AmCham Egypt - Doing Business in Egypt

The services sector, including social services, accounts for almost half of the GDP. Within the services sector, tourism and the Suez Canal are important sources of foreign currency. They have both suffered in recent years as a result of extremists' violence and the substantial decline in oil traffic. However, tourism has recovered strongly from the November 1997 Luxor attack, which sent the sector into sharp decline.

The agriculture sector is also a key economic sector, which -according to the Ministry of Planning 2000/01 figures- contributes with 16% to the total GDP and absorbs 28% of the total employment. Industry and mining are also major contributors to GDP, accounting for 20% of GDP and nearly 14% of total employment in 2000/01. According to sector specialists, the construction and building materials sector is expected to witness a 25% annual increase during the coming years after the passage of the mortgage law and the expected increase in construction operations. Petroleum and natural gas are mainstays of the economy, accounting for 8% of GDP in fiscal year 2000/01, besides their comprising over 60% of total exports in 2000/01. There is also a large informal sector, which, although no reliable data exist, may account for as much as 30% of the total economic activities.

The services sector accounts for 40%-50% of Egypt's GDP, unusually high for a country at its level of development; with tourism and Suez Canal being Egypt's largest source of foreign currency.

Tourism
Tourism receipts account for almost 5% of GDP, though many unofficial sources estimate its share at around 15%. It is one of the most dynamic sectors of the economy, generating large number of jobs and at least 8% of all jobs are connected to tourism.

Western Europe is Egypt's largest tourist market, and in recent years has accounted for two-thirds of arrivals. The number of tourists visiting Egypt amounted to 1,054,025 over the period Jan-March 2002 and the total number of tourist nights amounted to 7,045,140 over the same period.

Egypt has the potential to earn larger sums from tourism but the growth of the sector has been hampered by outbreaks of violence in the region. Tourist arrivals have dropped lately and many reservations were cancelled in response to the September 11th attacks on the US, and the violence in the West Bank, and Gaza. However, according to the ministry of tourism, mid to long-term prospects for the industry are bright. Government and private business have ambitious plans to increase the average growth rate in the sector to 12% over the next five years, expanding tourist arrivals to 9.5 with visitors spending 66.5m nights and generating around US$7.6bn in revenue.

Egypt has traditionally relied on its archaeological heritage to attract tourists, but is now attempting to diversify in order to increase the prospect of repeat visits. Beach tourism now rivals historical tourism, and major hotel constructions continue along the Sinai and Red Sea coasts, which host some of the world's finest coral reefs. The prevailing domestic credit crunch and overbuilding in some new resort areas has led to a slowdown in new construction, but the Red Sea resorts are likely to attract increasing numbers of tourists.

Realizing the enormous opportunities in the sector, both the government and the private sector worked hard to enhance tourism services. The majority of the development has taken place in Sinai and the Red Sea coast. The recent government plans call for an increase in room capacity over the next five years to around 140,000 rooms that will serve to accommodate more tourist arrivals.

	1998/99	1999/2000	2000/2001
No. of Tourist Arrivals	4266	5311	5347

European Countries	2282	3241	3501

Eastern Europe	242	298	369

Western Europe	2040	2943	3132

Middle East Countries	1388	1303	1070

African Countries	150	148	145

Americas	244	315	325

Asia & Pacific	200	301	304

Other Countries	2	3	2

Source: Central Bank of Egypt
Central Agency for Public Mobilization & Statistics (CAPMAS)

The Suez Canal
Suez Canal revenues have been relatively flat in recent years because of the growing global trend of relying on other means of transportation (chiefly pipelines and air) for trade. Plans to deepen the canal to allow the use of supertankers will help, but the long-term prospects are for no or slow growth in revenues. Contributions of the Suez Canal and transportation sector to the total GDP in 2000/2001 amounted to LE 26.921 billion.

