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Al-Ahram Weekly 12 - 18 August 1999 Issue No. 442 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 12 - 18 August 1999 Issue No. 442
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Books Features Travel Living Sports Time Out Chronicles People Cartoons Letters Feasible investment
By Aziza SamiThe US Trade Development Agency (TDA) has announced that it will provide $695,000 for feasibility studies of Egyptian projects to help American companies evaluate potential investments in Egypt.
The decision to commit these funds is part of a major drive by both the Egyptian and US governments to boost bilateral trade ties. The TDA grants are directed to the petroleum and health sectors, according to US Ambassador in Cairo Daniel Kurtzer, who signed the agreement last week on behalf of TDA with three Egyptian companies.
A grant worth $300,000 will fund a feasibility study of the delayed coker facility project of the Suez Oil Processing Company. The project will convert low-value residual fuel oil, which Egypt produces in large quantities, into high-value products such as gasoline, kerosene and diesel fuel. Once production starts, it will lessen Egypt's dependence on imports of high-value petroleum products.
The second grant, worth $250,000, will fund a feasibility study for the aromatics facility project of the Alexandria Petroleum Company (APC) which will produce petroleum solvents and kerosene.
The third grant will provide $145,000 for a feasibility study of a private hospital project to be undertaken in Alexandria by the Andalus Corporation, a major Egyptian company which originally started out as a contractor. Both the Egyptian and US governments want to introduce private sector investments into the health sector, which has been a major recipient of US economic assistance. Private investment directed to health services, which takes into account the broad-based demands of the local market, could help offset the effect of the current decrease in USAID funds. This assistance is being reduced by five per cent annually over a 10-year period.
The TDA, a US government agency, helps American companies compete for infrastructure and industrial projects in developing countries. Top priority sectors considered for funding by the agency are energy, environment, health care, manufacturing, minerals development, petroleum and water resources.
The announcement of new TDA funding comes in the wake of President Mubarak's visit to Washington last month. The promotion of US investments in Egypt as well as viable means of 'marketing' the Egyptian economy inside the US were discussed during the visit.
At present, American investors studying the Egyptian market often express initial interest but do not always follow through with projects. So the country is still not attracting substantial US direct investment at the level hoped for by the Egyptian government. This is partly because Egypt's relatively recent liberalisation process, despite making strong economic progress, needs more deregulation and openness from the viewpoint of most foreign investors.
In addition, the Middle East region as a whole is a relatively new market for US investors, compared to other more competitive regions such as Asia and Latin America.
But the idea of Egypt as a market for American companies is gaining ground, in theory at least. The reduction in US economic assistance is now making it necessary for the relationship to become more trade-oriented.
The recent grants for feasibility studies are the direct outcome of a conference organised by TDA in Cairo last October with the aim of acquainting American investors with the Egyptian market. In May TDA and two other key US trade and investment agencies, the Overseas Private Investment Corporation (OPIC) and the US Export-Import Bank (Ex-Im Bank) sent missions to Egypt. A spokesman for the agencies said if American companies could find the right partners, they could put as much as an additional $4 billion of investments into the Egyptian economy.
Ambassador Kurtzer, whose mandate since he took up his post a year and a half ago has included as a top priority the promotion of US companies in Egypt, said, "There are already $15-17 billion worth of American investments here, including the petroleum sector." This figure, according to some assessments, makes the US the number one foreign investor in Egypt.
"We are very proud, by the calculations of most experts, to be either the number one foreign investor or number two or three, depending on how you calculate foreign direct investments," said Kurtzer. If the US is indeed Egypt's foremost foreign investor, the ambassador said he hopes it will outpace the others even more.
"I am hoping that my signing of these agreements on behalf of the TDA will serve as a reminder of its commitment to American investors, and also as a reminder to Egyptian businesses and the government of our commitment to promote investment and economic cooperation."
TDA funding of feasibility studies for Egyptian projects should encourage US companies to invest in them, according to Kurtzer, because it will save them the additional expenses incurred by such studies. "In this case, the US government pays for the study in order to induce the company to pay for the business plan," said Kurtzer.
During the past year, additional TDA funding worth $800,000 has gone into feasibility studies for the planning, expansion and modernisation of the Borg Al-Arab and Assiut airports, according to the ambassador.
