25 July 2024 01:58 AM

Ras Al-Hikma... Toward a sustainable development partnership

Thursday، 29 February 2024 04:39 PM

In light of Egypt’s current efforts to attract direct foreign investments, Prime Minister, Mostafa Madbouly, witnessed on 23/2/2024 in the NAC the signing ceremony of the largest direct investment deal concluded through an investment partnership, between the Ministry of Housing, Utilities, and Urban Communities, represented by the New Urban Communities Authority, and Abu Dhabi Developmental Holding Company PJSC in the United Arab Emirates; to implement the project of developing the Ras El Hikma city on the northwest coast.

The agreement was signed by the Minister of Housing, Utilities, and Urban Communities, Assem El-Gazzar; and the UAE Minister of Investment, Mohamed Alsuwaidi, in the presence of several ministers and senior officials of the two countries, as well as many Egyptian parliamentarians and a group of senior media professionals.

Details of the deal

The project is the largest of its kind as it aims to develop one whole city with an area of 170.8 million square meters, or more than 4600 feddans. The Abu Dhabi Developmental Holding Company will establish an Egyptian joint-stock company named Ras El-Hikma in Egypt to implement this mega project.

The project will include residential areas for all segments, world-class hotels, resorts, leisure mega-projects, and all urban services, such as schools, universities, hospitals, and administrative and service buildings. Furthermore, it will include a special service-free zone that has technology industries, light industries, and logistics services to serve the city. The city will also have a central business neighborhood to attract global companies.

Furthermore, a large international marina for yachts and cruise ships will be located in the Mediterranean. It was also agreed that an international airport would be developed and established on a plot of land to be allocated to the Egyptian Ministry of Aviation. Additionally, Abu Dhabi Development Company will be contracted to develop the airport. Egypt will have a share of the airport's revenues. 

The city will be international in every sense of the word and will attract an additional 8 million tourists to Egypt when the mega-city is completed.

The financial agreement comprises two parts: a financial part to be paid as an advance, and the other a share of the profits. The financial part would include FDI amounting to $35 billion, which would be divided into two payments, the first in a week of about $15 billion and the second two months after the first payment of about $20 billion.

The first installment, totaling $15 billion, will be split into $10 billion that comes from overseas, and the remaining $11 billion in deposits in the Central Bank of Egypt (CBE) will be waived by the UAE or the government represented in the Abu Dhabi Developmental Holding Company (ADQ). $5 billion of them will be used in the first installment and converted from dollars to Egyptian pounds for use by the project business and the ADQ in starting the project. Accordingly, the country enters foreign direct investment with a total of $15 billion.

$20 billion will enter two months later, representing $14 billion in direct liquidity. As a result, in addition to the $11 billion in deposits that will be transferred in Egyptian pounds, there will be $24 billion in direct liquidity available for the project's development.

Location

The city is located on the northeast coast of Marsa Matrouh, about 85 kilometers away from the governorate, and 138 kilometers east of the New Alamein City. The “Ras Al-Hikma” bay extends from the Dabaa region at kilometer 170 on the western coastal road to kilometer 220 in Matrouh.

Northwestern Coast Development Project

The Northwestern Coast development project is the third national one of a series of development national projects all over the Republic, drawn by the National Strategic Plan for Urban Development in 2052, where the government have taken serious steps recently. The first project is the New Suez Canal and the second one is the Golden Triangle for mining in the Eastern desert.

This project coincides with the plan being implemented by the government to demarcate the future borders of the governorates, provides development and investment opportunities and establishes new urban communities to accommodate the population increase expected in the coming decades.

This plan included the addition of three new governorates, these governorates are Central Sinai, Oases (Bahariya Oasis and Farafra), and al-Alamein (el-Alamein, el-Dabaa, el-Hamam, and Fukah), which was affiliated to Matrouh governorate.

The Northwestern Coast extends from al-Alamein to Salloum about 500 kilometers and has a desert hinterland extending to 280 kilometers, covering an area of about 160 thousand km2.

The importance of this developmental area lies in the fact that it is the unique and distinctive and it has all development resources distributed all over the Republic to be concentrated in the Northwestern Coast and its desert hinterland.

The Northwestern Coast and its various resources represent Egypt's hope to absorb overpopulation in Egypt in the coming 40 years. These projects will also provide about 11 million job opportunities until 2052.

Objectives of the Northwest Coast Development Project

One of the most important strategic objectives for the regional development of the Northwest Coast is to achieve a high economic growth rate of at least 12% per year.

