Economic Data
Total GDP (in U.S.$): $82.7 billion (1998)
GDP Growth: 5.2% (1998)
GDP per capita (in U.S.$): $1,300 (1998)
Inflation: 4.2% (1998)
Unemployment Rate: 9.2% (1998)
Exports (U.S.$): $5.6 billion: crude oil and petroleum products, cotton, yarn, raw cotton, textiles, metal products, chemicals
Imports (U.S.$): $17.6 billion: machinery and equipment, foods, fertilizers, wood products, durable consumer goods, capital goods.
Trade Balance: $ -12.4 billion (1998)
Best Prospects for Export: Construction equipment, building materials, mining equipment, engineering services, packaging equipment, biotechnology labs, medical equipment, oil and gas field machinery, franchising, computers and peripherals, agricultural equipment, port development services, electrical power systems, paper, telecommunications equipment and services, environmental equipment and services.
Key Trading Partners: United States, Italy, Israel, Germany, Netherlands, France, Australia.
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The phrase “only as good as the paper it’s printed on” has taken on a special meaning for Maxson Automatic Machinery Corporation – especially in the Egyptian market.
The 80-year-old Westerly-based company has 75 employees and has been exporting sheeting equipment used in the paper and printing process in foreign markets for more than four years, but for the last three years close to 40 percent of its overseas sales has gone to Egypt.
Last year, Maxson sold four of its machines, which cut paper into individual sheets, in the Egyptian market, and so far this year the company has sold two more.
Erin Erni, international sales director for Maxson, credits the company’s success in Egypt to a program sponsored by the United States government known as AID (Agency for International Development), a commodity program that provides financing to Egyptian buyers. According to Erni, Egypt is the only country the Maxson Corporation deals with that is eligible for the program.
“We became aware of the program several years ago, and it has been extremely helpful in the way that we do business there,” she said. “The program makes us very attractive for Egyptian buyers, and it really helps us compete with our European competitors.”
Erni said although the company does dabble in other foreign markets, including Asia, South Africa and South America, Egypt is the only African country.
But she admits, the company’s initial dealings with the country were not easy.
“It took several years for the idea to work, but we had to be patient,” she said. “The first time we dealt with the exporting documents was a little daunting, but once you’ve done it everything gets easier. We have been very thoughtful and methodical about the process and it’s really proved to be beneficial.”
Erni said a change in agents has also proved to be essential in connecting with the foreign market, which is separated not only by oceans, but by language barriers as well.
“I don’t speak Arabic,” she said. “So we needed to find a good intermediary agent, and we did. Our agent is very helpful and gives a lot of good information to both sides.”
Arab Republic of Egypt
Location: Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip.
Total Area: 1 million square kilometers, slightly more than 3 times the size of New Mexico.
Climate: Desert, hot and dry summers, moderate winters.
Main Cities: Cairo (capital), Alexandria, Luxor, Aswan, Sharm el Sheikh.
Population: 66 million (1998)
Languages: Arabic (official), English and French widely understood by educated population.
Workweek: Saturday or Sunday to Thursday, 8:30 a.m. to 1:30 p.m.
Type of Government: One-party state under President Hosni Mubarak’s National Democratic Party. The governmental system is both presidential and parliamentarian.
Head of State: President Hosni Mubarak
Currency: Egyptian Pound (LE), 1 LE = 100 piasters
Exchange Rate: US$1 = 3.4197 Egyptian Pounds (August 5, 1999)
Economic and Political Conditions: Egypt has experienced significant political, legal, economic and social changes in the past decade. The International Monetary Fund (IMF) fostered changes due to debt rescheduling requirements in the early 1990s. The Egyptian government has continued reforms to create a free market economy through more liberal investment and trade incentives. The government has recently begun a massive sell-off of state-owned enterprises. The political system is highly stable, in a volatile region, despite sporadic attacks on government officials. President Mubarak has been in office since 1981. He has supported strong ties between the U.S. and Egypt based on mutual interests in fostering peace and stability in the Middle East. The U.S.-Egypt Partnership for Economic Growth and Development, sponsored by Vice President Al Gore and President Mubarak, provides a structure for closer trade and investment ties between countries.