1. Banking
The Banking industry in Egypt is amongst the oldest and largest in the region. In the nineties, as part of Egypt's economic and financial reform program, the banking sector was completely liberalized, while banking supervision was further strengthened in accordance to international standards. The 49% limitation on foreign ownership in domestic banks was lifted, service fees and bank charges were freed, and competition between banks was left for market forces to determine. In addition, banks were set free to determine their lending and deposit rates and spreads, while the role and size of the inter-bank market has become quite significant.

Currently, there are 63 banks operating in Egypt, with 2,386 branches in addition to 26 representative offices for foreign banks. These include the four big state-owned banks _ the National Bank of Egypt, Bank of Alexandria, Banque du Caire and Banque Misr. The four state-owned commercial banks dominate the sector, accounting for nearly 57% of total assets, and holding 70% of deposits and 59% of loans. . However, state-owned banks generally suffer from low capitalization; a high percentage of poorly performing loans, and massive overstaffing.

Private-sector commercial banks are superior to public banks in terms of service quality, profitability and transparency. There are four large private sector banks which account for the bulk of interest on the part of foreign investors, counter parties and brokers: the Commercial International Bank, Egyptian American Bank, Misr International Bank and National Societe Generale bank. Alongside these joint venture institutions, HSBC and Citibank have ambitious plans to expand in Egypt through wholly owned or controlled subsidiaries.

Generally speaking, though Egypt is perceived as over-banked with the expanding local banks - continuously opening new branches - the extended services are quite basic, particularly in the retail sector. There is no central clearing and although credit card usage is growing, Egypt is still largely a cash economy. Short-term lending makes up about 80% of the major banks' portfolios and it is estimated that only one in ten Egyptians has a bank account. However, this underdeveloped retail market offers substantial opportunities especially international banks that wait for the opportunity to attract hundreds of thousands, if not millions of new depositors at relatively low costs. One major attraction of Egypt is its major population concentrated in its two big cities, Cairo and Alexandria, which together have a combined population of 18-19 million people. They also account for the majority of the middle class Egyptians. Thus, the cost of developing a branch network and its associated IT network is relatively low.

As of November 2001, total deposits amounted to LE 307,985 billion, total credit reached LE254 billion, and net international reserves stood at US $14.5 billion. Judging by the results of the larger private banks at the end of 2001, liquidity in the banking sector seemed to have eased over the year largely as a result of the increase in deposits. The aggressive expansion of many of the private sector banks into the retail market- with many of the players opening new branches- has increased deposits and eased loans/deposits ratios.

Concerning banks' privatization_ because the sector is over-banked _the CBE has been refusing to grant new licenses lately, preferring that international institutions that wish to enter the market would do so through acquiring an existing bank. Investors were particularly attracted to smaller commercial banks that offer less risk. In 1999, the Arab Banking Corporation, a large consortium bank based in Bahrain bought Egypt African Bank. On the other hand, foreign partners in the existing joint ventures have raised their stakes in their Egyptian associates. Among international banks that followed this path were: Barclays of the UK, BNP Paribas of France, Credit Agricole Indosuez, as well as HSBC of the UK which raised its stake in what was then the Egyptian British Bank from 40% to 90%.

Among Egyptian Banks that are up for sale are: Arab African International Bank, Cairo Far East bank, Misr Iran Development Bank and Misr America International Bank. Advisors have already been appointed for the first two.

2. Capital Market
As of June 2001, Egyptian equities had attractive valuations with a P/E multiple of 8.3 times earnings and a high dividend yield of 17.06%. Compared to an average P/E ratio of 12.52 times and dividend yield of 3.81% for the Middle East and Africa and a P/E of 17.5 times and dividend yield of 2,17% for the whole IFCG composite, the Egyptian market offers a very good opportunity for equity investments and rank near the top of the S& P/IFCG list of emerging markets.

The Egyptian Stock Exchange has concluded an agreement with the New York Stock Exchange to list selected Egyptian stocks on Wall Street.

