Reaching out to Iraq

Bilateral Egyptian-Iraqi relations have come into the economic spotlight. Mona El-Fiqi reports on the Iraqi Reconstruction Exhibition recently hosted in Cairo, while Sherine Nasr speaks to businessmen on the birth of an Egyptian-Iraqi Business Council

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Ebied inaugurates the Iraqi reconstruction exhibition

The Cairo International Conference Centre was packed last week for the first Iraqi Reconstruction Exhibition and Conference, organised by the Egyptian Ministry of Industry. Hundreds of Iraqi businessmen were invited to discuss potential economic cooperation while Egyptian businesses displayed a wide range of Egyptian products suitable for use in the reconstruction effort or in the Iraqi market in general.

According to Federation of Egyptian Industry figures, a total of 900 Egyptian and 600 Iraqi business representatives visited the exhibition. Held from 8 to 10 March the exhibition displayed products manufactured by more than 320 private and public Egyptian companies from different sectors. Prime Minister Atef Ebeid inaugurated the exhibition, with the ministers of industry, public enterprise, petroleum and foreign trade, and the chairmen of both the Egyptian and Iraqi federations of industry, in attendance.

Since the Iraqi market is now open and all kinds of products and services are required, Egyptian businessmen considered this exhibition a golden opportunity. "Doing business in Iraq is now easy and its market is completely open to Egyptian products," stated Alaa El-Badri, chairman of the Egyptian Centre for Trade and Export Development, a private sector company.

Iraqi businessmen agreed that Egyptian exports have a good chance in Iraqi markets. Hassan El-Ganini, the owner of an export and import company in Baghdad, said that Egyptian products have the advantage of being familiar to Iraqi consumers. Moreover, some Egyptian products such as cement, steel, food, and agricultural machinery are very much needed in the Iraqi market. However, El-Ganini noted, some exports are not well marketed, while others do not meet international specifications. "But the main problem of Egyptian products is that their prices are somewhat higher than Asian goods," he added.

Egyptian businessmen see it differently. Khaled Fekri, export manager at Oriental Weavers Group, one of the largest manufacturers of machine- made carpets in Egypt, argues that the prices of some Egyptian exports are very competitive in the Iraqi market. Citing the example of his own company, Fekri said, "our prices are half as high as their alternatives in Iraq."

El-Ganini, meanwhile, complained of the inferior quality of some Egyptian goods, such as medicines that are ineffective and not therefore favoured by Iraqi physicians. Egyptian businessmen understand that "Egyptian exports should follow international specification standards to be able to break into Iraqi markets," El-Badri said. But even if the product meets international standards it still faces the problem of poor marketing, "so the Egyptian Centre for Trade and Export Development helps in marketing Egyptian products", El-Badri explained. The total value of contracts concluded by El-Badri's company within the "Food for Oil Agreement" was about $200 million. "We expect that the centre can get $1 billion in contracts during the reconstruction period," he added.

Non-Egyptian Arab businessmen were also attracted to the exhibition and conference. Some 30 Jordanian and 10 Syrian trade agents attended, aspiring to act as middlemen between Egyptian and Iraqi businessmen. Mohamed El-Zayoud, a Jordanian businessman and El-Badri's partner, said that he procured a contract to export 20,000 Egyptian refrigerators to Iraq last week.

Given that Iraqi businessmen have difficulty travelling to Egypt, El- Zayoud said his company plans to open a permanent exhibition for Egyptian products in Jordan. "The products of 50 Egyptian companies have already been shipped and the exhibition will open on 18 March," El-Zayoud added. The idea of dealing with Arab businessmen as mediators to conclude export contracts with Iraqi businessmen is acceptable to Egyptian businessmen. "There is no risk in dealing with the Jordanian mediators since they pay in cash before the products are shipped," said Mohamed Al- Ashmawi, export manager at Al- Ahram Aluminum Company.

Businessmen complained of the difficulty Iraqis have visiting Egypt. "We invited 25 Iraqi businessmen to visit Egypt in an attempt to encourage them to conclude export contracts with Egyptian companies but they were kept in the airport for six hours before they were allowed to enter Cairo, which is unacceptable," El- Badri said. He added that the government should facilitate entrance procedures for Iraqi people who come to Egypt for business purposes.

In an attempt to solve the problems that hinder trade relations between Egypt and Iraq, Abdel-Moneim Saudi, chairman of the Federation of Egyptian Industries (FEI), announced the establishment of the Egyptian- Iraqi Business Council. "The council aims at promoting the bilateral trade relations and solving any obstacles facing the businessmen in both countries," Saudi explained. Representing the Egyptian industrial private sector, the FEI will start sending delegations of businessmen to search for cooperation opportunities in Iraq.

The government is also trying to play a role in helping to promote Egyptian exports to Iraq. Last week, Minister of Foreign Trade Youssef Botrous-Ghali signed a protocol with the Iraqi delegation to boost bilateral cooperation and negate any obstacles that may hinder cooperation. Ghali announced that the newly- established Egyptian-Iraqi Business Council will do its best to activate the bilateral free trade agreement between Egypt and Iraq. Both states decided to continue exchanging visits. An Egyptian business delegation will fly to Baghdad within the next two months to follow up on methods of boosting bilateral cooperation.

During the opening session of the exhibition, Egyptian officials announced that the participation of Egypt's organisations, private and public sectors should be expanded to fulfil the requirements of Iraqi reconstruction in such sectors as IT, construction, export and finance. Kais El-Khafagi, chairman of the Federation of Iraqi Industries (FII), said that due to the war, the state of the Iraqi economy is poor. Only about 20 per cent of the country's 40,000 industrial organisations are open for business. The unemployment rate among the Iraqi labour force is at 50 per cent. Additionally, about 50 per cent of the workforce employed receives salaries equivalent to $20 per month or less. According to El-Khafagi, in order to rebuild Iraqi infrastructure and economy, operations will cost around $74 billion until 2007.

Abdel-Hadi Reda, an Iraqi businessman and member of the FII said that Egyptian technicians and workers operated the leather products factory he used to own in Iraq. "The factory was closed seven years ago," he said. "I am hoping to employ a number of Egyptian technicians to help me to open the factory again. The fair also encouraged me to import leather goods from Egypt." According to Reda, Egyptian workers are in high demand in Iraq, especially in the furniture and construction industries.

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