|
LUNCHEON MEETINGS
U.S. energy secretary looks to the future of world energy needs
The future of the world’s growing energy demand and finding alternative ways to meet it was the topic addressed by the outgoing U.S. secretary of energy, Spencer Abraham, during a special luncheon on January 6, 2005. Abraham, the highest-ranking Arab-American to have served in U.S. government history, spoke to politicians, diplomats and businessmen from Egypt and the U.S., highlighting the contribution of AmCham Egypt in forging closer ties between American and Egyptian business leaders, and its positive impact in the political arena, which he termed as “intrinsically linked with commerce in promoting world integration and stability.”
Abraham summarized the status of worldwide energy and foretold of the enormous challenge the world would face over the course of the next two decades as it struggled to meet growing energy demands in an environmentally responsible manner. He said there was a universal conundrum forthcoming in addressing environmental concerns while supporting economic growth and increased standards of living. “Worldwide demand for oil will increase significantly from approximately 84 million bpd in 2005 to as high as 120 million bpd in 2025,” he said.
Abraham noted that the worldwide increase in demand for oil was a result of demands in developing nations to augment their energy grids to meet household and industry needs, according to U.S. department of energy analyses. Abraham added that China’s booming economy would also have a significant impact on the development of natural gas, which lagged behind demand for oil. He pointed out that this increased demand would force the development of a world market for natural gas, from which Egypt, which holds large reserves, stands to directly benefit.
As for renewable energy, the secretary said the sector’s growth would be slow due to the high cost of producing energy from renewable sources. He commented that the U.S. government sees hydrogen as the most likely renewable source of energy in the 21st century. Abraham said that U.S. and Egyptian researchers were working collaboratively in support of this policy.
As for the future of nuclear power, Abraham informed the guests that although the U.S. nuclear power facilities provide 20 percent of the country’s electricity demand, no new plants had been constructed in almost 25 years. This moratorium is due to public concerns for safety and health. As the existing units age, he predicted that by 2020 their share in supplying the country’s energy production needs would drop to only 14 percent of domestic demand. He pointed out that in China, on the contrary, where nuclear proponents face no opposition, plans were in place for the construction of approximately 25 plants over the next 10 years, indicating that nuclear energy would have a significant role in meeting worldwide demand.
In conclusion, Abraham called for international collaboration to share expertise that would lead to the development of “clean” energy technologies, and new, alternative and modified fuels in an effort to develop new energy sources with minimal environmental impact.
U.S.-Egyptian relations: opportunities for leadership
Reflecting the bipartisan nature of their visit and their common commitment to promoting democratic institutions worldwide, former U.S. secretary of state Madeleine Albright, and former Congressman (R-Minn) Vin Weber engaged AmCham members in a lively dialogue during a special luncheon held on January 26.
Albright, chairwoman of the National Democratic Institute for International Affairs (NDI), and Weber, chairman of the National Endowment for Democracy (NED) and vice chairman of Empower America, talked about their active engagement in promoting democratic institutions through their chairmanships of the NED and NDI.
Weber and Albright addressed the many challenges facing the world over the previous four years, focusing on the Middle East in particular. Weber pointed out that despite political differences on Iraq and Palestine, opportunities existed for increased bilateral relations between Egypt and the United States. “We should not lose sight of the fact that we have a long and strong relationship [with Egypt],” he said, adding that the opportunity to expand the economic nature of this relationship had never been stronger.
“We are in one of the most difficult times we have ever experienced,” Albright noted. “There are so many troubling issues in terms of our classical relationship with allies, new relationships that have come on the scene and issues that have to do with understanding other cultures.” She described the U.S. relationship with Egypt and the region as central to many of the issues confronted by America. The former secretary of state described U.S.- Egypt ties as strained, but felt there were significant possibilities for reinvigorating this relationship in the near future.
She noted Egypt’s growing emphasis on the relationship between economic and political development, and commented that democracies cannot function without vibrant economies that result from economic liberalization.
While Albright criticized the current administration for ignoring the Palestine issue during the previous four years, Weber said the U.S. did not prioritize peace talks because of the belief that negotiations were “burnt out.” He called on Egypt as a “dominant country [in the region]” to play a major role in moving towards an agreement between the Israelis and Palestinians.
