Annual Report 2015
President’s Letter
2
About AmCham Egypt
4
Long-Standing Members 2015
5
Board of Governors
6
AmCham Egypt Inc.
8
Committee Leaders
9
Staff
11
Operations
14
Membership Services
15
Career Development Center
16
Business Information Center
17
Business Studies & Analysis Center
18
Publications
19
Planning and communications
20
Committe Highlights
21
Event Highlights
36
Doorknock Mission 2015
50
AmCham MENA Regional Council
56
AmCham Constitution and Bylaws
58
Financial Statements
63
President’s Letter
Dear AmCham Members,
I
am happy to present the 2015 Annual Report. This year marks AmCham’s 33rd year as Egypt’s foremost institution committed to the promotion of trade and investment between Egypt and the United States. 2015 has been an extraordinary year for Egypt and particularly for its bilateral relationship with the United States. Egypt has witnessed a number of significant events including the inauguration of the New Suez Canal and the launch of the U.S.-Egypt Strategic Dialogue, in addition to a series of consequent macro-economic, social policy and pro-business reforms undertaken by the government to boost investment. These key developments sent out waves of optimism throughout the private sector and within the AmCham community. Under the umbrella of AmCham’s flagship events, members had the opportunity to participate in more than 30 events and roundtables featuring high-profile guest speakers, including senior representatives of corporate America, Egyptian cabinet ministers and visiting U.S. dignitaries. A major highlight was a special event held in honor of U.S. Secretary of State John Kerry on the margins of the Egypt Economic Development Conference in Sharm El Sheikh on March 13. In May, AmCham organized its annual Doorknock mission to Washington D.C., where its 35-member delegation took part, over five working days, in more than 90 meetings with key congressional and administration officials and think-tanks. On the margins of the visit, a special breakfast was hosted jointly with the U.S. Chamber’s U.S.-Egypt Business Council (USEBC), featuring H.E. Ghada Waly, Egypt’s Minister of Social Solidarity, who shared what she described as the “story of a society and a country being transformed and being reshaped to conquer its future.” A high-level business roundtable with 22 distinguished American corporate CEOs was organized in New York in collaboration with the USEBC on September 24 in honor of President Abdel Fattah el-Sisi on the margins of his address to the United Nations General Assembly. This function as well as other events have all helped drive the message to U.S. stakeholders that Egypt is indeed moving forward. AmCham continued to deliver on its commitment to serve and advocate for the interests of its 1,900 plus members, acting as a forum for sharing sector-specific concerns, linking members to key decision makers and providing relevant business intelligence whenever needed. During the year, our 21 sectorial committees met more than 150 times, and major initiatives were undertaken by several of them. The Travel and Tourism Committee hosted a group of international media and travel reporters for a visit covering key Egyptian sites. The Real Estate Committee also organized a major conference showcasing recent developments within this growing sector. As the secretariat of the MENA Council of Regional AmChams, AmCham Egypt coordinated the nomination, selection of awardees and the ceremony for the third AmCham MENA Council
2 • President’s Letter
Women in Business Awards, which took place in Abu Dhabi on January 30. Later in April, AmCham Egypt organized the Council’s Annual Conference in coordination with AmCham Abu Dhabi. Communicating developments taking place on the ground has never been more important. Launched in early 2014, the Egypt4Business initiative has been working on heightening awareness of the private sector’s role in developing Egypt’s economy and sharing many success stories. In 2015, the campaign generated numerous articles in prominent international publications, resulting in 68 story placements. Business Monthly, AmCham Egypt’s monthly magazine, maintained its circulation of 7,000 copies—among the highest for local English-language magazines. The Business Studies & Analysis Center (BSAC) produced several reports, including the Egypt Economic Profile, the MENA-U.S. Trade and Investment Report, the Energy Sector in Egypt, Egypt-US Trade and Investment Profile and a number of sector-specific Industry Insight supplements. AmCham’s website includes more than 3,000 pages of invaluable information for the entire business community and receives over three million hits per month. AmCham’s Business Information Center (BIC) continues to offer a number of online services catering for the business community. Human resource capacity building is another key area of focus for AmCham’s Career Development Center (CDC), which is committed to addressing the employability concerns of Egypt. Through its offices in many universities, CDC offers programs to advise, guide and direct individuals. CDC trained 4,500 candidates in 2015. AmCham’s Membership Department continued to engage regularly with members to explore better ways to serve them and bring exclusive benefits and offers to their attention. These were extended through the Quality Benefits Program. Regular orientation meetings were organized throughout 2015 to ensure that members are able to maximize the use of benefits available to them. In 2015, AmCham maintained its fiscal stability, ensuring the sustainability of all activities. AmCham is particularly grateful for the financial support it receives from its Annual Corporate Partners. Their support is instrumental to our success. Finally, I would like to take the opportunity to thank the Board of Governors, Committee leaders, AmCham’s management team and staff, and last but not least, YOU – our valued members. Your active support and engagement guarantees the continued success of this organization. It is indeed an honor to serve as president of AmCham Egypt! Sincerely,
Anis Aclimandos President
AmCham by the Numbers
AmCham Egypt Annual Report
2015
1,940+
The total number of AmCham Egypt members by the end of 2015
21
The number of AmCham committees
143
The number of AmCham committee meetings in 2015
30+
The number of AmCham events organized in 2015
16
The number of AmCham Annual Corporate Partners
5,755
The number of followers on the AmCham Twitter account
3,900+
The number of individuals trained by the CDC in 2015
7,000
The average number of copies of BUSINESS MONTHLY circulated each month
3 million
The average number of hits the AmCham website receives each month
90+
The number of AmCham Egypt employees
AmCham by the Numbers • 3
About AmCham Egypt
T
he idea of an organization promoting business ties between Egypt and the United States started in the 1950s, with prominent Egyptian businessman Hassan Al Abd its earliest advocate. But political changes within Egypt kept the idea dormant until 1974, when President Anwar El Sadat initiated the “Open Door” policy to encourage private and foreign investment. Taking advantage of this new economic environment, the Egypt-U.S. Business Council was formed to bring top-level Egyptian and American business executives together to discuss Egyptian business issues. The first resolution of the Council in 1974 called for the creation of an American Chamber of Commerce in Egypt. In October 1981, the founding of AmCham Egypt was approved, and in 1982, it was formally established, making it the 44th affiliate of the U.S. Chamber of Commerce and the first in the Middle East. On January 18, 1983, AmCham Egypt elected its first board of governors and started with around 200 members. Today AmCham Egypt stands as one of the most active AmChams in the region. Since its inception, it has developed into one of the country’s most influential non-profit business organizations, serving more than 1,900 members. Through the years, AmCham Egypt has fostered ongoing contact with business and governmental organizations in the United States. At times when U.S.-Egyptian economic relations have been strained, AmCham Egypt has consistently advocated for an enhanced investment and trade relationship. AmCham Egypt’s mission is to promote trade and investment between Egypt and the United States, with the organization representing Egyptian companies with business interests in the United States as well as American and multinational companies conducting business in Egypt. Supported by 90+ full-time employees, AmCham Egypt pursues its mission and represents its members’ interests under the guid-
4 • About AmCham Egypt
AmCham Egypt Annual Report
ance of an active board of governors and through the work of sector-oriented committees. The organization’s departments offer members a wide range of business services, including access to timely research and economic analysis through its magazine Business Monthly and other publications, online resources via its website www.amcham.org.eg, human resource development services through its Career Development Center, as well as several other marketing tools and online services geared toward assisting members in expanding their businesses. AmCham Egypt provides a forum to discuss challenges facing private businesses and presents the views of the business community to the Egyptian and U.S. governments. In addition, it hosts frequent meetings between its membership and key Egyptian and American policymakers and business leaders. AmCham Egypt also showcases the potential of Egypt’s private sector by highlighting business success stories in the international media through its Egypt4Business Campaign. The end goal is to encourage a friendlier business environment, facilitate communication and provide a network for sharing business information about Egypt. In December, the Board of Governors approved the establishment of AmCham Egypt Inc., AmCham Egypt’s new permanent representative in the United States, sharing the same mission and board. Starting February 2016, the two are working in tandem to promote commerce and investment between Egypt and the United States. AmCham Egypt is a founder and the permanent secretariat of the MENA Council of Regional AmChams, whose mission is to promote trade and investment between the MENA region and the United States. AmCham Egypt also currently serves as the secretariat for the Egypt-U.S. Business Council (EUSBC), which helps promote trade and investment between Egypt and the United States.
Long-Standing Members
AmCham Egypt Annual Report
Long-Standing Members 2015
Long-Standing Individuals
AmCham Egypt would like to recognize the companies and
Abdel Khalik Ayad Ahmed Hussein Sabbour Ahmed Said Al-Mansour Al-Tarzi Amr Badr Amr Helal Sheta Amr Kais Ashraf Sabry Emil A. Iskander Gerry D. Scott Hamed El Shiaty Hani Seif Hassan El Laithy Hazem El Tahawy Hisham Said Hossam Ahmed Fawzi Hossam Megahed Ibrahim Sarhan Ihab Gohar Islam Salem Karim Atalla Wahba Karim Magdy Salama Magdy Michel Girgis Maha Heba EnayetAlla Mahmoud Awad Mohamed A. Ghannam Mohamed Abou Ghaly Mohanad Adly Mona Galal Moustafa Montasser Abou Ghali Mustafa Salem Nawal El Degwi Osama Saleh Sarwat Abd El Shahid Tarek El-Hemaily Tarek Fayed Wael W. Olama Wafaa Youssef Walid Gad
individuals who reached their 15th year as AmCham members in 2015. Thank you for your commitment and dedication.
Long-Standing Companies ABCO United (Plastics & Chemicals) Abercrombie & Kent Egypt, SAE Abou Ghali Group Abou Ghaly Motors Al Ahlia Oil Fields Development Co. Al Ahly Real Estate Development Co. American Research Center in Egypt CARE Egypt CI Capital Holding Co. Commercial International Life Insurance Co. (CIL) FACT (Financial Advice Corporate Transactions) Global Brands Industrial Development of Automotive Components (IDACO) Johnson & Johnson Medical Egypt Leadership Training & Consultancy (LTC) LINKdotNET Mentor Graphics Egypt October University for Modern Sciences Perfect Trading, Inc. (Li & Fung Group) Rasmala Egypt Asset Management Shahid Law Firm Shoura Chemical Co. Sigma for International Supplies SMG Engineering Automotive Co. Strategy &. Suez Canal Container Terminal, SAE The Petroleum Projects & Technical Consultations Co. (PETROJET) Top Business V&E Engineering International, Ltd.
Long-Standing Members • 5
AmCham Egypt Annual Report
Board of Governors
January-May 2015
President
Anis A. Aclimandos Transcentury Associates
Executive Vice President
Executive Vice President
Curt Ferguson Coca-Cola Egypt – Atlantic Industries
Sherif Kamel The American University in Cairo
Vice President, Programs
Vice President, Legal Affairs
Amr Talaat IBM
Member of the Board
Treasurer
Sherif El Kilany Allied Accountants – Ernst & Young
Member of the Board
Member of the Board
Ahmed El Daly Dale Carnegie Training Egypt
Member of the Board
Member of the Board
6 • Board of Governors
Dalia Wahba CID Consulting
Said Hanafi Orascom Hotels & Development
Amr Allam Misr Sons Development – Hassan Allam Sons
Omar A. Mohanna Suez Cement Group of Companies
Vice President, Membership
Thomas Maher Apache Egypt Companies
Nevine Loutfy Abu Dhabi Islamic Bank - Egypt
Past President
M. Gamal Moharam MGM Financial & Banking Consultants
AmCham Egypt Annual Report
June-December 2015
President
Anis A. Aclimandos Transcentury Associates
Executive Vice President
Executive Vice President
Vice President, Membership
Curt Ferguson Coca-Cola Egypt – Atlantic Industries
Ahmed Abou Ali Hassouna and Abou Ali Law Offices
Vice President, Programs
Vice President, Legal Affairs Said Hanafi Orascom Hotels & Development
Sherif El Kilany Allied Accounting & Auditing – Ernst & Young
Member of the Board
Member of the Board
Member of the Board
Member of the Board
Member of the Board
Tarek Tawfik International Company for Agricultural Production & Processing
Aladdin El-Afifi ASEC Company for Mining (ASCOM)
Omar A. Mohanna Suez Cement Group of Companies
Hashem El Dandarawy Team 4 Security
Thomas Maher Apache Egypt Companies
Amr Allam Misr Sons Development – Hassan Allam Sons
Treasurer
Nevine Loutfy Abu Dhabi Islamic Bank - Egypt
Past President
M. Gamal Moharam MGM Financial & Banking Consultants
Board of Governors • 7
AmCham Egypt Inc.
G
iven AmCham Egypt’s extensive network and reputable standing among stakeholders in the United States, the AmCham Egypt Board of Governors resolved to establish the American Chamber of Commerce in Egypt Inc. in the U.S.—a mirror organization to AmCham Egypt to further strengthen the bilateral commercial relationship. AmCham Egypt Inc. was incorporated on January 14, 2015, as a Delaware nonstock, nonprofit corporation under section 501(c) (6) of the Internal Revenue Code of 1986. AmCham Egypt Inc. works with AmCham Egypt to enhance the commercial and investment relations between the U.S. and Egypt, promote the common business interests of members and act as a platform through which AmCham Egypt members and stakeholders engage with U.S. decision makers and corporations. AmCham Egypt Inc. is supported by the 1,980 executives representing more than 900 companies that make up the membership of AmCham Egypt, and it is governed by AmCham Egypt’s board of governors. AmCham Egypt Inc. and AmCham Egypt share an identical mission. As of January 2016, and in light of the increased need for continuous engagement with policymakers in the U.S. to discuss issues of bilateral importance, the AmCham Egypt Board of Governors decided to designate the organization’s longstanding CEO Hisham Fahmy to become the CEO of AmCham Egypt Inc., handling its operations in Washington, D.C., as well as advisor to the AmCham Board.
AmCham Egypt Annual Report
• Expressing the views of the business community in Egypt to public and private interests in the U.S. • Working with individuals and organizations in Egypt and the U.S. to further bilateral economic ties
AmCham Egypt Inc.’s program of activities • Outreach and engagement with stakeholders in the United States • Coordinating the AmCham Egypt Annual Doorknock Missions and follow ups • Working with the U.S. Chamber of Commerce to coordinate Business Missions to Egypt • Advocating for policy matters vital to the promotion of the bilateral relationship • Representing AmCham Egypt on panels hosted by key Washington-based think tanks that address the commercial aspect of the bilateral relationship • Building the awareness of AmCham Egypt members on key policy issues affecting the bilateral relationship
AmCham Egypt Inc. Leadership
Tamer El Naggar was appointed as CEO of AmCham Egypt, replacing Hisham Fahmy as of January 2016.
AmCham Egypt Inc.’s objectives • Promoting the development of commerce and investment between the United States and Egypt • Acting as a direct liaison with the U.S. Chamber of Commerce, and other chambers of commerce and business organizations
8 • AmCham Egypt Inc
Hisham A. Fahmy
CEO, AmCham Egypt Inc. Advisor to the AmCham Egypt Board of Governors
AmCham Egypt Annual Report
Committee Leaders
January-June 2015
Agriculture and Food Security
Information and Communications Technology
Chair: Tarek Tawfik, International Company for Agricultural Production & Processing Co-Chairs: Seif ElDin ElSadek, Agrocorp For Agriculture Investment Tony Freiji, Wadi Holding, SAE
Chair: Bassel Mubarak, Oracle Egypt, Ltd. Co-Chairs: Ayman Elgohary, Cisco Systems International Reem Asaad, Raya Holding
Insurance Chair: Alaa El-Zoheiry, Arab Misr Insurance Group | gig Co-Chair: Mike Newton, Commercial International Life Insurance Co. (CIL)
Banking and Finance Chair: Zeinab Hashim, National Bank of Egypt Co-Chair: Nadir Shaikh, Citibank, NA Egypt
International Cooperation
Corporate Social Responsibility (CSR)
Chair: Hanaa El Hilaly, Social Fund for Development Co-Chair: Rafeh Saleh, CID Consulting
Chair: Mohamed El Kalla, Cairo for Investment & Development Co-Chair: Shereen Shaheen, Pepsi-Cola Egypt
Investment and Capital Market
Chair: Hassan M. Hegazi, Master Trading, SAE Co-Chair: Hossam Nasr, Allied Accountants - Ernst & Young
Chair: Alaa El-Afifi, Qalaa Holdings Co-Chairs: Sharif El Akhdar, Beltone Private Equity Hussein El Sherbiny, Pharos Holding for Financial Investments
Education
Legal Affairs
Chair: Amr Ezzat Salama, The American University in Cairo Co-Chairs: Elizabeth Khalifa, Binational Fulbright Commission in Egypt Shahinaz Ahmed, Amideast Egypt
Chair: Ahmed Abou Ali, Hassouna & Abou Ali Law Offices Co-Chairs: Emma El Meligi, Pepsi-Cola Egypt Girgis Sarwat Abd El Shahid, Sarwat A. Shahid Law Firm
Customs and Taxation
Chair: Khaled Abu Bakr, TAQA Arabia Co-Chairs: Ali Bakr, ExxonMobil Egypt, SAE Arshad Sufi, BG Egypt, SA Osama ElSaid, Masa Electro
Ç Ç Ç
Health and Pharmaceuticals Chair: M. Maged El Menshawy, Manapharma Co-Chairs: Ahmed Ezz El Din, Johnson & Johnson Medical Egypt Mohamed S. Roushdy, Amoun Pharmaceutical Co., SAE
Chair: Somaya El Sherbini, Microsoft Egypt, LLC Co-Chair: Maisa Galal, General Motors Egypt, SAE
Industry and Trade Co-Chairs: Mostafa El Halwagy, The Egyptian Company for International Touristic Projects (Americana) Omar El Derini, FAOM Consult/Red Wing Suresh Narayanan, Nestle Egypt
Marketing
Real Estate
Chair: Alaa Hashim, Egyptian Center for Economic Studies (ECES) Co-Chair: Hashem El Dandarawy, Team 4 Security
Human Resources
G
Chair: Hisham Ezz El Arab, Danone Egypt Co-Chairs: Mai Aly, 4PR Communications Tamer El-Araby, Nielsen Egypt, Ltd.
