22 - 28 July 1999
Issue No. 439
|Published in Cairo by AL-AHRAM established in 1875|
Egypt Region International Economy Opinion Culture Profile Features Focus Interview Travel Living Sports Time Out Chronicles People Cartoons Letters
Privatisation in reverseSHAREHOLDERS of Misr Company for Duty-Free Shops will enter into negotiations to sell back their stake in the company to the public business sector.
Misr Company, one of the leaders in the duty-free business, held an extraordinary general assembly last week to discuss the negative impact of recent new government regulations affecting the company's business.
A few weeks ago, the government issued a decree which banned the sale of durable goods in duty-free shops outside customs outlets and curtailed the period allowed for duty-free purchases from one month after arrival from abroad to 24 hours.
These regulations have led to a drop in the company's share price from LE40 to LE16.5 and an 80 per cent reduction in sales.
During its meeting, the general assembly delegated the board of directors to negotiate with the government to repurchase the shares at the LE40 share price from those who wish to sell.
Moreover, participants at the meeting asked the Capital Markets Authority to halt trading in the shares of Misr Company for Duty-Free Shops until the end of negotiations 27 July. If negotiations with the government fail, the board of directors will file a suit against the government before 7 August, the end of a two-month grace period given to duty-free companies to sell their inventory of durable goods.
Two years ago when the government offered 77 per cent of Misr Company for public subscription, investors, 25 per cent of whom are foreigners, were encouraged by the company's future potential which was based on a forecast of high sales.
Revolutionary credit cardsCITIBANK, a pioneer among foreign banks in Egypt, will expand its activities in the market by introducing debit and credit cards. It will also install CitiPhone, which is a 24-hour telephone banking service, and Automatic Teller Machines (ATM). CitiBank officials announced the new developments at a press conference last week.
CitiBank has been operating in Egypt for 25 years. It has 100 branches worldwide.
New lending facilities, a greater variety of savings and deposit accounts and advice on investment for bank customers are expected to be offered in the next few months. The bank's decision to offer expanded services was motivated by the increasing liberalisation of Egypt's financial sector and the strengthening of the financial services' infrastructure through the privatisation of banks.
To get a credit card, the customer will need only an identity card and an official report from the place where he or she works giving salary details, according to Ajay Banga, head of CitiBank's Central and Eastern Europe, Middle East and Africa region. "The revolutionary aspect of our credit cards is that they do not require the customer to have a bank account to get one," Banga said.
Once the bank gathers the necessary financial information about the customer, it will specify the amount of cash that he or she will be allowed to spend through the credit card, the CitiBank executive said.
Exports to UK soarTRADE relations between Egypt and Britain are booming. At a recent meeting with members of the British-Egyptian Business Association (BEBA), a non-governmental business organisation, Graham Boyce, the British ambassador to Cairo, said that Egypt and Britain are strong partners in trade and that the potential for greater partnership exists. "Egypt is open for business" and wants to do increased business both at home and abroad, Boyce said.
British exports to Egypt rose last year to over $815 million, while Egyptian exports to Britain increased by eight per cent to reach $465 million, said Boyce. "As we progress through 1999, Egypt's share in the (trade) relationship is increasing faster than Britain's," he added.
In addition, Britain is the second largest foreign investor in Egypt. "In 1998 we invested nearly two billion sterling in 170 projects, not including British oil and (natural) gas investment," Boyce said.
He said his main job in Cairo is "to work hard to promote the two countries' trading relationship."
The commercial department in the British Embassy receives numerous inquiries from Egyptian firms looking for British partners, the ambassador said.
Egypt has been chosen by the British Department of Trade and Industry as one of 10 countries in the world in which it wants to improve business. The vehicle the department has chosen to further develop the relationship is the three-year "Connect Egypt" campaign launched in November 1998.
Orascom and Link linkORASCOM Telecom announced last week that it has acquired a 51 per cent stake in Link Egypt, one of the country's leading Internet Service Providers (ISPs). Although the value of the deal has not been disclosed, company officials say that it will be used to increase the capital of the company and finance expansion of its business. Link Egypt will maintain its current management and structure.
