Summary of a Preliminary Feasibility

Study on Furniture Manufacturing

April 2024
 The Outcomes of a Preliminary Feasibility Study on
Furniture Manufacturing *

Wood and Furniture Sector

Project General Description
• The study aims to enhance the home furniture manufacturing, which has recently seen
significant advancements due to rapid technological developments. Furniture
manufacturing is a highly productive and labor-intensive sector, relying on a variety
of materials. Wood remains the most widely used material in furniture production
globally. Additionally, medium-density fiberboard (MDF) has become a popular
alternative to wood in modern homes due to its cost-effectiveness, ease of shaping,
and high availability.
• Egypt's furniture industry boasts several comparative advantages. Its strategic
geographic location provides easy access to major markets, while the relatively low
cost of skilled labor enhances its competitiveness. Additionally, the Egyptian
furniture industry offers a diverse range of styles and sizes, catering to the needs of
international markets, from large enterprises to small retailers.
• The wood and furniture industry in Egypt encompasses approximately 120,000
companies, providing around 900,000 job opportunities, primarily within the
informal sector. In 2021, furniture export revenues reached approximately USD 214
million, with the Kingdom of Saudi Arabia (KSA), the United Arab Emirates (UAE),
and Iraq being the largest importers of the Egyptian furniture. The furniture
manufacturing sector contributes about 2.2% to Egypt's gross domestic product
(GDP). Despite its significant impact on the economy through export revenues and
job creation, this industry faces challenges, such as a reliance on imported production
inputs. Addressing these challenges is essential to reducing the cost of the final
product and further enhancing the industry's economic contribution.

*
The data mentioned in this study are preliminary, estimated, and indicative material retrieved from the
competent authorities for the purposes of promoting the investment opportunities available at GAFI.
Accordingly, they may not be used before banks, the judiciary, or any other government entity or any
third party.

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The Investment Opportunity and the Location of the Project
• This project can be established in any industrial zone authorized to license furniture
manufacturing activities. However, it is important to consider that the project will
require extensive surface areas for manufacturing processes as well as substantial
spaces for warehousing.
• Project location: According to the data provided by the relevant authorities and
available on the Investment Map, this project can be set up at the village of Mit
Ghazal, Santa Precinct, Gharbia Governorate by way of usufruct.
• The project can also be set up in any other governorate fulfilling its needs and
potential requirements.
• Project surface area: According to the data obtained from the relevant authorities
and available on the Investment Map, the project can be set up on a surace area
ranging from 2,000 m2 to 6,000 m2.

Project Key Financial Indicators

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The Outcomes of the Legal Feasibility Study
• Depending on its scale of investments, the project can be structured as a corporation,
such as a joint stock company, as this legal structure facilitates project management
without undue influence from individual owners and ensures seamless engagement
with government and regulatory authorities, including in particular the tax authorities.
It is recommended that the project be incorporated in accordance with Investment Law
72/2017 in order to enjoy the statutory incentives granted to this kind of business
activity.
• Generally, the company undertaking this business can be structured as a sole
proprietorship, partnership, limited liability company, or joint-stock company.
• If the project intends to conduct export operations, it must obtain an export card
detailing the products to be exported. Additionally, the project can use an import card
to directly acquire production supplies from abroad. Alternatively, it can work through
intermediaries who would undertake and finalize the importation and customs release
procedures.
• The incorporation fees, attorney fees, licenses fees, and the fees of registration with
GAFI cost approximately EGP 700,000.

The Outcomes of the Environmental Feasibility Study

• The environmental feasibility study is defined as the study that explains the degree of
protection and maintenance achieved for the environment, by taking into account its
absorptive capacity or its maximum capacity to withstand human activities aimed at
exploiting environmental resources without the occurrence of environmental
degradation or depletion on the short and long term, whether directly or indirectly.
• As specified under Item (7) of Article (14-bis.) of Law 105/2015 (dated October 19,
2015) Amending Environment Law 4/1994 and its Executive Regulations, and in
accordance with the Minister of Environment Decree 159/2015, this project falls under
Class (B), ranking 34th in the relevant environmental classification list. Consequently,
the project is required to prepare environmental impact assessment studies. It must also
adhere to inspections and standards outlined in the environmental classification Form
(B) and comply with the requirements of the Environment Law. Additionally, the
project must pay the relevant fees mandated by the Government for its designated class
and must ensure compliance with environmental regulations pertinent to its industry.
• The expenses associated with addressing the project’s environmental impact, managing
industrial waste disposal, and implementing environmental protection measures are
accounted for within the raw materials expenditure, as elaborated on in this study.
• Subject to complying with all environmental impact requirements, the project is
environmentally feasible.