Regarding Iraq, Albright was highly critical of the Bush administration’s decision to go ahead with the war. “I have always said that the war in Iraq was one of choice and not necessity, but getting it right is a necessity and not a choice,” she said. She noted that multilateral, rather than bilateral cooperation would be needed to rebuild Iraq, with the first step being to rebuild the legitimacy of the United Nations.
Investment reforms: prospects and challenges
Guest speaker Mahmoud Mohieldin, minister of investment, addressed dignitaries, members and special guests attending the AmCham pre-annual general meeting luncheon on April 27.
Mohieldin reviewed Egypt’s economic growth over the past 75 years, highlighting significant gains since the inception of the Ministry of Investment only nine months earlier. He cited the success of the one-stop shop for registering companies, noting that the number of registered companies had jumped 118 percent from July 2004 to March 2005 compared to the same period the previous year. He went on to explain that “the [corporate] capital increase from £E 6 billion to £E 11 billion within just nine months is a signal of renewed interest in the Egyptian economy.”
The minister addressed the issue of sustainable growth, and commented that a shift to a more democratic system would be needed in order to achieve sustainability. “We argue today that in order to achieve higher economic growth rates we need the sustainable involvement of investors and investment in economic activity.”
The minister then explained some of the reasons for the ministry’s current “culture of reform,” and stressed the government’s focus on the social dimension of reform. He praised the policy work being undertaken by the National Democratic Party to tackle all aspects of development, not just economic reform, and clarified the ministry’s role in applying these policies.
Mohieldin pointed out that his ministry was working diligently to make the special economic zones in the Gulf of Suez fully operational, and discussed ongoing cooperation with other ministries such as the Ministry of Communication & Information Technology and the Ministry of Foreign Trade & Industry, as a means for generating private sector solutions. The minister then went on to discuss three key issues: investment and business climate, asset management and non-bank financial services.
Regarding the investment and business climate, Mohieldin explained that to address the challenges and encourage economic growth, the ministry had to institute reforms. He added that by instituting personnel and leadership changes that brought private sector and multinational expertise to serve on the boards of directors and trustees of the Investment Authority, it enabled the ministry to better speak the language of investment and address issues related to investment promotion, inward investment, foreign direct investment, private sector investment and public investment.
Concerning asset management and privatization, the minister said, “We delivered 21 transactions in privatizations of majority and minority owned companies. The proceeds so far from privatization are £E 3.2 billion.”
The third issue discussed by Mohieldin was related to developments in non-bank financial services including insurance, capital market and mortgage finance. He acknowledged the challenges faced by public companies due to private and joint-venture insurance companies and assured the guests that the ministry was taking the issue very seriously. He also praised the success of the Cairo & Alexandria Stock Exchanges (CASE) as “one of the most profitable stock exchanges in the world.”
In conclusion, the minister stressed the importance of pursuing sustainable reforms in other areas such as trade, finance and industry in order to promote investment.
Gamal Mubarak highlights recent political reforms
The 23rd Annual General Meeting, held on May 29, was addressed by guest speaker Gamal Mubarak, head of the National Democratic Party (NDP) Policy Secretariat. The first order of business during the meeting was a report on the financial health of the organization by AmCham treasurer Yasser El Mallawany, who noted that AmCham continued to increase its revenue-generating ability “to sustain its exclusive goal in promoting business.”
Before the 750 members, guests and journalists present at the Four Seasons Hotel – Nile Plaza, El Mallawany presented AmCham’s 2004 financial statement, giving it a clear bill of health.
AmCham president Taher Helmy shared highlights from the AmCham Board of Governors’ report for 2004 and recounted the successful passing of a motion to amend AmCham’s constitution to reflect a more practical and democratic voting system for the Chamber. Helmy then introduced the main speaker, Mubarak, who took the podium to discuss recent developments in the nation’s political reform process. He highlighted the May 25 referendum, which approved an amendment to Article 76 of the constitution to allow – for the first time in Egypt – multi-candidate presidential elections, to be followed by general elections for the lower house of parliament.
“The amendment to Article 76 was not done in a vacuum, but as part of an overall vision for political reform,” he asserted. “While it opened the door for political parties to compete for the highest office in the land, the legislative changes, taken together, provide for a level playing field in which all political parties will have an equal opportunity to engage in fair competition. It is a prescription for political dynamism, rather than a perpetuation of the political status quo.”
