The area of the Russian industrial park on the Suez Canal is to be expanded from 80 to 2,000 hectares (20 sq. km.), said Russia’s Industry and Trade Minister Denis Manturov.
“Egypt’s President Abdel Fattah al-Sisi has decided to allocate 80 hectares to us in the eastern part of Port Said on the Suez Canal.
In the future Cairo is ready to expand this zone to 2,000 hectares,” Manturov said on Friday.
Manturov says work on the intergovernmental agreement may be finished in the first quarter of 2017.
Russia plans to build an industrial park on the Suez canal as part of Egyptian plan to develop the canal zone into an international industrial area.
Here’s all you need to know about the project
- The agreement was made in 2014 between President AbdelFattah Al-Sisi and Russian President Vladimir Putin, however the Memoranda of Understanding wasn’t signed until February 2016.
- The Russian industrial zone will be located east of Port Said and will cover an area of 2 million square meters.
- The industrial park will be established with $4.6 billion worth of investments, this is the preliminary estimation offered by the Russian side.
- The zone is expected to generate at least $11.6 billion revenues and more than 70,000 jobs.
- Almost 60 Russian companies are taking part in the project, mostly private companies including GAZ, Gazprom Neft, Kamaz, UAZ, Transmashholding, Tatneft, InterRAO among others.
- The first stage of the project is due to start in 2018 and cover more than 80 hectares.
- The project is expected to be finalized and fully functional by 2035.
- The Industrial zone is planned to offer low taxes for Russian companies that are part of the zone, with reports about 0 sales tax.
- The project is considered a kick start for further Russian expansion in Africa and the Middle East regions, further strengthening the bond between Egypt and Russia.
- The Russian zone should be the first of several zones to be established around the Suez Canal, with plans already underway for Chinese and Italian industrial parks.
The decision to build a Russian industrial zone in Egypt was agreed by President Vladimir Putin and his Egyptian counterpart in 2014.
Negotiations were temporarily frozen after a Russian airliner was blown up by terrorists over the Sinai Peninsula in October 2015.
The new industrial zone will have a friendlier tax regime for resident Russian firms.
It is expected to provide 77,000 jobs, and the companies expect revenues to reach $11.6 billion.
The tax rate for businesses in the project and personal income tax will be 10 percent.
Sales tax will be abolished.
Russian companies will design and construct the industrial facilities, jointly produce and supply various types of equipment, and provide the necessary technical assistance.
It is estimated around $4.6 billion will be invested in the construction of the industrial park by 2035.
Two years ago Egypt announced the modernization of the Suez Canal, which is one of the world’s major transportation routes.
Originally, it was planned to complete the work in three years, but later it was reduced to 12 months.
The new Suez Canal will include a vast range of services, as well as several industrial parks, including Russian, Chinese and Italian.