GAZA, Oct. 27—The Executive Vice President
of the International Finance Corporation (IFC), Mr. Jannik Lindbaek, signed
agreements on October 25 for IFC to invest in the first industrial estate
catering to small and medium industries (SMEs) in the West Bank and Gaza.
At completion, the project will employ up to 20,000 Palestinian workers
in about 250 factories of various kinds. Mr. Lindbaek is currently on an
official visit to the West Bank and Gaza.
Also signing the agreements were Mr. Munib R. Masri, Vice Chairman of the
Palestine Development and Investment Ltd. (PADICO), the main sponsor of
the project, and Mr. Farouk K. Toukan, Chairman of the Board of the Palestine
Industrial Estate Development and Management Company (PIECO).
A joint effort with the World Bank, the project will establish PIECO, a
private sector company which will build and operate the Gaza Industrial
Estate (GIE). GIE will be located in the northeastern edge of the Gaza
Strip on a 48 hectare site leased from the Palestinian Authority. GIE will
include on-site infrastructure, administration offices and maintenance
buildings, and 112 industrial plots, 67 of which will have factory buildings
for lease. The total cost of the project is about US$39 million.
IFC's financing package to GIE consists of a loan for its own account of
up to US$8 million, a syndicated loan of up to US$7 million for the account
of participants and an equity investment of US$1 million in the share capital
Mr. Lindbaek said at the signing, "The project will help to alleviate
the severe unemployment that has been crippling the Palestinian economy.
Because GIE is located within Gaza, its workers can have easy access to
their workplace. In addition, GIE's location on the border will facilitate
greater integration of Gaza's economy with the rest of the world. The project
will also help to build Gaza's trade and business potential, create a model
for the development of future industrial estates in the region, and give
confidence to private sector businesses, including those from overseas,
to locate at the site."
Industries expected to locate at GIE include garment manufacturing, wood
working, plastics, food processing, other light manufacturing, and information
services. Tenants are likely to be both local and expatriate Palestinians
as well as Israeli firms. At a later stage, PIECO intends to actively market
GIE to multinational businesses.
The project has received up to US$50,000 from the Irish Trust Fund. (Donor-supported
Trust Funds finance technical assistance work in IFC projects.) The grant
will finance a preliminary investigation by industrial estate experts from
Ireland to examine how they could best assist PIECO in the management and
operation of GIE.
The donor community, led by the World Bank and the U.S. Agency for International
Development, has strongly supported this project, assisting in the development
of the government's industrial estate policy and financing related off-site
infrastructure and technical assistance. On-site and off-site works will
be carefully coordinated. The Multinational Investment Guarantee Agency
(MIGA) has established the West Bank and Gaza Investment and Guarantee
Fund to provide guarantees against political risks for foreign private
investments into the West Bank and Gaza. The Trust Fund will be able to
cover prospective eligible investments in the GIE.
PADICO was established in 1993 by Palestinian, Jordanian, and other Arab
businessmen and institutions interested in the economic development of
the West Bank and Gaza. Since then, PADICO has launched several subsidiaries,
including PIECO, to carry out projects in the West Bank and Gaza covering
tourism, real estate, industry, telecommunications, and securities exchange.
IFC, the private sector arm of the World Bank Group, is the world's largest
multilateral source of equity and loan financing for private sector projects
in developing countries. The Corporation has approved about US$86.8 million
in financing for seven projects costing about US$165.3 million in the West
Bank and Gaza, with other investors contributing about US$16.2 million.