Annual Report 2005
	President's Letter Committee Highlights AmCham Profile Events Highlights Board of Governors DoorKnock Report Committee Chairs 04-05 Committee Chairs 05-06 Operations & Services Constitution AmCham Annual Reports History

Committee Highlight

AmCham Egypt’s 21 specialized, sector-oriented committees met over 100 times in 2005 to discuss new developments and address problems in their various fields of interest.

	Banking, Finance & Insurance		Marketing
	Courier Services		Trade & Commerce
	Customs & Taxation		Transport
	Environment		Women in Business
	Health & Pharmaceuticals		Human Resources
	Information & Communications Technology		Petroleum
	Industry		Qualifying Industrial Zones (QIZ)
	Legal Affairs		Construction & Development
	International Cooperation		Travel & Tourism
	Joint Committees

Banking, Finance & Insurance Committee

In January, Hisham Ramez, managing director of Egyptian Gulf Bank, and Hisham Ezz El Arab, chairman and managing director of Commercial International Bank (CIB), discussed moves taken by the Central Bank of Egypt (CBE) to consolidate the black market rate with the official rate as the first step towards strengthening the pound. Ramez explained that clear monetary and fiscal policies had been adopted and banks had reclaimed the privilege of pricing markets. Ezz El Arab concluded by noting that the CBE’s decision to create a dollar interbank market had helped to bridge the gap between dollar demand and liquidity and add transparency to the market.

In December, Ezz El Arab and Aly Shaker, chairman and managing director of National Bank for Development (NBD), discussed banking mergers and acquisitions during a breakfast meeting. Shaker explained that banking crises can stem from poor management and ineffective supervision. He focused on banking mismanagement and the deterioration of management culture, problems that beset mergers and acquisitions, and the importance of transparency in banking. Ezz El Arab added that developing and sticking to a detailed plan is the best way to avoid problems in mergers.

Later in the month, guest speakers Mahmoud Abdel-Latif, chairman and CEO of Bank of Alexandria, and Fatma Lotfy, vice chair, discussed the state bank’s privatization experience, which entailed restructuring its systems and key departments, a new credit policy, the creation of remedial and risk management divisions, and the launching of proper MIS reporting and credit scoring systems. Bank policies and responsibilities regarding audits were also redefined. During the meeting, the speakers highlighted win-win reforms in the human resources department designed to achieve higher profitability, strengthened capital structure and increased shareholder value. The three-year privatization process doubled customer deposits and the total balance sheet, with operating profits rising by 600 percent.

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Courier Services Committee

Established in 2004, the Courier Services Committee is dedicated to promoting and improving commerce within Egypt and between countries by fostering the development of a competitive express transportation industry. The committee works in conjunction with the AmCham Customs & Taxation Committee on specific customs clearance and tax-related issues on express shipments.

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Customs & Taxation Committee

In February, chairman of the Customs Authority, Galal Aboul Fetouh, explained that customs reform was essential for economic reform plans. He stated that the authority had shifted its priorities away from the collection of duties and prevention of tariff evasion “to save time to gain trust.” Thus far, reforms have reduced the period goods are kept in storage before being released to two days, resulting in a 15-percent reduction in import prices and a 17-percent increase in the value of exports. He added that universal fine rates for tariff violators will be fixed at 10 percent for commercial and 15 percent for other cases.

In April, Sayed Aboul Komosan, first undersecretary and head of the foreign trade policies section at the Ministry of Foreign Trade & Industry, discussed the Duty Drawback Decree. He explained that goods imported from the Arab free zone, COMESA and Egyptian-European Trade Agreement countries would not require certificates of origin or additional documents.

A new philosophy centered on trust between taxpayers and the Tax Authority was the topic of discussion in June when Hosny Gad, director of the Tax Authority, presented the new income tax law. Gad explained the amnesty provision, corporate tax reductions and tax withholding and advance payment systems. A reduction in personal income tax rates had further contributed to reform efforts, he concluded.