Energy
Entrepreneurship and Innovation
˚
Chair: Mohamed Abdalla, Coldwell Banker Affiliates of Middle East & Greater Africa Co-Chairs: Abdalla El-Nockrashy, Majid Al Futtaim Properties - Egypt Hala Bassiouni, Egyptian Housing Finance Co.
Transport and Logistics Chair: Alfred Assil, Menarail Transport Consultants Co-Chairs: Amr Kabil, National Stevedoring Group Amr Tantawy, DHL Express Tarek Fahmy, Mediterranean Shipping Company
Travel and Tourism Chair: Karim El Minabawy, Emeco Travel Co-Chairs: Cesare Rouchdy, Four Seasons Hotels and Resorts, Egypt Roland Bunge, Carlson Wagonlit Travel
t
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Women in Business Chair: Hala El Barkouky, Allied Business Consultants Co-Chairs: Ghada Hammouda, Qalaa Holdings Jailan Shindy, Shindy & Associates, Inc. Committee Leaders • 9
AmCham Egypt Annual Report
Committee Leaders
July-December 2015
Agriculture and Food Security Chair: Abdel Hamid Badawi Demerdash, Magrabi Agriculture Company Co-Chairs: Seif ElDin Saad ElSadek, Agrocorp for Agriculture Investment Hatem El Ezzawy, PICO Agriculture
Banking and Finance Chair: Nadir Shaikh, Citibank, NA Egypt Co-Chairs: Zeinab Hashim, Abu Dhabi Islamic Bank – Egypt Ahmed Issa, Commercial International Bank (CIB)
Capital Market Chair: Karim Awad, EFG-Hermes Holdings, SAE Co-Chair: Sharif El Akhdar, Beltone Private Equity
Legal Affairs Chair: Hani Sarie-Eldin, The Middle East Center for Law & Development Co-Chairs: Emma El Meligi, Pepsi-Cola Egypt Girgis Sarwat Abd El Shahid, Shahid Law Firm
Education Chair: Sherif Kamel, The American University in Cairo Co-Chairs: Shahinaz Ahmed, Amideast Egypt Maggie Nassif, Binational Fulbright Commission in Egypt Chair: Khaled Abu Bakr, TAQA Arabia Co-Chairs: Ali Bakr, ExxonMobil Egypt, SAE Arshad Sufi, BG Egypt, SA Osama ElSaid, Masa Electro Sofiane Ben Tounes, General Electric International Operation
Ç Ç Ç
Health and Pharmaceuticals Chair: M. Maged El Menshawy, Manapharma Co-Chairs: Mohamed Roushdy, Amoun Pharmaceutical Co., SAE Amjad Laimoun, AbbVie Tamer Said, GE Healthcare
Co-Chairs: Mostafa El Halwagy, The Egyptian
10 • Committee Leaders
˚
G
Marketing
Energy
Industry and Trade
Chair: Alaa El-Zoheiry, Arab Misr Insurance Group | gig Co-Chair: Udo Krueger, Allianz Insurance Co. – Egypt
Chair: Hazem Badran, CI Capital Holding Co. Co-Chairs: Ahmed Ozalp, Akanar Partners Sherif El Kholy, ACTIS
Chair: Hassan M. Hegazi, Master Trading, SAE Co-Chair: Hossam Nasr, Allied for Accounting and Auditing- Ernst & Young
Chair: Somaya El Sherbini, Microsoft Egypt, LLC Co-Chair: Maisa Galal, General Motors Egypt, SAE Industry and Trade
Insurance
Investment
Customs and Taxation
Human Resources
Chair: Amr Talaat, IBM Co-Chairs: Ayman ElGohary, Cisco Systems International Reem Asaad, Raya Holding
Chair: Nada Shousha, IFC International Finance Corporation Co-Chairs: Rafeh Saleh, CID Consulting Nahla Zeitoun, UNDP
Chair: Mohamed El Kalla, Cairo for Investment & Development Co-Chair: Shereen Shaheen, Pepsi-Cola Egypt
Chair: Alaa Hashim, Egyptian Center for Economic Studies (ECES) Co-Chair: Heba Gamal, Endeavor Egypt
Information and Communications Technology
International Cooperation
Corporate Sustainability and Responsibility (CSR)
Entrepreneurship and Innovation
Company for International Touristic Projects (Americana) Omar El Derini, FAOM Consult/Red Wing Ashraf Bakry, Unilever Mashreq
Chair: Dalia Wahba, CID Consulting Co-Chairs: Mai Aly, 4PR Group Tamer El-Araby, Nielsen Egypt, Ltd.
Real Estate Chair: Mohamed Abdallah, Coldwell Banker Affiliates of Middle East & Greater Africa Co-Chair: Abdalla El-Nockrashy, Majid Al Futtaim Properties-Egypt
Transport and Logistics
t
Chair: Marwan El Sammak, Worms Alexandria Cargo Services Co-Chairs: Ahmed Elfangary, DHL Express Osama Fawzy Hegab, Triangle Trading & Engineering
Travel and Tourism Chair: Karim El Minabawy, Emeco Travel Co-Chairs: Cesare Rouchdy, Four Seasons Hotels and Resorts, Egypt Roland Bunge, Carlson Wagonlit Travel Nelly El Kateb, Astra Travel
Women in Business Chair: Hala El Barkouky, Allied Business Consultants Co-Chairs: Dina El Mofty, INJAZ
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AmCham Egypt Annual Report
Staff
(As of December 31, 2015)
CEO OFFICE Hisham Fahmy CEO
Rania Sabsouba
Menna Zahran
Senior Media Relations Officer and Assistant to CEO
Junior Administrative Assistant
Ahmed Abdel Fattah
Youssef Agab
Support Staff
Support Staff
OPERATIONS Sylvia Menassa
Chief Operating Officer
Nada Abdalla
Dina El Mofty
Carla Gazal
Hadil Hammad
Head of Committees & U.S. Relations Committee Officer
Programs Officer
Lama El Saloussi
Senior Programs Coordinator
Susanne Winkler
Committee Officer
Senior Committee Officer
Mohamed Ismail Support Staff
ADMINISTRATION Magda Hanna
Mahmoud Manaa
Senior Operator/Receptionist
Senior Reception Representative
Edward A. Sarkis
Senior Administrative Executive
Abdel Rahman Nekheily Support Staff
BUSINESS INFORMATION CENTER (BIC) Amr Mansour
Chief Information Officer
Mohamed Alaa
Software Development Manager
Nayera El Harizy
Mohamed Amr
Senior Web Developer
Zeina El Leithy
Marketing & Sales Coordinator
Marketing & Sales Coordinator
Ahmed Fahim
Abeer Gamal
Nayera Helal
Mohamed Saad
Senior Information Technology Specialist Marketing and Sales Specialist
IT Manager
Senior Web Developer
Dina El Ebiary
Business Development Manager - BIC
Samha El Tonny
Marketing and Sales Specialist
Sherin Hashem
Sales & Marketing Officer
Naglaa Sobhy
Senior Software Development Team Leader - BIC
Wafeek Shehata Support Staff
Staff • 11
AmCham Egypt Annual Report
Staff
(As of December 31, 2015)
BUSINESS STUDIES & ANALYSIS CENTER (BSAC) Khaled Sewelam
Director, Research & Publications
Aya Enaba
Brendan Meighan
Administrative & Design Assistant
Economic Researcher
Amira Sheha
Research Manager
Shaaban Selim Support Staff
PUBLICATIONS Tasneem Abo El Ezz
Katherine Durham
Advertising & Circulation Coordinator
Head of Corporate Publications
Emy Emile
Tamer Hafez
Graphic Designer
Amany Kassem
Advertising & Business Development Director Publications/Research
Contributing Editor
Reham Khaled
Circulation & Ad Traffic Coordinator
Rachel Scheier Editor in Chief
Hani Elias
Production Supervisor
Nessim Hanna
Senior Art Director
Fred Thomas Staff Writer
Mohamed Awad Support Staff
CAREER DEVELOPMENT CENTER (CDC) Mohamed Amin Deputy Chief Operating Officer / Director of CDC
Ahmed Adel
Customer Relations Specialist
Waleed Arafat
Senior University Program CoordinatorAin Shams
Tarek Emam
Eslam Adel
Recruitment Officer
Menna Assem
Karim El Shaarany
Senior Account Executive
Hassan Gaafar
Customer Relations Specialist
Senior Administrative Officer
Mohamed Hosny
Islam Ibrahim
Mohamed Omar
Mamdouh Rashwan
Logistics Specialist
Senior Account Executive
Monica Said
Recruitment Specialist
Logistics Officer
Account Executive
Mohamed Sameh
Senior Customer Relations Specialist
Ahmed Khalaf Support Staff
12 • Staff
Shereen Aiman
Senior Account Executive
Account Executive
Heba Hamza
Logistics Manager
May Magdy
Administrative Assistant
Aya Sabry
Training Coordinator
Dalia Sennara
Account Executive
AmCham Egypt Annual Report
(As of December 31, 2015)
FINANCE Amira Kamal
Director of Finance
Ahmed Ali
Ahmed Ehab
Accountant
Junior Accountant
Amr Kamal
Sameh Mostafa
Accountant
Mohamed Eid Credit Officer
Mostafa Saad
Junior Accountant
Accounting Supervisor
Zein El Abedeen Support Staff
MEMBERSHIP SERVICES Dahlia Younis
Director, Membership Services
Dina Dessouky
Marwa Hossam El Din
Membership Development Assistant
Senior Membership Engagement Specialist
Yasmine El Shimi
Azza Sherif
Membership Officer
Senior Membership Officer/Benefits
Mohamed Guineidy Support Staff
PLANNING AND COMMUNICATIONS Dina Nawar
Director of Planning and Communications
Sarah El Etribi
Communications and Social Media Specialist
Menna Khaled
Nihal Mazen
Communications Coordinator
Communications Offcer
Ahmed Gamal Support Staff
PREMISES & SECURITY MANAGEMENT Haytham Fahmy
Premises & Security Manager
MESSENGERS Saad El Din Mahgoub Chief Messenger
Khedr Abdel Rehim
Shawki Hassan
Mohamed El-Sabbahy
Emad Saber
Messenger Messenger
Messenger Messenger
Staff • 13
AmCham Egypt Annual Report
Operations
AmCham Egypt carries out its mission through the implementation of a wide scope of activities.
AmCham Committees A large part of AmCham Egypt’s work to encourage trade and improve the Egyptian business environment is conducted through regular meetings of 21 committees, each focused on a particular sector or area of interest. The committees provide a forum for AmCham members to raise and resolve issues concerning the country’s business climate. Prominent guest speakers from the government, international agencies and the private sector are frequently invited to discuss issues of concern, provide updates on new developments or highlight best practices in a given sector. AmCham Egypt’s committees also draft position papers to solicit government action on important business issues (see Committee Highlights, page 21).
Events Larger events such as luncheons, special meetings, seminars and roundtable discussions allow members and guests to hear the views of major political and business figures as well as offer good networking opportunities for members. AmCham Egypt
14 • Operations
also organizes international business and economic conferences, and hosts breakfast briefings with visiting dignitaries and local officials (see Event Highlights, page 36).
Missions to the U.S. The missions to the United States represent a cornerstone of AmCham Egypt’s proactive approach. For over a quarter of a century, a delegation of members has visited Washington, D.C., for meetings with members of Congress, administration officials, think tank representatives and U.S. business leaders. These visits are intended to inform U.S. decision makers in both the government and the private sector of the latest developments in Egypt’s economy. Delegates answer questions, provide updates and clarify misconceptions related to Egypt’s business climate in order to encourage trade and investment between the two countries. In addition to the visits to Washington, special business missions to the U.S. are often carried out. Their objective is to further enhance the commercial relationship between the U.S. and Egypt by reaching markets that present important trade and investment opportunities, as well as secure one-on-one meetings for AmCham members with their potential business counterparts.
AmCham Egypt Annual Report
Membership Services
A
mCham Egypt’s activities revolve around the needs of its members, who are drawn primarily from private companies that operate in Egypt and have significant connections to the U.S. market. Members include Egyptian and American firms as well as multinationals and not-for-profit organizations. In 2015, the Membership Services Department achieved a 95 percent renewal rate for existing members and a 33 percent increase in new members. As of year’s end, AmCham Egypt had a total of 1,943 primary and affiliate members. Continuing a tradition that started with AmCham Egypt’s 20th anniversary in 2003, the Membership Services Department recognizes long-standing members, who have been members of AmCham Egypt for 15 years or more. At the close of 2015, the 355 longstanding member companies represented 37 percent of AmCham Egypt’s membership company base, while the 335 long-standing individual members represented 17 percent of the membership base. The Chamber offers its members an extensive array of business services including access to economic data, online resources, publications, training services, video conferencing facilities and marketing tools. In 2015, the Membership Services Department conducted three orientation meetings to familiarize new members with AmCham Egypt’s full range of activities and benefits (see Events Highlights page 47). AmCham Egypt also regularly hosts meetings to familiarize diplomats with the organization’s role in promoting trade and investment between Egypt and the United States, and to facilitate communication between their countries and the Egyptian business community. In 2015, the Membership Department held three breakfast briefing events to welcome newly appointed foreign diplomats (see Events Highlights page 48). The 2015-2016 Annual Directory of Membership connects members representing different sectors, making it an indispensable tool to help members expand their professional network and their businesses. In addition to facilitating the exchange of information among members, the directory also includes an extensive listing of governmental, diplomatic and regional contacts. The directory is produced in cooperation with the Publications Department and was distributed in September for free to AmCham Egypt members.
Through the department’s Quality Benefits Program, member companies periodically offer special services or preferential discounts to fellow AmCham Egypt members. During 2015, members were able to take advantage of more than 30 offers, a 31 percent increase over 2014’s offers, covering diverse sectors such as education, travel, food and beverage, banking, health, human resources, information technology, insurance and many more.
Membership Services • 15
Career Development Center
AmCham Egypt Annual Report
(CDC)
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mCham Egypt’s Career Development Center (CDC) offers a variety of services for human resource development. While CDC prioritizes tailoring programs to the needs of members, its services are also available to the wider business community. The center trained over 3,900 individuals in 2015. CDC offers a wide variety of business-related workshops and courses designed specifically to meet the needs of organizations. The center also offers several international certifications including: • Certified Treasury Professional (CTP) • Certified Management Accountant (CMA) • SHRM – Certified Professional (CP) • SHRM – Senior Certified Professional (SCP) • Essentials of Human Resources (EHR) • Project Management Professional (PMP) • Certified Information Systems Auditor (CISA) • Certified Information Security Manager (CISM) • Certified in the Governance of Enterprise IT (CGEIT) • Certified in Risk and Information System Control (CRISC) • Certified Internal Auditor (CIA) • Certified Manager (CM) • Certification in Production & Inventory Management (CPIM) • Certificate for Supply Chain Professional (CSCP) • Certified Professional Trainer (CPT) In addition to its internationally recognized certifications, the center offers six achievement certificate programs in various fields, endorsed by AmCham Egypt. CDC is also committed to helping young graduates acquire the necessary skills to succeed in the business world. The center’s Junior Professional Program is designed to enhance graduates’ business skills and allow them to excel in their fields, with modules covering business-related topics that are crucial to any fresh graduate or new business professional. CDC’s Career Advising Sessions
16 • Career Development Center
help prepare university graduates for the business world by offering helpful advice, useful tips and an opportunity for participants to discuss a wide range of career-related topics. The Business English courses help professionals acquire the language skills crucial to conducting business in English. To make its services more accessible to youth, CDC offers training programs at universities across the country, including Ain Shams University, Assiut University, October 6 University and Future University of Egypt (FUE), along with an office in Alexandria. Through a partnership with the University of Toledo’s College of Business and Innovation, CDC offers a 15-month MBA program consisting of in-depth business courses, relevant case studies and simulations, and a comprehensive Strategic Management Capstone course in the final semester that features guest speakers. Six of the program’s courses are delivered live in Egypt by the university’s professors and two of the courses via video conference. CDC also provides the Certified Professional Trainer (CPT) as a joint certificate between AmCham Egypt and the College of Business and Innovation - The University of Toledo. This certificate provides practical guidance, knowledge and skills on how to design and deliver effective training programs. In 2015, the center continued to publish its quarterly newsletter CDC News, featuring a wide range of career development resources, articles, interviews with training professionals, course schedules and up-to-date information on all CDC developments. CDC’s recruitment center continues to be a valuable resource that puts qualified job seekers in touch with prospective employers. In 2015, there were 758 employers subscribing to the service, and by year’s end, the database had over 22,900 CVs with over 10,500 vacancies posted. In December 2015, over 2,500 job seekers attended the CDC Employment and Professional Development Fair for Middle Management, targeting candidates with four or more years of professional experience. The fair was sponsored by Emaar Misr, Coca-Cola, SIAC Holding, Naeem Holding, Orascom Construction and Titan Cement Egypt.
