Briefs
Conference on war and trade
THE EFFECT of the war in Iraq on trade flow issues and the terms of trade in the economies of the Middle East will be the topic at an upcoming conference in Frankfurt, Eman Youssef reports.
To evaluate the impact of the war in Iraq and other recent political events on the flow of trade and foreign investment in the Middle East and North Africa (MENA) region, the German-Arab Chamber of Industry and Commerce (GACIC) is hosting a conference next month in Frankfurt, Germany.
The changing structures of the markets, flows of trade and various forms of product distribution will be the topic issues of the event, subjects which Marion Kussman, executive officer of GACIC, described as "a great challenge for German multinationals".
In the past, Dubai, Jordan, Egypt and Lebanon constituted the main gateways to the Middle East. These days they form hubs rivalling the regional distribution centres and the international exporting economy. According to Kussman, regional political developments mean that -- even in more traditional countries like Saudi Arabia or Iran -- the terms of trade are changing. The conference will also discuss the European Mediterranean Partnership Initiative as well as the US-backed Powell Initiative for Democratisation and Liberalisation of the Middle East, which will have a profound impact on further developments. "That applies to finalised as well as to future free trade agreements," she added.
The rules concerning distribution in Iraq are still being written, both formally and informally. Neighbouring countries and more distant economic powers are all jockeying for position in this potentially large market. Even concerning public sub-contracting, it is now possible for German companies to start business activities. Kussman said that German companies so far have been practically unable to do business in Iraq.
Commercial law has not always adapted in response to the latest political developments in the various countries of MENA, especially concerning the agents and authorised dealers law, which remains unclear. Reliable legal advice is not only hard to find in the first place, but can be prohibitively expensive, discouraging companies from entering MENA countries, added Kussman.
Tightening security
A US-ORGANISED transportation forum opened the region to foreign investment emphasising Egypt's strategic role in international security, reports Sherine Nasr.
Last week, Cairo hosted a regional transportation security forum. The forum brought together representatives from maritime and civil aviation authorities, customs officials, port and airport operators, freight forwarders and air and ocean carriers to discuss new security initiatives affecting the region, and to offer information on business opportunities related to security projects currently under development.
Organised by the United States Trade and Development Agency (USTDA), in cooperation with the US departments of Homeland Security, Transportation, State and Commerce, the event also brought together officials from private foreign investment corporations to discuss the funding available to companies for transportation security projects in the Middle East and North Africa. The forum comes at a time when heightened security alerts provide impetus for tighter security measures throughout the international supply chain.
"The balance of security and openness is one of the most important security challenges we face," said David Welch, US ambassador to Egypt, who added that having this conference in Cairo underlines the fact that Egypt is both a crossroads and a trade route in the region. "Egypt has always played a central role in all commercial relationships in the Middle East and Africa," said Welch.
"Another important objective of the gathering is to promote and highlight new technologies and procedures that facilitate the secure and efficient movement of goods," he said. In Egypt, as in Africa, the Middle East and South Asia, compliance with new security standards is challenging for ports, airports, shippers and customs authorities. "I think one of the strongest selling points of this country is its security and stability," commented Welch.
"Egypt has done a lot to upgrade its transportation facilities," said Essam Badawi, head of the maritime sector of the Ministry of Transportation. Currently, the port of Alexandria is undergoing a major renovation process. There will also be a new container dock in Port Said. Moreover, the transportation sector in Egypt and the Customs Administration are planning a number of broad initiatives to reinforce trade security.
"The total value [of the initiatives] is estimated to range from $15 to $20 million," said Badawi. The Egyptian Customs Administration is looking to purchase 10 non-intrusive detection devices for containers to supplement its existing equipment. According to Badawi, the port sector is developing plans to ensure compliance with international security codes and systems. The Cairo Airport Authority is considering the development of an automated employee access system with smart cards.
Orascom bonds
THE BOND issue for Orascom Construction Industries (OCI) closed almost two times oversubscribed last week. The LE400 million bond issue was handled by a consortium consisting of the Arab African International Bank, Banque Misr, Citigroup and the Commercial International Bank.
The purpose of the bond, issued in two tranches, is to finance the company's capital expenditure. The first tranche of LE240 million will yield a fixed interest rate of 13 per cent per annum, while the second tranche of LE160 million will yield a floating interest rate of two per cent over the Central Bank of Egypt's discount rate.
Promoting competitiveness
THE ESTABLISHMENT of the Egyptian National Competitiveness Council (ENCC) was announced last week. At the 2004 Davos meeting of the Arab Business Council, it had been decided to establish such councils in every Arab country to promote the reforms necessary to increase the competitiveness of enterprises in the Arab world.
ENCC Chairman Nehad Ragab said that the ENCC intends to define emerging issues of national importance and set priorities for reform, change and sustainable development in Egypt. "It will work as a community to elaborate practical and positive solutions to these issues and present them to decisionmakers and civil society to take action," Ragab added.
The ENCC is an affiliate of the Arab Business Council, which was formed to coordinate action among the leading voices of the Arab corporate sector in addressing multiple issues on the regional and global agendas. It was a response by Arab businessmen to the changes brought about by the events of 11 September 2001 and the subsequent global recession.
New Arab credit lines
THE CENTRAL Bank of Egypt (CBE) and the Egyptian Export Development Bank signed two credit agreements with the Arab Trade Finance Programme last week.
The two credit lines worth $55 million will finance the promotion of trade between Egypt and other Arab countries. These agreements bring the total facilities provided by the Arab Trade Finance Programme to Egypt to $652 million.
Gasem El-Mana'e, chairman of the Arab Trade Finance Programme, said that the credit lines were provided to develop the productivity and competitiveness of Arab products and to enhance Arab economic integration.
El-Mana'e added that the programme aims to facilitate the establishment of the Arab Free Trade Area which in turn is hoped to generate sustainable economic development in the Arab world.
Farouk El-Okeda, CBE governor said that the credit services provided by the Arab Trade Finance Programme are having a tangible positive impact on raising the volume intra-Arab trade and raising the competitiveness of Arab producers and exporters.