The article allowed all existing political parties to present their candidates, without restrictions or conditions, for 2005’s presidential elections. He noted, however, that for future presidential elections, political parties are required to hold 5 percent of the seats in parliament as a prerequisite for fielding candidates, not as a barrier to participation but as an incentive for serious competition.
Acknowledging that the country still has a long way to go in the process of political reform, Mubarak expressed the conviction that “Egypt’s political future should be one of greater political competition.”
Moving on to the topic of governance, Mubarak stated that “success will depend on the structures of government that must translate policy into concrete reality.” Central to this endeavor, Mubarak elaborated, will be efforts to restructure civil service to better accommodate society’s needs and increase efficiency in executing government policy, including a renewed focus on local government.
Discussing the link between democratization and economic growth, Mubarak made clear that competition will be the organizing principle of the economic reform agenda. He explained that achieving this goal will require building the institutional and regulatory framework for a successful market economy and that the macro-economic reform agenda will include the opening of doors to private sector participation in key sectors.
Shifting to social reform, Mubarak noted that “the core of our social reform program has and continues to be a fair and accessible safety net that caters to the underprivileged in our society.”
In closing, Mubarak directly asked Egypt’s business leaders to accept responsibility for shaping the country’s future by participating in the proposed changes and reform. “The greater the scope of political participation, the more society itself becomes the true custodian of change. Participation thus becomes the key guarantor ensuring the irreversibility of reform.”
Reform in Egypt: The IT & telecom sector as a model
AmCham Egypt and the U.S. Chamber of Commerce, in collaboration with the U.S.-Egypt Friendship Society, honored Tarek Kamel, minister of communications and information technology, at a luncheon in Washington, D.C. on June 21. The luncheon was part of a greater IT & Telecom Mission, led by Kamel to the United States, which included representatives from Microsoft Egypt, Oracle Egypt, Cisco Egypt and Motorola Egypt, amongst others.
Kamel co-facilitated a panel discussion about “Reform in Egypt: The IT & telecom sector as a model” with Elizabeth Cheney, principal deputy assistant for Near Eastern affairs and coordinator for Broader Middle East and North Africa Initiatives, and AmCham Egypt president Taher Helmy.
The discussion began with an overview of the latest political and economic reforms undertaken by Egypt since the appointment of a new cabinet in July 2004. Kamel described customs and financial sector reforms, and reported on the 105% capital gain realized by the Cairo & Alexandria Stock Exchanges (CASE) in 2004. He continued to describe how private operators were leading Egyptian telecommunications and IT sectors, which had grown from 185 companies in 1998 to 1,349 companies in 2004 – an impressive 629-percent increase over six years.
Cheney echoed Kamel’s assertions that Egypt indeed was on the path to reform. She spoke of the dramatic shift in the political landscape of the Middle East, referring to the elections in Iraq, elections in the Palestinian territories, and the Lebanese experience. She also spoke of the Middle East Partnership Initiative (MEPI), which seeks to bridge the “jobs gap” by promoting economic reform and private sector development.
A lively Q&A session followed during which questions concerning the upcoming presidential election were posed, and the capacity of Egypt to attract and absorb venture capital were discussed.
At the end of the luncheon, Telecom Egypt and Lucent Technologies signed an agreement that was witnessed by all in attendance.
A healthy market with room to grow, predict leading Egyptian businessmen
Four leading businessmen assembled for a panel discussion on the future of Egypt’s stock market at the November 27 AmCham luncheon. The speakers – Aladdin Saba, Maged Shawky, Mohamed Taymour and Naguib Sawiris – agreed that the market was healthy and had room to grow, despite preliminary results from the parliamentary elections during which the Muslim Brotherhood posted significant gains.
Upbeat about the promise of the Egyptian securities market,
Taymour, chairman of Egypt’s largest securities broker, EFG-Hermes Holdings, credited economic reforms instituted over the previous three years for increasing the daily trading volume at the Cairo & Alexandria Stock Exchanges (CASE) by roughly 2,000 percent, from £E 20 million in 2002 to an average of between £E 600 and £E 800 million in 2005. He added that the daily trading volume hit the £E 1 billion benchmark in November, an event that “most people would have thought impossible a year ago.”
