Transcript integrating a changing europe into global business strategies

INTEGRATING A CHANGING EUROPE INTO
GLOBAL BUSINESS STRATEGIES
MOHAMED ASHMAWY
Vice Chairman and Managing Director
COMMERCIAL INTERNATIONAL BANK
EGYPT
The European Community, has a long history of fruitful cooperation with the Mediterranean countries and Egypt in
Particular. The year 2010 has been set as "the target date for the
gradual establishment of the Euro-Mediterranean Free -Trade
Area.
It is becoming clear now that, as stated by Mr. Manuel Marin;
“the EU cannot maintain its prosperity and deepen its integration
without stability and prosperity in its immediate neighbourhood.
Necessary too for the Mediterranean Partners who expect from the
union not only market access, investment and transfers of know
how, but also a better understanding as regards to culture,
civilisation and human affairs.”
EGYPT
EU Business Partner
•Area: 1,001,450 km2
land: 995,450 km2
water: 6,000 km2
•Coastline: 2450 km
•Natural resources: petroleum,
natural gas, iron ore, phosphates,
manganese, limestone, gypsum, talc,
asbestos, lead, zinc
•Land use:
arable land: 2.85%
permanent crops: 0.47%
other: 96.68%
•Irrigated land:
33,000 km2
Egypt has the largest population in the region (71.2 million 2003), whereas 20% are
below 20 and 6% are over 60, resulting in a huge workforce.
It is the second largest economy in the region, dominated by services, which account for
about 50% of GDP (cf € 88 bn).
Although tourism has not fulfilled its potential in recent years as a result of regional
conflicts, but nevertheless it has shown considerable resilience, having recovered
strongly after both September 11th 2001 and the US war on Iraq in 2003.
The Suez Canal has suffered as a result of the substantial decline in oil traffic.
Although only 3% of the total land area is arable, agriculture accounted for 16.4% of
GDP in fiscal year 2002/03 (July 1st-June 30th) and 26% of total employment in
2002/03.
Manufacturing, accounting for 19.7% of GDP in 2002/03, and is heavily concentrated in
Cairo and the Nile Delta, and employs with mining around 24% of total employment.
Petroleum and natural gas are also mainstays of the economy, accounting for 8% of GDP
in 2002/03 and nearly 40% of exports, despite the gradual decline in crude oil
production, natural gas production increased.
A large informal sector is estimated to be around 30% of total economic activity.
OUTLOOK
01/02
02/03
03/04
04/05
(frcst)
Real GDP (% change)
3.2
3.1
3.5
4.0
CPI inflation (% change; average)
2.4
3.2
5.1
5.3
Current-account balance (US$ billion)
0.6
2.0
2.6
3.2
(0.7)
(2.4)
(3.6)
(4.4)
Foreign currency reserves (US$ billion)
13.0
13.6
15.0
17.0
External debt (US$ billion)
28.7
28.7
29.6
29.9
(33.1)
(36.0)
(41.4)
(41.1)
4.5
6.0
6.5
6.8
(% GDP)
(% GDP)
Exchange rate (LE:US$; end-period)
Foreign trade, 2002/03 (%)
Major exports
Fuel, mineral oils & products
Cotton
Raw materials
Semi-finished commodities
Finished commodities
Other goods
38.9
2.4
3.5
8.0
36.8
10.3
Major imports
Fuel, mineral oils & products
Raw materials
Intermediate goods
Investment goods
Consumer goods
Durable, non-durable & other goods
6.7
18.1
29.7
21.4
17.5
20.0
“Egypt is a pivotal Arab, African, and a Euro-Med power. The EU has
major policy objectives in all these regions and supports Egypt’s
role as a reliable and constructive regional partner in these areas.”
Egypt CSP
Trade Relations with the EU
The EU is Egypt's largest trading partner, accounting for around 35-40%
of Egyptian foreign trade in terms of Exports and Imports.
Main Exports to EU
Oil and oil products
Textiles and clothing
Agricultural products
Engineering products
Main Imports from EU
Power generation machinery
Chemicals
Food & agricultural products
Transportation equipment
* Trade Composition with the rest of the world:Exports
Imports
USA
15%
20%
Asia
25%
25%
Arab Countries
15%
5-7%
Rest of the World
5%
5%
Information Technology and Telecommunications
The government has identified development of information and telecommunication
technology (ICT) industry as a national priority.
ICT in Egypt continued to grow in 2003 despite the overall sluggish economy.
Internet penetration almost doubled from 2002 to over one million by early 2003, mainly
due to the launch subscription-free Internet service in 2002.
E-commerce, however, is not evolving as such pace basically due to the conservative
nature of the Egyptian market place and lack of public awareness. The Egyptian
Government is aggressively working in an effort to stimulate rapid development. Laws to
govern e-commerce are in the works, including the e-signatures law, to reach the
legislature this year.