As of June 2001, 9 Egyptian companies have their shares traded in the form of GDRs on the London stock exchange. Several Egyptian Companies are currently studying the feasibility of issuing American Depository Receipts (ADRs), which trade exclusively in the US. Both Mobinil and Orascom Construction industries are thinking of launching ADR issues, since the US market provides more capital though it has tougher rules than elsewhere.

Egypt is also participating in the creation of the Arab Corporation for Clearinghouses, which will link up Arab clearinghouses to expedite the development of intra-Arab trade.

There are neither regulatory restrictions precluding foreign participation in the market nor any prohibitions against repatriation of profits. (Few exceptions to this rule exist, not from a regulatory standpoint but because certain companies' charters do not permit foreign shareholders).

Foreign investors' trading for the period between January and June 30, 2001 amounted to LE3.77 billion, representing almost 18% of total trading over the same period.

3. Insurance
Egypt's insurance industry can be generally described by being underdeveloped with a big room for significant future growth. In recent years, annual insurance premium growth averaged 10%, compared with average global growth of about 2%.

The sector's growth has been traditionally hampered by a lack of public appreciation for the significance of insurance and a general reservation within society regarding the religious probity of insurance. Another factor that limited the operations of insurance companies is the heavy state dominance in the sector, a case which limited the sophistication and variation of products compared to those in other developed markets.

However, the picture is expected to brighten up during the coming period, with the country's transition towards a market driven economy and the encouragement of private participation that will likely lead to an increasingly liberal and sophisticated insurance industry. Ministry of Economy, Youssef Boutrous Ghali told public sector insurance providers in early 2000 that the liberalization of the insurance and the breaking down of the long-established state monopoly could lift domestic savings from today's 19% of GDP to as high as 30%. This in turn could bring the insurance premiums to at least 4% of GDP, compared to its present rate of less than 1% of GDP.

Overall, the sector consists of fourteen registered insurance companies, one Reinsurance Company, three insurance pools and 591 private company funds, mainly operating in life and retirement insurance activities. Of the total fourteen companies, three are state-owned insurance companies and one is a state- owned reinsurance company. The remaining eleven private companies are operating in the local market and the free zones.

The sector is almost evenly split between life and non-life insurance, where non-life insurance companies account for 48% of total direct premiums, life private funds 33% and life insurance companies 19%. The three public insurance companies occupy 90% of all life business and 75% of non-life business.

In preparation for the privatization of the 4 public companies, Morgan Stanley & Flemings have finished the assessment of the assets of the four companies.

Foreign operators in the sector include: American Insurance Group (AIG) of the US which became a major player in both the Egyptian general and life insurance, British Royal and Sun Alliance, the US based Marsh& McLennan which opened a representative office, Legal & General of the UK operating in the life insurance, in addition to other major foreign insurance companies.

The most widely used sources of energy in Egypt comprise petroleum, natural gas and electrical power. The energy sector is one of the major components of Egypt's trade balance and it contributes with about 50% of foreign exchange receipts from the merchandise exports, and accounts for more than 5% of GDP. Over the last 20 years, 217 oil and gas exploration and drilling agreements, including offshore exploration in the Mediterranean have been signed with international firms and the Egyptian private sector. These operations have cost more than $27 billion and have resulted in 444 oil and gas discoveries. Current reserves are estimated at around 3.7 billion barrels of oil and 50 million trillion cubic feet of natural gas. Egyptian oil exports are currently estimated at US$46.2 billion, while domestic consumption is valued at US$82 billion. Foreign interest in the sector has spurred over the past decade with the increase in local demand. The oil and gas industries account for the bulk of foreign investment in Egypt, including industry giants such as BP which is planning to invest an additional sum of US$450 million in new technology over the next six years, British Gas, ENI, Shell, ExxonMobil, Repsol and Agape. Also, Apache, one of the leading oil and gas companies worldwide is now considering increasing its investment in Egypt to $196 million compared to US$ 81 million in 2000. It also plans to increase its natural gas production from 47.5 cubic feet to 108m cubic feet and its oil production to 35,200 barrel per day.