Taymour pointed to the privatization of Egypt’s national banks as evidence that “we are seeing, for the first time, the true dismantling of the socialist dogma and central planning policies that directed the way that we have done things for the past 45 years.”
CASE chairman Maged Shawky further credited the recent decrease in oil prices and an injection of cash from retail banks for boosting the trading volume at the stock exchange. Shawky noted that the CASE was updating its infrastructure to allow for online trading and other improvements expected to facilitate even greater volume on the stock exchange.
Naguib Sawiris, chairman of Orascom Telecom, praised the government’s efforts to improve the national economy. “We are proud of the caliber of the men who are guiding Egyptian economic policy right now,” Sawiris said, adding that he believes Egypt’s stock market was still undervalued, especially when compared to the markets of other Arab countries.
Sawiris expressed concern over the Muslim Brotherhood’s strong showing in preliminary results from the parliamentary elections and encouraged AmCham members to form a secular party to champion capitalism, liberalism and open economic policies.
Aladdin Saba, chairman of asset management and investment banking firm Beltone Financial Services, focused on the Egyptian market’s performance relative to other developing markets in the Middle East and Eastern Europe. While Middle Eastern markets performed better than their Eastern European counterparts, Saba cautioned that other Arab markets “are progressing at a faster rate than ours is. So unless we pick up the pace again, we’re going to be left behind.” He cautioned analysts against seeing influences on the market through rose-colored glasses. Saba said he expected steady but solid growth over the next year, “somewhere around 6-10 percent above the rate of inflation to give you a return of around 15 percent – not a return that’s 50 percent or 100 percent.”
Prospects for prosperity outside the world trading blocs
On December 18, AmCham Egypt and the German-Arab Chamber of Industry & Commerce co-hosted a luncheon to discuss whether Egypt could prosper outside the regional trade blocs in Europe, Asia and the Americas. It was the first event jointly organized by the two chambers, which was duly noted in the opening remarks of Taher Helmy, AmCham president, as he introduced guest speakers Norbert Walter, chief economist of Deutsche Bank Group, and Mahmoud Mohieldin, minister of investment.
During his address, Walter presented research results from Deutsche Bank that identified four crucial factors that determine whether a country could become a center of economic growth. The first, he said, was demography. He commented that developing countries, like Egypt, harbor youthful populations that are key resources for economic growth.
The second element Walter highlighted was investment. Emphasizing that, “In many societies in the world, savings are not invested wisely, so the results of investment are much more modest than they could be,” Walter underscored that growth in investment is part and parcel of an economic policy that considers how money is invested and tries to direct investment toward areas that will help create a mature financial system.
He added that Deutsche Bank research also identified a country’s willingness to open up and interact with other cultures and societies as an indicator of future success. He pointed to the value of cross-cultural interaction and understanding to provide fresh ideas and compete more effectively in the international market.
Lastly, Walter said governments and societies should adopt ecologically friendly policies as a means of preserving the resources they would need to sustain future growth. He warned that economic growth could be jeopardized if the environment – particularly finite resources such as Nile water and fertile land – are not taken seriously.
Reflecting on the outcome of the recent World Trade Organization (WTO) ministerial conference in Hong Kong, Walter suggested that multilateral trade could slow down. He added that countries such as Egypt, which stand on the sidelines of regional trading blocs, will suffer. He encouraged Egypt to focus its trade options on the European Union and to look for a sponsor – perhaps France, Germany or Italy – in its negotiations with the EU.
He also cited the benefits of parallel competition as a source of inspiration. He recounted Malaysia’s choice of Singapore as an economic model and competitor as it moved to expand its trade policies and practices. He advised Egypt to identify a country in the region – possibly the United Arab Emirates – as a source of competition and inspiration.
Mohieldin then took the podium, describing recently enacted institutional reforms and macroeconomic policies that resulted in the elimination of the black market, a significant decrease in inflation, down to 3-4 percent from 16-18 percent, and a reduction in the weighted average of its trade tariffs from 14.5 percent to 9 percent. He further noted that many countries have long been the victims of a “mechanical approach to trade” that excluded democratic, educational and institutional reforms from their trade calculations.
Rachid highlights importance of trade agreements
On December 21, Minister of Foreign Trade and Industry Rachid Mohamed Rachid briefed AmCham Egypt members and guests on the importance of trade agreements and Egypt’s progress during recent World Trade Organization (WTO) talks in Hong Kong.
