An Egypt Day is being held in Malta on Tuesday, with the participation of a number of Egyptian companies and speakers who will meet Maltese companies and interested members of the Malta Chamber of Commerce. The commercial event is being organised in conjunction with the Economic and Cultural Unit of the Ministry of Foreign Affairs, the Egyptian Businessmen Association and the Egyptian Embassy in Malta together with the Maltese Embassy in Cairo. The following is an interview which Gamal El Nazer, chairman of the Egyptian Businessmen Association, gave to The Sunday Times.
When was the Egyptian Businessmen Association founded and what kind of services does it give to its members?
The association, which was established in 1979, offers many services to its 400 members. Internally it helps them find solutions for their problems and puts them in contact with the different local authorities. Internationally EBA helps its members to find new markets for their products and find new foreign partners for joint ventures.
Economic growth
How would you define the Egyptian economy today?
After a period of stagnation and following the appointment of a new government, the Egyptian economy is starting to recover and grow once more; GDP growth rose to 5% in 2004/2005 and is forecast to reach 6% in 2005/2006.
It is also worth mentioning that the new government is committed to reform, so it has modified several decrees and laws such as:
The new tax law, which lowered the highest personal tax rate from 32% to 20%, cut the corporate tax rate in half - from 42% to 20% - and adopted streamlined, automated customs procedures.
The new regulations in the Customs law, which reduced tariffs from an average of 14.6% to 9%, simplified and reduced tariff bands from 29 to six and adopted streamlined, automated customs procedures.
Moreover, in December 2004 Egypt signed the QIZ Protocol Agreement with the United States, which grants all Egyptian products manufactured in QIZ free access to the US market without tariffs or non-tariff barriers, as long as products comply with rules of origin requirements and consists of 11.75% Israeli local content.
Politics and economics are intertwined. How much would you agree with this statement vis-à-vis the overall situation in your country?
I fully agree with this statement not only for Egypt, but also for other countries. The recent political changes that led to the first contested direct election of the President in Egypt will definitely have the right impact on Egypt's economic growth.
The first thing that comes to mind when thinking of your vast country is its huge population of around 74 million. What measures does your country take to create new job opportunities?
Egypt has a big population which is growing at a high annual rate of 2%. We have to create around half a million jobs every year. We also have almost four million who are currently seeking a job. The key to solving this problem is to stimulate economic growth through enhancing the investment environment in Egypt, so as to attract more foreign direct investment.
I believe that the new Ministry of Investment pays high attention to this matter as it can be clearly noticed by the strong increase in FDI as it climbed from $237 million in 2003/2004 to $1 billion in 2004/2005 and the government forecasts that FDI will grow by 40% to reach $1.4 billion in 2005/2006.
On the other hand education must be improved to allow the Egyptian labour force to find jobs not necessarily in Egypt but also in the Arab countries, Africa and Europe.
Help for SMEs
Nowadays, national economic emphasis is often directed towards a country's small to medium size industries, because it is within this sector that innovation and growth are most likely to occur. How important and what is the contribution of this sector to the Egyptian economy? Are there any incentives specifically aimed at supporting this sector?
Small and medium size industries are certainly very important for the Egyptian economy. There are special financial credits for these industries with preferential terms. There are also marketing channels to help them sell their production.
In 1991, the government of Egypt established the Social Fund for Development to hold the responsibility to develop small Egyptian projects, consolidate mechanisms for better understanding of the impact of globalisation and mobilise efforts to minimise risks of social exclusion, help alleviate poverty and combat unemployment. In this capacity, it creates employment opportunities for start-up entrepreneurs and provides them with credit, technical assistance, skills and technological know-how, both Egyptian and international.
Nine million tourists
Some 839,000 tourists visited Egypt last July, according to latest statistics. How do you evaluate the impact of tourism and its related hospitality sector on Egypt's economy?
Tourism is one of the most important sectors in our economy. It is labour-intensive and being three hours from Europe and two from the Gulf countries makes Egypt a very promising destination. Some eight million tourists visited Egypt in 2003/2004 and nine million are expected by the end of this year. Moreover, in 2003/2004 income from tourism accounted for the greater portion of income from services, totalling $5.5 billion, a growth of $1.7 billion over the preceding year. It is worth mentioning that we do not compete with other countries, like Malta; we rather complement each other by encouraging tourists to visit both countries.
Your Minister of Petroleum, Eng. Sameh Fahmy, recently said that Egypt has been having strong international demand for its natural gas supplies. What are the prospects in this field?
Gas has only been discovered recently. However, we export gas to Europe and a new pipeline to Jordan, Israel and Turkey in future is being established. We believe that the government should encourage the usage of natural gas as a replacement for the petroleum products in the fields of industry, transportation and household.
In addition to attracting more investments in industries that depends on natural gas as a dominant raw material, such as fertilisers and petrochemicals, to optimise the added value and to bind the price of gas with the international price of the final product.
Efforts are being made to encourage Maltese-Egyptian commercial relations. How optimistic can we be?
Trade relations between our two countries have not been satisfactory. However, if we both target a third market we could have great results. Egypt has preferential agreements with the Arab world through the Arab Free Trade Agreement, with Africa through COMESA, which covers 300 million people and with the US through Qualified Zones. Maltese businessmen are most welcome to come and use these privileges.
On the other hand, Egyptian businessmen could make use of Malta's membership of the European Union.
Personal contacts
The Maltese Embassy in Cairo in conjunction with the Economic and Cultural Unit at the Maltese Ministry of Foreign Affairs together with your association is organising an Egypt Day in Malta following the Malta Day in Cairo last May. How would you evaluate such events?
There are many ways to create economic ties between countries. There are definitely positive signs emerging from the Malta Day in Cairo. I am confident that Egypt Day in Malta will be as successful.
It is often said that commerce thrives not only in response to market generated demand, but also on the level of confidence achieved between business partners. How do you rate the level of foreign confidence in their dealings with Egyptian businessmen?
Egyptian businessmen have been dealing with their counterparts in all parts of the world. Business is very much linked to personal contacts. So far all business relations have been successful.
Your country is a prime mover for peace in the Middle East and other international issues of concern to us all. How committed is Egypt to its regional and international aspirations?
Egypt is certainly committed to its regional and international role. If we take the Arab-Israeli conflict, Egypt has lost over 150,000 men and $200 billion in that conflict alone. Egypt has played an important role in helping African countries. We are always ready to assume responsibility at the regional and international levels.