Guest speaker Seif Coutry, adviser to the minister of finance and general supervisor of the Large Taxpayer Center (LTC), described the reasons for establishing the center. Noting that large taxpayers are responsible for the bulk of Egypt’s income, he said they deserved outstanding services. Coutry mentioned, in his October presentation, that LTC employees are highly trained and qualified to quickly and accurately answer tax-related questions.

Aboul Fetouh fielded questions in November about the Customs Authority’s devotion to large importers at the expense of their smaller counterparts. Aboul Fetouh responded that large importers generate 70 percent of customs revenue and consume over 60 percent of custom outlets’ time. He concluded that a department devoted solely to their needs would free other customs officers to focus on small and mid-sized importers.

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Environment Committee

In April, Luigi Marcon, head of the European Investment Bank (EIB) Cairo Regional Office, explained the role of EIB in enhancing the environment. Referring to the areas tackled by the EU Environmental Policy, Marcon clarified how the EIB environmental policy supports the action plan drawn up by the EU community, promotes good environmental management practices, best available techniques and compliance with EU laws and standards.

Sherif Arif, regional environmental and safeguard adviser at the World Bank, recapped Egypt’s recent social and economic performance for the Environmental Committee in June, highlighting improvements in female education and employment opportunities, increased primary education enrollment and a reduction in poverty to 0.4 percent. Arif commented on progress made in the environmental sphere including improved air quality, the introduction of natural gas in the power, industrial and housing sectors, and improved efficiency of electrical transmissions and distribution systems, roads, highways and mass transit systems. He noted that sanitation had improved to cover roughly 98 percent of the urban areas but only 5 percent in some rural areas, while access to an adequate water supply had reached 100 percent and 80 percent in urban and rural areas respectively. Arif concluded by stressing the importance of mobilizing local resources instead of depending on grants or subsidized environmental investments.

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Health & Pharmaceuticals Committee

The Health & Pharmaceuticals Committee serves as a point of contact and a forum for dialogue for the Egyptian Government and the pharmaceutical industry. It has identified six priority issues: the proposed Free Trade Agreement with the United States, leadership for FDI in the pharmaceutical field, protection of intellectual property, combating counterfeit medicines, ethical pharmaceuticals marketing and social responsibility programs.

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Human Resources Committee

Explaining the meaning and purpose of return on investment (ROI), Hazem Hamdy, executive director of Egyptian Leadership Training & Consultancy, explained to committee members in March, that ROI requires a paradigm shift, from an activity-based to a results-based model of human resources management. Hamdy provided an overview of ROI purposes in supporting training projects aligned with business needs and some of the common barriers to its implementation. According to Hamdy, five levels of evaluation are used to measure participant satisfaction with coaching, changes in knowledge skills and attitudes, on-the-job behavior, changes in business impact variables and to compare monetary benefits to the cost.

Competitiveness, according to Salah Khalil, chairman of Egyptian American Paints, can be created by “a solid vision that is built by people who are proud of who they are, what they do and how they do it.” During the June meeting, Khalil explained how human resource development is at the heart of both competitiveness and visioning. He commented that in Egypt, cultural norms have resulted in a “me too” attitude that obstructs creativity. In concluding he noted that, “the more developed people are, the better the vision and the more competitive they become.”

The HR Committee and the Egyptian Human Resource Management Association (EHRMA) organized their second Health Care Fair on July 12 with around 200 people in attendance. The fair aimed to introduce companies that offer medical care services and provide an opportunity to meet their representatives. Companies present included Medmark, Alico, Care Plus, Egycare, Inaya, MediCare and Unicare.

Addressing a very sensitive topic during the December meeting, Simon Varely, managing director of I CAN Consultants Europe and Middle East division, explained how companies can “downsize with dignity.” Varely presented strategies to help companies prepare for employee reactions, cope with increased workloads and plan for the future. He stressed the importance of a visible and available senior management team who remain firm but sensitive to employee reactions.