The project also aims to settle at least 5 million people and provide about 1.5 million job opportunities, in addition to integrating the region into the national and global economy by increasing its contribution to GDP from the current 5% to 7%.

Speech of PM Mostafa Madbouly

During his speech, Madbouly expressed his happiness to announce this major investment deal, which he stressed is by all accounts the largest foreign direct investment deal in Egypt, which concerns the development project of the city of Ras al-Hikma on the northern coast of Egypt.

Madbouly added that the development of the city of Ras El Hikma comes within the framework of the National Urban Development Plan 2052, which was developed by Egypt, emphasizing that work started on this giant project to develop the entire country and establish the New Republic

He explained that the National Urban Development Plan 2052 identified the North Coast region as the first promising region that can accommodate the largest part of the population and development in Egypt, because of its encouraging potential, including lands along the coast with suitable climatic and geographical conditions.

At the same time, Madbouly stressed that this plan, which included a group of cities, changes the thinking of the development of the northern coast. He said that we are talking about the development of "integrated urban communities" and not "summer tourist resorts." Therefore, the plan identified the cities of Ras El Hikma, El Negaila, Sidi Barrani, and Jarjoub as new cities to be established, in addition to Matrouh and Sallum so that we have a series of new cities that have a developed infrastructure.

The Prime Minister also stressed that this was the vision from the beginning, as there were many wondering why the state established the international coastal road to include 10 lanes in each direction, and what is the benefit of the high-speed electric train that the state is implementing from Sokhna to Salloum. In this regard, Madbouly explained that the infrastructure on which the state is currently working serves from 50 to 100 years in the future.

Madbouly added: “Therefore, we emphasis on large infrastructure projects that are being developed, including "El Dabaa" project, which aims to generate clean energy to serve these cities as sustainable and green cities.”

The Prime Minister also thanked the political leadership in Egypt and the United Arab Emirates, President of the Republic, His Excellency President Abdel Fattah El-Sisi, and President of the United Arab Emirates, His Highness Sheikh Mohamed bin Zayed, for their generous sponsorship and great support for the project. It, without their full support and guidance to the two teams from the two countries, would not have seen the light of day at this record time.

Madbouly stressed that the project represents a partnership between the two brotherly countries that have brotherly and strategic relations, saying that we pray to God that it will continue forever. He also explained that the Egyptian side will be represented in the project in the "New Urban Communities Authority", while the UAE side will be represented in the "Abu Dhabi Development Holding Company".

The Prime Minister thanked, once again, the political leadership for its support and sponsorship of this project, and also thanked the two working teams from the Egyptian and Emirati sides. He confirmed that they continued night and day in order to announce today that deal and the large project for the development of Ras El Hikma.

Madbouly highlighted that this project follows the same mechanism as the state. whereas the New Urban Communities Authority, with all developers and the private sector, allocates a plot of land to the developer, for which the state receives a cash advance and has a share of the project's profits to maximize its assets.

Moreover, he highlighted various successful examples of compounds, alluding to the fact that this project is the largest. It represents one whole city with an area of 170.8 million square meters, or more than 4600 feddans.

He also added that ADQ will establish an Egyptian joint-stock company named Ras El-Hikma in Egypt to implement this mega project.

Madbouly confirmed that the project will include residential areas for all segments, world-class hotels, resorts, leisure mega-projects, and all urban services, such as schools, universities, hospitals, and administrative and service buildings. Furthermore, it will include a special service-free zone that has technology industries, light industries, and logistics services to serve the city. The city will also have a central business neighborhood to attract global companies.

Furthermore, a large international marina for yachts and cruise ships will be located in the Mediterranean. It was also agreed that an international airport would be developed and established on a plot of land to be allocated to the Egyptian Ministry of Aviation. Additionally, Abu Dhabi Development Company will be contracted to develop the airport. Egypt will have a share of the airport's revenues.

Madbouly discussed the financial agreement, clarifying that this agreement comprises two parts: a financial part to be paid as an advance, and the other a share of the profits. He noted that the financial part would include FDI amounting to $35 billion, which would be divided into two payments, the first in a week of about $15 billion and the second two months after the first payment of about $20 billion.

Meanwhile, the PM went over the specifics of the two installments, stating that the first installment, totaling $15 billion, will be split into $10 billion that comes from overseas, and the remaining $11 billion in deposits in the Central Bank of Egypt (CBE) will be waived by the UAE or the government represented in the Abu Dhabi Developmental Holding Company (ADQ). $5 billion of them will be used in the first installment and converted from dollars to Egyptian pounds for use by the project business and the ADQ in starting the project. Accordingly, the country enters foreign direct investment with a total of $15 billion.