Following an introduction by AmCham president Taher Helmy, Rachid asserted that Egypt’s goal since day one has been to “integrate positively in the global economy for the benefit of Egypt, and for the benefit of Egyptians and the Egyptian economy.” Pursuing this goal led to a greater activation of bilateral, multilateral and regional trade agreements over the previous 15 to 16 months. He went on to highlight the most significant of the trade agreements that encourage foreign investment, lead to increased technology transfer and create employment opportunities.
Rachid stated that the Egypt-EU Association Agreement had resulted in a number of immediate rewards, with exports to Europe increasing more than 50 percent in the first 12 months of the agreement’s implementation. In addition, the partnership “creates an incentive for both parties to explore a possibility to go further in areas like services... and full liberalization of agriculture and food products exports to Europe.”
He continued, noting that a section of the agreement outlines mechanisms for EuroMed cooperation that encourage trade among countries in the Mediterranean region. The newly-signed Egypt-Turkey free trade agreement was one positive outcome of EuroMed cooperation that “allows the accumulation of origin, which means that factories from Egypt can use inputs from Turkey and other countries, such as Jordan or Tunisia, and then export them to Europe.”
Rachid described the COMESA trade agreement with Africa as “more challenging” because the countries involved are very poor, although he attributed the difficulties encountered to “the infrastructure of trade.”
Turning to agreements with the U.S., Rachid announced that the QIZ agreement attracted over 400 Egyptian companies in its first year. He described it as a “stepping stone” to a free trade agreement (FTA) with the U.S., adding that recent talks in Washington along this track had been “extremely successful.” He pointed to recent discussions held under the Trade & Investment Framework Agreement (TIFA), a precursor to any future FTA. “The purpose of this meeting was to have a final assessment of where Egypt and the U.S. stand on each of the issues,” he said.
While he emphasized the progress, he also cautioned that even in the best case scenario, an FTA would not be granted until at least mid-2007. Moreover, it would only happen if the outcome were beneficial to both sides.
Finally, Rachid spoke of Egypt’s position during WTO talks in Hong Kong in mid-December. He explained that the WTO began these negotiations in 2001 and it would take years to reach a final agreement. He recalled the failure of the Cancun round to bridge the divide between developed and developing countries on agricultural issues, but said the Hong Kong meeting had succeeded in finding some common ground; including an agreement to end all agricultural subsidies by 2013 and a decision to give 32 “poor” nations duty- and quota-free access to developed countries. “It was a success because everybody agreed before the meeting that this would not be the end of the negotiations,” he concluded.
SPECIAL EVENTS
Bill Gates sees bold and challenging changes as important to Egyptian progress
AmCham Egypt, along with the Egypt-U.S. Business Council and the Egyptian Businessmen’s Association, welcomed Bill Gates, Microsoft CEO and chief software architect, on his second visit to Egypt on January 29. The special dinner and panel discussion in his honor were attended by Prime Minister Ahmed Nazif and other senior government officials.
Gates began the discussion by commenting on the significant changes that had taken place since his previous visit. “I couldn’t be more excited about the changes taking place here in Egypt and the opportunities that we have to be one of the companies that help out with these changes,” he said, referring to the previous July’s cabinet shuffle and subsequent economic reforms. He noted that the changes, even if challenging, were important to the future of the country.
He shared his excitement about the ways in which technology has become more approachable. Gates referred to a variety of e-government projects, including several in Egypt, as striking examples of how technology can simplify our lives. “We are finally using technology for some of the toughest problems, like eliminating paperwork.” The Microsoft chief added that the technology was “making government closer to citizens.”
Despite simplifications in technology, he said that in order for people to have access to computers and the Internet, prices must come down. To make this a reality Gates added that Microsoft was increasing its investment in R&D to $6 billion a year, almost double what the company spent three years earlier. “The ability to actually unify the network for telephony, the network for TV and the network for the Internet into a single network will actually drive down prices so that even developing countries [can benefit from it].”
Gates told the audience that he was particularly proud to be among the first IT companies to move to the Smart Village near Sixth of October City. He commented that Egypt’s emphasis on IT and communications would help to transform the domestically-focused economy to an internationally competitive economy. Gates characterized Egypt as having a lot of untapped potential and said that, “companies here will be competing with companies in India and China.”