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Information & Communications Technology Committee

In February, Mohamed Omran, CEO of the Information Technology Industry Development Authority (ITIDA), presented the opportunities, challenges and plans of the newly-formed government agency responsible for developing the IT sector and enabling IT industries to boost exports. Omran discussed the role of ITIDA in enhancing e-business through the implementation of an e-signature law and the regulation of e-signature related activities. He stated that ITIDA would issue licenses to certified authorities in Egypt and act as the catalyst, coordinator and national focal point for other national and international stakeholders. Ultimately the agency envisions an Egyptian IT industry that is world-class and export-oriented, and that Egypt will be the destination of choice for multinationals looking to outsource or in-source services and R&D in the IT sector.

Providing an update on the telecommunications sector in March, Amr Badawi, senior adviser to the Ministry of Communications & Information Technology (MCIT) for the development of the telecommunications sector, pointed out that £E 15 billion had been invested in the sector in the previous three years. Badawi described the ministry’s vision for the future as a partnership between the government, the private sector and civil society; a partnership for economic and social development and e-readiness. He cited plans to extend Free Internet services to an additional 600,000 households, increase usage to 5.5 million users and establish an IT club in every Egyptian village by 2007. In conclusion, he affirmed Egypt’s commitment to a fully liberalized telecom sector by the end of 2005.

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Industry Committee

In January, Slim Tlatli, executive director of the Industrial Modernization Center (IMC), and Hisham Ezz El Arab, chairman and managing director of Commercial International Bank (CIB), discussed how IMC provides guidance and assistance in marketing and human resources strategies through its Business Resource Centers (BRCs). Ezz El Arab noted how CIB’s cooperation agreement with IMC would help consolidate efforts and access to financial services, especially for SMEs.

In June, guest speakers Mohamed Fathi, personal assistant to the minister of foreign trade and industry, newly appointed IMC director Helmy Abouleish and Mohamed Badra, general manager of CIB’S SMEs Banking Group, discussed the National Suppliers Development Program (NSDP). The goals of this joint capacity-building initiative between the IMC and the MFTI are to establish a chain of internationally accredited suppliers, gain access to global markets and increase exports. Program objectives include stimulating economic and export growth, improving the trade balance, achieving sustainable employment and preparing small businesses to compete internationally.

The Industry Core Committee met in September to adopt a vision of “proactively” improving the competitiveness of Egyptian industry and exports through continuous improvement of the investment, business and trade climate. They set a five-pronged priority plan that addressed the drawback system, import cycle, FTA with the U.S., product safety, health and environmental standards, and antitrust legislation.

Abouleish returned in December to provide an overview of the IMC’s long-term goals. Abouleish said the IMC planned to significantly increase industrial investments and exports, especially in medium-tech industries by 2020. He described how IMC program support focuses on exports, quality, finance, HRD, innovation and technology, R&D and information.

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Legal Affairs Committee

With the proposed tax law on everyone’s mind, Mohamed El-Dakrouri, state counselor and legal adviser to the minister of finance, focused on the differences between the proposed tax law and existing legislation during the March meeting. Citing the revision of certain tax exemptions, the simplification of conflict resolution procedures between taxpayers and the Taxation Authority, and amendments for equal treatment between private and public sector companies, El-Dakrouri explained that the proposed tax law would cap corporate income tax at 20 percent and expand personal tax exemptions regardless of the taxpayer’s profession. He said the major benefit of the new draft law was that tax declarations submitted by taxpayers would – in most cases – be considered accurate and serve as the basis for settlement.

In October, Bill Batchelor, partner at Baker & McKenzie LLP, addressed Egyptian competition and anti-monopoly legislation in light of European practices. He pointed out that Egyptian authorities need to distinguish between anti-competitive collusion and beneficial cooperation and be on guard for cartels and distribution agreements that may result in anti-competitive and illegal activity. Batchelor observed that navigating a myriad of legal definitions is one of the trickiest aspects of anti-monopoly legislation.