Khaled Bichara, chairman and chief executive officer (CEO) of Link Egypt, said that his company will use the money invested by Orascom to "leverage the expansion of our business" in Egypt and in the region. Without this financing, he said his company could not grow. Link Egypt "needs the investment to make the boom happen [for the company]."
According to Naguib Sawiris, chairman of Orascom Telecom, his company chose Link Egypt because the latter's regional operations fit in well with Orascom's plans to expand regionally. Orascom Telecom is the operational arm of Orascom Technologies. It owns a significant stake in the Egyptian company for Mobile Services (MobiNil) as well as Menatel, one of Egypt's two public pay phone networks, and InTouch, another one of Egypt's largest ISPs.
Orascom Telecom is also developing its cellular phone presence in Jordan, Syria and Lebanon.
Through Link Egypt, Orascom will be able to provide Internet service to its mobile phone subscribers.
Before carrying out its regional expansion, Bichara said Link will first expand locally. It will extend its service to cover more governorates and acquire a larger number of users. Currently Link only offers its service in Cairo and Al-Minya.
Sawiris said that his company is betting on an explosion of the Internet market in the region. Currently there are only around 40,000 paying Internet subscribers in Egypt, he said. He attributed this low figure to the fact that the Internet is unaffordable to many Egyptians because of the relatively high cost of entry to the Internet system. To use the Internet an individual must be able to purchase a personal computer and relevant accessories, such as a modem, and absorb the cost of a monthly subscription to an ISP.
Once these costs drop, more people will be able to access the Internet, he pointed out. And the situation will improve even more after Egypt Telecom, the national telecommunications authority, cuts the rates it is charging ISPs to provide them with lines.
Women's contributionBUSINESSWOMEN from Egypt and Morocco have resolved to make a greater contribution to boosting Arab economic cooperation in the future. A cooperation protocol was signed last by Yomna El-Sheridi, chairwoman of the Association of Businesswomen of Egypt 21 (BWE21), and her Moroccan counterpart, Mansoria El-Besheiki, which calls for joint projects and trade exhibitions.
The document was signed during the Economic Forum on Arab Businesswomen which concluded its sessions last week in Morocco. The event, held under the auspices of King Hassan II, was attended by more than 40 businesswomen representing eight Arab countries.
Participants discussed means of instilling market confidence in Arab products. They also examined the possibility of forming a federation of Arab businesswomen which would coordinate activities of women's business associations in countries of the region.
This was the second meeting between Egyptian and other Arab businesswomen. The first was held in Cairo last March during an economic conference entitled "Towards the Arab Common Market".
BWE21 is a non-governmental organisation of Egyptian businesswomen working to enhance women's active participation in public life.
Wena wins a roundTHE EGYPTIAN government may be obliged to pay some $62 million to Wena Hotels, a UK-based company, as compensation for the expropriation of the Nile Hotel in Cairo and the Luxor Hotel in the city of Luxor.
Wena had signed long-lease contracts, 25 and 21-and-a-half years respectively, with the government-owned Egyptian Hotels Company (EHC) for the management of these two hotels.
Wena filed a complaint last year with the International Centre for Settlement of Investment Disputes (ICSID), affiliated to the World Bank, claiming that the Egyptian government had failed to protect Wena's investments, which it was required to do under the terms of a 1975 investment promotion and protection agreement signed by the Egyptian and UK governments.
The Egyptian government had argued that the ICSID had no jurisdiction in the case because the complaint was filed by an Egyptian, Nael Farargy, against the Egyptian government. However, the ICSID ruled that it does have jurisdiction because Farargy, Wena Hotels' managing director, has British citizenship.
A final decision will be made in the case at an October hearing. If the ICSID finds in favour of Wena, the government will be the one responsible for paying, according to an official source. The EHC is no longer the target of the claim because it paid around LE1.5 million as compensation to Wena when the hotels were first taken over by the government, the source said. The new owners of the Nile Hotel, which is up for sale, will not be answerable either, he said.
Negotiations for the sale of the Nile Hotel are currently stalled because of a disagreement with the potential buyers on the height of the building. A ministerial decree was issued last year allowing the buyers to demolish the current structure and build a new hotel on the site on condition that it includes an underground car park.