Business Information Center
AmCham Egypt Annual Report
(BIC)
I
n 2015, the Business Information Center (BIC) continued to offer a wide and valuable range of services for AmCham Egypt members and the business community at large. These services are designed to give companies competitive advantages and help them keep abreast of the rapidly changing global marketplace. The AmCham website – www.amcham.org.eg – was developed by BIC in 1997 to serve as an access point for Egypt-U.S. bilateral trade and economic information, while bringing together all products and services provided by the Chamber’s departments in one easy-to-navigate site. AmCham Egypt’s Cyberlink – www.amcham.org.eg/cyberlink – was designed to create an online community of AmCham Egypt member companies. In 2015, BIC provided AmCham members online access to audio and video recordings of 17 events and 32 committee speeches. Furthermore, members and their key staff remotely submitted 27 exclusive offers on their products and services to other members. In addition, more than 626 members updated their membership information and 684 renewed their membership online. AmCham Egypt was the first association in the country to offer an online registration and payment system, which allows the Operations Department to design and send invitations for events via e-mail. AmCham members can register themselves and their guests with a simple click of the mouse. Members and subscribers to AmCham services can make online payments with their credit cards securely. In 2015, 760 AmCham members used the system to register online and invite 3,151 guests to 49 AmCham events. BIC also developed an online voting system, which allows members to vote using their mobiles during AmCham events. The results are then generated as a chart updated in real time. BIC offers free online access to the Tenders Alert Service (TAS) – www.amcham.org.eg/TAS – which alerts subscribers to the latest sectoral business information including upcoming tenders, projects, news, privatization, loans and grants. More than 131,913 tenders have been published on the site since November 2000. The service is user-friendly with an advanced search function, and users can also receive updates via e-mail. The number of TAS subscribers exceeded 26,000 in 2015. During
the year, BIC conducted a TAS survey, the results of which showed that 84 percent of subscribers were highly satisfied with the service, while 56 percent said there were improvements in their business performance as a result of using TAS. The online Business Matchmaking Service (BMM) – www.amcham.org.eg/BMM – provides a free forum for browsing and submitting business opportunities, such as offers to buy or sell products, requests for trade partners or investors, and notifications of import/export opportunities. A weekly e-mail alert allows users to receive notification of new opportunities related to their sector. Currently, there are more than 10,900 subscribers. The BMM Directory was launched in November 2009 and features a listing of worldwide companies covering various business sectors with their full contact information. In 2015, the AmCham Egypt website received more than 3 million page views per month, and the number of online advertisers reached 91. BIC offers website development, intranet and extranet to businesses and organizations to provide easier access to their products or services. AmCham Egypt’s Videoconferencing Service – www.amcham.org.eg/VConf – helps local and multinational companies save time, effort and costs by conducting remote meetings, interviews and depositions. BIC uses state-of-the-art equipment, a high-speed international connection and meeting rooms that accommodate up to 50 people to conduct conferences among up to four parties. More than 170 hours of video conferencing sessions between Egypt and countries in Europe, Australia, the Far East, North America and elsewhere in the Middle East were conducted in 2015. The online reservation system continued to help clients keep track of their sessions. In cooperation with CyberLearning USA and Skillsoft, BIC’s Online Training Service (OTS) offers the latest e-learning courses at special prices for the Egyptian market. OTS offers solutions for educational institutes to train their staff and educate their students with diverse courses. Staff and students can choose from more than 300 online courses in various fields. While the OTS began on a small scale, with less than 200 accounts in 2006, in 2015 that number rose many times over to 1,063, and 2,021 certificates were issued.
Business Information Center • 17
Business Studies & Analysis Center
AmCham Egypt Annual Report
(BSAC)
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he Business Studies & Analysis Center (BSAC) provides accurate, timely and concise information on specific sectors and economic issues for the benefit of those doing business in Egypt. Over the course of 2015, BSAC produced research studies, economic profiles, industry insights, news bulletins and other supporting materials to inform and advise investors, entrepreneurs and policymakers. In February, BSAC produced “The Energy Sector in Egypt,” an industry report providing a snapshot of where the country stands on issues surrounding energy. The comprehensive report included the latest data on subsidies, progress in renewable resources and other alternative energy options, and the state of oil and natural gas. The report was timed for release alongside the Egypt Economic Development Conference in March to help investors evaluate the industry. In April, BSAC published its annual Egypt Economic Profile, which features sections on the macro-economy, stock market, and goods and services. The country report was distributed during the AmCham Doorknock mission to Washington, D.C., and all AmCham principal members received complimentary copies of the report. Several copies were distributed to visitors during AmCham events throughout the year. BSAC also produced the “2015 Egypt-U.S. Trade and Investment Profile,” a tri-fold summary of trade relations between the two countries, for the Doorknock mission. Also in April, BSAC published the “MENA-U.S. Trade & Investment Report 2015” for the annual AmCham MENA Council meeting held in Abu Dhabi. This report highlights the region’s trade activity and opportunities with the United States.
18 • Business Studies & Analysis Center
BSAC and the Publications Department published two editions of Industry Insight in 2015, part of the ongoing series that focuses on trends and growth potential within a spectrum of sectors in the Egyptian economy. “Energy Overhaul” came out in June, covering hydrocarbons, renewable alternatives, the electricity crisis and subsidies. In December, “Real Estate on the Rise” looked at two related sectors—real estate and tourism—with sections on Cairo’s east and west suburbs, hotels and resort developments, financing options and retail developments. Each issue was distributed with Business Monthly magazine. In addition, “Real Estate on the Rise” was distributed at three major industry events: a special AmCham real estate conference, the MEED Egypt Mega Projects conference, and the #RiseUp15 entrepreneurship summit. During 2015, BSAC distributed thousands of its various publications to members, policymakers, government officials, academics, reference libraries and donor agencies. Also, BSAC’s Egypt Watch Bulletin — which compiles news extracts from the local and international press that highlight recent business trends, legislation and trade indicators — saw the number of subscribers grow to nearly 4,000, in addition to all AmCham members. The Bulletin is distributed by e-mail every two weeks. BSAC also provides special consultations upon request and responds to business-related inquiries. In 2015, BSAC specialists handled inquiries on diverse issues related to trade and investment in Egypt, as well as regular updates for trade and economic data on the AmCham Egypt website.
AmCham Egypt Annual Report
Publications
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he Publications Department is responsible for creating the wide range of printed materials that AmCham Egypt produces to assist members doing business or interested in doing business in Egypt. The department’s flagship publication is Business Monthly, the official journal of AmCham Egypt. The monthly magazine provides in-depth coverage of Egyptian business and the economy, as well as an overview of the Chamber’s events and activities. The magazine is distributed to all AmCham Egypt members and subscribers, and has an average monthly readership of nearly 30,000. The Publications Department is comprised of editorial, design, advertising and production teams, which support all of the Chamber’s departments by designing and producing printed and digital materials including flyers, brochures, booklets, posters, invitations, catalogs, newsletters, reports and various other projects. Additionally, the department produces the delegate brochures and other materials for AmCham missions to the United States. The Publications Department works closely with the Membership Services Department to produce the Annual Directory of Membership. The 460-page directory provides addresses, phone numbers, corporate descriptions and other information about all of AmCham Egypt’s member companies. It also lists governmental organizations and other authorities in Egypt and the United States. Approximately 2,500 copies of the 2015-16 edition were produced and distributed free to all AmCham Egypt members. In late 2015, the Publications Department published the AmCham Egypt 2015 Desktop Calendar, which is distributed free with the December issue of Business Monthly. In addition, the Publications Department produces AmCham Egypt’s Annual Report, which makes public the organization’s constitution, yearly financial statements and summarizes the Chamber’s achievements and activities over the previous year. Copies of the Annual Report are distributed to all members and can be obtained free on request.
Publications • 19
Planning and
AmCham Egypt Annual Report
Communications
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he Planning and Communications Department publicizes AmCham’s many activities and advocacy efforts, initiates partnerships and engages with local, regional and U.S.-based stakeholders to showcase Egypt’s economic potential and promote the Egypt-U.S. bilateral relationship. In 2015, the department continued AmCham’s Egypt4Business Campaign, the strategic communications initiative to strengthen the “Egyptian Brand” in the international media by highlighting opportunities and recent developments within different sectors. The campaign connects AmCham members with media outlets to pitch for interviews, story and op-ed placements in renowned publications. As a result of these efforts, 62 interviews were conducted with business community leaders, resulting in 68 traditional media hits and tens of stories published in various U.S. media channels and renowned business publications throughout the year. AmCham Egypt continued to leverage its presence on different social media platforms to share insights from events and committees as well as to highlight positive economic developments. Our 5,490 followers on Twitter (@amcham_egypt) represent a vibrant mix of members, policymakers, civil society and journalists, making our Twitter feed a fertile ground for constructive discussion and interactions. The Annual Corporate Partnership program has attracted 16 member companies, which have committed to support AmCham’s services and activities throughout the entire year. The 2015/2016 AmCham Corporate Partners include Abu Dhabi Islamic Bank (ADIB), Arab African International Bank (AAIB), Bavarian Auto Group, Barclays Bank, BP, Coca-Cola, Commercial International Bank (CIB), Emaar, ExxonMobil, General Motors, IBM, Mobinil, Smart Village Co., Taqa Arabia, Vodafone and Xerox. Through the generous support of its Corporate Partners, AmCham is able to ensure the sustainability of its ongoing program of activities.
20 • Planning And Communications
The department also serves as the Secretariat of the MENA Council of Regional AmChams connecting more than 3,500 members from nine different AmChams in the Middle East and North Africa region. The Council fosters increased collaboration and cooperation among the members, promoting greater business opportunities between the United States and the MENA region (see event highlights on page 56). In addition, it serves as the Secretariat of the Egypt-U.S. Business Council (EUSBC), whose mission is to advance the bilateral commercial relationship between Egypt and the United States. The council is governed by a board comprised of leading members of Egypt's dynamic private sector with strong business ties with the United States. The EUSBC works closely with its U.S.based counterpart, the U.S.-Egypt Business Council (USEBC), under the umbrella of the U.S. Chamber of Commerce. In 2015, the department also prepared support documentation, updates and speeches for visits by several AmCham leaders to the United States. Finally, the department coordinated AmCham Egypt’s prominent participation in major events that took place in Egypt. For the Egypt Economic Development Conference (EEDC) on March 13-15, the planning and communications team produced a video documentary showcasing the strength of the Egypt-U.S. bilateral relationship and the instrumental role played by AmCham Egypt; the video was presented at the March 13 special AmCham breakfast meeting with U.S. Secretary of State John Kerry on the sidelines of the conference. The team also arranged AmCham’s participation in several other conferences and secured exclusive benefits for AmCham members at registration. During 2015, AmCham Egypt was represented at Euro Convention’s “Financing Renewable Energy Projects in Egypt” on October 1, T20’s Innovation in Government conference on October 11, the MEED Egypt Mega Projects Conference on December 8, and #RiseUp Summit on December 12-13.
AmCham Egypt Annual Report
Committee Highlights
Agriculture and Food Security Committee
Capital Market
AmCham reconvened its Agriculture and Food Security Committee in November 2012, tackling issues facing the agriculture sector, upon which much of the economy is dependent. The committee aims to address issues such as sustainability, efficiency, food safety and market development. It also seeks to engage and educate the community, as well as raise awareness regarding agriculture and food security issues in the sector and greater population.
The Capital Market Committee serves the interests of AmCham members on issues related to capital markets and advocates on behalf of members with the relevant authorities.
Banking and Finance The Banking and Finance Committee concentrates on financial issues to encourage Egypt-U.S. joint venture business in Egypt. The committee also works toward bringing greater understanding of the Egyptian financial system while advocating for policies to strengthen the sector.
Funding the future “What I have learned from experience is that you should never let a crisis go to waste. And this is what is happening in Egypt,” said Philip ter Woort, Egypt director for the European Bank for Reconstruction and Development, at the Banking and Finance Committee’s Feb. 11 panel discussion “Project Financing and Syndicated Lending—Case Studies.” Understanding the global trends dominating project financing is important for domestic lenders and borrowers alike. One such trend, according to David Dubin, Citigroup London managing director and head of the Europe, Middle East and Africa Project and Infrastructure Finance Division, is that long-term debt financing is no longer dominated by banks and insurance firms. Equity and capital markets are showing interest in this type of financing. “Debt investors wanting long-tenure investment in a variety of markets is something that was unheard of in the past three or four years,” said Dubin. The IFC has also played a major role in project financing in Egypt with a portfolio of $1 billion, the largest in the region along with Pakistan, said Nada Shousha, IFC manager for Egypt, Libya and Yemen. The IFC generally finances long-term projects, but when many foreign investors exited Egypt after 2011, it stepped in with short-tenure investments. The IFC’s focus in the coming four years will be to finance real estate and micro-lending projects.
Corporate Sustainability and Responsibility (CSR) The CSR Committee provides a forum for raising awareness and promoting constructive dialogue on CSR related issues. It aims to facilitate cross-sectoral partnerships and foster effective and mutually beneficial relationships between businesses and the communities in which they operate. Over the course of 2015, the committee developed a comprehensive Concept Note and Agenda for the 2016 AmCham Egypt and UNDP Conference on “A Commitment to Development: The Private Sector’s Role in Inclusive Growth.” In preparation for the conference, the committee also approached potential high-level speakers including Queen Rania of Jordan.
Customs and Taxation The Customs and Taxation Committee aims to establish channels of communication for AmCham members with customs and taxation authorities to solve problems of a general nature and recommend improvements.
The benefits of VAT Egypt’s sales tax “brought in LE 90 billion in tax revenue in the last fiscal year,” said Mamdouh Omar, advisor to the Minister of Finance and Taxation and former chairman of the Egyptian Tax Authority, at a Feb. 18 Customs and Taxation Committee meeting. “Now, however, its shortcomings are becoming more apparent, and it is becoming an obstacle to investments,” said Omar. One of these shortcomings is that the minimum capital requirements for a corporation to be liable to pay sales tax, set at LE 54,000, has not changed since 1991, when the tax law was passed. “The LE 54,000 registration limit set in 1991 is now equivalent to LE 500,000,” said Omar. He also noted that the sales tax registration doesn’t apply to every product or service, the definition of processed goods is vague, and not all products and services are taxed equally. “This creates massive discrepancies in accounting.” The Value Added Tax law is meant to address all these problems by unifying the registration limits for all businesses and the rates and processes to calculate the tax. It will also allow companies to deduct taxes paid on raw materials from the taxes due on the final product. “We have only a short list of exemptions for products that the poor
Committee Highlights • 21
AmCham Egypt Annual Report
Committee Highlights
frequently use and goods bought for national security or the army,” said Omar. “We are also integrating the VAT with foreign country VAT laws to facilitate imports and exports.”
Rules and regulations update “During the last few years, the Customs Authority has really struggled to do its job properly. And it’s not just because of turbulent times. It’s also because of decades of neglect from top management of the authority to improve it,” said the newly appointed chairman of the agency, Magdy Abdel Aziz, at an April 8 Customs and Taxation Committee meeting on “Customs Rules and Regulations Update.” Abdel Aziz explained that top management introduced best practices from all around the world but stopped implementing them after a short period. Advanced inspection hardware was never bought and importers had to present large amounts of paperwork that is easily forged, he said. All these factors led to increased smuggling and customs evasion. Smuggled items include drugs, fireworks and shoddy consumer goods from China, which usually enter via freetrade zones. “We never had any sort of supervision over these free trade zones because they don’t pay customs,” explained Abdel Aziz. The Customs Authority only recently began ensuring that free-zone imports have correct paperwork. “In the past six months we caught 3,500 smuggled shipments. That is more than the authority caught in the past eight years or so,” said Abdel Aziz. To streamline inspection, the coming 12 months should see the delivery of x-ray inspection devices, and processes will be automated to speed up import processes and make it harder to forge documents. Abdel Aziz also said the authority is revising price guidelines for individuals bringing home foreign products.
22 • Committee Highlights
Fine-tuning the VAT “Regarding the value-added tax, we are aiming to completely overcome problems in the sales tax law,” said Salah Youssef, head of the Central Authority for Research at the Egyptian Tax Authority, at a May 13 Customs and Taxation committee meeting on “The Latest Developments in Tax Legislation.” Osama Tawakol, also of the Tax Authority, spoke as well. Currently, a value-added tax is applied on goods but not all input costs can be discounted. It is also applied to 17 services with no option to discount input costs. “VAT needs to be applied on all goods and services, and all input costs have to be discounted,” said Youssef. He expects the approved law will stipulate that all services and goods, manufactured or not, will be subject to the tax, with only a short list of products exempted “for social reasons,” he said, adding, “VAT will have a much broader definition of what constitutes input costs compared to the current sales tax law.” The VAT law will also unify the tax rate. “We are still discussing that rate to benefit everyone,” said Youssef. “The unified rate will solve a lot of existing problems, such as having raw material taxed at 10 percent while the final good is taxed at 5 percent.” Despite the Tax Authority’s readiness to apply the VAT, there is still no word on when the final law will be approved. “It is a political decision,” said Youssef. “In the meantime, we are constantly tweaking it to make it better.”
Broadening the base “We want to increase tax revenue by increasing the base of taxpayers rather than by increasing the tax rate. For me, horizontal expansion is much better than vertical expansion,” said Abdel Moneim Mattar, chairman of the Egyptian Tax Authority, in a June 15 Customs and Taxation Committee meeting. “Almost half of Egypt’s economy doesn’t pay taxes. If we could encourage them to pay it, then everyone benefits.” The Tax Authority is pursuing several options to push up revenues, starting with dropping the income tax rate to 22.5 percent from the current range of 25 to 30 percent. “This tax rate is currently only a suggestion. It’s not an approved law yet,” said Mattar, adding that the rate would stay unchanged for several years to attract new investment and encourage existing companies to pay. “The tax would, in the worst case, go to pay wages of government workers, who would then use this money to buy products from the company that paid the tax in the first place, thus increasing its revenue,” Mattar said. “It’s a win-win
AmCham Egypt Annual Report
situation.” The TA is also looking into double taxation and reimbursement procedures for multinational firms operating in Egypt and paying taxes in their home countries. Mattar also alluded to creating a completely new income tax law. “Every day we are logging problems that corporations and people face, so that when the time comes for a new tax law, it will tackle all problems,” he said.