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Marketing Committee

In January, Nader Iskandar, managing director of Egypt Middle Egypt (EME), characterized the nature of the service sector as intangible, variable and inseparable from the provider. He explained that the marketing of services and goods is the same, except that services are experienced, not consumed. Emphasizing that consumers of services are shopping for attitude, confidence, assurance, style, trust and responsiveness, Iskandar noted that soliciting and responding to feedback from clients is a critical management function.

The brand, not the celebrity, should be the star of the ad, said guest speaker Omar Mandour, marketing director of Pepsi-Cola Egypt & North Africa. In April, Mandour presented a communication strategy that combines celebrities, global branding and integrated communication tools. He explained the logic in using celebrity role models to link the brand and the experience with targeted consumer groups. He noted that extensive market research helps to determine the matching of brands with celebrity personalities. Category development within a rapidly changing market was the topic in May when Hazem Hafez, managing director of Inspire Consulting, discussed strategic steps in marketing. He emphasized the importance of category definition as a major influence for vision setting and identifying the “war zone” when it comes to marketing. In conclusion, Hafez said strategic category reviews can prove to be vital to the livelihood of any operation.

From global to local was the theme in June when Muthanna Al Durah, managing director of Radio Shack Egypt, gave a brief history of the company and shared its worldwide positioning, expansion and perception strategies. Al Durah noted that the company had 35 stores and 420 employees in Egypt who follow an organized system of reporting, sales analysis, product management, pricing structures, automated stock control and after-sales service.

The committee organized a special one-day seminar on December 20. The event, which showcased public relations success stories, enabled PR agencies and their clients to share successful public relations tools for visible marketing results. Experiences shared included how PR and marketing departments could successfully collaborate to reach a global audience using the Web and traditional media, how to maintain good relationships with journalists, the importance of corporate social responsibility in establishing and promoting a good relationship with the public, how PR can change public perceptions or create awareness about a product, and how PR creates a “fertile environment” for marketing and sales activities.

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Trade & Commerce Committee

In February, guest speakers from the Ministry of Foreign Trade & Industry (MFTI) presented the ministry’s strategic plan designed to facilitate the export process both for producers and exporters. The speakers included Sayed Aboul Komosan, first undersecretary and head of the foreign trade policies section, Said Abdallah, head of the central foreign trade agreements department, and Walid El-Nozahy, head of the WTO Unit in the trade agreement sector. The speakers affirmed the ministry’s focus on the textile, agriculture, food, chemical and construction industries, attracting investments and reducing the level of unemployment.

In April, Leila Aridi Afas, Middle East and North Africa country manager for the U.S. Trade & Development Agency (USTDA), described the agency’s unique mandate to foster public-private partnerships designed to engage U.S. private sector expertise, technology and best practices in meeting overseas developmental challenges. Afas discussed how technical assistance and training grants help foreign organizations to develop technical and managerial capacities to implement projects with the potential cooperation of American companies.

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Transport Committee

On February 22, AmCham’s Transport Committee held a special breakfast with Abdel Azim Wazeer, governor of Cairo, who enumerated the magnitude of Cairo’s traffic problem. Cairo’s 50,000 taxis account for 23 percent of vehicles on the streets – contributing to its congestion and pollution problems, he said, adding that insufficient parking space is another major factor. Wazeer introduced the Cairo Capital Taxi Project, an initiative aimed at introducing a 2,000-strong fleet of brand new, air-conditioned taxis in the Greater Cairo governorates. He also noted that £E 10 billion would be allocated to construct several multi-story garages to help meet a shortfall in parking garages, citing a demand for 100,000 spaces.

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Women in Business Committee

Carmen Niethammer, director of the Gender Entrepreneurship Markets program of the International Finance Corporation (IFC), shared research results in January that suggested a potential 20-25 percent increase in net family income for the MENA region if more women were to join the labor force. She explained IFC programs focus on empowering women by maximizing their contribution to private sector development and targeting solutions that promote fast-track growth in women-owned SMEs.