Dr. Madbouly clarified that in addition to the remaining portion of the deposits, which is $6 billion, $20 billion will enter two months later, representing $14 billion in direct liquidity. As a result, in addition to the $11 billion in deposits that will be transferred in Egyptian pounds, there will be $24 billion in direct liquidity available for the project's development.

To address the dollar liquidity crisis, the Egyptian economy will get $35 billion in two months. Furthermore, 35 percent of the project's earnings will go to Egypt. This technical section was provided in the agreement specifically with the terms and obligations mentioned.

In addition to these sums, the UAE side anticipates investing a minimum of $150 billion, which will be used to support the project's implementation and the development of Ras al-Hikma. This implies that the urgent aspect will benefit our nation immediately by $35 billion. The leadership of the two nations is solely responsible for the highest amount of foreign direct investment that has ever entered the Egyptian economy, regardless of the time, year, or date, said Madbouly.

In addition, we will ensure the continuation of foreign direct investments throughout the duration of the project. There is another benefit: all investments that will be pumped will be transferred to the Egyptian pound, and Egyptian companies will be the ones that will work in the establishment and development of this major city, including contracting companies, real estate development companies, and logistics companies, and Egyptian factories will be the ones that will be charged with providing raw materials and production inputs, added the Egyptian PM.

He continued, saying: "We are not exaggerating when we talk about the millions of job opportunities that will be available for Egyptian youth and businesses in the contracting sector during the construction of the city and after its establishment and operation. It is anticipated that the volume of tourists that come to this area will not be less than 8 million, if not more."

The Prime Minister pointed out that through the presence of such projects, we will be able to achieve the dream of attracting 40 or 50 million tourists to Egypt.

At the end of his speech, the Prime Minister stressed that the Egyptian state is committed to the people of Matrouh who are on this land allocated for the project's implementation, by compensating them fully in cash.

In this context, the Prime Minister referred to the state's planning in the area south of the coastal international road, where residential communities will be established to relocate the residents. This ensures that they are close to the area, as they are expected to directly benefit from the development of this location through the employment opportunities provided by the project for extended periods. He also mentioned the meetings held with the residents in this regard, confirming the efforts to complete the implementation of these residential complexes as soon as possible.

Mostafa Madbouly also stressed the Egyptian state's full openness to foreign direct investment, and its continuous welcome for such projects to be implemented in various locations and sectors across Egypt. He pointing out that such projects provide integrated development that achieves many goals, including the reconstruction of lands, increasing job opportunities for youth, and fostering investments that enhance Egypt's economic growth rates. Additionally, he highlighted the role of such projects in achieving returns and benefits for investors.

International economic institutions and agencies

International economic institutions and agencies have praised the major investment deal signed by Egypt and the UAE to develop Ras Al Hikma:

Bloomberg reported that Egypt is expected to receive 35% of the profits from the Ras Al Hikma project. The UAE has also agreed to a joint venture aimed at building an international airport in the region.

Goldman Sachs expects the UAE's massive investment in Ras El Hikma City (along with a massive IMF program) to provide enough liquidity to cover Egypt's financing gap over the next four years.

"Egypt's stability is important for Egypt, but it's (also) important for the entire Middle East," IMF Managing Director Kristalina Georgieva said, adding that Egypt's announcement of a $35 billion investment from the UAE to develop one of its best areas on the Mediterranean coast is a "very positive sign."

International Media

"One of the biggest deals of its kind... the project will earn $150 billion for the Egyptian economy," Reuters said.

The Financial Times reported that the major investment deal between Egypt and the UAE, which aims to build a tourism and financial centre in the Ras al-Hikma area, is central to unlocking a long-stalled agreement with the IMF for a loan package expected to top $10bn.

According to Forbes, the development of Ras El Hikma, a huge investment project in Egypt, will increase Egypt's foreign exchange resources, with $35 billion being injected into the Egyptian economy

CCTV: The partnership agreement between Egypt and the UAE to develop the Ras El Hikma Peninsula is the largest foreign direct investment project in Egypt's history.

Under the headline "Ras al-Hikma. Egypt and the UAE sign the largest foreign investment deal," CNN writes about the deal and its importance, which is the largest in the history of foreign direct investment in Egypt.


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