On the power side, demand for electrical power is growing at an annual rate of 6%-7% and the government plans to invest LE4.1 billion in new electricity projects during 2001-2002

Petroleum
Petroleum is a major source of foreign currency and accounts for almost half the export revenues with the upstream sector contributing 8%-10% to the GDP. The downstream oil industry is also important with a domestic energy consumption rate increasing by 2% to 10% per annum. The majority of the production of Egyptian oil is refined domestically where Egypt has one of the strongest refining industries in Africa based in the Port Suez refinery complex.

Total crude production as well as refined output is around 30 million tons per year (800,000 barrels per day), sufficient to cover local consumption for fifteen years. Almost 79% of Egypt's oil comes from the Gulf of Suez and Sinai. Meanwhile, there are other exploration areas in the Western and Eastern Desert, the Red Sea and Upper Egypt.

Egypt also constitutes one of the largest markets for lubricants in Africa, accounting for as much as a sixth of the continent's demand for lubricants. It is also one of the main producers of lubricants with three refineries producing base oils.

Demand has been growing steadily in recent years. Local consumption is around 20 million tons and the remaining production is exported. Currently, there are more than 30 joint venture companies operating in oil production, in addition to thirty other companies working in research and exploration. Egypt has witnessed a boost in the production and export of petroleum, with continuous exploration activities, application of sophisticated technologies, development of human resources and the expansion of the private sector participation in this industry.

The Egyptian General Petroleum Corporation (EGPC) controls the oil industry in Egypt. It is active in the upstream, downstream and petrochemical sectors. The EGPC has full responsibility for all sectors of the Egyptian petroleum industry and holds the sole right to import and export crude oil and other petroleum products. Egypt is currently an oil exporter, but with increasing domestic demand and maturing oil fields in the Gulf of Suez, there are fears that by 2005 to 2010 it will become a net importer of oil. The Egyptian government is attempting to counter this by encouraging increased exploration, enhanced oil recovery and an increase in the domestic consumption of gas.

Natural Gas
Natural gas is gradually replacing oil products in Egypt given its cleanness and relative abundance. The government is continuously encouraging industries to switch to natural gas as an alternative for cheaper energy. Around 90% of Egypt's thermal electricity is generated from natural gas. It is expected that Egypt would have gas export surplus of about 15% per annum. The abundance of natural gas has attracted a number of foreign companies to invest in new natural gas projects. Egypt domestic consumption has risen from 6 million tons in 1990 to reach around 13 million tons in 2001.

Egypt's average gas production stands at 16 million tons and the gas reserves are around 50 trillion cubic feet. British Gas Company has recently developed the largest gas field in Egypt with an estimated reserve of 4 trillion cubic feet of high quality gas. With this increase in natural gas reserves, the government has lately negotiated to export liquefied natural gas.

There is also regional cooperation with other countries to facilitate the creation of electricity networks. Egypt, Lebanon and Syria have signed a preliminary agreement to build a regional gas pipeline worth $ 1 billion.

Electricity
Electricity demand is growing at an annual rate of 6% nationwide and 7% in Cairo. To meet this growing demand, Egypt has to provide an additional 1000 megawatts (MW) to its electricity grid that has a maximum load of around 14000 MW.

At present, Egypt has installed generating capacity of 17 GigaWatts (GW), with plans to add 9.3 additional GW (mainly gas-fired) by 2010. Around 84% of Egypt's electric generating capacity is thermal (gas turbines), with the remaining 16% hydroelectric, mostly from the Aswan High Dam. All oil-fired plants have been converted to run on natural gas in a recently completed program. Egypt is building several gas-fired dual-cycle power stations. Funding for these projects will be dependent on foreign participation in BOT projects as well as limited privatization of the sector.

