By Shaimaa Elise and Ahmed Eladly
Various memoranda of understanding (MoUs) will be signed during President Abdel Fattah Al-Sisi’s visit to Germany next month, according to German-Arab Chamber of Industry and Commerce CEO Rainer Herret.
Daily News Egypt spoke to the German-Arab Chamber of Industry and Commerce Chairman, Ulrich Huth, and CEO Rainer Herret about Al-Sisi’s upcoming visit to Germany’s capital, Berlin.
How do you see Al-Sisi’s visit to Berlin?
President Al-Sisi’s visit to Berlin is the highlight of the year, and we are quite excited for this visit. It will be in the period of 3-4 June, and the venue will be in Berlin. There are three events that will happen during this visit. First is Al-Sisi’s visit to meet German Chancellor Angela Merkel, Germany’s Federal President and number of German government officials. The second event is the economic committee consisting of Egyptian and German government representatives, to discuss the economic policy between the two countries. The third event is the Egyptian business summit, where a delegation of German and Egyptian businessmen will meet to discuss the business climate. Besides this, memoranda of understanding (MoUs) will be signed between Egyptian and German companies, as well as signing some cooperation agreements.
How many companies have confirmed participation?
180 German companies in different sectors confirmed participation and most of them work in Egypt. However, the Egyptian delegation is now in the process of being finalised, as we don’t know yet how many will be in the Egyptian delegation because the Ministry of Industry has yet to select the participants due to the large numbers involved. From the German Chamber, there are 80 members of companies and about 20 will participate in the Egyptian-German Business Council. I expect that about 150 Egyptian companies will participate with 300 members of Egyptian companies in the chamber. Next week we will know the exact numbers of Egyptian businessmen and companies who will participate.
What is the main goal of the visit?
The main goal is to put Egypt back in the focus of the German business community, because Egypt has disappeared over the last three or four years, due to security issues. During the visit, we will discuss the new investment law and new economic policy beyond presenting the mega projects coming up in the renewable energy sector, which is a very interesting sector that includes German partners, and will work on infrastructure such as railways and highways. All things are up for discussion, especially in terms of security issues, because it is time to rebuild confidence on the German side. Through this, we also want to promote travel to other regions in Egypt, not only Cairo and the Red Sea, but also Luxor and Aswan.
What are the major German companies which will participate in the visit?
Major German companies involved will include Siemens, Mercedes, PASF, BMW, Bayer, SODIC, Merck and others.
What do German companies need to know about Egyptian business?
German companies participated in the Economic Summit in Sharm El-Sheikh to meet some Egyptian companies and to decide on how to cooperate. In addition, we asked our chamber members about the challenges they face in doing business. In a survey divided between Egyptian and German companies, we found that this year business is better than last year and next year will be better than this year, which is optimistic.
Egyptian companies have the same opinion about some challenges, such as hard currency to import raw and prefabricated materials, even machines needed for production, as without them, you cannot do any local business. Meanwhile, the German investors involved in the survey said the challenge is that they have bank accounts with hundreds of millions of Egyptian pounds and they want to transfe themr to hard currency (dollars or Euros) to buy and import materials from abroad, but the process is difficult in terms of transferring money , which slows down the investment. You have to wait for the bank to convert the money to dollars or Euros and this process takes as long as six to eight months to get the foreign currency. Moreover, if I can’t transfer my profit back, I will not invest – why should I invest?
Do you think that these problems will affect investments in Egypt?
There is so much advertising on TV encouraging investors to invest in other countries such as Kazakhstan, Azerbaijan and other countries. For example, establishing a company in Dubai takes less than a week, but it takes months in Egypt, considering the country’s bureaucracy. For instance, German-Chinese company RAK, has, for the past 15 years, wanted to build factory in Egypt, but it has been delayed and delayed, then it decided to go to Dubai and now they have great investments.
Did the chamber discuss the issue with the Egyptian government?
Yes, two weeks ago we discussed this issue with the Central Bank of Egypt (CBE) Governor [Hisham Ramez] and he said that his policy started to work with immediate effect, so foreign reserves will slowly be built up. But he didn’t tell me whether the solution will be after three months or six months, because this depends on, amongst other things, how tourism will develop to provide hard currency and at least stabilise the out-flow of hard currency for three months to import food.
Does Siemens have the same challenge?
No, Siemens has priority to start work in power plants, which is lucky, as its products are needed by the Egyptian government. To set up Siemens’ factories is one of the government’s priorities. As Siemens is fully committed to the project declared in the Economic Summit, as it maintains the schedule, brings experts and engineers from other regions from worldwide, and employ them in Egypt.
How does the chamber view the delays in issuing the executive regulations for managing the investment law?
This issue is the third problem in the list to be discussed during the visit, which is bureaucracy, as the procedures to get licences to run business could take a year. The new law says there will be a one stop agency to get your licence together, but we have to wait for an executive regulation to know how the law will be implemented. In the past, companies had bad experiences because of the law, but the law so far is good. Even though there are a few questions on it, in general, the direction is right.
Will you promote the new investment climate in Egypt?
Indeed, as during the visit we are going to inform German companies that the Egyptian government has a new investment law, as German companies are interested in machinery, cars, plants and manufacturing investment goods. Renewable energy is a very promising field for investors, as there are no Egyptian partners in this field. If you look at the investment field in Egypt, most of the investments go to real estate, and oil and gas. We have one of the biggest German companies operating in this field in Egypt, the DEA group.
How many German companies are operating in Egypt and what is the size of investments?
There are 70 companies involved in industrial activities in many fields and 250 companies in trading and services, in addition to 4,000-4,300 companies that are represented throughout Egyptian companies and agencies. The size of investment is about $6bn-$8bn, part of which is for oil and gas, especially in oil exploration.
Do you expect that German companies will invest in the Suez Canal axis project?
The Egyptian government declared that there are some incentives that will be provided, besides special treatment for those investing in this project. German companies are interested in some aspects of the logistics sector, such as the shipping industry, so the Suez Canal is the right place to go. However, we need a better energy supply to start.
The media is circulating news that Mercedes’ business will be closing in Egypt. What is your opinion on this?
There has been a lot of misunderstanding about Mercedes, that they have closed down in Egypt and moved to Algeria, but business in Algeria is a totally different project. Mercedes has had business in Algeria for seven years, which is different from its business in Egypt, but Mercedes will still be working in the Egyptian market.
Will MoUs or contracts be signed during the visit?
MoUs will be signed between the Egyptian Minister of Industry and Trade and the “Messe Berlin” exhibition. Other MoUs will be signed with Fruit Logistica, as Egypt is strong in exporting fruits and this year Egypt is the official partner in 2016. We are going to sign cooperation contract between the chamber and the Ministry of Industry will provide Egyptian companies with “expert services”, which are special services for companies hiring engineers or experts for short durations of three to six months. We will provide these companies with experts to share their expertise. Other MoUs will be signed during the visit include additional ones with Siemens and with Dorsch Consulting, as they could be involved in the infrastructure development for the Cairo Capital.
Will the Bundestag’s President’s refusal to meet Al-Sisi affect economic relations?
I do not think so. First, we believe that capital punishment is generally bad, but I also believe that the media exaggerated the issue. It is also a political and cultural issue of Egypt’s, where we don’t interfere, and if [Lammert] doesn’t want to meet him he doesn’t have to.