Waiting to take off
Egyptian investors are retracing the footsteps of their ancestors, Niveen Wahish
reports from Singapore
For centuries the Silk Road was the only trade route connecting the Far East with the Mediterranean and East Africa. Today investors are trying to revive that route. Late last week, Commercial International Capital (CI Capital) held their second Egypt Day in Singapore under the slogan "Resurrecting the Silk Road". It was organised in cooperation with the Development Bank of Singapore (DBS) and the Singapore Business Federation (SBF).
"We need to revive the Silk Road in terms of being the vital economic link between the east and our part of the world," Karim Helal, CI Capital Group CEO told Al-Ahram Weekly. "Experience shows that when there is trade, it is usually followed by investment," he said.
However, according to figures by the Singapore Business Federation, Egypt was Singapore's 66th trading partner in 2009 with a total trade of a meagre $0.5 billion. In the meantime, according to the Egyptian Ministry of Investment, investments are limited to some $13 million placed by around 33 companies. To boost these figures the Egyptian government is seeking to expedite the signing of a Comprehensive Economic Cooperation Agreement (CECA) with Singapore.
According to Egyptian minister of investment, Mahmoud Mohieldin, this agreement will go beyond already existing agreements. "The CECA will build on what we have, to enhance trade, capital flows, dispute settlement and technical cooperation." Egypt and Singapore already have agreements for the protection of investments and avoidance of double taxation. Singapore holds a similar CECA agreement with India. According to Mohieldin, the benefits of the CECA go beyond the Singaporean market into Asia. The agreement was first suggested by Egypt in January and the two countries agreed to seal it within 12 to 18 months.
While in Singapore Mohieldin and Minister of Communication and Information Technology Tarek Kamel met with representatives of the Development Bank of Singapore (DBS), one of the largest financial services groups in Asia with operations in 16 markets. They also met with representatives of the Singapore Sovereign Wealth Fund (Temasek), the largest sovereign wealth fund in Singapore with investments of $120 billion. Mohieldin also met representatives of Neptune Orient Lines (NOL), the global shipping and transportation company, who expressed interest in expanding their existing operations in Egypt. NOL runs offices in Cairo, Port Said, West Damietta, East Damietta and Ain Sokhna Port.
According to Helal, Singapore is number one in the world with its expertise in the area of logistics, port management, handling, storage, river transport, as well as communication and information technology. "We need this expertise and we need investment to come with it."
In fact, Mohieldin and the accompanying delegation invited Singaporean investors to consider 46 projects in the area of infrastructure, energy, transportation, ports and container handling in various areas around Egypt including Upper Egypt, the Red Sea, and the North-West Suez Gulf Economic Zone. What they presented appeared to be well received by Singaporean officials. Stephen Ho, managing director of the Development Bank of Singapore (DBS), recognised the resilience of the Egyptian economy during the global economic crisis. And V K Rajan, vice-president of the International Relations Committee of the Singapore Business Federation, praised the reforms carried out by Egypt, saying that it has founded a good climate for improving business and investment.
"The government now talks the language of business," Rajan said, adding, "that was not the case before when the regulatory environment was not conducive." Now "they have realised they have lost a lot of investment and they must make a move." He acknowledged that CECA could be helpful, "but it is the businesspeople that make an agreement work." When they invest, they must be nurtured and their problems solved quickly.
Rajan underlined that Singapore businessmen invest everywhere around the globe. "When a Singapore businessman sees an opportunity, he is not going to miss it. Singapore's lifeline is investment." He added that Singaporean investors are willing to tap all types of investments. He cited that, for example, due to the high cost of manufacturing in Singapore, they manufacture in neighbouring countries. And they would not mind taking that elsewhere. "Distance does not matter."
However, Rajan emphasised that nothing is assured. "If companies have problems they just pack and go." "One bad example and they will go somewhere else. This is the language of business."
This is what Hany Tawfik, board member of Naeem Holding for Investment, fears most. He is sceptical that Egypt would be attractive enough for Asian investors.
"They will have difficulty setting up a business," he said, questioning why Asian investors should choose Egypt instead of neighbouring Asian countries where they would find "cheap, efficient labour and less corruption and bureaucracy." He cited that some Egyptian companies today find it much cheaper and more efficient to manufacture their goods in China.
But Helal is confident that Singaporean investors will not face difficulties. "Working with a local partner will help them find their way around, and the whole government is realising that this is the future; they are making a point of making it easier."