Agriculture's share of nominal GDP accounted for 16% of GDP in 2000/01 and the sector remains the country's largest employer; employing 28% of the labor force, and accounts for 20% of commodity exports. Productivity gains since the mid-1980s have helped increase grain and vegetable production. It has increased the size of its cultivated and reclaimed land and attained self-sufficiency in white meat and dairy products as well as being able to meet 80% of its red meat requirements. Nevertheless, Egypt remains a large food importer. It is the single largest overseas market for U.S. wheat, importing around 5 million metric tons annually.

The Ministry of Agriculture estimates that fruit and vegetables output in fiscal 2001-2002 will be worth LE 47.44 billion, animal produce - LE 4.06 and fish produce LE 5.2 billion. According to the ministry, agricultural production rose at an average annual rate of 3.6% in the 1990s, up from 2.6% in the 1980s.

Agricultural Crops
Egypt is the world's most important producer of long-staple cotton. Other leading crops include rice, tomatoes and wheat. Also produced are sugarcane, watermelons, millet, barley, onions, vegetables, citrus fruits, mangoes, dates, figs and grapes. Egypt hopes that the signing of the EU Partnership Agreement and the development of the Toshka agricultural scheme will lead to large increases in fruit and vegetable exports. Furthermore, while still a small part of total exports, horticultural exports, chiefly to Europe, have become increasingly important in recent years.

Agricultural crops production is expected to increase significantly upon the completion of the South Valley Development project known as "Toshka". The Toshka project began in January 1997 in the area bordering Lake Nasser, north of Abu Simbel and aims to irrigate some 500,000 acres of arable arid soil in Egypt's far south with water from Lake Nasser. The government has spent LE 2.2 billion of a planned total LE 5.7 billion on a massive pumping station and irrigation canals to transport the water to the agricultural land. Saudi Prince Walid bin Talal's Kingdom Agricultural Development Corporation has purchased 120,000 acres, to be managed by the U.S. firm Cadiz/SunWorld.

Fisheries
National figures give a fish catch of 649,000 tones in 2000, some 35% marine. Egypt exports some 2,900 tones per year of generally fine quality fish. The government is aiming to increase annual production mainly by encouraging the use of the country's inland lakes and waterways for intensive aquaculture.

Livestock
The Egyptian livestock herd is estimated at 6.2 million head, of which 3.2 million are buffalo and 3 million are cattle. The primary usage of the local livestock is in manufacturing dairy products, while its use in meat is of secondary importance. Australia is Egypt's major supplier of imported live cattle, but there are also several shipments from Sudan, Uruguay, Argentina, Paraguay and Brazil to prevent any significant rise in prices of the Australian imports. Egypt also imports frozen beef from non- EU suppliers such as India, China, Australia and New Zealand. In October 2001, the Minister of Agriculture eased the ban on frozen meat imports from Europe -imposed after the big concern about BSE tainted meat but the ban on live cattle from Europe as well as fresh beef products still exists.

Manufacturing
The manufacturing sector accounted for 20% of GDP in 2000/01, employing 13.75% of the workforce. Around 65% of the manufacturing output is produced by the private sector. The vast majority of private industries are small units-some 93% of employment is in enterprises of 15 or less people.

Food-processing and textiles industries account for the bulk of Egypt's manufacturing value added, however, there has been also a gradual increase in the share of value added in the furniture, ceramic and pharmaceutical industries, and most branches of the metallurgical and engineering industries.

