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Al-Ahram Weekly 8 - 14 April 1999 Issue No. 424 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 8 - 14 April 1999 Issue No. 424
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Cementing ties with the 'tigers'
by Gamal NkrumahChina is perhaps the place to be when the time comes to stand astride two millennia, and President Hosni Mubarak's five-day visit to China this week is a timely tribute to China's growing economic importance. The Chinese economy is among the fastest growing in the world, and cities like Shanghai are developing at a rate no place has ever witnessed before.
But the economic importance of Korea and Japan must not be underestimated either. China, despite its great potential, has followed closely the Korean and Japanese examples. Chinese policymakers chose South Korea's giant conglomerates, the chaebol, and Japan's keiretsu system of interlocking companies as models for its market socialism and state-guided development.
The large and high-powered Egyptian delegation of businessmen and top policymakers making the trip are expected to get better acquainted with East Asian business leaders and policymakers. Several cabinet ministers are accompanying President Mubarak on his Asian tour including Prime Minister Kamal El-Ganzouri. The visit is also regarded as a golden opportunity to chart the parameters of economic and trade relations, sign bilateral agreements and close deals -- five with China, 11 with South Korea and eight with Japan.
The single most contentious issue on the agenda in Beijing, Seoul and Tokyo is likely to be the horrendous trade imbalance between Egypt and China, Korea and Japan. The three countries import goods worth $500 million from Egypt, and export goods worth $4.5 billion to Egypt. Topping the list of Egyptian imports are vehicles and electronics.
"There are many opportunities for Egyptian exporters in Japan, but the Japanese market is extremely quality conscious," warned the Japanese Ambassador to Egypt Takeshi Ohara. "Vitrac jam, Cleopatra ceramics and the machine-made carpets of Oriental Weavers are three Egyptian products that are selling very well in Japan." Egyptian businessmen accompanying Mubarak hope to clinch deals worth $400 million during the trip. "The resumption of yen loans will help enormously. Through participation in yen credit, Japanese exporters will become better acquainted with the Egyptian business environment," Ambassador Ohara said.
After a couple of difficult years, the economies of Japan and Korea are poised to ride back to health on the crest of an overseas wave. Egypt is well positioned to take advantage of the anticipated Asian comeback. But what is the scope of Asian investments in Egypt today?
Chinese investment projects in Egypt are considerable, but substantially less than either Korean or Japanese investments -- $140 million and a staggering $1.06 billion respectively. Still, among China's main investments in Egypt are the $70 million Chinese stake in the Egyptian-Chinese Joint Venture Company for Investment which focuses on the development of the Suez Special Economic Zone, the $2.65 million joint production of the Great Wall Colour TV, the $2 million Zhongjiang-Carlin Electrical Fans Company, the Egyptian-Chinese Hitech joint venture, and the $1 million joint production Panda TV project among others.
Total Korean investments in Egypt stood at some $140 million in 1998 and are expected to rise further. Goldstar, the Korean electronics giant which has run a highly successful joint venture plant to manufacture television components since 1990, is set to expand its production capacity in Egypt. On the eve of President Mubarak's visit to Korea, Goldstar announced plans to produce television tuners, a key TV component, in Egypt. "This production line will make Egypt one of 10 countries in the world which produce television tuners," a Goldstar spokesperson told the Weekly. "The Goldstar factory facilitates the production of some 400,000 television sets both for the Egyptian and regional markets. Some sets produced in Egypt are now even exported to Europe," the Goldstar spokesperson proudly added.
Other Korean electronics giants are catching up with Goldstar. Samsung, Daewoo, Hyundai and Korean Electronics Company have all recently announced plans to expand production capacity in Egypt. Samsung in collaboration with the Arab Organisation for Industrialisation produces some 130,000 television sets in Egypt. Daewoo, in conjunction with Banha Electronics, currently produces 70,000 television sets annually. Daewoo recently announced that its capacity will be doubled in the next three years.
Korean companies also have impressive investment portfolios in the vehicle manufacturing, oil and gas and banking industries. In the banking sector, Korean banks, in conjunction with their Egyptian counterparts, set up the Cairo Far East Bank, one of the most outstanding joint venture projects since its foundation in 1978. Today, taking cognizance of the fast changing banking laws in Egypt, Korean banks are rapidly expanding their capital inflows into the country with an eye on funding and promoting the different projects launched by Korean companies.
In the oil and gas field, Korean companies in conjunction with American and European companies, are substantially involved in oil exploration, production and refining. Yunkong, a giant Korean oil company, is pumping oil jointly with American and European companies in the Red Sea's North Zafarana area. Other Korean companies involved in oil exploration are Samsung, Hyundai and LG.
Perhaps no sector symbolises the success of Korean companies in Egypt like the car manufacturers. Korean cars have become quite a common sight on Cairo's bustling streets, and Korean car-makers hope that soon Korean vehicles manufactured in Egypt will spread to the neighbouring regional markets.
Hyundai Motors together with Egyptian Prima produce over 20,000 Hyundai Exel cars a year. The highly successful joint venture has created some 1,500 jobs. Hyundai plans to expand car production as well as the production of cargo trucks, tractors and concrete mixers. Daewoo Motors, which produces some 10,000 cars annually in Egypt, is another leading Korean car manufacturer which has ambitious plans. 1998 was a particularly good year for the expansion of Korean car manufacturing ventures in Egypt. Daewoo opened a new plant in the Sixth of October City last August and Kia Motors, another Korean car giant, launched its car production venture last June. Last, but not least, the Halla Group plans to manufacture auto parts such as shock absorbers and air conditioners in Egypt. The Halla Group is also involved in joint investment projects in sectors as disparate as steel and shipbuilding, paper production, cement and construction.
Korean construction companies such as Daelim and Doosan have been very successful in constructing large-scale projects and factories in Egypt since the late 1970s. Daelim built the largest thermal power plant in the country at Al-Kureimat near Beni Suef.
Foreign direct investment in Korea almost doubled last year as foreign companies rushed to take advantage of the country's new liberal rules on foreign acquisition in the wake of the Asian economic crisis. According to data recently released by the United Nations Conference on Trade and Development (UNCTAD), inflows to South Korea reached $5 billion last year compared with less than $3 billion in 1997 and less than $1 billion per year between 1991 and 1996. These positive developments are expected to directly boost economic relations between Korea and Egypt.
Japanese investments in Egypt are focused on infrastructural development. The biggest Japanese investment project in the country is the $188 million suspension bridge over the Suez Canal.
A request by the Egyptian government for increased Japanese involvement in the Toshka project is currently under study by the relevant Japanese ministries and agencies. Also under study are solar energy and power generation projects and the lifting of underground water in Toshka. Already some Japanese companies, such as Hitachi, are involved in Toshka, pumping water from Lake Nasser to Lake Sheikh Zayed.
