1 of 143 U.S. Department of State FY 2001 Country Commercial Guide: Egypt The Country Commercial Guide for Egypt was prepared by U.S. Embassy Cairo released by the Bureau of Economic and Business in July 2000 for Fiscal Year 2001. International Copyright, U.S. & Foreign Commercial Service and the U.S. Department of State, 2000. All rights reserved outside the United States. TABLE OF CONTENTS CHAPTER I. EXECUTIVE SUMMARY 5 CHAPTER II. ECONOMIC TRENDS AND OUTLOOK 8 -Major Trends and Outlook -Principal Growth Sectors -Key Economic Trends and Issues -Economic Cooperation -Nature of Political Relationship with the U.S. -Major Political Issues Affecting Business Climate CHAPTER III. MARKETING U.S. PRODUCTS & SERVICES 17 -Distribution and Sales Channels -Use of Agents and Distributors - Finding a Partner -Franchising -Direct Marketing -Foreign Sales Corporation (FSC) -Joint Ventures/Licensing -Organization Structure and Management in Egypt -Steps to Establishing an Office -Selling Factors/Techniques -Advertising and Trade Promotion (and Selected Media List) -Pricing Products -Sales Service/Customer Support 2 of 143 -Selling to the Government -Tenders Law -Defense Trade -Protecting your Product from IPR Infringement (see Chapter VII) -Financing U.S. Agricultural Sales -Selling Through USAID Program CHAPTER IV. LEADING SECTORS FOR U.S. EXPORTS & INVESTMENT 41 -Best Prospects For Non-Agricultural Goods And Services -Best Prospects for Agricultural Products -Significant Investment Opportunities CHAPTER V. TRADE REGULATIONS, CUSTOMS, AND STANDARDS 55 -Trade Barriers (Including Tariff And Non-Tariff Barriers) and Tariff Rates -Import Taxes -Representative Listing of Commercial Legislation In Egypt -Customs Regulations -Import Licenses Requirements -Temporary Goods Entry Requirements -Special Import/Export Requirements And Certifications -Ministerial Decree 619 of 1998 - Certificate of Origin -Labeling Requirements -Prohibited Imports -Export Controls -Standards -Free Trade Zones/Warehouses -Membership in Free Trade Arrangements -Customs Contact Information CHAPTER VI. INVESTMENT CLIMATE 76 -Openness to Foreign Investment -Conversion and Transfer Policies -Expropriation and Compensation -Dispute Settlement -Performance Requirements and Incentives -Right to Private Ownership and Establishment -Protection of Property Rights -Transparency of the Regulatory System -Efficiency of Capital Markets and Portfolio Investment -Political Violence -Corruption -Bilateral Investment Agreements and Regional Cooperation 3 of 143 -OPIC, TDA, Ex-Im, and Other Investment Insurance Programs -Labor -Foreign Trade Zones and Ports -Foreign Direct Investment Statistics CHAPTER VII. TRADE AND PROJECT FINANCING 93 -Description of the Financial System -Description of the Banking System -Foreign Exchange Controls Affecting Trade -General Availability of Financing -How to Finance U.S. Exports/Methods of Payment -Egyptian Financial Insurance Mechanisms -The World Bank Group -Multilateral Institutions Abroad -Multilateral Institutions in Egypt -List of Local Banks and American Correspondent Banks CHAPTER VIII. BUSINESS TRAVEL 102 -Business Customs -Travel Advisory and Visas -Holidays -Business Infrastructure CHAPTER IX. ECONOMIC AND TRADE STATISTICS 111 APPENDIX A – Egypt Country Data APPENDIX B - Egypt’s Domestic Economy APPENDIX C - Trade APPENDIX D - Investment Statistics CHAPTER X. U.S. AND EGYPTIAN CONTACTS 113 APPENDIX E - U.S. And Egyptian Contacts CHAPTER XI. MARKET RESEARCH AND TRADE EVENTS 139 APPENDIX F - Market Research APPENDIX G - Trade Event Schedule While all reasonable care has been taken in the preparation of this guide, the U.S. Government assumes no responsibility for the outcome of any business transaction resulting from this publication. COUNTRY COMMERCIAL GUIDE - EGYPT F Y 2 0 0 1 4 of 143 CHAPTER I. EXECUTIVE SUMMARY This Country Commercial Guide (CCG) presents a comprehensive look at Egypt's commercial environment, using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies. By far the largest Arab country by population, Egypt is in the heart of the Middle East and boasts a reasonably well-educated labor force. The market is large: anywhere from five to ten million of Egypt’s total population of 66 million enjoy western consumption patterns. The rest of the population is poor, but habits and consumption are changing rapidly: for example, fast food franchising continues to