Stamping out smuggling “We have seen a massive increase in the number of arrests of smugglers and have caught a lot of shipments carrying smuggled goods heading into or out of Egypt recently,” said Magdy Abdel Aziz, chairman of the Egyptian Customs Authority, at a Nov. 4 Customs and Taxation Committee meeting. Egypt’s main ports will become even more secure with the ECA’s six new infrared scanners, which will speed up the inspection process and reveal concealed storage compartments and cargo. GPS tracking of shipments should also come online “soon,” to identify shipments that deviate from their courses and end up in the wrong location. The authority has issued a new guideline price list with more products and updated prices. “Many smugglers forge bills to show much lower prices and therefore pay lower customs on inbound items,” said Abdel Aziz. The ECA is also working to close loopholes such as temporary exemption clauses, which companies have used to dodge paying customs on imports. Abdel Aziz recently visited Russia to ensure that Egyptian exports to Russia are treated similarly to those coming from Turkey, as reports indicated that the latter have been getting preferential treatment. “We signed a protocol agreement and gave them a comprehensive list of prices of local products exported to Russia to act as their guideline to prevent smuggling at their end,” said Abdel Aziz. “Since then we have seen an increase in exports to Russia.”
VAT update “Industry people are the ones who are pushing to have a value-added tax instead of the existing sales tax,” said Abdel Moneim Mattar, chairman of the Egyptian Tax Authority, at a Nov. 18 Customs and Taxation Committee meeting. “The benefit to businesses is that under VAT, they can exempt taxes paid on inputs, which they are not allowed to do under the current sales tax. This will increase their revenues.” The current system taxes different products at different rates, and there are many services that should be taxed that aren’t. “The sales tax is creating a lot of confusion and hence opening the door to tax evasion,” Mattar said. The VAT sets a single base rate, with lists of exemptions and special conditions. For example, luxury items and products such as cigarettes will be subject to additional taxes, applied after the VAT is calculated. Perishables and basic services will get a deduction. “These lists are still being tweaked and will be issued in due course so that each one knows how much tax they will pay,” said Mattar. “A lot of products will not see their final prices increase, just because their tax will be divided between the VAT and the list.” The chairman said that the rate and date of implementation are completely out of the hands of the TA: “This decision is 100 percent political.”
Education The Education Committee aims to support and encourage AmCham members, whether investors, suppliers or employers, to take an interest in the field of education and conduct policy dialogue as well as national advocacy to support educational reforms.
Human capital Egypt’s beleaguered schools will not see much improvement without significant investment from the private sector, said Nadia Touba, the former project director of Nile Egyptian Schools and an advisor to the ministries of education and higher education, at the Education Committee’s May 3 panel discussion on “Investment Opportunities in Education.” Around 2.5 million new students enter Egypt’s schools annually, and an estimated 7,500 new facilities are
Committee Highlights • 23
AmCham Egypt Annual Report
Committee Highlights
needed to meet that demand, said Ahmed Ozalp, the founder and managing director of investment firm Akanar Partners. Developing private education is key to meeting Egypt’s growing educational needs, said the panelists. Private schools make up around 20 percent of the total in Cairo but only 5 percent in rural regions. Targeting this niche, Nile Egyptian Schools runs facilities in governorates outside of the capital, said Touba. Egypt should look to innovative strategies involving e-learning and “a policy that encourages a one-classroom model at the village level,” said Mohamed El Kalla, managing director of Cairo for Investment and Development. Fouad Helmy, a consultant in planning and institutional development for the Ministry of Education, explained that the government serves some 20 million students and 1.8 million teachers countrywide and noted that the main problem with Egyptian public education is that students are taught to focus almost exclusively on getting adequate grades in order to be admitted to universities. Egyptian education is ripe with investment opportunities, but the public sector must be more transparent and balance between government and market needs.
sector, including high demand, limited financing and commercial regulations. To address these challenges, the government is working on providing alternative energy resources, attracting investment and gradually transforming the sector into a commercial one. Egypt aims to increase energy efficiency on both the supply and demand levels and develop the national grid. The NREA chairman provided an overview of the solar and wind atlas, explaining that Egypt enjoys excellent wind conditions, particularly in the Gulf of Suez. The nation also has intense sunshine, with direct solar radiation ranging from 2,000 to 3,200 kWh/m²/year from the north to the south, with nine to 11 hours of sunshine per day. Elsobki surveyed the various renewable energy development schemes that will be used to promote the sector, ranging from independent power producer projects to feed-in tariff schemes.
Entrepreneurship and Innovation
Energy The Energy Committee aims to provide effective support to ongoing government efforts to restructure the energy sector. It also aims to enhance AmCham members' knowledge and awareness regarding the government's restructuring programs for the energy industry.
Going green “If Egypt retains its fossil fuel products, renewable and nuclear products and undergoes energy efficiency reforms, we will still need to meet 37 percent of our energy needs,” said Mohamed Salah Elsobki Jr., executive chairman of the New & Renewable Energy Authority, at a Feb. 2 Energy Committee meeting entitled “The Future of Renewable Energy in Egypt.” The NREA chairman added that with 7,650 square kilometers of Egypt’s land allocated to renewable energy projects in the coming years, this offers a great opportunity for the country to diversify its energy mix. Elsobki explained that Egypt faces many challenges in the energy
24 • Committee Highlights
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The Entrepreneurship and Innovation Committee is committed to synergizing existing initiatives in the entrepreneurship ecosystem through knowledge sharing and concentrating on certain focus areas. As part of its aggressive agenda, the Committee has formed five Subcommittees: mentorship, policy advocacy, impact sourcing with the aim to include small and medium enterprises in large business supply chains, mapping the entrepreneurship ecosystem in Egypt, and integrating entrepreneurship skills in education. The AmCham “Mentor for Egypt” program was launched to connect AmCham members with expertise and know-how to promising entrepreneurs to assist them and support their growth. The efforts of the Subcommittees have recently been extended to Upper Egypt and Alexandria, with the formation of task forces bringing entrepreneurship expertise outside of Cairo.
Network on the Nile “There are a number of successes in Cairo’s tech sector that have contributed to job creation and the economy as a whole,” Rhett Morris, director of Endeavour Insight, told a March 25 Entrepreneurship and Innovation Committee meeting on the “Network on the Nile: The Launch of Cairo’s Techmap.” Endeavour Insight, working with Mercy Corps Egypt, tracked that success in a
AmCham Egypt Annual Report
landmark study that maps the ecosystem of tech companies in Cairo. Heba Ali, Senior Entrepreneurship Advisor, Mercy Corps Egypt, was also on hand to discuss the project. To understand dynamics of Egypt’s booming tech sector, researchers interviewed over 200 entrepreneurs, asking about how the respondents were inspired or mentored to become entrepreneurs, who invested in them, where they previously worked, and whether they had founded any additional companies. Morris explained that by combining this data with that from LinkedIn, CrunchBase and AngelList, they created a picture of how entrepreneurship in Cairo works. The success of firms such as ITworx and LinkdotNet has inspired their former employees to create their own tech firms, leading the sector as whole to grow rapidly since the early 2000s. Beyond that, Morris explained, Egypt’s tech sector is very young, with entrepreneurs falling largely in the 21-26 year old range, and tightly connected, with many tech startups populated by university classmates. Those surveyed listed political instability and difficulty finding managerial and technical talent as their main challenges. Morris explained that if investment opportunities follow suit, the tech sector could provide a minimum of 15,000 jobs by the year 2020.
reality into the plan. It’s also key to hire smart, have fun and hit the ground hard, said Harris. In today’s global marketplace, successful business people must have a sufficient degree of motivation, knowledge and experience in collaboration with technology in order to deliver the best possible services. “There is a need to be a full participant in the world,” said Harris.
Health and Pharmaceuticals AmCham’s Health and Pharmaceuticals Committee aims to provide a point of contact and forum for dialogue with the Egyptian government on healthcare issues and the pharmaceutical industry. The improvement of the investment environment and opportunities in the health and pharmaceuticals sectors has been a key priority. In November, the committee organized a roundtable meeting between Minister of Health and Population Ahmed Rady and U.S. multinationals and other pharmaceutical and healthcare corporations operating in Egypt to tackle challenges affecting the sector’s business operations.
Human Resources Connecting with the world “Entrepreneurs are made with the skills, dedication and desire to do well,” said Harry G. Harris, the president and founder of HealthCare California, a home health agency based in the U.S. state’s Central Valley region, addressing a May 4 meeting on “Entrepreneurial Networking: Today’s Global Environment,” sponsored by the Entrepreneurship and Innovation Committee. Harris explained his role in starting a business in the American home health care sector and the 12 qualities that have helped drive his company forward. HealthCare California provides organizations and individuals with trained nurses, physical therapists and other home-based specialists. “The first key to success is to have communication, concentration, ingenuity, discrimination, organization and innovation as the character of an entrepreneur,” said Harris. Other important pillars of running a successful business include making sure your staff has sound, up-to-date knowledge of the marketplace, who the competition is, cash flow and company finances as well as a sense of confidence, a firm grip on the company strategy and a willingness to recognize and incorporate
The Human Resources Committee aims to increase awareness of professional human resources practices. It provides a forum for discussion of best practices and supports AmCham members in matters relating to human resources.
Building business acumen “From CEOs to street vendors, they all share a common secret to success by developing business acumen and learning to apply these fundamentals to all types and sizes of businesses,” said Hisham El Bakry, managing director of the Leadership Training and Consultancy, at the Human Resources Committee’s March 26 interactive session on “Building Business Acumen.” El Bakry explained that knowing your organization is important, and you should develop a working knowledge of the firm’s key financial statements and success measures in order for employees to analyze their organization’s financial results. To learn how a company really works, employees must understand the concepts of cash generation, return on assets, growth and customers. The speaker referenced a book by Ram Charan called “What the CEO
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AmCham Egypt Annual Report
Committee Highlights
Wants You to Know,” which discusses the five main interrelated pillars of business: cash, margin, velocity, growth and customers. He explained that the key to getting things done in an organization is putting the right people in the right jobs, knowing when to make changes and solving conflicts. El Bakry also pointed out that CEOs nowadays try to expand their employees’ capacity by helping them build their skills, develop their abilities and release their positive energy: “Coaching is also a key success factor.”
Organizational psychology Organizational psychologists can contribute to companies’ success by improving the performance, satisfaction, safety, health and well-being of its employees. On May 12, the Human Resources Committee hosted a meeting on the topic that featured guest speaker Suzan Stub, the managing director of Leadership Dialogue, a Cairo-based consultancy specializing in business psychology. The session tackled how human resources professionals can take proactive steps to prepare for changes in an organization, including new management, mergers and acquisitions, a change in office culture, contrasting generations and the impact of the external environment on workers. “Organizational and business psychology is the psychological understanding of its functions on the boundary between the individual, the group and the organizational system,” explained Stub. “Each organization is distinct, with its own mode of environmental interaction.” She added that interactions within an organization do not necessarily have to be linear. Rather, a workplace can create its own network, which enables it to continue living in its environment. Stub added, “Often the past is analyzed, and maybe lessons are learned, but the past cannot work with the present. What organizational and business psychology understands is that the present can be a container of the past, rekindling dreams of the future.”
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Organizational behavior Communication is key. That was the message shared by Hany Mahmoud, a former minister of state for administrative development who was the guest speaker at the Human Resources Committee’s Nov. 8 meeting titled “Organizational Behavior.” The session tackled the actions and attitudes of individuals and groups toward one another and toward organizations as a whole and their effects on performance. The session also tackled human behavior in a work environment and its impact on job structure, performance, communication, motivation and leadership. “Over a 10-year period, companies that intentionally managed their cultures increased revenue by 682 percent, compared to 166 percent for those who did not,” said Mahmoud, noting that firms with highly committed employees generated 200 percent higher three-year shareholder returns than companies with less committed employees. He also pointed out that the aim of all internal communications should be to influence an organization’s culture and behaviors that are aligned with its purpose, strategy and objectives. He concluded that effective communication is critical to all organizations and plays a role in enhancing loyalty and commitment, getting everyone behind a unified set of goals and vision, instilling a sense of belonging, expressing the organization’s culture and sharing information.
The pay spectrum To put some science to the art of salary negotiations, Mohamed Faisal, country manager of the American HR consultancy the Hay Group, was on hand at a Dec. 22 Human Resources Committee meeting to discuss the Hay Group Compensation Survey 2015: Changing Dynamics in Egypt and Impact on Pay. The Middle East saw nominal salary increases of 5.3 percent, or 2.9 percent adjusted for inflation. “Almost everywhere, inflation played a massive part in determining real growth in salaries in 2015,” said Faisal. In Egypt, the industry with the highest increase in the average salary was fast moving consumer goods, with an 11.2 percent hike during 2015; the sector also ranked number one in terms of employee promotions. The oil and gas sector was second with average raises of 7.1 percent, followed by banking with 6.7 percent hikes. Hay’s report noted that oil and gas salaries are 53 percent higher than in other sectors,
AmCham Egypt Annual Report
while banking salaries are 19 percent higher and FMCG salaries are on par. The lowest-paying sectors are retail and industry. Banks give 50 percent higher bonuses than the average, followed by oil and gas. FMCG and retail give below-average bonuses. In terms of employee turnover, Faisal noted that in Egypt in 2015, “our stats show that the work environment is stable,” with almost 33 percent of those surveyed staying at the same firm for five to nine years. “This is also a sign of unemployment,” he said. IT positions are the hardest to fill, followed by research and development and engineering. “The outcome of all our surveys indicate that the pool of qualified Egyptians is limited, and that companies are headhunting, trying to obtain and retain the best.”
offers advice and technical support to help organizations properly apply standards, measurements, calibrations and quality control. Keeping pace with technological updates, the EOS has also developed a user-friendly, downloadable mobile application known as EOSQ. A member of the United Nations Economic Commission for Europe, the EOS also has a special unit to develop and leverage Egypt’s competitiveness in the automotive sector by helping carmakers meet international safety and quality standards. Its newly developed energy efficiency unit offers technical advice to consumers about the differences among energy efficient appliances. The organization also helps SMEs by offering technical support on the application of standards, calibrations and product testing. The agency has issued close to 10,000 standards via more than 150 technical committees, and Abdel Magied noted that 95 percent of all EOS standards are based on international standards.
Industry and Trade The Industry and Trade Committee aims to help members in lobbying with governmental authorities to tackle major obstacles and enhance the climate for economic progress and investment. The committee works on the advancement and facilitation of industrial development and competitiveness. The committee regularly hosts limited roundtable meetings with key stakeholders, including senior government officials and representatives of the World Trade Organization, UNDP and USAID. Additionally, the committee developed a position paper with the Federation of Egyptian Industries on the impact of the Egyptian Customs Authority’s regulation for the chemical analysis of goods entering Egypt immediately following its announcement.
Keeping standards up Egypt was the first Arab state to join the International Standardization Organization, said Hassan Abdel Magied, chairman of the Egyptian Organization for Standardization and Quality at a Jan. 13 meeting of the Industry and Trade Committee. As the sole organization in the country responsible for enforcing standards and quality control, the EOS issues quality marks and conformity standards for Egyptian products as well as the halal mark for food. It serves as the technical branch of the Consumer Protection Authority, said Abdel Magied, and it fields consumer complaints and has issued consumer protection standards such as those protecting hospital patients. The EOS
Making buildings energy efficient If you want to cut your energy consumption, start by changing your lights. That was the take-away of the Industry and Trade Committee’s Nov. 29 meeting on “How to Convert Your Premises into an Energy Efficient Building.” Mohamed Bayoumi, environment team leader, assistant resident representative, United Nations Development Programme, described the UNDP’s Energy Efficient Lighting and Home Appliances project being implemented in cooperation with the Egyptian Ministry of Electricity. “Lighting is the first step with energy efficiency, [because] it is a simple technology and has the shortest payback period,” said Bayoumi, adding that entities that do not start with energy efficient lighting are unlikely to see impact. Lighting typically amounts to 20 to 25 percent of total electricity consumption; this may be reduced by 15 percent through the use of efficient lighting alone. Launched at UNDP’s premises, the project achieved a 30 to 40 percent savings in energy consumption with a payback period of five months for investment capital. Hoda Sabry, chief financial and economic expert, European Bank for Reconstruction and Development, highlighted the Egypt Sustainable Energy Financing Facility, a credit line developed by the EBRD for energy efficiency and renewable energy investments in Egypt. SEFF offers technical assistance and loans to the private sector ranging from $300,000 to $5 million.
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Seif El Din Batanouni, corporate affairs, CSR and communications manager, Mansour Manufacturing and Distribution Group of Companies, discussed the UNDP project’s pilot test, noting that the preliminary results indicated a 20-30 percent direct reduction in overall electricity consumption.
AmCham Egypt Annual Report
Information and Communication Technology The ICT Committee provides a forum for members to discuss information and technology-related issues and keep abreast on the latest developments in the field.