The growth of cellular phone service in Egypt is perhaps a more reliable indicator of IT
market growth and potential in Egypt. Despite the weak economy over the past three
years, the number of mobile phone subscribers has risen steadily, from 650,000 in Oct.
1999 to 6 million in Nov 2003. This compares with only 7 million fixed telephone lines in
the country.
In June 2002, Egypt became a member of the WTO Basic Telecommunications Agreement
(BTA), which commits it to allowing greater competition in its telecommunications
market. In April 2003, the country joined the WTO Information Technology Agreement,
which will lead to an eventual phasing out of tariffs on all IT products.
In June 2001, Egypt signed an Association Agreement with the EU, which was
ratified in April 2003 by the Egyptian parliament and five parliaments of the EU.
The agreement will come into effect next month.
When in force, it will immediately grant Egyptian exporters increased access to
the European market, particularly for agricultural products and agricultural
manufactured products. Tariffs and other barriers to European exports to Egypt
will be phased out in 4 stages over 12 years.
Tariffs on raw materials and capital goods for industry will drop to zero three
years after the agreement enters into force; on semi-finished goods after 10 years;
on consumer goods and finished products after 13 years; and on automobiles
after 15 years.
The agreement includes €615 million in project assistance grants and €1.1 billion
in loans from the EIB, designed to help modernize Egyptian industry. A
transitional Egypt-EU agreement designed to speed the implementation of the
Association Agreement is currently being negotiated.
Investment Tax Incentive
Corporate Tax Exemption Incentives
Life of Project
Public Free Zones
Private Plants Specific Free Zones
20 Years
Regional Development
Toskha/East Owaynat
10 Years
Investment in New Communities
Oases
Kharga/Farafra/Baris
Land Reclamation & Agricultural Cultivation
5-10 Years
Projects Under Law 203
Poultry Cattle & Fisheries
Hotels & Tourist Projects
5 Years
Industrial Projects (More than 50 employees)
Suez Canal
Facts and Figures
The Suez Canal is 193KM long.
The Canal was built to connect the Atlantic Ocean and
thus the Mediterranean to the Red Sea and thus the
Indian Ocean. The two main points at either end of the
Canal are Port Said at the North end and Port Suez at
the Southern end.
Constant dredging operations being undertaken as ships
around the world get bigger, faster and deeper. Projects
over the years have increased the dimensions of the
Canal so much so that in 2001 a large project to deepen
the Canal so that it could receive vessels of up to
210,000 tons with a depth of 19m, to reach 22m by
2010.
In 2003, 15667 ships carrying 549 million tons of cargo
on an average of 42.9 ships/day went through, making it
the busiest canal in the world.
Suez Canal 2
Facts and Figures
Ships
South bound
North bound
Tonnage
South bound
North bound
2002
13,447
2003
15,667
6,721
6,726
7,895
7,772
444,786
549,381
217,841
226,945
272,467
276,914
%
17%
24%
EGYPTIAN PORTS
Maritime
All these ports are fully equipped with latest technology and have duty free warehousing
areas.
International Inspection and warehouse management companies are operating in most of
these ports such as (SGS and Cotecna).
Governorate
Alexandria
Dekhela
Damietta
Port Said
Sokhna
Suez
Adabeya
Safaga
Nuweiba
East Port Said
Total
Max Cargo
Capacity
( 000 's
Tons)
23,200
1,500
5,600
5,400
3,000
1,500
4,500
4,000
250
5000 *
48950
Max Container
Terminal
Capacity
( 000 's TEU)
230
500
500
350
450
400
1500 *
2430
EGYPTIAN PORTS
Roads & Airports
Railways
total: 5,105 km
Highways
total: 74,000 km
paved: 58,000 km
unpaved: 16,000 km
Airports –93Airports - with paved runways
total: 79
over 3,047 m: 11
2,438 to 3,047 m: 42
1,524 to 2,437 m: 19
under 914 m: 3
Airports - with unpaved runways
total: 14
under 914 m: 7
2,438 to 3,047 m: 1
1,524 to 2,437 m: 2
914 to 1,523 m: 4
A current project is under going to triple the Refrigeration facilities in the Cargo
Terminal of Cairo International Airport from 180 to be 540 tons/day.
A new terminal and cargo village is also an under going project with the cost of 120
million dollars over an area of 18 km2 in Borg El Arab 30 km west of Alexandria
Port and 60 km north of the main Export agricultural production area of Egypt.
Banking Sector
•
•
4 Public Sector Banks
60 Private Banks
Total Net Worth:
% to Assets:
•
•
Total Assets: $ 93.0 billion
% to GDP: 115%
$4 billion
4.3%
CIB Position
•
•
•
•
•
5th largest bank in Egypt (Assets)
4th largest bank in Egypt (Net Worth)
The highest in Profitability
Best Bank in Egypt by Euromoney for the 10th year
Best Bank in Egypt by Global Finance for the 6th year
Thank You