In March, Dina Galal, communication manager for IBM Egypt and IBM Women’s Leadership Council representative for the Middle East, Pakistan and North Africa, discussed results from IBM studies that show women’s leadership styles typically focus on building organizational and employee capabilities. Galal added that this climate enables them to attract, develop, leverage and retain talent. For this reason, she added that forward-looking employers know that women’s success is part of their business success. Sheikha Hessa El-Sabah, head of the Arab Businesswomen’s Council, called for a network between Arab businesswomen during the April meeting. El-Sabah explained the mission of the council as one that aims to develop and enhance the role of women in investment, real estate and tourism.

Reform of the Egyptian media was addressed by Lamees El Hadidi, executive editor-in-chief of Al-Alam Al-Youm’s weekly edition and Cairo bureau chief for CNBC Arabiya, and Nihal Saad, Nile TV International senior political correspondent and news anchor, in June. The speakers called for the evolution of a new policy that elevates Egyptian print and broadcast media to compete with worldwide networks.

According to Rajendra Singh Rathore, ambassador of India to Egypt, women in India have gained considerable rights including equality in work opportunities, maternity support, free education until the age of 14 and the right to vote. He added during the June meeting that an entire ministry and a national rights commission are solely dedicated to women’s issues, while 33 percent of seats in parliament are reserved for women.

Sharing her personal experience as an entrepreneur, Aziza Berry, managing director of The Design Emporium, described her entrepreneurial journey to the committee in December. Berry encouraged those attending to achieve their goals through hard work and tapping into their experiences.

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Petroleum

Fuel subsidies were the topic of a one-day workshop held in April by the Petroleum Committee to ascertain if there was a consensus for the gradual elimination of fuel subsidies in Egypt. After identifying areas of concern, sector experts discussed the pros, cons and challenges of removing subsidies. Recommendations were developed in the areas of environment and health, economics and energy and the effect of fuel subsidies on the budget deficit.

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Qualifying Industrial Zones (QIZ)

The newly formed Qualifying Industrial Zones (QIZ) Committee met in November to discuss QIZs for non-textile industries with Ali Awni, head of the QIZ Unit at the Ministry of Foreign Trade & Industry, and Tarek Tawfik, vice chairman of the Chamber of Food Industries and chairman of the Food Export Council. The speakers explained that to date 60 Egyptian food companies had registered in the program and exported duty-free to the U.S. Awni explained how goods manufactured with a specified ratio of Israeli content may be shipped to the U.S. without any duties or quotas when qualified under QIZ.

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Construction & Development

The Construction & Development Committee was formed to discuss ways of optimizing Egypt’s competitiveness in the construction industry both locally and regionally.

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International Cooperation

The International Cooperation Committee increases awareness of donors and the services they offer, and contributes to the planning and implementation of activities geared toward private sector employment creation. The committee also disseminates success stories and information to better convey its programs to AmCham members and public officials.

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Travel & Tourism

Peter Kaestner, consul general at the U.S. embassy in Cairo, addressed the role of the consular office in rebounding U.S. tourism to Egypt during a breakfast meeting held in November. He noted that AmCham and the consulate share a mutual interest in promoting U.S. tourism to Egypt because tourism creates jobs, generates hard currency and promotes development. He stressed the importance of mutual understanding between Americans and Egyptians as a by-product of tourism. In response to questions about visa issuance to the U.S., Kaestner said restrictions had been eased to take into account special circumstances.