Textiles
The textile industry in Egypt covers the entire spectrum of cotton processing operations, including spinning, weaving, converting, knitting, dying and garment manufacture.One of the important characteristics of the textile/garment industry is that it is one of the very few manufacturing processes in Egypt that is handled completely in-country and has the highest value added. However, Egypt's public sector textile factories, mostly engaged in spinning and weaving industries, are in real need for restructuring and investment; this is in contrast to the private sector garment and carpet manufacturing, which is moving forward with big steps. Generally, the sector is growing at an average rate of 6.5% annually and has a paramount importance to the Egyptian economy as it employs 2.5 million Egyptians in over 5000 factories. It is also a crucial foreign exchange earner as it contributes up to 23% of industrial exports and nearly half of all exports, if oil is excluded. According to export figures, 50% of the textiles exports are destined to the U.S., 35% to the EU, and the balance to regional markets in the Middle East. Egyptian textiles exports have proven to be very competitive in international markets, especially ready-made garments, which sold really well in the US markets that the US government imposed a quota on Egyptian-made shirts.

Food Processing
Special emphasis was given in recent years to this sector due to its big potential and rapid expansion. The sector has also witnessed a series of privatizations (eg. Kaha and Edfina) which gave room to high pace development. Rises in income levels among middle class Egyptians, changes in lifestyles and consumption patterns and the growing number of Western style supermarkets, have all been among the factors that helped develop the sector rapidly. Food processing could become one of Egypt's leading export industries, though till now most production is consumed locally. In 2001, Egypt exported US$83 million worth of processed food to Europe, the US and the Middle East.

Pharmaceuticals
Egypt is the largest producer and consumer of pharmaceuticals in the Middle East accounting for 30% of the supply of the MENA region. The region absorbs most of Egypt's pharmaceutical exports, which represents approximately 6% of total production. The Egyptian drug industry is mainly drug formulation rather than research based. Local manufacturers import their ingredients either from their licensors or from numerous suppliers worldwide. Pharmaceutical raw material or final products are imported from France; Switzerland, Belgium, Germany and the U.K. and U.S. suppliers have captured 2.8% of the total market. Importation of finished drugs is related to research and advanced technology including insulin, vaccines, anti-cancerous and some cardiovascular products and baby milk.

The public sector's share of the market is 29%, while the private sector's share is 71%. The Egyptian pharmaceuticals market is expected to grow annually by 14% as a result of growth in drug consumption, increased government spending on healthcare, increased foreign assistance. The market for advanced drugs under license from multinational and foreign companies are also growing and showing potential opportunities for foreign firms.

Automotives
The number of registered vehicles in Egypt, including passenger cars, trucks, buses and motorcycles is estimated to reach 3.6 million in 2002. At present, the market for automotive parts and accessories sold to original equipment manufacturers (OEMs) in Egypt is estimated at $694 million, while parts and accessories demand for the after-market is estimated at $600 million. Many internationally known auto manufacturers, including General Motors, Daimler/Chrysler (Jeep Cherokee), Mercedes, Peugeot, Hyundai, Suzuki, BMW, and Citroen have established assembly plants in Egypt.

Information Technology and Communication Sector
(This sector will be covered in a separate section)

The construction sector is one of the most dynamic sectors of the economy. Demand for construction materials has been high since 1995 due to extensive private sector construction of resorts on the Red Sea, Sinai, and Mediterranean coasts. The demand for building materials is expected to increase further at an annual rate of 25% during the coming years, largely because of the passage of the mortgage law, which will make it easier for the low income to low-middle income to own property. Growth in the sector is also expected with the progress of land reclamation projects in the New Valley (Toshka), the construction of new airports.

Demand for construction equipment and materials is also affected by construction activities in other key sectors such as the agriculture and tourism sectors. Moreover, the country will complete the infrastructure in 15 new cities presently under construction. About 85% of the construction material used in Egypt is manufactured locally and only 15% is imported. The reason for the low rate of imports is the high prices resulting from the high Egyptian tariffs on construction material, which ranges from 20% to 40%. However, this will no more be the case by 2003 when the WTO regulations are enacted.

Private sector investment in construction contracting, equipment and materials is about 40% of the total market. Foreign participation is mainly from the US, France, Germany, and Spain. U.S. firms have an excellent reputation in state-of-the-art innovations in all aspects of construction, in particular with respect to quality standards and delivery times. The supply of foreign expertise in design, engineering, construction, and construction management services has definitely enhanced the sector.

