VZCZCXYZ0003
PP RUEHWEB

DE RUEHEG #1338 1271306
ZNR UUUUU ZZH
P 071306Z MAY 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 5066
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 1633
RUEHAK/AMEMBASSY ANKARA PRIORITY 0574
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0172

UNCLAS CAIRO 001338 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR ELA 
USTR FOR SAUMS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD CH JO EG TU
SUBJECT: ROSY REPORTS OF NEW INVESTMENT IN EGYPTIAN TEXTILE 
INDUSTRY 
 
REF: A. 2006 AMMAN 6886 
     ¶B. 2006 CAIRO 7219 
 
Sensitive but unclassified, not for Internet distribution. 
 
¶1. (SBU) SUMMARY: A recent press report of new Jordanian 
investment in the Egyptian textile industry is indicative of 
a trend of increasing FDI in Egypt and expansion of the 
textile industry in particular, as foreign investors eye the 
rapidly expanding Qualified Industrial Zone (QIZ) program for 
duty-free exports to the United States.  However, GOE and 
private-sector contacts caution that the press accounts of 
new investment plans are often overblown and may come to 
little in the end.  END SUMMARY. 
 
¶2. (U) The Ministry of Trade and Industry's Industrial 
Development Authority has approved plans for the Jordanian 
firm Tagamoaat to establish an industrial zone in 10th of 
Ramadan, Egyptian press reported May 6. 
 
¶3.  (SBU) Mohamed Kassem of the Egyptian Chamber of Textile 
Industries told econoff that Tagamoaat participates in the 
QIZ in Jordan, exporting ready-made garments that include at 
least 8 percent Israeli content to the United States 
duty-free.  He said the firm is interested in moving 
operations to Egypt to avoid the labor problems plaguing 
Jordanian QIZ factories (ref A). 
 
¶4. (U) The report was consistent with a number of recent 
press and anecdotal accounts of plans for new FDI in Egypt 
including investment by Chinese and Russian investors.  For 
example, the GOE also announced recent approval of a Chinese 
plan to manufacture electrical wires in 10th of Ramadan 
industrial zone, while a news report on April 10 noted the 
signing of a memorandum of understanding to establish a new 
USD 550 million Russian industrial zone on the Mediterranean 
coast to manufacture cars, aircraft, and other products.  As 
in similar accounts, the story refers to a new GOE 
"eastward-looking strategy, shifting the focus of its trade 
development from its traditional Western partners." In 
addition, a number of Turkish investors have announced plans 
to invest in Egyptian QIZ factories. 
 
¶5.  (SBU) Ali Awni, head of the Egyptian QIZ unit, said no 
new factories have sought the required USTR designation to 
export under the QIZ program because plans are still 
preliminary and often come to nothing. 
 
¶6.  (U) Even so, exports under the QIZ program have risen 
steadily during its first two years (ref B), and FDI in Egypt 
has increased sharply as well, from USD 3.9 billion in FY05 
to USD 6.1 billion in FY06 to USD 7.2 billion in only the 
first six months of FY07. (This year's dramatic increase was 
driven by a USD 3.1-billion UAE investment in a national cell 
phone license.) 
 
 
RICCIARDONE