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Joint Committees

Banking, Finance & Insurance/ Investment & Capital Market Committees

Guest speaker Khaled Sherif, manager of the World Bank’s Private and Finance Development Sector for the Eastern Europe and Central Asia Region, addressed a joint meeting of the Banking, Finance & Insurance and Investment & Capital Market committees in April. Sherif discussed the effects and impact of state ownership of banks on development. State-owned banking systems, which include export development and insurance banks, are characterized by huge losses due to non-performing loans, deferred risk-taking by private banks and deferred investment by foreign banks. Sherif noted that countries with successful privatization processes start by privatizing banks first and then companies

Banking, Finance & Insurance/ Legal Affairs Committees

During a joint meeting held in December by the Banking, Finance & Insurance and Legal Affairs committees, Samir El Sharkawy, a professor of commercial law at Cairo University, presented new terms and conditions governing checking in light of new Egyptian legislation. Misuse of checks such as postdating, has cheapened their worth, El Sharkawy explained, acknowledging that checks are the only immediate instrument of payment protected by the penal code. According to El Sharkawy, Egypt has integrated international regulations into its legislation and revived the check’s utility by implementing Trade Law No. 17/1999 after a long delay.

Customs & Taxation/ Maritime Committees

Damietta port was the subject of a joint meeting held in March by the Customs & Taxation and Maritime committees, when chairman of Damietta Port Authority, Ibrahim Youssef, discussed the most recent developments with committee members. Youssef explained that the construction of a second basin and a logistics center would enable Damietta port to meet forecast cargo traffic increases and become an international trade center. Upgrading infrastructure and developing human resources were equally important, Youssef stressed, as he described the overhaul of the port’s entry road and warehouses and implementation of training courses.

Environment/ Petroleum/ Transport Committees

Connected by their concern for the earth and its natural resources, the Environment, Petroleum and Transport committees hosted a joint meeting in December with Emad Hassan, a principal consultant with NEXANT, and Khaled Abu Bakr, vice chairman and managing director of Gas & Energy Co., to discuss current practices and future trends for compressed natural gas (CNG) vehicles in Egypt. According to Hassan, 95 CNG fueling stations were servicing 63,135 vehicles, mostly taxis and microbuses, in 14 governorates, and 40 conversion centers were turning gasoline-powered cars into CNG vehicles. Lack of awareness and misperceptions hinder greater acceptance and vehicle conversion. The speakers recommended lowering import duties on CNG vehicles and manufacturing components, as well as initiating a public-awareness campaign to improve CNG vehicles’ image.

Legal Affairs/ Real Estate Committees

The Legal Affairs and Real Estate committees held a joint meeting in January with guest speaker Sameh El Torgoman, chairman of the Mortgage Finance Authority (MFA). El Torgoman gave an overview of the Egyptian mortgage market. Deeming the market ineffective, El Torgoman explained that 90 percent of real estate assets in Egypt remained unregistered, despite legislation requiring registration. To address this problem and develop a healthy mortgage market, the MFA proposed a fully automated one-stop-shop for registering mortgage contracts and other real estate assets. El Torgoman warned that increasing demand without providing an adequate supply and diversity of loan funds and infrastructure would be counterproductive.

Marketing/ Investment & Capital Market Committees

Amgad Sabry, managing director of Leo-Burnett Egypt, addressed a joint meeting of the Marketing and Investment & Capital Market committees in February. Sabry’s presentation focused on advertising in volatile local and international markets. Using well-known ads as examples, he demonstrated how great advertising builds a better, deeper and stronger identification with the product. He concluded by saying that advertising is “all about the power of ideas.”

Transport/ Travel & Tourism/ Construction & Development Committees

On December 10, AmCham Egypt and the Ministry of Civil Aviation co-organized a field trip to three of Egypt’s newly renovated international airports: Cairo, Luxor and Sharm Al Sheikh. The event, hosted by Minister of Civil Aviation Ahmed Shafik, provided 130 AmCham members and their spouses with an exclusive look at the newly renovated terminals.

After a short tour of Cairo International Airport’s newly renovated Terminal 1, managed by Germany’s Fraport AG Frankfurt Airport Services, the group was transferred via a private jet to Luxor for a tour of Luxor International Airport, managed by France’s Aéroports de Paris (ADP), which also manages Sharm Al Sheikh and Marsa Allam international airports. The guests were then flown to Sharm Al Sheikh International Airport, where they were able to view the construction in progress.

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