While the cash-strapped Egyptian government grapples with a dwindling economy and reaches out for all the assistance it can get, concerns have risen regarding the impact an ongoing strife between the cabinet and the U.S. can have on economic ties between the two countries.
The Daily News Egypt sat down with Anis Aclimandos, the president of the American Chamber of Commerce in Egypt, to discuss the situation of American investors in Egypt, evaluate the government’s performance and talk about upcoming projects the chamber is planning.
How do you see the future of the Egyptian economy?
The Egyptian economy is going through extreme difficulties, so let’s divide the economic presentation into two sections: opportunities/potential and historical.
Opportunities and potential are great. I mean, unless they invent people who don’t eat, don’t use pharmaceuticals and don’t transport goods, which are the defense industries of the day, you will continue to have business opportunities. The public sector doesn’t have the means to deliver the services to all the people, so the private sector will have huge room for performance and growth for years to come. Seventy percent of the Egyptian economy has been in the private sector for the last thirty years or so. I think it will continue to be so. Plus, the Egyptians are highly trainable and we have great plans about how to make industries function and how Egypt can maximize its export potential.
Unfortunately, destruction is much faster than construction, so what has been destroyed will take a really long time to be rebuilt. We have to be patient and understand that it’s not a “push button” kind of situation, and if people are not patient and start rebelling again, it’s going to be a problem again.
How about the government so far, how can we assess the overall performance?
I really wouldn’t want to be in the government’s shoes. If it moves really fast without properly studying the issues, it will be blamed. And if it spends time trying to really understand what the issues are and how to move and design plans for months, people will also blame it. So it’s a no -win situation. I think they are doing fine. I think that most of them are very competent people and will do a great job. However, we need time.
What are your expectations for the government regarding the encouragement of investments?
I think that while building investment in Egypt, we have to think about the social problems as well. We need to encourage labour intensive projects, we need to get out of the big metropolis so that people have a better chance of living under better conditions and being more productive. Productivity is the name of the game today. If you go to China, Indonesia or Egypt you will find that everybody is buying the same textile machine, the same material and using the same raw materials; so if somebody produces 20 shirts while you are producing 3, you will never be able to compete. So I will go for training. I am purposely avoiding using the term education because education is a long term process, but training is a possibility.
Do you see any challenges that may hinder these economic processes?
There are huge challenges. We have energy challenges coming ahead, and energy is going to be a big problem. We have the education problem and the training problem of people who have always seen one side of the balance sheet. They know what they need but they don’t necessarily know what it takes to get what they need.
There are challenges in terms of competition and in term of sheer numbers of people that need to be trained and meet productive goals.
How do you see the volume of investment and trade between the United States and Egypt evolving?
We have talked to a lot of our members and American firms working in Egypt. They don’t work in Egypt just because they like it. They work in Egypt because they make money and some of them have committed more funds to grow, and none of them have left. There’s a market and they recognize that market, so it will continue to grow. We import from the U.S. much more than what we export to them. We don’t have a free trade agreement and it will be a long time before we have one; in the mean time, we have to take advantage of all the programs we have and try to maximize them and continue to work.
Do you expect the political tension between the U.S. and Egypt to reflect these investments?
I think the tension will ease. I think that business is business and it will prevail. It is almost impossible to separate business from politics and vice versa. There will be some tensions but it is in the interest of the national security of the United States to have good relations with Egypt, and I think Egypt has invested interest in remaining in good term with the United States. I don’t think we will have a problem.
Can you give me a specific figure on the volume of trade?
I don’t want to give figures because it is a moving target, and I don’t have specific figure right in front of me.
So can we say it is on the rise?
No, I wouldn’t say it is on the rise in the past two years. To me, the fact that investors don’t leave the country is a big plus.
But we have recently heard that Apache sold some of its shares; can we name some of the businesses that have increased their investments?
The sale of Apache’s shares was a business decision and we have Coca Cola, Pepsi, Johnson and Johnson, City Bank, Procter and Gamble and Heinz, who are all continuing their investments and growing.
What are the incentives that the government or the business environment in Egypt can offer to the U.S. investors in order encourage them to do business in Egypt?
There is a lot to be done. We invented bureaucracy and we have been good at it for years. We know exactly how to use the red tape and how to make people’s lives impossible. We have to make sure that people come and don’t have to face this kind of bureaucracy that scares them away. We have to make sure that it’s an easy process. Also, our respect for time leaves a lot to be desired.
We need to attract FDI [foreign direct investments] and if we don’t attract FDI, we can’t make it.
We have recently witnessed bomb attacks in several provinces in Egypt; how do you see this affecting the Egyptian economy?
Security is the core of everything. There are two things that you will never do if you feel in danger. You’ll never go on holiday in a place where you don’t feel secure; so tourism is going to suffer. This is sad because all the elements and ingredients of a successful touristic business are available. If we adjust security problems, it will probably be the easiest industry to restart.
It also affects investments. The warnings from the embassies are scary. The fact that they took their non-essential personnel out gives a poor indication. The American school has witnessed a huge drop in the number of students because most of the families went back home.
It’s a complicated situation, but I think that we are very aware of that. I think that the Ministry of Interior is doing a good job, but I think that what is more important that the Ministry of Interior and the army and whatever, is the need to come to some kind of social reconciliation. We all have to be security-conscience and have supervision to make sure that the country functions.
How do you see the country emerging from such situation?
We have to understand that complaining about problems does not solve them, and rioting should not be a profession.
We have expressed our views, things have changed and people lost the fear. They feel empowered and they have realized that they can voice their opinions. It’s really important to stop for a while and go to work. [Economic development] is not going to fall from the sky.
Egypt is not going to be built by older people; it is going to be built by younger people. So the younger people have to learn patience and go to work. If you turn what is considered to be a burden, which is population growth, into an asset, by training the youth, we can have a great country.
The government announced an EGP 22.3m stimulus plan; what are your views on this plan?
I think it is a fantastic plan. It is very well designed and I think it is needed. It will hopefully be well managed.
What about the upcoming projects? What can we expect?
There are products in the United States that can never be exported to many countries because of different impediments. I mean it is a labour intensive industry, or the freight cost is too high because it is too heavy or bulky and the tax rate or customs duty is very high. Egypt has a very good trading agreement with Africa and another with Europe, and we have a Pan Arab trading agreement that grants privileges to importers.
We have to select products that we can import from the U.S., incomplete products or raw materials, and complete the industrial process in Egypt, and then it will be a joint export program between the United States and Egypt.
This program has a lot of advantages. When you try to export to the United States, you face the industrial boards. For example, you have something called the leather board, [where] you try to export leather products but they always want to protect the industry [so you lose the job]. We can go on and on and I am just giving you an example; when it is a joint export program, I am not going to lose a job in the U.S. This will open gates that were shut.
If we can use the pharmaceutical base in Egypt, which is really good, to export goods that are licensed in the United States, and sell them in Africa together, we can a lot of businesses.
To make sure that we understand correctly, does this means that we will import from the U.S. and export to other countries?
Yes, but with a process in Egypt. You import something, then you add on to it and then export it. This is one of many ideas that we are considering.