be an area of notable growth. Moreover, given its strategic position in the region, Egypt continues to benefit from strong donor support, including about $2 billion annually in U.S. economic and military assistance. Bilateral efforts are underway to reduce economic assistance gradually, as our relationship begins to make the transition from “Aid to Trade.” Progress in the Arab-Israeli peace process will have an effect on opening regional markets, but Egypt itself enjoys political stability and a growing if still transitional economy that is increasingly open to the global market. Egypt is a market opening wider to U.S. exporters and is increasingly attractive for an eclectic mixture of U.S. goods ranging from expensive consumer products aimed at the wealthy, to competitively priced industrial and agricultural inputs (plastics, chemicals, components and fertilizers) for Egypt’s expanding industry, to grains and feeds, processed foods, and a wide range of new and used industrial goods. Egypt’s fiscal and monetary reforms since 1991 have created a stable currency and allowed the country to accumulate reserves of approximately $15 billion, equal to ten months of imports. Starting in 1996, Egypt has taken serious steps toward selling off state-owned factories and other companies, including sales to “strategic” and “anchor” investors. This is a major change from years past when the government was reluctant to privatize its extensive (two-thirds) public holdings. Share sales through the capital market--to Egyptian and foreign investors--are growing steadily and offer a vote of confidence by the private sector in the government’s reform program. Over the past two years, a variety of economic legislation has been passed or introduced which will serve to facilitate private sector activity in Egypt as well as better enable American firms to do business in Egypt. Tenders Law No. 8 was passed by the People’s Assembly in May 1998 lending greater transparency and predictability to the bidding process. In addition, Egypt’s Parliament passed a new Companies Law No. 3 in January 1998, a revised Law No. 118 of 1975 on Import and Export Regulations in January 1998, a new Law No. 156 on Insurance Supervision and Control in Egypt, and a revised Customs Law No. 158 in December 1997. 5 of 143 Red tape remains a key business impediment in Egypt, including a multiplicity of regulations and regulatory agencies, delays in clearing goods through customs, arbitrary decision-making, high market entry transaction costs, and a generally unresponsive commercial court system. At cabinet levels, the government has shown willingness to intervene in favor of private sector concerns and to abolish or modify onerous regulations when they are brought to the attention of senior officials. A strategic alliance between the U.S. Embassy, American exporters, and their Egyptian importers, agents and partners has proved successful in combatting unfair bureaucratic practices. U.S. firms have competed successfully for major infrastructure projects in Egypt, and more projects are on the way, some of which have regional impact, such as airports, telecommunications, TV broadcasting, and port projects. Tourism is a major growth industry, especially along the Mediterranean and Red Sea coasts, and is attracting U.S. project management expertise and quality U.S. building systems and equipment. The U.S.-Egypt Partnership for Economic Growth and Development, explained in this guide, offers a framework within which U.S. firms and Egyptian counterparts can implement closer trade and investment ties that provide jobs in both countries and bind both private sectors together. Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at HTTP://WWW.STAT-USA.GOV; HTTP://WWW.STATE.GOV/; and HTTP://WWW.MAC.DOC.GOV. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553- NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRADE or by fax at (202) 482-4473. Other information on Egypt and surrounding countries is also available from numerous on-line sources, including: WWW.ITA.DOC.GOV (includes all homepages of International Trade Administration (ITA) entities) WWW.ITA.DOC.GOV/USCS/EGYPT (homepage of the Commercial Service in Egypt) ;;;97)1&%77=)+2)82)8 (homepage of the American Embassy including the Commercial Service in Egypt) WWW.ITA.DOC.GOV/ITP/EGYPT/EGYPT.HTML (homepage concerning the US-Egypt Partnership) WWW.USIS.EGNET.NET