On May 31, the American Chamber of Commerce in Egypt held its Annual General Meeting (AGM), convened at the Grand Hyatt Cairo hotel.

AmCham Executive Director Hisham Fahmy kicked off the meeting by thanking the event’s sponsors, which included: Apache Egypt Companies; the Commercial International Bank; General Motors Egypt; Heinz Egypt; and Visa International.

Fahmy went on to give a brief presentation on recent improvements made to the AmCham Egypt website (www.amcham.org.eg), noting that that the chamber had become the first organization in Egypt to offer online registration and payment. He also announced the launch of AmCham’s new “CyberLink” network, which will allow AmCham member companies to communicate with each other via the website.

Tarek Mansour, country senior partner of PricewaterhouseCoopers, then took the podium to run through the auditor’s report included in AmCham’s 2003 annual report, which was distributed at the meeting. “The financial position of the chamber is in good health,” Mansour said, noting that AmCham boasted a $10,500 accumulated surplus for the year ending December 31, 2003.

AmCham President Taher Helmy then took center stage, welcoming guests to the chamber’s twenty-second AGM.

Helmy shared highlights from the AmCham Board of Governors’ report for 2003, saying that, in that year, “We have seen the highest membership renewals, attendance and committee activity.” He pointed out that the chamber currently boasts 20 different sector committees which have held more than 160 meetings since January 1, 2003, adding that prominent committee speakers had included National Democratic Party (NDP) Policy Head Gemal Mubarak; Petroleum Minister Sameh Fahmy; Communications and Information Technology Minister Ahmed Nazif; US undersecretary of state for economic affairs Alan Larson; and Microsoft founder and CEO Bill Gates.

Helmy went on to draw attention to AmCham’s recent, successful two-day conference on financial-sector reform, saying that, “Papers and recommendations [from that conference] are currently being compiled and will soon be presented to the Prime Minister and the NDP.”

He also mentioned that AmCham had stepped up its rapport with the local media, holding a number of regular meetings with the editors-in-chief of prominent magazines and newspapers. Helmy also pointed out that the chamber board had stepped up cooperation with US officialdom, increasing the number of AmCham’s “Doorknock” missions to Washington, DC to “a minimum of twice per year.”
The AmCham president then offered “a glimpse of the chambers’ future,” pointing to a planned general vote in the coming year to determine whether the AmCham constitution would be changed to replace the unpopular “proxy” voting system with a system of absentee ballots – an announcement which drew applause from the audience.

Finally, Helmy – on behalf of AmCham – paid tribute to Gretchen Welch, wife of US Ambassador to Egypt David Welch, thanking her for her many contributions while resident in Egypt. An accomplished foreign service professional in her own right, Mrs. Welch is set to soon join the State Department, where she will be working as Executive Director for the Bureau of European Affairs.
Mrs. Welch was then presented with a framed montage of traditional Egyptian crafts.

Helmy then introduced the main speaker, US Ambassador to Egypt David Welch.

The ambassador began by expressing his thanks to AmCham and attendees, saying that, under the new board, elected last year, “AmCham continues to be the premier business organization in the region,” and continues to “stimulate dialogue” on reform issues.

The ambassador’s talk focused mainly on the economy, and was noticeably more upbeat than in previous statements. “Events over the past year,” he said, “give cause for cautious optimism.”

He went on to give an economic overview of 2003, starting with the January, 2003 currency devaluation. Prior to the move, he said, Egypt had been “living beyond its means – that was unsustainable.” After the flotation of the Egyptian pound, by contrast, exports and local production became more competitive, while imports became more expensive. Subsequently, he noted, “Egypt ran up a balance-of-payments surplus for the first time since 1997, meaning that more foreign currency came in – from exports and tourism – than left the country.”

Exports in several sectors have enjoyed marked improvements. The ambassador took the popular example of Ramadan lantern production as one that had become more competitive, successfully fighting off inroads by lean Chinese manufacturers.

He also pointed out that Egyptian exports to the US were up by 26 percent – to $1.1 billion – over last year.

