of Industry council met with the Bangladeshi minister and discussed means to boost economic cooperation between Jordan and Bangladesh furthermore, according to the Jordan News agency, Petra.

AMMAN — A forum to strengthen economic partnership between Jordan and Spain opened this week, according to a statement received by The Jordan Times on Thursday. 

Representatives of public and private sectors from both countries are participating in the forum in a bid to strengthen joint business relations. 

On the sidelines of the forum, the Amman Chamber of Commerce and Amman Chamber of Industry signed a cooperation agreement with the Madrid Chamber of Commerce and Industry to foster economic coordination and cooperation, the statement said. 

The Jordanian delegation to the forum includes Amman Chamber of Commerce President Issa Murad, Amman Chamber of Industry President Ziad Homsi, Jordan Europe Business Association President Jamal Fariz, EDAMA Association for Energy, Water and Environment’s Board of Directors President Dureid Mahasneh, Secretary General of the Jordan Investment Commission Mikhled Omari, and representatives of several commercial and industrial companies.

In his inauguration speech, Jordan’s Ambassador to Spain Ghassan Majali stressed the strong Jordanian-Spanish relations, expressing hope that it will lead to further commercial and technology cooperation. 

“We gather here today to discuss ways that enable us to increase the partnership between the two countries in investment fields,” he said addressing the forum. 

He said the investment volume and trade between the two countries was below the desirable level, calling for holding “direct” meetings to understand the needs of investors and to highlight the opportunities available to boost joint investment projects.

The forum provided a platform for the attendees to discuss investment, trade and industrial issues, besides related legislation. 

NEW YORK/LONDON/DUBAI — Boutique investment bank Moelis & Co has been chosen as an adviser by Saudi Aramco on what is expected to be the world's biggest initial public share offering, sources familiar with the matter told Reuters.

The IPO, which Saudi officials expect to value the oil producer at a minimum of $2 trillion, is the centrepiece of a Saudi Arabian government plan to transform the economy by attracting foreign investment and diversifying away from oil.

Moelis will be the internal independent adviser, a key position in which it will provide counsel on selection of underwriters, how much to pay them and where the shares should be listed, said the sources, who spoke on Tuesday and Wednesday. The persons spoke only on condition of anonymity because the process is confidential.

Moelis' appointment is a big win for the New York bank, dwarfing previous IPO advisory mandates that include luggage maker Samsonite International SA on its $1.3 billion IPO in 2011 and last year's flotation of Extraction Oil & Gas Inc., which valued the company at $3.23 billion.

Moelis, founded by veteran US dealmaker Ken Moelis in 2007, itself went public less than three years ago.

Moelis shares rose as much as 7 per cent on Wednesday and were still up 2.6 per cent at $35.90 in late morning.

The major selling point of boutique banks is that their lack of sales and trading divisions allows them to offer unconflicted advice to corporate clients.

Moelis' win comes after the bank bulked up its energy business and presence in the Middle East. It opened offices both in Houston and the United Arab Emirates in 2011. The Houston unit, which hired three people last year, now has six managing directors and one senior adviser.

In the UAE, advisory positions include Dubai ports operator DP World Ltd. on its $3.5 billion acquisition of Economic Zones World FZE and the Government of Dubai on the $24.9 billion restructuring of state-owned conglomerate Dubai World.

Senior dealmakers at the bank, whichjavascript:void(0); has offices around the world, have worked for years to win a role with Saudi Aramco, one of the sources said.

Saudi Aramco is expected to decide by early next week on the appointment of international and local banks for preparatory work, the people said.

Representatives of Moelis and Saudi Aramco declined to comment on Wednesday.

Local and major international banks including Morgan Stanley, HSBC Holdings Plc. and Citigroup Inc. were among those asked to pitch for an advisory position with Aramco three weeks ago, Saudi-based industry sources said last month.

Wall Street bank JPMorgan and independent boutique bank Michael Klein had already been picked to advise the country ahead of any listing.

Generally, government work is poorly paid all over the world, but banks often vie for the contracts simply to build a relationship with the state in the hope of winning future business.

The listing of Aramco is slated for 2018, so the appointment of banks to run the share sale as lead managers and book runners is still some way off, the sources said.

Saudi Energy Minister Khalid Al Falih said last week the company was evaluating concurrent listings on more than one exchange.