A changing telecom industry
Benchmarking government performance On Nov. 30, the Industry and Trade Committee hosted a meeting with guest speaker Seif Fahmy, chairman of the Egyptian National Competitiveness Council, to address “How Competitiveness Rankings Benchmark Government Performance.” Fahmy defined competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. Established in response to Egypt’s poor ranking in the Global Competition Review, the ENCC monitors Egypt’s standing and offers recommendations on how it may improve. Fahmy highlighted efforts to revive the Business Advisory Council of the Egyptian Regulatory Reform and Development Authority for legislative reform. He addressed the private sector’s important role in introducing legislative reform through ERRADA, which led to the cancellation of 40,000 laws; this naturally impacted Egypt’s ranking. Fahmy said that, in general, Egypt currently ranks 116 out of 140 countries. He explained that the process of measuring the competitiveness of a country assesses 12 pillars including infrastructure, institutions, and health and primary education. A thirteenth pillar is to be developed to include equity. Close to 65 percent of data is derived from World Economic Forum surveys on the views of the private sector. The World Bank’s Doing Business Report also serves as a data source. Tourism, agriculture and food security are areas that reflect Egypt’s competitive edge, therefore policy advocacy is focused on these areas to improve Egypt’s ranking. Fahmy concluded by noting that “the higher the [country’s] ranking, the better the investment [it would attract].”
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“An evolving young market with an expected 30 million people and 5 million new households within 10 years is a market that cannot be saturated,” said Mohamed Elnawawy, managing director and CEO of Telecom Egypt, at the ICT committee’s March 29 meeting on “Egypt Communications Network: Development and Roadmap.” He noted that the telecom industry has changed in a way that has brought with it a generation that is very connected, creative and curious, dubbed “Generation C.” Elnawawy noted that the total market revenue of the telecom industry was LE 35.07 billion in 2014. Of this, mobile voice services accounted for LE 23.45 billion, mobile data accounted for LE 5.68 billion, fixed voice brought in LE 2.99 billion and fixed data brought in LE 2.95 billion. He added that the data market is still growing and far from saturated. Demonstrating how Telecom Egypt has strong international connectivity, Elnawawy presented a survey of the submarine cables established since 1901, covering 12 different routes. As Egypt continues to evolve into a telecommunications market that is more datacentric, Elnawawy said Telecom Egypt will rise to meet this demand as a total telecom provider.
Big Data, the corporate revolution? Information is a cornerstone of our daily lives. Whether we are researching a company before deciding to invest in it or simply checking a weather application on our smartphones prior to leaving our homes, data is imperative in guiding our decisions. This is particularly the case for corporations, which rely on information to guide every strategic decision. Corporations have traditionally relied on internal sources of information and system records alone for their decisions. However, there is a vast amount of data sources that can be of optimal use to business. These data sources are a compilation of the digital traces we leave on our smartphones and social media websites, to name a few. This massive amount of data—whether it is structured, unstructured or semi-
AmCham Egypt Annual Report
structured—is referred to as Big Data, a voluminous amount of data that can be processed into information for business use. On Dec. 2, the ICT Committee hosted a meeting on Big Data as the driving force of change in the corporate world, featuring experts explaining the use of Big Data in the sectors of retail, manufacturing, finance and security. Ahmed Murad, MEA enterprise architect at Oracle Egypt; Hisham Mortada, cloud solution architect at Microsoft Egypt; Martin Willcox, director of international Big Data at Teradata Corporation; and Walid Sharara, Big Data brand manager at IBM Egypt, all spoke about the potential that Big Data holds for corporations in various sectors.
Insurance The Insurance Committee seeks to increase awareness of life and general insurance among AmCham members while educating them on the benefits and risks of having coverage both commercially and individually. Its objective is to enhance the discussion on the insurance sector’s growing market value in Egypt and to build its essential role in various Egyptian industry sectors.
Opening the market “Private pension funds registered with EFSA have reached 610 with over LE 40 billion in assets,” said Sherif Samy, chairman of the Egyptian Financial Supervisory Authority, at a March 9 Insurance Committee meeting on “Overview of the Overdue Insurance Legislative Changes in Egypt.” The chairman said the authority is developing new executive regulations for the Private Pension Funds Law, which dates back to 1975, to enhance governance, allow private pension funds to be more active players in the capital market within conservative investments guidelines and enable asset managers to manage their investments. The EFSA has issued several directives on the rules regarding insurance intermediary activity and the conditions that insurance companies should abide by while operating open-ended, money market and debt instrument funds. The EFSA is also addressing regulations for marketing insurance products through banks and the postal authority, and for registering
reinsurance companies and concentration limits for Egyptian insurance companies in dealing with reinsurers. The EFSA has three main objectives for 2015, said Samy. The first is amending the executive regulations, which will, among other things, find new distribution channels, simplify the process for insurance brokers, amend investment limits, amend fluctuation provisions and open a narrow door for takaful and reinsurance. The latter involves the new insurance law, which will cater to new technologybased distribution channels, allow for microinsurance, allow for the establishment and regulation of specialized medical insurance companies and bolster flexibility. Samy said that the financial authority’s final goal is to address the Policyholders Protection Fund.
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International Cooperation
The International Cooperation Committee aims to increase members’ awareness of donors working in Egypt and their related programs and to explore new opportunities to mobilize regional and international resources.
The EU’s strategy and outlook for Egypt “The European Union has long been Egypt’s most important trade partner, with about 30 percent of the nation’s trade being with the EU,” said James Moran, head of the EU Delegation in Egypt, at a March 19 meeting of the International Cooperation Committee on “The EU’s Strategy and Outlook for Egypt.” Despite the challenges posed in 2014, trade between the European Union and Egypt grew by 11 percent. Europe is the number-one investor in Egypt, and gross European FDI accounted for more than 60 percent of the total in 2014, Moran added, noting that new loan and grant aid commitments by the EU, the European Investment Bank and other European financial institutions amounts to over €3 billion in the coming years. The ambassador said the European Union focuses on two major challenges: trade and investment, and “bread and social justice.” The EU recently launched a Trade and Domestic Enhancement Program to train the Ministry of Trade, Industry and Small and Medium Enterprises in trade policy development, intellectual property law reform, anti-dumping, investigation technique improvement, and the implementation of a national market surveillance strategy. The EU helps Egypt develop quality
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AmCham Egypt Annual Report
Committee Highlights
infrastructure by pairing up Egyptian agencies with the best of their European counterparts in areas such as meteorology and accreditation and standards. In terms of social justice, the EU has invested €1.2 billion in socioeconomic assistance grants for the poor. It funds school lunch programs in Upper Egypt, emergency employment schemes and the establishment of gas supply connections.
Fostering French development The French Development Agency, said Stéphanie Lanfranchi, the Egypt country director, is “different from other donors—we have the capacity and ability to provide tailor-made financing.” She was speaking at the International Cooperation Committee’s May 20 meeting looking at the French agency’s contributions to Egypt’s development. Among the AFD’s financial tools are direct grants to the government and public entities, commercial loans, soft loans, guarantees, subsidies and others. In Egypt, the director noted, the sole recipient of direct grants is the Ministry of State for Antiquities. Lanfranchi said Egypt is one of the bank’s main focus areas for its activities, which involve sectors including infrastructure development, agriculture and small and medium enterprise development. Other sectors of importance include the transport and energy sectors. Since it was established in Egypt in 2007, AFD funding has focused on transport, water and most importantly, health care, education and vocational training. Major projects include connecting Egypt’s poorest to the gas network, developing the later phases of the Metro line, water sanitation in Upper Egypt and irrigation for agriculture. “What we really want to do is try to improve our commitment to health and education,” the director said. The bank has helped establish 800,000 family farms and enabled 2 million children to attend primary and elementary school through direct loans to the government as well as private companies.
The IFC and EBRD: Supporting Egypt’s private sector The International Cooperation Committee held a meeting on Dec. 2 to discuss “The IFC and EBRD: Supporting Egypt’s Private Sector,” featuring Nada Shousha, country manager of the International Finance Corporation, and Philip Ter Woort, director of the European Bank for Reconstruction and Development Egypt as speakers. Best known for its investment services providing financing to private sector projects, the IFC also provides advisory services aimed at enhancing the business environment by increasing access to finance and improving both the investment climate and the business operating environment at large. Shousa said that the IFC is currently venturing into a new area of mobilization and collaboration through an asset management company that invests third party capital. Ter Woort spoke about EBRD’s mandate of promoting and supporting private sector development by helping build the institutional framework of the economy. EBRD’s focus in Egypt is on both infrastructure projects and the agribusiness sector, and it also conducts around 20 projects per year in other sectors including energy and infrastructure. In addition, the EBRD offers funding and technical support to small and medium-sized enterprises in the areas of strategy, marketing and administration. Both institutions have collaborated on several joint projects in natural resources, logistics and infrastructure, and have also hosted several joint roundtables with the aim of positioning Egypt as an optimal location for investment. Moving forward, the IFC and EBRD have both expressed willingness to continue allocating more funding to Egypt, mainly focused on infrastructure, access to finance, renewables, energy efficiency and SME support.
Investment The Investment Committee aims to address barriers to investment by creating an ongoing forum with the relevant authorities.
Legal Affairs
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The Legal Affairs Committee provides a forum in which law-related issues are discussed and explained. It supports AmCham members and other committees by disseminating information on developments in laws and regulations.
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AmCham Egypt Annual Report
Special Economic Zones Hani Sarie-Eldin, chairman of the Middle East Center for Law & Development, explained key differences between two major government development projects at a July 7 meeting of the Legal Affairs Committee on “New Law on the Special Economic Zones: What is Next for Investment?” A member of the committee that developed the draft law on the SEZ activities, Sarie-Eldin discussed the new Suez Canal initiative to be launched Aug. 6 and the Suez Canal Area Development Project, which includes the governorates of Port Said, Suez and Ismailia and covers an area of up to 560 square kilometers. Encompassing six ports, the top industrial zones are located near the East Port Said and Sokhna ports and aim to serve as an international business hub with a special focus on industrial exports. The projects are expected to create about a million new jobs. Sarie-Eldin talked about the need to address existing obstacles to investment, noting that the area, if well developed, could contribute as much as half of Egypt’s total GDP. In explaining the legal framework for the Suez Canal Area Development Project, Sarie-Eldin highlighted the philosophy of establishing a new economic entity that will serve as the sole governing body overseeing investment matters in the zone. The body will carry out government mandates and issue licenses for construction, environmental matters and other things, reporting to state authorities only on security-related and judicial matters. The draft law was amended in June after review by the private sector and other government institutions, including the Ministry of Finance. The key characteristics of the final draft ensure a “one-stop shop, simplified tax system, simplified custom duties system, tax exemptions for all exportation activities, no sales taxes levied on projects in economic zones, an effective board and [governing] entity to take decisions,” said SarieEldin. “There are no restrictions whatsoever of foreign ownership of the companies,” he added. The Suez Canal Authority is expected to conduct all the preparations to establish the economic zones and to fund their preliminary activities. The authority will also act on behalf of the new governing entity until it is established.
change within the business and regulatory environments for marketers in Egypt through AmCham's active program in creating awareness and advocating relevant business issues.
Employees as players How does one align incentives in a very complex organization so that everybody knows the company’s score?” asked Ashraf Bakry, managing director of Unilever Mashreq, at a Feb. 4 session of the Marketing Committee’s Inspiring Young Talents roundtable series. Through anecdotal examples, Bakry invited the audience to question how managers can interact with their teams to produce successful outcomes. “On a sports field, the football player knows the game, its purpose, its rules, his position on the field and the overall team strategy. The player also knows how to score and can always see the goal,” Bakry said. The player also has coaches, trainers, managers, captains and supporters who recognize achievement. Bakry compared this kind of team dynamic to a chessboard, where the pieces do not know the rules or the strategy and are moved by a single player. “If the goalkeeper is lying flat on his face in the mud, and the center forward is the best person to prevent the opposition from scoring a goal, [the center forward] does not stand back and say, ‘This is not my job,’ and lets them score,” he said, switching metaphors to explain the importance of aligning the incentives of the team. He emphasized that it is the role of managers to develop their employees into good players by making sure they understand how to score as a team, deploying the team in the right skill/job match and ensuring that the incentives of their employees are aligned.
The TV industry: three angles
Marketing The Marketing Committee aims to promote positive
In the first event of its kind, the Marketing Committee gathered three stakeholders from the television industry—a TV producer, channel representative and advertiser— for its Feb. 24 meeting “The TV Industry: Challenges and Opportunities.” Ahmed Lasheen, brands and communication director at Etisalat Misr, discussed the challenges of creating a media industry regulatory body for advertising. He noted that with an increasingly fragmented viewership, offering longer advertising breaks on TV channels makes no sense.
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Rawia El Shater, strategies and news initiatives group director at Future Media Group, added that it is also important to monitor intellectual property rights. She noted that the local TV industry is quite young, most channels are privately owned, and viewership tools and analysis have yet to develop. Tarek Al Ganainy, producer and owner of the TVision Production Co., noted that fewer producers are entering the market and fewer series are being produced, while the majority of content is slated to be aired during Ramadan. According to Al Ganainy, there is no audience meter to measure how many viewers watch television during the rest of the year. The panelists pointed out that the increase in content from the Gulf and Turkey means more competition and fewer local series being distributed regionally. On the upside, channels are more open to less well-known series and new talents, while the Internet offers many opportunities for the television industry to expand.
AmCham Egypt Annual Report
perspectives on corporate social responsibility and how addressing CSR may contribute to building a brand. The conference concluded with a session on digitizing one’s product and product safety, featuring panelists Omar Elsahy, general manager at Souq.com Egypt; Marian Makary, head of communications at Mobinil; and Sally Khairat, Knorr marketing manager at Unilever Mashreq.
Inspiration through hospitality
Selling the Egypt of tomorrow How do you capture Egypt’s mood? The Marketing Committee, in cooperation with Nielsen Egypt, explored this question at a March 1 conference featuring marketing experts from various sectors. The event anchored a series of youth-focused, brand-focused and product-focused megatrends panel discussions with insights into the latest trends in the Egyptian market and how companies can remain one step ahead of their consumers. After a video covering Nielsen Egypt’s report, “Mood of the Egyptian Nation,” Christin Ghobrial, deputy managing director at AMA Leo Burnett, moderated the first panel discussion. Ahmed Nazmy, franchise marketing manager at Coca-Cola Egypt–Atlantic Industries, highlighted the company’s strategy for engaging Egypt’s youth in controversial topics. Cairo Runners co-founder Mahmoud Tarif said he relies on social media to reach out to the company’s young followers, while Fadi Abi Nader, Egypt market director for Mars, engaged with the audience on his company’s brand strategy for targeting youth. The next session focused on branding and corporate sustainability, and Heba Afifi, head of insights and communications at Nestlé Egypt, presented a video celebrating Nestlé’s century of production in Egypt. Shereen Shaheen, head of corporate affairs at PepsiCo Northeast Africa, offered different
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The hospitality industry is diverse, and in today’s world, just about anyone can make a career in this vast and complex sector. That was the message of hospitality management expert Christian Muhr, vice president of operations in Egypt and the Levant for Hilton Worldwide, at a March 12 session of the Marketing Committee’s Inspiring Young Talents roundtable series. Muhr began with an overview of Hilton, starting with Conrad Hilton purchasing his first hotel in 1919 in Cisco, Texas, to its evolution into one of the world’s fastest-growing global hospitality companies, with hotels in 94 countries. Obviously passionate about his work, Muhr explained that inspiring talent requires a leadership development model that begins with oneself and moves on to leading others, such as managers and enterprises. He added that Hilton Worldwide has developed global programs that are built around a stepped progression designed to move up deserving talent through the organization to eventually become hotel general managers. They include general manager excellence programs, VP excellence programs, women’s leadership programs and enrollment in Hilton Worldwide University and its colleges. As a parting thought, Muhr noted that it is critical to map out a personal career path at the beginning, as it helps you stay focused on your goals and enables any necessary adjustments in order to fulfil your dreams.
AmCham Egypt Annual Report
A changing media landscape ‘’Social media cannot be done in a silo. It is just as much a part of your business as e-mail,” said Katie Morse, vice president of social media at Nielsen. Morse was a featured speaker at the Marketing Committee’s Oct. 27 meeting “Digital Trends: The Changing Media Landscape and the Impact on Your Social Environment.” Amr Kalaawy, general manager for FP7 Cairo, was the other main speaker. Morse noted that given the vast number of social media tools, companies should research their consumers, as there is no single correct social media tool. On media consumption trends, Morse noted that globally, media is mobile. She highlighted changes in grocery shopping trends, which are affected by work, commuting and family obligations. Advances in technology have greatly impacted shopping habits: for example, 15 percent of Egyptians shop at virtual supermarkets while over 50 percent do not but indicated a willingness to do so. Successful brands have a positive consumer impact, such as the valued benefit of efficiency and ease of use. “Look outside of marketing to uncover opportunities because what makes your company special... may not be within the marketing department,” she said. According to Kalaawy, the average Egyptian consumer spends three hours on social media via mobile phone and an average of 10 hours a day on a digital space, spending the majority of their 18-hour day on media. He added that Egypt is above average amid global rates for Internet use and social media use.
software technical simplicity and market availability, Bichara and his team capitalized on Egypt’s Internet consumers in the course of five years. He elaborated on the evolution of his customer-centric modus operandi, detailing how it created the vision and direction for the company. As the Internet moved from a could-have to a must-have service, LINKdotNET had to face market changes. LINKdotNET’s sales team had to continually adapt to a changing business environment in the face of major governmental decisions such as the launching of free nationwide Internet. Adjustment, he points out, occurred in the creation of uniform and temporary bouquets, pending the full operation of the government’s telecommunication infrastructure; this allowed sales to jump even in the face of reforms that many believed would to bring his business to bankruptcy. Ultimately, Bichara concluded, profitability is only possible when customers’ needs are identified and catered to. Once you do that, effective marketing and commercial acclaim follow suit.
