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Military production minister: We want to expand our civilian business partnerships

Military Production Minister Mohamed al-Assar has announced that the ministry plans to increase its local and international business partnerships with non-military companies, stressing the necessity of boosting Egypt’s local industries following the pound’s devaluation

In an interview aired on the privately owned On Live satellite station on Monday, Assar said the ministry has already entered into several partnerships with the private sector, and is launching its own ventures in several industries, including the petrochemical, pharmaceutical and electronics industries.

On Sunday the government approved a license for the military to establish a pharmaceutical company and, according to Assar, the Armed Forces is keen to fill gaps in the local production of such strategic commodities. He referenced medical supplies, vaccines and infant formula in particular.

He confirmed that the Military Production Ministry, one of several government bodies affiliated with military enterprises, has multiple partnerships with the private sector, and said it is conducting projects with 21 out of the 33 other ministries and 40 other state bodies.

Observers have noted increased military activity in Egypt’s civilian economy since President Abdel Fattah al-Sisi’s inauguration in 2014, particularly following the issuance of a decree in December, 2015 which permits the Armed Forces to establish companies on its own or with national or foreign capital. The past year has seen expansion into everything from healthcare and education, to energy and fish farming.  

Assar stated that his ministry has recently signed protocols with, among others, the Supply Ministry for the creation of information systems to better track subsidies, the Housing Ministry for water treatment facilities and water meter manufacturing, with the Irrigation Ministry for drilling and the Education Ministry for the construction of schools.

However, he emphasized the drive to embark on new projects with the private sector. “We are completely open, there is no isolation in the world now and we must be open. There is an investment law and if you are following the legal route and know there is oversight from other bodies, why shouldn’t you launch your project?” he said. The ministry has set its sights on Africa for business partnerships, with exports one of the primary he said, adding that exports are one of the primary targets after the fulfillment of local economic needs.

The Military Production Ministry’s enterprises currently consist of six companies, 17 factories, a construction company and a  information systems company. According to Assar these are not subject to competitive privileges. However, the law differentiates between the structure of military and civilian companies, providing the former with some real estate tax exemptions and permitting judicial oversight by military tribunals in cases of illicit gain litigation. Despite this, Assar insisted that there is 100 percent oversight of the ministry’s civilian economic operations.

He also asserted that the Armed Forces does not seek a high profit margin, claiming that the current economic crisis has not negatively affected workers in the ministry’s companies, as there have been no layoffs or wage cuts.

However civilian workers employed in military establishments are subject to different conditions, and have occasionally been tried in military courts, as in the ongoing Alexandria Shipyard Company case.

The Armed Forces’ share in Egypt’s economy is unclear, with estimates ranging from 5 to 40 percent. Sisi claimed in November that the military’s economic activities constitute between 1 and 1.5 percent of GDP.

The 2016-2017 national budget officially allocates LE47 billion for defense and national security, although the breakdown has not been presented to Parliament and Sisi has acknowledged that some weapons purchases come from the Armed Forces own budget reserves.

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