Tariffs, Trade, Taxes, Trademarks
Trade Regulations and Tariffs: The Egyptian government has reduced trade barriers, eliminated unnecessary regulations and restrictions, liberalized the financial system and decontrolled investment and pricing. Proposed structural reforms include reductions in the maximum tariff rate, elimination of tariff exemptions, consistent application of quality control standards, and unification of the laws governing investment. Foreign exporters still face requirements for multiple permits, long delays in clearing goods from customs and arbitrary decision-making
Taxation: Companies are subject to a standard 40 percent Corporate Profit Tax. Stamp Taxes are levied on most types of documents and bills, and on some types of debentures and bonds.
Foreign Investment: In the last two years, the government has approved a series of measures designed to streamline and strengthen laws related to foreign investment and to reduce limits on foreign ownership.
Import/Export Controls and Documentation: Egypt no longer requires import licenses. Certain companies may import industrial inputs necessary for production and export the products they manufacture. Non-manufacturing foreign companies may import goods (e.g. furniture, equipment) for office use only. Foreign companies wishing to import goods for commercial (resale) purposes can only do so through an Egyptian import company.
Free Trade Zones: The eight free trade zones are in Cairo (Nasr City), Alexandria, Port Said, Suez, Ismailia, Damietta, Safaga, and Sohag. Goods exported from or imported into the free zones are exempt from normal customs procedures, duties and other taxes and fees. Any needed machinery, equipment or transportation equipment for establishments authorized within the free zones are exempt from customs and taxes. Companies are not subject to currency transaction controls. Provisions of the labor law do not apply to companies operating in the free zone. Commodities manufactured and/or stored in the free zones are considered “imports” subject to full customs duties if they enter Egypt.
Trade Financing: U.S. exporters to Egypt typically rely on letters of credit that Egyptian buyers arrange through Egyptian banks, confirmed irrevocably by a U.S. bank. Other financing sources include USAID Private Sector Commodity Import Program, the U.S. Export-Import Bank (Ex-Im), and the U.S. Overseas Private Investment Corporation (OPIC).
Marketing and Selling Factors: Egyptians involved in international business are typically trilingual (Arabic-English-French), well-traveled individuals who pride themselves on ferreting out good deals at decent prices. Cairo is the cultural capital of the Arab world, attracting thousands of affluent Arab tourists and investors. Foreign suppliers/ marketers are beginning to take advantage of Egypt as a locale from which to market to its audience of wealthy Arab visitors.
Product Pricing: Egyptians traditionally have been price-sensitive; quality is a secondary factor. Prior to new legislation, government rules had essentially required that the low bid win, regardless of quality. American firms sometimes did not understood this and would mistakenly quote “better value” than was required by tender specifications, thereby losing bids. Many companies would bid strictly to the specifications, then provide a second, optional value-based bid.
Patents/Trademarks/Copyrights: Egyptian patent law provides protection below international standards. The patent term is 15 years from the application filing date, compared with the international standard of 20 years. A five-year renewal may be obtained only if the invention is of special importance. Egypt has drafted, but not passed, legislation designed to improve the patent process. Egypt has strengthened the enforcement of copyright protection laws already on the books, although enforcement remains erratic and inadequate. Computer software is protected as a literary work, allowing it a 50-year protection term, with increased penalties against piracy. Egypt is considering laws that enhance significantly legal protection for trademarks and industrial designs. The current trademark law is not enforced strenuously and the courts have only limited experience in adjudicating infringement cases. Fines amount to less than $100 per seizure, not per infringement. Judgments and enforcement must be made separately in each of the 26 governorates.
Key Contacts
Rhode Island Export Assistance Center (RIEAC) and World Trade Center, Bryant College
Raymond W. Fogarty, Director. Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416’E-Mail: mailto:postoffice@itdn.net Website: www.rieac.org www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123 E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsushashi, International Trade Specialist
Telephone: (401) 528-5104
E-Mail: mailto:kyatsuha@mail.doc.gov
kyatsuha@mail.doc.gov
Egyptian Embassy
2310 Decatur Place NW, Washington, DC 20008
Tel: (202) 234-3903
Egyptian Consulate in New York
1110 2nd Avenue
New York, NY 10022
Tel: (212) 759-7120
English Language Publications
Business Today Egypt: www.businesstoday-eg.com/
Egypt Today: www.egypttoday.com/
Middle East Times (Egypt Edition): www.metimes.com/
American Chamber of Commerce in Egypt:www.amcham.org.eg/
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