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The Outcomes of the Social Feasibility Study

• The social feasibility study aims to analyze the social benefits and costs of various
projects for the purpose of selecting projects that achieve the maximum social benefit.
It is noted in this regard that the social feasibility study pays attention to additional
aspects that no other feasibility studies have made because it focuses on the social
effects of the project due to the project’s contribution to achieving the economic and
social goals of society.
• The project contributes to developing the surrounding community as a result of the
indirect services that the project needs from the surrounding environment, and the
complementary industries or that may be related to the nature of the activity, which
may help in providing more indirect job opportunities.
• The project assists in creating new job opportunities, reduce the unemployment rate
in the community, and employs different types of workers either via direct
employment, or indirectly through the supply and distribution chains of this type of
business. Such business provides about (29) direct job opportunities, as well as
indirect employment opportunities.
• It is necessary to review the Occupational Safety and Health Standards issued by the
International Labor Organization (ILO) in order to know all the details related to the
social effects of this type of industry.
The Outcomes of the Marketing Feasibility Study, Growth Drivers, and
Competitiveness
• The project aims to manufacture home furniture of various types and sizes such as
beds, wardrobes, and tables.
• According to Mordor Intelligence, the furniture market is estimated to be worth
$688.74 billion in 2024 and is expected to reach $903.14 billion by 2029, with a
compound annual growth rate (CAGR) of 5.57% during the forecast period (2024-
2029).
• Key factors positively influencing the furniture manufacturing market include the
increasing global population, urbanization, and the growing development of
residential and commercial buildings. Additionally, the demand for furniture is rising
globally due to higher income levels, changing lifestyles, and improved living
standards. Moreover, the ease of product availability through online shopping portals
is expanding this industry.
• Leading furniture manufacturers are recently creating new designs and working with
interior designers to increase their market share and attract more customers. They are
also launching recyclable furniture, which is expected to lead the global market.
• Asia-Pacific region is the fastest growing furniture manufacturing market. Asia-
Pacific region dominates the furniture market due to the large number of wooden
furniture producers in countries like China and India. Due to its large population and
expanding residential construction. It is rapidly expanding in this market due to the
high consumer purchasing power.

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Supply Volume
• Considering the world's largest furniture exporting countries, in 2022, the largest
exporters of furniture were China ($5.62 billion), Italy ($2.24 billion), Germany ($1.8
billion), Vietnam ($1.37 billion), and Poland ($953 million). According to World
Bank data, Egypt ranked 74th among the world's largest furniture exporters, with
exports valued at $983,000 in the same year.
• The main destinations for Egypt's furniture exports in 2022 were:
▪ Saudi Arabia ($158,000, accounting for 33% of Egypt's total exports)
▪ India ($100,000, accounting for 21% of Egypt's total exports)
▪ Germany ($87,000, accounting for 18% of Egypt's total exports)
▪ Lithuania ($71,000, accounting for 15% of Egypt's total exports)
▪ Italy ($64,000, accounting for 13% of Egypt's total exports)

Egypt Exports of Furniture

Data retrieved from WB in 2022

Demand Value
▪ Considering the world's largest furniture importing countries in 2022, the largest
importers of furniture were the United States ($4.27 billion), Germany ($1.82 billion),
France ($1.07 billion), the United Kingdom ($1.03 billion), and Canada ($701
million). According to World Bank data, Egypt ranked 61st among the world's largest
furniture importers, with imports valued at $25 million in the same year.
▪ The main sources of furniture imports to Egypt in 2022 were:
▪ China ($14 million, accounting for 66% of Egypt's total imports)
▪ Italy ($3 million, accounting for 14% of Egypt's total imports)
▪ Germany ($2.1 million, accounting for 10% of Egypt's total imports)
▪ Turkey ($1.6 million, accounting for 7% of Egypt's total imports)
▪ Australia ($660,000, accounting for 3% of Egypt's total imports)
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 Egypt Imports of Furniture

Data retrieved from WB in 2022

Market Gap:
▪ According to the previous data, it is clear that there is a significant shortage in the
supply of furniture. The project will contribute to covering a large part of the local
market, in addition to the great opportunities available for exporting to the Middle
Eastern or global market, provided that production meets the required standards and
quality.
▪ The total furniture exports in 2022 amounted to $983,000, while the total imports in
the same year amounted to $25 million, resulting in a trade deficit of approximately
$24 million.

Trade Balance
Imports

Exports
Trade Balance

Data retrieved from WB in 2022

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