Welch went on to note that the declining gap between official and black market exchange rates were attributable to growing confidence in central bank policy, and to the simple fact that there are now more dollars in the local market.

As for tourism, the ambassador recalled that, in early 2003, the industry had braced for a $2 billion loss in revenue as war loomed over Iraq. Happily, though, he added, more than 6 billion tourists – a record – ended up visiting Egypt over the course of the year. Welch also noted that “four times as many American tourists, in particular, visited Egypt in the first quarter of 2004 than did in the same period in 2003.”

He went on to cite a number of other positive economic developments that appeared in 2003, including all-time highs for Suez Canal revenue, tariff reductions and customs reform. In terms of the latter, Welch noted the newly inaugurated ports at Ain Sokhna and Damietta, as well as the new Model Customs and Tax Center.

“There is also cause for optimism on the domestic front,” he said, citing a recent IMF report stating that the Egyptian economy grew faster in 2003 than in 2002 – a trend set to continue into the next year.

The ambassador also noted the launch of Egypt’s first natural gas exports to Jordan, begun in the Summer of 2003, while LNG exports to Europe are slated to begin later this year. “In another five years,” the ambassador said, “Egypt could become one of the biggest LNG exporters in the world.”
He also said that export potential to Iraq was still high, noting that several Egyptian companies – including mobile-phone giant Orascom Telecom – had picked up lucrative contracts for the reconstruction of the war-torn country.

Welch then drew attention to the Cairo & Alexandria Stock Exchanges, noting that the flagship Hermes Financial Index had leapt from about 5,000 points at the beginning of 2003 to a current 15,000 points.

He also lauded the watershed banking law, passed in the summer of 2003, which aims, among other things, to curtail the perennial problem of non-performing loans (NPLs) – a phenomenon, Welch noted, that had also plagued the US banking system in the 1980s. “Once the NPL problem is solved,” he said, “the government must retreat to the role of regulator and arbitrator.”

In terms of privatization, while Welch conceded that the recent sale of the state’s stake in the Cairo Barclays bank was “a good step,” he added that, “More is still needed.”

The ambassador went on to mention Egypt’s nascent IT sector, which he noted was largely “impervious to economic fluctuations,” saying that the launch of the “Free Internet” initiative and “Smart Villages,” along with Egypt’s accession to the WTO’s IT convention, were positive developments.

In conclusion, Welch said that, while Egypt has “many things going for it,” still more “must be done for the country to compete internationally.”

He said, “It’s no coincidence that Egypt’s most viable sectors – oil and gas and tourism, for example – also boast the most private sector involvement.”

Much more foreign investment is still needed, though, he said. Welch pointed to the fact that, while foreign investment in Thailand averages about $4 billion annually, Egypt has averaged less than $1 billion a year. “Egypt attracted less than one percent of global foreign investment in 2003,” he noted.

He went on to urge several measures aimed at improving the local investment climate, including: a reconsideration of the national subsidy system; implementation of the new banking law; a renewal of the privatization process; reform of the customs/tariffs regime; greater government transparency; and greater freedom for civil society. “This is not others telling you what to do,” Welch stressed. “These demands are coming from Egypt.”

The ambassador then noted the importance of public debate on these issues, and commended AmCham for encouraging such debate.

Welch concluded his talk by announcing that $300 million in special funds – granted Egypt by US Congress lat year – would be disbursed imminently.

“You know what you have to do,” he concluded. “Just do it, and you’ll truly see a tiger on the Nile.”
The ambassador then answered a number of questions asked by the audience on a variety of topics, including: Egyptian participation at the upcoming G8 conference; the proposed Egyptian Qualified Industrial Zone (QIZ); US aid disbursement to Egypt; pharmaceutical pricing; democratic reform; the proposed US-Egypt FTA; and the recently exposed instances of prisoner abuse by US forces in Iraq.

Helmy then wrapped up the event by expressing his thanks to the ambassador, who he presented with an honorary 2004 AmCham membership.

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