Real Estate The Real Estate Committee aims to modify and simplify the legal procedures and regulations in the real estate finance system and increase public and developer understanding and awareness of the mortgage system.
Regulating funds The customer comes first “Managing the business around the customer is the biggest reason for success,” said Khaled Bichara, CEO of Accelero Capital and a pioneer entrepreneur in Egypt’s telecommunications sector. Bichara shared his success story as a guest speaker at the Marketing Committee’s Dec. 8 Inspiring Young Talents session. Bichara described his various ventures from 1996 to present: He has been professionally involved in telecommunications development since the age of 12, and his earliest success story was establishing Egypt’s first Internet provider, LINKdotNET. Promoting a pricing friendly approach and secure internet access, coupled with
“Egypt has recently witnessed a number of companies announcing plans to launch real estate funds in Egypt,” said Sherif Samy, chairman of the Egyptian Financial Supervisory Authority, at a May 25 Real Estate Committee roundtable on “Stimulating the Establishment of Real Estate Funds” with the nation’s key real estate players. Seeking to attract capital to the stock market, the EFSA has issued regulations to facilitate the creation of real estate funds, said Samy, which should increase liquidity in the market, attract more foreign and local investors, and ultimately contribute to the revival of the economy. EFSA’s regulations strike a delicate balance between allowing real estate fund managers freedom to invest as they like, while protecting share-
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AmCham Egypt Annual Report
Committee Highlights
holders from irrational decisions, said Samy. The new rules open the door for sector-specific funds, and fund managers can invest in land, commercial, residential or industrial properties, stocks and/or bonds of real estate firms or any other type of asset or financial instrument tied to real estate. He explained that the authority is imposing strict transparency and disclosure requirements to give investors a complete picture of how the fund is managing their assets. The real estate funds have to navigate their relationship with private fund administration firms, which act as independent auditors, ensuring that the fund reports are accurate and meet transparency regulations. The real estate sector is the main contributor to Egypt’s economic growth, affecting more than 90 industries.
Transport and Logistics
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The Transport and Logistics Committee aims to establish channels of communication for AmCham members with transportation authorities. The committee also disseminates current information on transport regulations and transport- related developments in Egypt.
Travel and Tourism
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The Travel and Tourism Committee’s primary objective is to promote local tourism and improve local standards.
Bring them back “We want to achieve maximum effort in marketing Egypt,” said Amr El Ezzabi, an advisor to the tourism minister, at the Travel and Tourism Committee’s April 29 meeting “Marketing Egypt’s Tourism for the Coming Years.” He noted that the nation’s last worldwide marketing campaign to encourage visitors to Egypt was in 2012 and targeted 27 countries, with a brand campaign involving advertising on international television channels such as CNN, BBC and EuroNews. Egypt’s best tourism year was 2010, when more than 14 million tourists visited. The Ministry of Tourism has the ambitious goal of attracting 20 million tourists to Egypt
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by 2020, bringing in $26 billion, but the industry is still struggling to recover from the twin blows of the 2011 revolution and the 2013 ouster of President Mohamed Morsi. El Ezzabi acknowledged that Egypt had suffered a “shortterm” decline in tourism, but he expects a fast recovery. At the end of the year, he said, Egypt plans to hire an international marketing firm to design a new campaign to encourage people around the world to visit. El Ezzabi stressed Egypt’s recent return to relative stability and security and added that the tourism ministry’s upcoming efforts will focus on developing and diversifying the country’s tourism offerings to include niches like eco-tourism, sports tourism, desert outings and religious retreats. He said that indicators point to the beginning of a recovery in the sector, and he is optimistic that the upcoming global advertising campaign will boost them further.
Media reps tour Egypt To showcase Egypt as a key destination for investors and tourists, the Travel and Tourism Committee, in cooperation with the Egyptian Ministry of Tourism, invited a senior media delegation with delegates from the United States, Canada, Mexico and Argentina on a familiarization trip September 14-20. The aim of the media trip was to alter negative perceptions about Egypt and reflect developments taking place in the country. The trip included visits to Cairo’s Giza Plateau and El Moez Street as well as Luxor’s Valley of the Kings and the Karnak Temple, a private tour of the new Grand Egyptian Museum, a trip to the Red Sea and a traditional Bedouin night. The itinerary highlighted Egypt’s cultural heritage, pristine beaches and state-of-theart leisure facilities to give the delegates a more rounded perspective of the entire country. Delegates also met with the minister of tourism, representatives of multinational corporations and other local business leaders, allowing for a first-hand overview of how the country’s business community works. Media representatives were delighted by the hospitality provided by the trip’s sponsors, which included hotels such as The Four Seasons Hotels in Cairo and Sharm el-Sheikh, the Semiramis Intercontinental, the Hilton Luxor
AmCham Egypt Annual Report
Resort and Spa, the Sofitel Winter Palace, the Cairo Marriott and Mena House. Other sponsors included including CocaCola Egypt, Emaar Misr for Development, ASTRA Travel and Emeco Travel. Feedback from the delegates was extremely positive and optimistic for the future of Egypt. Almost all the representatives admitted they had safety concerns after reading international media reports; however, after experiencing the country for themselves, the delegates remarked that they believed Egypt was as safe as any other country.
increased women’s employment and reducing the wage differential between the sexes.
Empowering Upper Egypt
Women in Business The Women in Business Committee aims at establishing ties with distinguished women in business, women entrepreneurs, organizations, associations and chambers of commerce.
The Finnish model The Finnish government’s aim is to increase employment among women and men, extend people’s working lives, improve gender equality and the reconciliation of work and family life, and make work more attractive, said Tuula Yrjölä, the ambassador of Finland to Egypt, at the Women in Business Committee’s June 15 meeting, “Gender Quotas and Female Leadership in Finland.” Yrjölä explained that achieving equality between women and men in Finland is one of the most important objectives of the Finnish government, and that women and men should have equal rights, obligations and opportunities in all fields of life. In 1995, the Finnish parliament amended the Equality Act to stipulate that at least 40 percent of the members of all official committees and councils had to be women. Starting that same year, employers with 30 or more workers have been obliged to include measures to promote equality in annual staff and training programs or in labor protection programs. As a result, more women in Finland are advancing to board positions. Yrjölä concluded that the Finnish government is committed to promoting equality in people’s work and family lives, with a focus on the reconciliation of the two, more flexible use of family leave, introduction of a one-month paternity leave, changes affecting people’s working lives,
Under the auspices of the Women in Business Committee, Dr. Heba Handoussa, managing director of the Egyptian Network for Integrated Development, spoke at a Nov. 26 meeting on “ENID’s role in Women Empowerment in Upper Egypt, an integrated development perspective.” Created in 2012, ENID brings together 70 founding members from diverse specializations in the developmental field to address obstacles to socioeconomic development in Upper Egypt. With 3 million inhabitants and a 58 percent poverty rate, Qena represents the socioeconomic and demographic conditions of Upper Egypt. ENID currently operates in 35 villages in this area through programs that promote micro, small and medium enterprises, boost agricultural methods and upgrade the quality of public services. MSME initiatives follow the “one-village, one-product” model, and offer technical and vocational training to enhance employability and develop business clusters connected to main markets. The implementation of sustainable agriculture practices introduced innovations such as recycling agricultural waste as well as farmer field schools showcasing best practices in farming and agriculture. Moreover, ENID provides small-scale literacy and health initiatives, aimed at improving the quality of life. The director said that ENID has trained 4,182 individuals, including 1,310 later employed by ENID; 75 percent of those trained are women.
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AmCham Egypt Annual Report
Event Highlights
BREAKFAST MEETING
A digital vision for Egypt This year, senior executives from Oracle, IBM, MasterCard, DHL, EMC2 and Microsoft met with Minister of Communication and Information Technology Atef Helmy to discuss their plans for growth in Egypt. “These visits send out a loud and clear message to the whole world that Egypt is at the right place and on the right track,” said Helmy at a Feb. 16 AmCham breakfast meeting titled “The Role of IT in Driving Egypt’s Economic Growth” at the Four Seasons Hotel Cairo at Nile Plaza. The meeting was hosted by Oracle. The rise of information technology has forced companies to adopt so-called disruptive technologies by digitizing their business operations to offer completely new and innovative products and services. “We have seen industries such as the recording industry, printing and publishing, postal services, photography and film, and even traditional currencies transformed by technology,” said Juan Jones, Oracle senior vice president for global customer support services. “Disruption will be a competitive advantage.” These technologies have changed the definition of innovation, said Jones. Instead of businesses focusing on creating new applications while maintaining their existing platforms, “The focus now is mainly around the user experience when executing transactions,” he said. “How can we make the experience more effective and personalize it for the customer?” The second aim of innovation is to make processes and procedures more efficient. The third is to develop new business models that will allow a company to expand by doing things in a completely new way. According to Jones, 73 percent of surveyed executives have a digital strategy, but only 19 percent feel they have the right tools to execute their vision. “So there is a lot of opportunity to deliver solutions.” These solutions will be based on a single familiar platform, but rather will require the integration of brand new platforms. The Internet of Things, for example, allows automobiles and home appliances such as the refrigerator to communicate with the Internet via familiar platforms such as mobile phones and cloud computing. Jones pointed to the example of Oracle helping the National Australia Bank switch from a system using paper checks to one with using mobile applications that enable customers to transfer cash between accounts and generate statistical reports. “It’s richer than writing on a piece of paper,” he said. The Egyptian government is also planning to adopt disruptive technologies. “Our vision for converting Egypt into a digital economy is moving from the planning phase to the execution phase,” said Helmy. The minister explained that the plan was first introduced in mid-2014 with vision to “provide prosperity, freedom and social equality for all citizens,” by allowing government services to be accessed anytime and anywhere via cheap, simple tools. The ministry’s first goal is to develop a unified digital portal
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through which all government services will be offered. “All we had so far were ad-hoc attempts, which pose huge security threats,” said Helmy. The second goal is to improve Egypt’s global attractiveness as an outsourcing hub, and the third is for Egypt to become an Internet hub, given that it already has 17 submarine cables passing through its territory. The conversion, Helmy said, will cost around LE 120 billion, of which the government will finance up to 20 percent, and the private sector will cover the rest. Changes to investment and labor laws will further support the ministry’s vision for Egypt. The aim is that by 2020, investment in the ICT sector will top LE 195 billion, or 8.4 percent of GDP, up from LE 58 billion (3.8 percent of GDP) at the end of 2014. Annual growth should increase from 10 percent to 18 percent in five years. The minister said the ICT sector has remained intact and stable despite the challenges faced since 2011. “During those difficult years we have maintained growth forecasts and in some areas even exceeded them,” said Helmy. “This proves that Egypt, despite all the negatives and instabilities, is moving in the right direction.”
BREAKFAST MEETING
The new canal Successfully completing the major Suez Canal expansion currently in the works will be key to demonstrating Egypt’s ability to pull off large-scale investment projects, said AmCham President Anis Aclimandos in his introductory remarks at a Feb. 22 AmCham breakfast event held at the Conrad Cairo Hotel entitled, “The Suez Canal Area Development Project: Master Plan – Nearly Accomplished.” Yehia Zaki, managing director at consulting firm Dar al-Handasah, provided an overview of the Suez Canal master plan, detailing the “consolidated canal corridor” project, which will develop areas of land east of the canal near such locales as El Arish and east of Ismailia. He also explained the “regional integrator plan,” which seeks to develop better integration between the canal and Cairo. The major question, said Zaki, is how to get the population in and around the crowded capital to move to new areas—an area of East Port Said and an urban zone east of Ismailia, for example, have both been designated as potential new population centers. Given how expansive the project is, “We had to get the vision of all the stakeholders,”
AmCham Egypt Annual Report
said Zaki, noting workshops and focus groups were held in order to understand the interests of the various parties. The expansion of the Suez Canal comes at a time when the vessels passing through it, and their containers, are getting significantly bigger. Fortunately the new canal can cater to these wider and deeper vessels. The master plan envisions tripling the number of containers that pass through Port Said, while the port’s basin will be extended by 800 meters, with new container terminals and a logistics area. The goal, said Zaki, is to transform Port Said into one of the top 10 ports in the world. In Ain Sokhna, a 33-kilometer area has been designated for development, 27 kilometers of which will be dedicated to industrial activity, with the rest for things like housing and ICT. The canal megaproject entails 600 square kilometers of land and promises to create a million jobs over 10 years—“This would represent 15 percent of Egypt’s employment and 2 to 3 percent of GDP in Egypt,” said Hani Sarie-ElDin, chairman of legal firm Sarei El Din and Partners. Given the project’s enormous scale, he said, “The setup has to be right from day one.” The sheer number of actors raises a key question: “Do we need new legislation for this type of project or can we use existing laws and regulations?” In the end, he concluded that the laws currently in place, particularly the tenders law from 2002, which he called, “the best piece of investment legislation since the investment code of 1948,” are enough to carry the project. However, Sarie-ElDin added that completing it will require a more “enabling framework.” He discussed the creation of a new economic board to run the canal zone that would have “exclusive and inclusive” authority over economic matters, meaning it would have final say over the approvals that are normally needed from outside authorities.
BREAKFAST MEETING
A class half full “We currently have students from primary to secondary years who don’t know how to read and write,” said Minister of Education Mahmoud Abul Nasr at a Feb. 23 AmCham breakfast meeting on “Education in Egypt: Issues, Challenges and Opportunities,” hosted by the Education Committee and held at the Cairo Marriott Hotel & Omar Khayyam Casino. “We have a strategic plan that will be completed by 2030. The first phase will end in 2017, where we will be laying the strategy’s foundations,” he said.
There are 20 million Egyptian youth in school, 18.5 million of whom are enrolled in public schools. “This is the biggest age group in Egypt’s demographic,” said Abul Nasr. The education ministry has more than 47,000 schools nationwide, with an average classroom density of 90 students per classroom. “This is a very high figure,” said Nasr. The strategic plan President Abdel Fattah el-Sisi approved last year aims at increasing children’s access to formal education, given that there are 1,163 rural villages in Egypt with no access to education. The Ministry of Education is working to set up single-classroom mini-schools for students under the age of 15 in more than 760 of these villages. These facilities are very small and highly localized, but they teach the same curriculum as the formal education system and are supervised in a similar fashion. These schools allow students to join the formal education system any time, said Nasr. With a goal of bringing classroom densities down to 40 students, the ministry will also extend its school expansion plans to cities and villages that already have schools. “We need almost 200,000 classrooms, or the equivalent of 10,000 schools to achieve that,” said Nasr, noting that this would cost the ministry LE 65 billion. “Our budget from the government only allows us to build 8,000 classrooms every year,” he said. Pushing forward, Nasr has signed deals with other Arab governments and domestic businessmen who have helped the ministry build 26,000 classrooms so far this academic year. “We are hoping that by the coming academic year we would have 35,000 classrooms,” said Nasr. “All this will improve the quality of learning, and hence the students’ employment and career prospects.” The Ministry of Education is also trying to make education more relevant to the skills and knowledge businesses need. To achieve that, the ministry has decreed that each vocational school is to have a mini-factory where experienced workers teach students how operate machinery and other necessary skills. Each factory will have at least three vocational classrooms, each capable of accommodating at least 25 students. “We have seen a lot of interest from factories to build such classrooms on their premises,” said Nasr. On the academic side, two STEM secondary schools—specialized in science, technology, engineering and math—were established in 2011 in Sixth of October City and Maadi, each backed by considerable government support. To enroll, prospective students must demonstrate academic excellence in their prep years as well as pass several entrance exams. “Students were entered into global competitions and achieved third place overall in two consecutive years,” said Nasr. Students in these schools have also registered 15 patents, mainly related to water treatment. “Some of them have gotten scholarships at universities outside Egypt,” said Nasr. The government is currently planning to expand these special schools nationwide as well as international baccalaureate schools that teach in Arabic, which currently exist only in Sheikh Zayed City and Maadi.
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The ministry has also launched a pilot program to teach students in primary one through primary three how to read and write Arabic. “The program achieved 85 percent success,” said Nasr. However, in the last academic year, when it was expanded to all grades, its success was only 65 percent. “We have made a lot of modifications to the program for this year and are awaiting the results,” said Nasr. He added that the ministry is in talks with the Ministry of Social Solidarity to link the aid given to poor families with their children’s school attendance. Officials are also looking into having one school in each of the ministry’s 278 educational districts obtain global certifications in every aspect of education. “These schools would then be responsible for helping other schools become certified,” said Nasr. The minister said there is still a long way to go toward granting all Egyptian children a decent education. “When we started, the glass was empty. Now it’s 30 percent full, and every year we will fill it a little bit more,” said Nasr. “We know we will never reach 100 percent success or effectiveness. It’s not humanly possible. But we want to reach just short of what is impossible.”