Gates emphasized his commitment to social responsibility, sharing his two passions with the audience. “The first, [has to do with] every citizen accessing information technology and not just at universities and businesses.” The second, also his personal belief, that developing better medicine should not be limited to benefiting developed countries. He said the Bill Gates Foundation has made this its goal, putting prevention and treatment of AIDS and malaria, as well as childhood vaccination, at the top of its agenda.
In closing, Gates shared his optimism that Egypt was very much on the right track, and encouraged all those involved with reform efforts to continue their work.
Intel CEO announces increased presence in Egypt
Members of AmCham co-hosted Intel CEO Craig Barrett on March 28, as part of his multi-leg tour of the Middle East, during which he promoted IT awareness and announced Intel’s plans to increase its presence in Egypt.
Barrett opened the discussion by explaining how technology plays a major role in a country’s economic competitiveness. He cited examples of several countries around the world, including India and Russia, that have already established infrastructure, streamlined government regulations and focused on increasing IT production. Barrett explained that the production of inexpensive and complicated transistors is a driving force that permits the growth of IT industries. “Everyone is getting involved and striving to move ahead and they are all doing this on the basis of a knowledge-driven structure and economy.”
The Intel CEO pointed out that countries need IT for social and economic development, businesses need it for growth, and individuals need it for education and communication. “The future is going to be different than it is today,” said Barrett, welcoming the opportunity for growth and competition as he challenged the AmCham audience, “This is the opportunity to change places with other countries.”
Barrett discussed the four main areas a government needs to focus on in order to improve its IT competitiveness: infrastructure, education, research and development (R&D) and policy. He noted the significant progress Egypt has achieved in augmenting the infrastructure essential for knowledge-based technology, such as increasing the number of landlines, expanding telephony and augmenting broadband wireless capabilities.
Barrett singled out education as the “first and second and third priority for any government and setting the foundation for that is critically important,” he said, particularly in Arab countries characterized by youthful populations. Barrett additionally called on Egypt to increase its commitment to R&D, which currently amounts to only 1 percent of GDP.
The Intel CEO highlighted the country’s educational programs for producing technical workers, as well as the government program to promote PC ownership, the so-called “PC for Every Home” initiative. He stressed the importance of Egypt’s e-government initiative, which is making government services available online. “There are lots of exciting things happening with e-government here in Egypt. It is the way the government can demonstrate the value of technology.” Barrett commended the government for recognizing the importance of IT and acknowledged its IT ranking as 13 out of 104 countries assessed by the World Economic Forum.
Mrs. Mubarak calls for engagement in the business of peace and human security
On May 16, the Suzanne Mubarak Women’s International Peace Movement and AmCham Egypt hosted a fundraising dinner in support of the peace movement’s activities. Founded by the first lady, the peace movement is an international organization that utilizes the unique skills of women in active peace-building and the enrichment of quality of life through alliances for collaborative action.
Mrs. Mubarak, a strong believer in the role of women in resolving conflict, was introduced by Taher Helmy, AmCham Egypt president and a board member of the peace movement. Mrs. Mubarak told guests during her keynote address that “peace is still in our reach,” despite the turmoil experienced by the global community.
Citing a recent poll by the World Economic Forum that reflected the views of 1.4 billion people in 50 countries, Mrs. Mubarak noted that 51 percent of women and 46 percent of men believed they were living in an “unsafe” environment. “These figures indicate that as long as we have poverty, unemployment, insecurity and the lack of application of rule of law... we will continue to live in an insecure and unstable world.”
Combating illiteracy, she said, was another battle that the world must win at all cost, pointing out that 140 million children worldwide still lacked even minimum schooling. “Illiteracy is closely linked to unemployment and poverty,” she told the guests. When compounded by other inequities, this generates feelings of frustration, anger and despair, and creates a climate in which many young children and youth become prey to human traffickers, forced labor and prostitution. “They pay the price of economic insecurity.” She asserted, “We all stand to gain when we are all actively engaged in the business of peace and human security.”
The first lady’s plea was echoed by Hollywood actor Richard Gere, as he praised the peace movement’s mission. Gere, a long-time peace advocate and president of the Healing the Divide Foundation, encouraged people to thi
Top |
