When the Suez Canal first opened in 1869 it revolutionized global trade, shortening the shipping distance between East and West by more than 4000 miles, and dramatically reducing the delivery time of goods to market. Today the first major renovation to the Suez Canal in its 146-year-history will have a similarly profound effect on the economies of Egypt, the region and the world.
The creation of a 45 mile long channel running alongside and connecting to the original Canal will double shipping capacity from 49 to 97 ships daily. It will shrink transit times by eight hours, because the Canal will no longer be limited to a one-way system. The economic benefits of this increased traffic are substantial. Transit revenues for Egypt’s Suez Canal Authority are expected to grow from $5 billion to $13.2 billion annually by 2023. Shipping companies will see a significant drop in fuel and operating costs. The compressed transit, idling and waiting time will also have a positive environmental impact by reducing carbon emissions.
The economic impact will travel far beyond Suez. Ports from Singapore to Savannah and Dubai to Rotterdam are already expanding in anticipation of the increased demand in freight handling and shipping services that the new Suez Canal will contribute to creating. The positive effects will reverberate throughout the global supply chain, as each link in it exploits the opportunities that derive from the ability to transport products to people who need them more efficiently.
When President El Sisi announced the plan to expand the Suez Canal in August 2014, shortly after his landslide election to lead Egypt in a new direction, experts predicted it could not be accomplished in under three years. The UAE is proud to have played its part in completing this engineering feat in record time. Working closely with our Egyptian partners, the UAE’s National Marine Dredging Company led an international consortium, including the Dutch and Belgium firms Boskalis, Van Oord and Jan De Nul, to dredge 184.3 million cubic meters of earth and silt in under a year.
It is essential, however, that while we praise this historic event, we do not rest on our laurels, but capitalize on the opportunities to sustainably grow Egypt’s economy. Smart development of the area adjacent to the Suez Canal is critical to this endeavor. The Government of Egypt has designated 76,000 square kilometers of land alongside the Canal specifically for this purpose. This corridor of land, known as the Suez Canal Area Development Zone, represents a significant opportunity to build on the economic activity that the Suez Canal expansion will stimulate. An industrial park is envisioned in the area around East Port Said, and feasibility studies have been completed for siting engineering and manufacturing facilities ranging from the production of cars and car parts, to household and economic appliances. In addition the proposed redevelopment of the port itself, including a 3 billion dollar container terminal, will transform the area into a logistics and trading hub on an international scale. Similar development is planned at the Port of Ein Sokhna at the southern end of the Canal. Together these projects can generate up to one million much-needed new jobs and exploit Egypt’s geographic position as a trading gateway to Africa.
To facilitate this growth it is imperative that Egypt follows through on the program of investment and regulatory reform it has begun. A key aspect of the changes intended to smooth the way for foreign investors is the introduction of a “single window” system that will cut red tape and reduce the risk of corruption, because foreign corporations will no longer have to navigate multiple agencies for permits. Proposed streamlining of the civil service should also be enacted to minimize the obstacles to completing transactions and doing business efficiently.
The international business community should be encouraged to take advantage of this new pro- investment climate, to continue to build on relationships forged at Egypt’s Economic Development Conference in March and seek out the many opportunities for investment that Egypt now offers. The success of the New Suez Canal proves what Egypt can achieve in just one year. Together let us ensure that the intensity of the last year carries through into the next so that much more can be accomplished for Egypt and the wider region.
* H.E Dr Sultan Ahmed Al Jaber, UAE Minister of State and Head of the UAE/Egypt Liaison Office