Launch of Russian industrial zone in Egypt requires preparations, they normally take 2-3 years - Russian deputy PM

CAIRO. Sept 15 (Interfax) - Russia will assess the state of the infrastructure of the site provided by Egypt in the economic zone of the Suez Canal for the creation of a Russian industrial zone, after which it will become possible to speak about possible timeframes of the construction of enterprises on its territory, Russian Deputy Prime Minister Alexei Overchuk said, noting that preparations in such projects normally take up to three years.

A presentation of the Russian industrial zone for Russian businesses is expected to be conducted during the Russian deputy prime minister's visit to Cairo.

Russia and Cairo signed a contract for long-term right to use the land plot in the economic zone of the Suez Canal, which outlines commercial conditions for its operation (usufruct contract) in May. The document, among other things, envisages the provision of a three-year grace period for lease of land plots on the territory of the Russian industrial zone without a fee. It was signed between the main directorate of the economic zone of the Suez Canal and the Russian special company, which will be the developer of the project, which was created in spring 2025.

Overchuk told reporters the grace period has not begun yet. It gives companies an opportunity to decide on the creation of production facilities in the Russian industrial zone. Companies operating in the sphere of pharmaceuticals, agro-industrial sector, auto and machine-building are showing an interest in the zone. There are candidates for the status of anchor investors in the Russian industrial zone, Overchuk said.

"We have gathered a group of interested Russian entrepreneurs, as well as representatives of business associations. We believe that the Russian industrial zone will become a convenient point for our business to enter both Egypt itself and the African continent. During the visit, we will go to the site and see, the Egyptians will speak about the advantages of their economic zone," Overchuk said.

Responding to a question about the possible timeframe for signing the first contracts for the placement of Russian enterprises' capacities in the Russian industrial zone, he said, "It is now too early [to say], there will now be familiarization with the zone, the work conditions, the concessions for residents of the zone, the readiness of the infrastructure, and business will be adjusting its plans to that."

"The plot for the zone has been provided quite recently, and we are de facto at the start of the way. At this point, it is important to make the Russian industrial zone attractive to our business, It is necessary to draw infrastructure there, and to do that it is necessary to make a lot of preparations," Overchuk said, emphasizing that the Russian industrial zone "is a big project, and it requires time."

"Such preparation projects can normally take 2-3 years, it's a clear planning horizon," Overchuk said.

The intergovernmental agreement on the creation of the Russian industrial zone in the economic zone of the Suez Canal was signed by Russia and Egypt in 2018. The agreement envisages the launch of the Russian industrial zone at the first stage in the northeastern part of the economic zone of the Suez Canal on a plot of a total area of 50 hectares with direct access to the Ain al-Sokhna port.

Products manufactured in the Russian industrial zone (provided the condition of localization of more than 30% is fulfilled) will get Made in Egypt status, which exempts products from customs duties when they are exported to the countries of Africa, the Middle East, Latin America and other countries included in trade agreements with Egypt. Besides, up to 100% of the products manufactured in the Russian industrial zone can be sold on the Egyptian market.

Residents of the Russian industrial zone are also exempt from duties on the import of equipment and materials, property tax, the value-added tax in the purchase of resources and parts, they have a right to a profit tax refund within seven years in an amount of 50% of the investment in the project. Foreign residents can import unlimited production resources and finished products from the mother company of a non-resident.

The Russian Industry and Trade Ministry said in 2023 the amount of budget financing for the creation and development of the Russian industrial zone in Egypt for the period until 2026 reached 9.5 billion rubles.