Egypt’s phosphate revolution a boon for Aswan industrial zone

Egypt is investing heavily in phosphates. (AFP)
Updated 06 May 2018
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Egypt’s phosphate revolution a boon for Aswan industrial zone

  • Phosphate rock producers are integrating in order to add value and meet the demands of Asian customers
  • The fertilizer sector is also growing domestically, with Egypt consuming 14.3 million tons of nitrogenous and phosphate fertilizers per year

LONDON: Cairo is upping its game in the global phosphates market by funding a new multimillion-dollar phosphate industrial zone in Aswan, as well as expanding Safaga Port on the Red Sea, a major hub for agribusiness exports to India. 

Phosphates and potash are part of a group of fertilizers that boost crop nutrition, and increase the yield from soil used to grow food. A report in Egypt Today said that since 2015, Egypt’s Industrial Development Authority had approved about 10 new projects in the field of phosphate fertilizers, with two already in production.

Phosphate rock producers are integrating in order to add value and meet the demands of Asian customers who find it more cost-efficient to buy intermediate or finished products since the price of phosphate rock has more than doubled since 2006. 

That makes it harder for Asian middlemen to make money when they sell the raw material up the supply chain. It also means more manufacturing opportunities for Egyptian phosphate producers and suppliers, the prime targets of the new phosphate industrial zone in Aswan.

The fertilizer sector is also growing domestically, with Egypt consuming 14.3 million tons of nitrogenous and phosphate fertilizers per year, according to the annual report of the Chamber of Chemical Industries (CCI), affiliated with the Federation of Egyptian Industries. Egypt could achieve self-sufficiency before too long, as well as bolster exports, the CCI said. The international phosphate landscape is changing as US production declines and American mines become depleted.

The US has recently been an importer of phosphate rock, which means a bigger role for non-US producers such as Egypt. Asian customers can buy cheaper from North Africa as it is closer, putting the US at a disadvantage, and this spurs investment in the region. Phosphate production was slowing in China, but growing strongly in places such as Morocco, Jordan, Saudi Arabia and Egypt, according to a US Geological Survey report last year.  OCP Group of Morocco is the largest phosphate producer in the world. Morocco has the biggest phosphate rock reserve base in the world, accounting for about 75 percent of worldwide estimates, according to the report.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”