MONTHLY LUNCHEON
Room to invest “We are keeping our best resources unutilized. This is our potential,” said Khaled Hanafy, minister of supply and internal trade, at a Feb. 26 AmCham luncheon event titled “Why Invest in Egypt?” at the Conrad Cairo Hotel. Egypt currently uses only a little more than 10 percent of its land, and the majority of its unemployed citizens are between 25 and 35, most of whom are educated youths. “This means that we have a lot of room for development,” said Hanafy. “It is a major stop along Egypt’s aim for development,” said Hanafy. “What we are targeting now is not just economic growth. We are targeting structural changes in Egypt’s business environment.” This will require new laws reflecting the government’s economic policy, which is a “market-oriented” one, according to Hanafy. He said that regulatory frameworks and guidelines for this legislation also need to be updated to encourage proper enforcement and provide real benefit to individuals and corporations. “If we only develop better laws, those who are implementing them will still run into problems because the executive
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AmCham Egypt Annual Report
document still has the process and procedure problems of the older version.” The government’s other major goal is to include all businesses in Egypt’s economic environment and development plan. Hanafy noted that there is a large informal sector. “Formal businesses face problems such as unfair competition because informal businesses are not included in the system,” the minister said, pointing out that informal businesses don’t pay taxes. Hanafy used reforms in the bread subsidy system to encourage bakeries to formalize, he said. Previously, delays in the supplies of wheat and other production needs meant slow work for small, government-supplied bakeries. Reforms have reduced those delays, and now some 50,000 small bakeries have hired more people to manage the new supply chain and opened bank accounts. “Private companies have started dealing with them,” said Hanafy, adding that this has resulted in an increase in product circulation of almost LE 500 million a month. “We never expected this level of success. And if we can formalize tiny bakers, we can formalize more and more businesses in any sector.” Much of this depends on educating both businesses and consumers about the benefit of being part of the formal sector. “We need to talk to people to make them more aware of their rights,” said Hanafy. To that end, The Coca-Cola Co. has several programs in Egypt and the region, including one that aims to empower 5 million female entrepreneurs by 2020. “A lot of them are coming from MENA,” said Curt Ferguson, Coke’s regional president. The global beverage giant also has a similar program called Global Shapers that targets start-up businesses. “We help them bring their ideas to life. Sometimes it’s with money, other times it’s by connections or just giving them a spark,” said Ferguson. If programs like these are scaled up with the help of domestic partners, they should help dent unemployment rates in Egypt, he said. Accordingly, Coke has budgeted $500 million to invest in the community in the coming three years to expand its domestic operations. Another $100 million has been allocated to build a new juice factory that will contract with local growers to supply it with fruit. “We are proud to play the role of the big investor,” said Muhtar Kent, chairman of the board and CEO of Coca-Cola, adding that the Egyptian arm of the company exports to 40 other markets. “There is no question in my mind that Egypt will be among the next five booming economies. These economies will be champions in growth, create a new middle class and show the world what a dynamic environment is,” he said.
AmCham Egypt Annual Report
BREAKFAST MEETING
Power of the private sector Egypt’s economic future is not driven by any government, U.S. Secretary of State John Kerry told a packed hotel ballroom at a March 13 AmCham breakfast meeting, “EgyptU.S. Relations: Investing in the Future” at the three-day economic summit in Sharm el-Sheikh. “It’s the private sector, it’s the innovators, it’s the entrepreneurs, it’s people who are willing to put their capital into an idea and let that idea blossom by virtue of its acceptance in the marketplace and all that then brings in terms of jobs, prosperity, opportunity, education—the next generation doing better,” said Kerry. Speaking before an audience of about 450 business leaders, Kerry brought a message of bilateral cooperation, thanking event co-organizers AmCham Egypt, the U.S. Chamber of Commerce, the Egypt-U.S. Business Council and the U.S.Egypt Business Council “for their belief in this formula and in the ability of the private sector to make an enormous difference.” Kerry was the ranking official in the 100-person American delegation attending the economic conference. Wisely channeled, “private-sector engagement creates growth that is sustainable,” Kerry said. Sustainability, he added, “lifts living standards, it helps build bridges to communities that have for too long been left behind. It’s why I have always said that we must keep in mind this synergy— symbiosis, if you will—between the private sector and government today, if government today is doing its job properly.” Kerry outlined specific measures the government can take “to improve and sustain a welcoming investment climate.” In addition to bringing back the one-stop shop to ease the registration process for businesses, Egypt needs a strong bankruptcy law and better protections of intellectual property, said the U.S. secretary of state. The latter is “not a luxury in today’s global marketplace,” he said. “They are essential to being able to build confidence and attract capital.” “The more inclusive and the more diverse and the more rules-based and accountable the political process is, the greater confidence the business community will have,” Kerry added. “More than ever, trade, innovation, investment are not just the principal engines of a strong economy; they’re the principal engines of a strong society.” Above all, Kerry said, “Entrepreneurs have got to be empowered to create jobs and grow their businesses. Egypt boasts a lot of very capable entrepreneurs; I’ve met many of them. Too many are still in the diaspora. They need to come back.” The job of the secretary of state “is to encourage investment and help break down the barriers to the building of confidence that is essential for the movement of capital,” Kerry said. “We want to promote around the clock shared prosperity in Egypt and across the region, but particularly, I say, in Egypt.” To that end, Kerry pointed to the U.S. Chamber of Commerce-sponsored trade delegation that visited last November, bringing some 160 CEOs and 70 companies. Egypt’s foreign
ministry also announced after Kerry’s meeting with Egyptian Minister of Foreign Affairs Sameh Shoukry that another U.S. delegation of government officials and private-sector companies would be visiting Egypt to further strengthen the economic, commercial and investor relations between the two countries. Stressing the country’s appeal to investors, Kerry noted. “Egypt has always had an extraordinary business corps. Egypt has great capacity. This is not something new. In addition, Egypt has always had a vibrant civil society. And it has been there for the hub of thinking, of progress, of energy, of direction in this region—not to mention the fact that it represents a quarter of the population of the Arab world. It has always, in my judgment, had the ability to demonstrate entrepreneurial energy.” Kerry warned his audience not to take a wait-and-see attitude toward investing. “You have to commit to make certain that we’re attracting capital, that we’re investing in the future,” he said. “Because the more jobs that are created, the more people begin to see the movement toward that future, the more opportunities there are for those young people, the faster all the other things will be taken care of, and the faster things will turn around.”
BREAKFAST MEETING
Road to recovery “There are many developments that will take place down the road,” said Minister of Investment Ashraf Salman at the “Investing in Egypt: From Vision to Action” breakfast meeting at the Four Seasons Hotel Cairo at Nile Plaza on April 6. “We realize that Egypt has some impediments and obstacles when it comes to investment. We are solving them to move the economy in the right direction.” A major step toward solving Egypt’s problems is to coax back much of the foreign direct investment that fled after the 2011 revolution. March’s Egypt Economic Development Conference brought in deals valued at more than $38 billion. “It is crucial for Egypt to use this strong kickoff to push Egypt along its economic recovery roadmap,” said Salman. He noted that even with all the investments pouring into the country after the conference, the government will ensure reforms started mid-2014 are completed as mandated by President Abdel-Fattah el-Sisi, including the gradual removal of subsidies over the next four years. “The 2015/16 budget will
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see a significantly lower subsidy allocation. This will help to narrow the budget deficit,” he said. To attract foreign investors to key sectors that Egypt desperately needs in order to develop, Salman said that the Ministry of Finance will continue to “liberalize and deregulate” industries such as electricity, healthcare and education. The investment minister also said four public companies will sell shares on the capital market very soon to raise capital for the government. “It would serve to add more depth in the capital markets as well as continue to emphasize the important role of the private sector in Egypt’s development story,” he said. “Everyone was saying ‘we are scared,’ and ‘privatization is a bad word’ and that the street would not accept privatization. We are very serious about reform. We are working very hard to reform the economy and reduce unemployment and poverty rates and achieve proper growth rates to improve living standards for all Egyptians.” The minister argued that these reforms are working. Salman said that by the end of fiscal 2014/15, GDP growth should reach 4.2 percent, up from 2 percent in fiscal 2013/14. FDI is expected to hit $8 billion, up from $6 billion, and unemployment should drop to between 12.8 and 12.6 percent from the current 13.1 percent. The minister also claimed that by June, Egypt would be upgraded by credit rating agencies, making it cheaper for the government to raise funds from international markets. By the coming fiscal year, Egypt will issue its first-ever sovereign debt in the international markets to raise $1.5 billion to $2 billion. “Egypt’s policies are all about openness,” Salman explained. “Openness and integration with the region, openness and integration with the international markets.”
AmCham Egypt Annual Report
The first project completed is a 300-car underground garage in Tahrir Square, which was 16 years in the making; the last 50 percent of the construction was completed eight months before it opened last year. The new garage allowed the governorate to ban parking in and around Tahrir Square, thus improving traffic flow. “We are taking steps to ensure that the parking ban is enforced around the clock with no exceptions,” said Said. The governor is focusing on Khedival Cairo, covering Tahrir, Ramsis and Attaba squares, which have 500 historic buildings currently being used as residential or commercial space. “The ultimate goal of developing Khedival Cairo is to make it an open museum with its own transportation network and pedestrian areas,” Said explained. Currently, the governorate is working on projects for improving three major streets connecting Tahrir Square with Opera Square, to be completed in 2015, as well as the area facing Abdeen Palace, which will have a pedestrian-only space directly in front of the palace. The government is pushing owners and renters of homes overlooking Abdeen Street to renovate their building facades as part of the bigger renovation plan for the area. “People are responding very well to what we are doing once they realize our ultimate goals,” said Said. “In the locations that are near completion, people are starting to discover the beauty that was hidden by street vendors and decades of neglect.” Said’s biggest problem right now is financing. Currently, projects are being funded by the governorate and by shop and building owners. The Holding Company for Insurance, which owns many buildings in this area, is also paying for renovations from its own pocket. “Only recently have we sat down with public and private banks to discuss the project and see how they can help us,” said Said. “We have a lot of work to do. And we must do it quickly to capitalize on the momentum of support we are getting from individuals, commercial bodies and government. If we lose this momentum, this project of reimagining downtown Cairo will be dead in the water.”
BREAKFAST MEETING
Rebuilding Cairo “Downtown Cairo’s worsening gridlock is something no one can deny. Almost everyone has suffered from it at some point,” said Cairo Governor Galal Said at a breakfast meeting about “Rebuilding Cairo,” hosted by the Real Estate Committee at the Conrad Cairo Hotel on April 21. “For over a year now we have been executing pilot projects in Cairo’s downtown area. The aim of our work is to make downtown a place that tourists visit and Egyptians can be proud of. Our current work is only 10 percent of what we want to do.”
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PRE-ANNUAL GENERAL MEETING
Partners in economic success “The U.S. will do all it can to support Egypt’s success,” said Robert Beecroft, the United States Ambassador to Egypt during AmCham Egypt’s pre-annual general meeting on April 28.
AmCham Egypt Annual Report
Noting that this success will only come with economic prosperity, Beecroft stressed, “It is critical for Egypt’s economy to thrive.” There are many challenges ahead, however, starting with a population expected to double in less than 30 years. “Population growth, of course, can strain a country’s natural resources, infrastructure, energy supplies, environment and social services,” said Beecroft. “However, I emphasize the word ‘can’ here. It doesn’t necessarily have to.” The second biggest challenge is the increasing unemployment. Beecroft noted that Egypt must create around 700,000 new jobs every year to absorb new workers entering the labor market. The third hurdle is providing a proper education. “The simple fact is that the world is moving ever more rapidly towards a knowledge-based economy. The work force has to be better educated,” he said. Energy shortages form the fourth obstacle, one that has plagued economic growth as Egypt moved from being a net exporter to a net importer of oil. The fifth obstacle is the lack of “smart regulation,” said Beecroft. “Having smart regulations is a key factor to determine where you open a business.” “The encouraging news is that the current government in Egypt understands these global challenges and has demonstrated the leadership to take tough choices to start addressing them. I am speaking about the new investment law, changes to the tax law and steps to reform,” the ambassador continued. “Also encouraging are reforms still to come, which President Abdel Fattah el Sisi talked about in Sharm el Sheikh [at the Egypt Economic Development Conference in March 2015].” As a strategic partner, the U.S. has long supported Egypt’s economic growth, particularly through USAID, which has channeled nearly $30 billion since 1975 to support regulatory and customs reform, help government streamline business registration, and improve school and university education and training for Egypt’s labor force. “Today, the USAID program remains one of the largest in the world,” Beecroft said. In coordination with the Ministry of Health, the U.S. Centers for Disease Control and Prevention is supporting Egypt’s healthcare goals with a $35 million program to stem the spread of hepatitis C. To help American companies wishing to do business in Egypt, AmCham Egypt, the Egypt-US Business Council and the U.S. Chamber of Commerce in November 2014 organized the largest trade delegation to date, bringing 150 executives representing over 60 companies to Egypt. Beecroft also noted the U.S. government’s special focus on entrepreneurship: “It is one of the most powerful engines for economic growth.” The U.S. Embassy has provided $15 million to support the entrepreneurial ecosystem in Egypt, organizing workshops and training for over 23,000 Egyptians in business and management skills. “This July we will invite a delegation of Egyptian entrepreneurs to travel to Kenya, joining President Barack Obama at the annual global entrepreneurship summit,” said Beecroft. Egypt is also one of a handful of countries with preferential access to the U.S. market via the Qualifying Industrial Zones,
accounting for over half of Egypt’s exports to the United States, bringing in $1 billion in foreign currency and providing 280,000 jobs in Egypt. However, no matter how strong relations are between governments, there is no substitute for the private sector. “Ultimately, Egypt’s economic success will depend on businessmen,” said Beecroft. “At the end of the day, only business can drive exports, bring in investments, transfer technology and expertise, and create the jobs that will move this economy forward.”
CONFERENCE
Shaping the future As part of an ongoing effort to realize the potential of the human resources sector and its evolving landscape, the Human Resources Committee hosted an April 29 conference where HR professionals shared best practices and solutions for the complex issues organizations may face in the future. Four sessions—led by top HR executives—covered topics including extraordinary HR leadership, the importance of compensation and benefits for retention and recruitment, employee engagement, and HR as a partner in advancing and driving business goals. According to Maisa Galal, co-chairwoman of the HR Committee and the HR director for Egypt and North Africa at General Motors, it is essential for HR representatives to engage employees to “voluntarily dedicate and commit themselves to doing their very best in their work.” Also essential to a company’s success is talent management, a set of integrated organizational HR processes designed to attract, develop, motivate and retain productive, engaged employees. “The goal of talent management is to create high-performance, sustainable organizations that meet their strategic and operational goals and objectives,” said Hoda Mahmoud, a global talent development consultant at General Motors. At the keynote session, Omar Mandour, Egypt franchise general manager at Coca-Cola Egypt, explained that almost all companies make the mistake of approaching employees from a structural point of view; instead, it is essential to develop workers who achieve the company’s goals. Providing a framework for helping employees enhance their personal and organizational
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AmCham Egypt Annual Report
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skills, knowledge and abilities, HR development is about promoting a superior workforce so organizations and individual employees can accomplish company goals.
ANNUAL GENERAL MEETING
Stories of reform “Our story is a story of reform.” With these words Ghada Waly, the minister of social solidarity, described the social and economic changes that Egypt has undergone over the past year. She was speaking at AmCham’s Annual General Meeting on the topic “Safety Nets for the Security and Development of Egypt” on May 26 at the Four Seasons Nile Plaza Hotel. Waly shared promising stats that show a decline in unemployment from its unprecedented high of 13.5 percent in 2013 down to 12.7 percent today, adding that “in our country, every time you bring down unemployment, you are affecting positively the poverty rates in the country.” Highlighting Egypt’s latest economic successes on the international scene, Waly referenced an agreement with the organizers of the World Economic Forum to hold the upcoming regional WEF meeting in Sharm el-Sheikh. “It is another vote of confidence in Egypt’s economic stability, political stability and social roadmap,” she said. Moreover, both Fitch and Moody’s have released positive assessments of Egypt’s performance, while at the same time Egypt’s reserves reached 34 percent, the highest seen since 2011. But Waly said there was more work to be done. “To sustain economic growth and prosperity, let alone peace and stability in a democratic, open society, you have to be inclusive of the poor,” she said. Because of this, the Ministry of Social Solidarity is now addressing the social care front and launching a CSR unit to encourage social entrepreneurship and support interested youth. Current projects include involving street children in soccer championships, music and choir concerts, as well as an anti-smoking and drug addiction treatment campaign. Waly believes that success on the social front is crucial to success on the economic front. “With the CSR you provide, you’re paying back your country, but you are also investing in your tomorrow,” she concluded. To discuss the ongoing challenge of hepatitis C in Egypt,
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which has the world’s highest rate of the disease, Wahid Doss, professor of hepatology at Cairo University and head of the National Committee for the Control of Viral Hepatitis, showcased the different scenarios Egypt could adopt to eradicate the disease by 2030. However, disappointing statistics reveal that there are about 6 million cases of hepatitis C among Egyptians, with estimates of 100,000 to 150,000 patients newly infected annually. “One is to treat the same number of patients with a cure rate of 90 percent, or we can increase our treatment rate, we diagnose more cases and reduce cases by prevention,” Doss noted. The NCCVH, established by the Ministry of Health in 2006, is now expecting to increase its current 31 treatment centers to 50 by the end of 2015. In addition, it made Sovaldi, a new drug, available to Egyptians at a greatly reduced cost, approximately 1 percent of its U.S. price. The first treatment of a patient took place last October. Present in the audience, he is now totally cured, said Doss. On this positive note, Doss introduced a plan of action for prevention being carried out by the NCCVH with international partners including the World Health Organization, the U.S. Centers for Disease Control and Prevention, and Medicine sans Frontiers in France. Also at the meeting, the new AmCham board of directors for 2015 through 2017 was announced.
