Mohamed Mohsen Salah El Din, Chairman, The Arab Contractors: Interview

Interview: Mohamed Mohsen Salah El Din

Given strong growth in the past year, how can the construction sector further boost the economy?

MOHAMED MOHSEN SALAH EL DIN: We are at a growth stage in which the country needs many mega-projects to reinforce Egypt’s overall wealth. The economy today is supported by those projects that attract investments and investors, and such projects are thus the result of government policy to boost the country. We are focusing on infrastructure needs, such as roads, power (something very critical for investments) and energy in general, as well as land reclamation, so that these areas will be available for investment. The most important project now is the Suez Canal Zone; it’s a strategic and vital project and we are trying to apply the Singapore or Jebel Ali free zone model. There are vast areas along the Mediterranean Sea and Red Sea on both sides of the canal to develop and utilise, and this is the main pivotal project for the coming 50 years.

With many mega-projects in the pipeline, is there enough capacity in the market to complete them? What room is there for foreign companies?

SALAH EL DIN: The construction market can take in all the Egyptian companies, in addition to any international company interested in doing business here. There is room for growth. The current capacity is manageable, yet with the growing number of projects, it is possible that we may require new companies to enter the market or the expansion of existing ones.

At this time we have sufficient labour, but we may be short of new technologies or equipment. We should rely on international companies via partnerships when we need know-how in projects, such as the tunnels under the Suez Canal. Foreign companies are generally used in Egypt for new techniques, up-to-date equipment or know-how, but Egyptian companies can do all the new projects through joint ventures with foreign firms, as investors will need to partner with an existing Egyptian contractor. The government’s role should be to invest in these projects and present executable options to investors – providing land, infrastructure and power, so that the investor can securely invest. Egyptian labour can easily understand the know-how and apply new technologies. There is high unemployment, so we are trying to make use of the available labour.

What regional opportunities exist for Egyptian construction firms? Which other regions have the greatest potential in this respect?

SALAH EL DIN: The most important thing for Egyptian companies operating abroad is to compete on international standards. The quality and brand name of a firm are closely related to safety and reliability. Price comes next, along with the importance of meeting deadlines. The regions that we feel have the greatest potential are West Africa, North Africa and the Gulf. Even if many Egyptian construction companies are working there already, there is still room for more and the opportunities must be seized.

How have natural gas shortages and electricity tariff increases affected prices for building supplies such as cement and steel?

SALAH EL DIN: The price of construction materials has increased in the past year and will likely continue to do so. There are many reasons for this, notably that inflation causes prices to rise. However, even with these price increases, the cost of the projects currently under way in Egypt will be cheaper now than what they will be in 2016. It is certain that today’s prices will be less than tomorrow’s.

The Egyptian market has a sufficient local supply of various materials, but we will have no difficulty importing materials until we establish our own factories to provide us with what we need. That is why the government’s plan addresses the need to increase or expand factories manufacturing building materials.