Cement
The cement sector is one of Egypt's most active and profitable industries and has witnessed significant growth over the past several years, with demand growing by more than 11% per annum. The surge in cement demand in the last few years is largely attributed to the increase in population and the subsequent need for further establishments.

Current cement consumption stands at around 27 million tons with total production lagging at 22 million tons. The gap is covered by imports. However, supply is expected to exceed demand with the new entrants in the market that are expected to add 10 million tons per annum together with the increased capacity of the already existing companies that have upgraded their capacities by an additional 6 million tons.

Some of the world's biggest cement companies, such as Lafarge, Holderbank (which took a stake in a private-sector Egyptian start-up), and Cemex of Mexico have been attracted by the booming construction industry in Egypt and the government's grand infrastructure ambitions.

The cost of cement production in Egypt remains one of the lowest in the world, due to relatively low cost of labor, strategic location, abundant raw material mainly limestone and modern production facilities. Moreover, strong local technical and engineering capabilities allowed most cement companies to exceed their production capacities without difficulty. Privatization efforts have been quite remarkable in the sector and are expected to trigger renovations in the equipment and will affect the pricing policy. Hence producers would be free to price cement with seasonal market prices.

Steel
The local demand for steel is expected to increase by 8% during the coming five years. Despite Egypt constituting 5.2% of world steel production, it constitutes 6.5% of world consumption. Egypt's steel industry relies heavily on the re-bar sector, which is estimated to account for 80% of the steel market. A surge in the construction activities and increased private sector participation in the economy helped the sector experience a high growth rate of 23% in 1998. Dominating the steel re-bars market, Alexandria National Iron and Steel and El Ezz Steel Re-bars account for 56% of the total market capacity and 62% of market share. Other private sector companies account for 29% of the market, while public sector companies account for only 9%.

Local demand for re-bar accounts for 4.5 million tons per annum, while local production accounts for 3.6 million tons. The gap has been filled by imports in the past five years. Local producers not only compete with each other but with international markets. While Suez Steel, Aswan for Iron and Steel and Lakah Group's Arab Steel Factory constitute the new local competition, Libya, Saudi Arabia, Turkey, Eastern Europe and CIS countries form the foreign competition. Libyan steel is of low quality and does not threaten local production. However, Saudi steel, which is selling below the local market price, has been a serious competitor.

In 1998, the Egyptian authorities enacted a five-year anti-dumping duty plan against the dumping activities of foreign suppliers. Ranging from 4.2% to 23.5%, to 22.6% to 61% the anti-dumping fees on steel re-bar imported from Eastern Europe, CIS countries and Turkey respectively, are expected to protect the local market against these countries, most of whom are not members of the WTO. The anti-dumping duties coupled with an effective customs duty of 23% are expected to provide local producers with relative stability and flexibility in pricing their products in addition to creating an environment of fair competition.

The recent measures taken by the U.S to increase tariffs on steel entering the U.S and exempting Egypt from these tariffs, creates a big opportunity for Egypt to increase its share of steel exports in the US market.

Paint
The paint industry is expected to grow at an annual rate of 8% over the next five years. A once heavily protected industry, prior to economic liberalization, the paint market is now becoming highly competitive and fragmented. The market's openness and its profitability have attracted several new local and international competitors that have introduced to the market new product innovations. Prior to the market's liberalization, Pachin acted as a monopoly, but with the new breed of competitors, Pachin's market share has definitely decreased. Multinational paint and coating giants are entering the market, often in partnership with local firms. Examples include El-Mohandes/Jotun, a joint venture with Jotun S.A., which has expanded from marine paints into architectural paints. International Paint Egypt has also gone into partnership with Courtalds, one of the world's major producers of marine paints. By 2004, tariffs on paints imports will be gradually eliminated in line with the GATT, which means that more multinationals will be entering the paint market in the near future.