BREAKFAST MEETING
USAID in Egypt “As leaders of the business community, you play a leading role in advancing a structured, results-oriented reform effort in partnership with the Egyptian government,” said Sherry Carlin, mission director of USAID, at AmCham’s Education and International Cooperation committees’ breakfast meeting on June 16 addressing “USAID’s Latest and Future Initiatives in Egypt.” Carlin added that Egypt’s business community must play a central role, along with other civil society groups, in advancing Egypt’s economic development and its transition to a stable, democratic society. Employment is the key factor determining whether Egypt economy grows or remains stagnant. “As the young people of Egypt’s youth bulge begin to enter higher education and the workforce, Egypt faces a crossroads of risk and opportunity,”
AmCham Egypt Annual Report
she said. The high unemployment rates among both educated and uneducated youth and women is a great challenge in Egypt. Research has proven that an increase in female labor force participation results in greater economic growth, she pointed out. Carlin added that USAID works on eliminating economic barriers in order to create more employment opportunities, while simultaneously addressing barriers that prevent women and youth from accessing these job opportunities. Among its projects is the Higher Education Initiative, a $250-million multi-year program that provides educational opportunities to high-achieving students and helps institutions better prepare them to meet the demands of employers. The project gives out scholarships to underprivileged, deserving students. Carlin added that USAID is also focused on increasing the competitiveness of small and medium enterprises in Egypt, in order to stimulate job creation and economic growth. “Recently, our projects have built the capacity of select Egyptian SMEs to expand their access to export markets and helped them increase their energy efficiency, as well as their bottom line,” she said. This new activity will strengthen the SME sector, stimulate entrepreneurship, provide business development services and increase access to financial services that are not yet fully developed. The mission director highlighted USAID’s support of projects focused on Egypt’s two largest employment sectors: agriculture and tourism. In the past two years, USAID’s agriculture exports program has created close to 7,000 fulltime jobs and 8,000 part-time jobs. USAID has also supported large-scale projects to save key monuments, such as the Sphinx and the tombs in the Valley of the Kings. Carlin concluded by noting that “USAID can provide opportunities to support activities that align with [your] business models and amplify development impacts. These partnerships are win-win, not just for USAID and the private sector but for the people of Egypt.”
MONTHLY LUNCHEON
Bringing them back Minister of Investment Ashraf Salman discussed this fiscal year’s economic performance and what the roadmap would look like next year at the Oct. 13 AmCham luncheon titled
“Roadmap for Reinvigorating the Investment Climate in Egypt,” hosted by the Investment Committee at the Conrad Cairo Hotel. The main metric—GDP growth—was mostly positive. While the government had targeted a 3.1 percent growth rate for fiscal 2014/15, the actual rate exceeded expectations at 4.1 percent. “We promised that this growth would be inclusive,” said Salman. “Unfortunately, this is not the inclusive growth we were hoping for.” He explained that when studying the GDP growth rates of individual Egyptian cities, it was apparent that Upper Egypt, the Red Sea and parts of the Delta were the “slowest growing regions,” accounting for just 11 percent of overall growth. “During fiscal 2015/16, we will be focusing more on cities in Upper Egypt and the Red Sea to achieve much higher growth rates and therefore achieve inclusive growth,” he said. For fiscal 2015/16, the target growth rate is 5.2 to 5.5 percent. “It will be difficult to achieve,” said Salman, noting that to reach these targets, domestic investments should reach LE 440 billion, while foreign investment must range between $8 billion and $10 billion. “We were targeting $8 billion for this year, but only achieved $6.4 billion,” the minister said. “This year we will push harder to meet these targets.” One of the big projects to bring in foreign currency is the sale of land to Egyptians living abroad on the condition that they pay for it in foreign currency. The previous quarter saw the Ministry of Investment generate some $2.5 billion this way. Another tranche of 9,100 plots will be made available. Salman said, “We are expecting to generate $3-3.5 billion from the sale.” These proceeds will be added to the FDI account, which is targeting $10 billion during fiscal 2015/16. The other big push to boost FDI and the economy is via megaprojects. Salman made it clear that the government will only be laying the infrastructure, while the private sector will execute the principal investments for planned projects such as the Suez Canal Axis, the new Alamein City and the new administrative capital. “We are getting positive signals from private investors,” said Salman. The Ministry of Investment has also been working with other ministries to trim spending. Salman touched on the subject of the long-anticipated value-added tax, which has been worrying a lot of producers and consumers, he said. “We were supposed to start implementing it at the start of the year, but it was delayed as we have opened a wide societal dialogue, and we are also running many models to see how the VAT will affect inflation, and how much of it will directly affect the people,” said Salman. The last moves towards achieving the target 5.5 percent GDP growth by the end of fiscal 2015/16 will involve reforming Egypt’s bureaucracy. According to Salman, the ministry is working with the World Bank on a program to expedite land allocation, licensing and establishment of new companies. “We introduced a law in March that will
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help us make the necessary administrative reforms and have started working with it starting in August,” he said, adding that the Fast Track Registration center will open before the end of 2015. He said that it would enable the processing of paperwork in just 30 minutes in exchange for a higher fee. Meanwhile, the ministry is also working on reducing the time it takes all administrative centers to process paperwork to two days. For a more efficient land allocation process, the ministry is creating a nationwide database of government-owned plots. “This will allow us to activate the one-stop shop managed by GAFI. But this project will take 18 months to complete,” said Salman. His ministry is also looking to be the sole government body to approve mergers and acquisitions. “I believe we will see many more transactions as a result,” he said. All these plans aim at reducing unemployment, which according to Salman, stood at 11.6 percent in fiscal 2014/15, 100 basis points less than last year. “This is not enough because there were obstacles and red tape that hindered some businesses,” he said. “We want to open the bottleneck.” Looking ahead, Salman concluded, “By the end of next year, we will have a much more optimistic economic picture in terms of flowing FDI and completion of various infrastructure projects.”
MONTHLY LUNCHEON
Building a better business environment “Why did I accept this position, given that I have rejected it at an earlier time? I have been asked this question 100 times in the past month and a half. My answer is that now I feel it’s the right time. We have the right leader,” said Minister of Trade and Industry Tarek Kabil at a Nov. 3 AmCham luncheon titled “Deepening Egyptian Industry to Meet Global Challenges” at the Conrad Cairo Hotel. “We have a lot of challenges in trade and industry. But I love challenges. It’s what keeps me going.” The first step, according to Kabil, is understanding the problems, as decisions impacting industry are long term while trade decisions are short term by nature. Major problems include excess bureaucracy, scarce industrial land plots and the ongoing foreign currency shortages affecting
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industry, imports and investors. Kabil also noted shortages of available financing for SMEs in particular, with banks sitting on massive government treasury debt. The good news is that energy shortages have been solved as of November, according to Kabil, even among energy-intensive factories. Kabil has to deal with these issues while meeting the president’s “very ambitious” mandates, which include raising Egypt’s growth, reducing unemployment by 1.5 percent and cutting the deficit by 1.5 percent. “We are in a bottleneck,” says Kabil. “But I am optimistic. Our GDP grew last year by 4.2 percent. This is something that other countries dream about. Also, the megaprojects will start to see yields in the short and medium terms.” He noted that 3,000 kilometers of road outside Cairo, mostly connecting Upper Egypt with Red Sea seaports, have been paved, and three ports will be expanded and another three built. “This is how the United States built its economy. By laying infrastructure,” he said. Currently, the Cabinet is creating a comprehensive plan for rebuilding the economy to present to Parliament in March. “We never had short- and long-term strategies in the ministry,” said Kabil. “So, in addition to putting out fires for investors, we are working on a five-year plan.” Its targets include growing the manufacturing sector by 9 percent by 2020, thus increasing industry’s contribution from 17 percent to around 24 percent of GDP. This, he said, would create 3 million jobs. He also noted that exports would increase by 10 percent every year through 2020. “To create a better business environment, the investor needs to know who to go to for licenses and approvals, and who to go to for land,” said Kabil. The World Bank’s 2015 Doing Business report estimates that it takes an average of 643 days to license a new business in Egypt. The minister also plans to reintroduce the private developers program, in which a company lays the infrastructure for land that is then sold to investors. “This time, we will have much more strict rules and regulations regarding final pricing to make sure the land is not overpriced,” said Kabil. The ministry also wants to make local businesses more sophisticated. The minister noted that only 2 percent of domestic industry is high-tech, while more than 70 percent is classified as simple industry. “This doesn’t allow our industry a lot of value added,” said Kabil. A case in point: while agriculture exports increased by 14 percent in fiscal 2014/15, their value declined by 5 percent because Egypt is exporting commodities, and global prices have been dropping. “To upgrade this, the responsibility is shared between government and major private sector suppliers,” said Kabil. He also promised to activate the Egyptian Product Preference Law approved in early 2015. Another major problem is that non-oil imports are increasing while exports are decreasing. The ministry’s export subsidy, which has increased from LE 2.7 billion to LE 3.7
AmCham Egypt Annual Report
billion for this year, helps to solve this, he said. “I know it’s not enough, but with the current budget deficit, it is the best we can do,” said Kabil, who promised faster payments to exporters. He noted that the focus of the subsidy will be on African exports. “For us, Africa is the future of Egyptian exports,” said Kabil, adding that the ministry is still working on merging the continent’s three main trade blocs into one. The ministry is also negotiating free trade agreements with several South American nations. Kabil says he’s been aware of these issues throughout his career in the private sector, but executing the solutions is a different story. “It was one of the shocks that I got when I took office—how much persistence it takes to solve problems and overcome obstacles,” said Kabil. “Thankfully, I am known to be very persistent.”
CONFERIENCE
Big plans for real estate “We are very bullish when it comes the real estate sector in Egypt and are putting it on the top of our priority list in the investment guideline that we are publishing,” said Investment Minister Ashraf Salman during a Dec. 6 Real Estate Committee conference on “The Real Estate Sector Industry in Egypt: Challenges and Opportunities.” Also speaking were Sherif Samy, chairman of the Egyptian Financial Supervisory Authority, and Housing Minister Mostafa Madbouly. “Real estate development plays a vital role in activating economic growth for the entire country,” Salman said, adding the sector is worth LE 100 billion and represents 4.8 percent of Egypt’s GDP. It grew by 11.6 percent in fiscal 2014/2015 compared to the previous year, and in 2015 accounted for 13.8 percent of total investments coming to Egypt. It is also labor intensive, employing 11.5 percent of the workforce, making it the second biggest employer after manufacturing. Despite promising figures, the sector has serious problems: land availability, red tape when acquiring licenses, and limited mortgage finance activity. “If we can solve these problems, it’s not hard to see growth of around 15 percent,” Salman said. The 2015 investment law changed the allocation procedure from an open tender system where
developers bid for the land price and the project itself, which Salman said caused land prices to skyrocket, to a system where the government sets the price. The new law also puts the General Authority of Investment and Free Zones in charge of land allocation. “GAFI is working the New Urban Communities Authority in terms of creating a national database of land plots as well as pricing them,” said Salman. “The first tranche of the land bank will be available in January.” Samy of the EFSA addressed limited mortgage financing in Egypt and talked about changes in the mortgage law meant to expand the options. Among them, the new law allows civil and Islamic versions of the rent with the option to buy model, and the authority can introduce new mortgage-related tools in the future. “Having several tools will attract new types of investors and buyers who would have looked away in the past,” said Samy. The mortgage law also creates a fund to subsidize rents or mortgages for low-income citizens. Madbouly described plans for four new cities: the new administrative capital between Cairo, Suez and Ain Sokhna; New Alamein City on the North Coast; New East Port Said City in the Suez Canal’s special economic zone; and New Toshka. Outside these mega projects, the housing ministry’s long-term plan commits to laying infrastructure on 5,000 feddans every year. “We are now focused on balancing the supply and demand sides to stabilize land prices,” Madbouly said.
BREAKFAST MEETING
CEO breakfast at the RiseUp Summit Some 40 percent of the current Fortune 500 companies are expected to be replaced by rising entrepreneurs and innovators over the next 10 years. In an effort to create a channel between the leaders of today and tomorrow, the AmCham Entrepreneurship and Innovation Committee hosted an exclusive breakfast meeting in collaboration with RiseUp Summit and Endeavour Egypt on Dec. 13. The event aimed at immersing guests into the entrepreneurship ecosystem by exposing them to the opportunities presented in bridging the two worlds. This event featured Marlon C. Nichols, general partner at Cross Culture Ventures; Greg
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Rogers, executive director at TechStars; and Paris de l'Etraz, managing director at the IE Business School Venture Lab. The speakers shared their substantial experience in working with entrepreneurs and innovators and helped shed light on why entrepreneurship can help corporates innovate rather than simply act as an outlet for their CSR initiatives. Several case studies were shared including AirBnb, Uber, GoPro and other start-ups that have emerged as global powerhouses, proving how innovation is quickly changing the dynamic of global competition.
BREAKFAST MEETING
The Suez Canal - in the zone It’s important to manage expectations regarding the development of the area around the Suez Canal. “This is a very longterm project,” said Ahmed Darwish, the Suez Canal Economic Zone Authority chairman, at a Dec. 21 AmCham breakfast at the Cairo Conrad Hotel. Darwish cautioned that the authority’s contribution to Egypt’s GDP would not be felt right away. The area along the canal is laden with investment potential that has never been fully realized, and local developers have tried since 1998 to get projects off the ground there, with little success due to lack of infrastructure and red tape, among other problems. In 2002, the government designated the area as a Specialized Industrial Zone, with its own special regulatory frameworks, terms and conditions. “The problem was that existing government employees were still the decision makers, and therefore investors still suffered from the same level of bureaucracy as other investments outside the zone,” said Darwish. In 2015, the regulations were changed. “They learned a few lessons over the years, and this law shows it.” The most significant change is that the authority, led by Darwish and a board of directors, will have full discretion over the zone, streamlining investment decisions. Environmental reports, for example, will be reviewed and approved without involving the Ministry of State for Environmental Affairs, and approving schools will not require the Ministry of Education. “We are completely independent of the government decision-making process,” said Darwish. The zone will even have its own industrial registry, which will be shared
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AmCham Egypt Annual Report
with the rest of the government. The only exemptions to this blanket authority will pertain to issues of national security, defense, foreign affairs and justice. Darwish explained that he wants to create a more flexible legislative environment in which executive powers are centralized. “This will expedite decision making,” he said. The authority will follow Egypt’s laws to the letter but have flexibility in setting its own legal regulations. “Egypt’s laws work, it’s just bureaucracy that stifles the business environment,” said Darwish. So, for example, cargo on ships moving through SCEZ ports will only be screened for explosives, rather the current procedure of opening up crates to inspect the merchandise. The authority chief also said there will be zero customs for companies operating within the zone, with customs on products moving out of the zone assessed based on their raw material inputs rather than on the finished goods. “We are competing with places like Jabal Ali in the UAE, where taxes and customs are zero,” he said. “Our taxes are 22.5 percent, so we need to offer other incentives and benefits.” Currently, the Suez Canal zone is far from being ready for new investors. For one thing, the area needs better infrastructure. “This will be a big job, because it’s a large plot, and there is nothing there,” said Darwish. The authority must also carefully craft the regulatory framework to anticipate future changes: “We can’t change the regulatory framework every time we want to do something differently.” The zone will focus on industries in which Egypt has a competitive edge, and Darwish stressed, “We will not allocate plots for industries haphazardly.” The master plan includes projects related to logistics, ports, maritime-related services, manufacturing zones, ICT parks and energy investments as well as a new city close to Port Said governorate. “These projects will start in two to three years’ time, after the digging of the tunnels and extensions to the canal end,” said Darwish. While the authority is authorized to establish its own companies to partner with investors, Darwish said it will not be run as a “for-profit” body. “I will discuss our key performance indicators with our board,” he said, explaining that these will focus on how much revenue the zone generates for the government and how many jobs are created. “Egyptians have high hopes for this zone, and we need to make sure not to disappoint them.”
Meetings for Members
AmCham welcomes new members AmCham regularly hosts orientation meetings to familiarize and engage new members with AmCham activities and programs. At each orientation, AmCham CEO Hisham Fahmy explained how new members can best utilize their membership and the benefits of being part of the Chamber’s various advocacy efforts, which are carried out on behalf of members to improve Egypt’s business climate.
AmCham Egypt Annual Report
On Jan. 21, AmCham had the pleasure of hosting a group of more than 20 new members for an orientation meeting on AmCham’s activities and recent projects. Attending the meeting was AmCham Vice President of Membership Dalia Wahba, managing partner and director for communications and development for CID Consulting at the time, who gave the opening remarks. Maissa Galal, human resources director for Egypt and North Africa with General Motors, shared her experience in AmCham Egypt’s committees.
On May 25, AmCham welcomed more than 20 new members for an orientation meeting on AmCham activities and recent projects. Dalia Wahba, AmCham’s vice president for membership and the chairwoman of CID Consulting, gave the opening remarks, while Mohamed El Kalla, managing director of Cairo for Investment & Development, spoke on the benefits of participating in AmCham’s committees.
On Oct. 21, AmCham hosted an orientation meeting for more than 20 new AmCham Egypt members to share information about AmCham’s activities and recent projects. Attending the meeting was Amr Allam, AmCham vice president for membership and the CEO for Misr Sons Development – Hassan Allam Sons. Alaa Hashim, a board member and treasurer at the Egyptian Center for Economic Studies, encouraged the attendees to become involved in the AmCham committees related to their sectors.
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2015 Ambassador Meetings
2015 Ambassador Meetings
AmCham Egypt Annual Report
AmCham Egypt regularly hosts meetings to familiarize newly appointed foreign diplomats with its role in promoting trade and investment between Egypt and the United States and in advocating for a friendly business environment. During each meeting, AmCham CEO Hisham Fahmy gave a presentation on the Chamber’s activities, and a question-and-answer session followed that focused on Egypt’s political and economic challenges and the positive role the Chamber can play in them. During 2014, AmCham welcomed diplomats at three meetings.
On Feb. 4, AmCham hosted a special orientation meeting for Ambassador Georg Stillfried of Austria, Ambassador Markus Leitner of Switzerland, Ambassador Premjith Sadasivan of Singapore, Deputy Head of Mission Jean-Pierre Reymond of Switzerland and Deputy Chief of Mission Mark Seah of Singapore.The diplomats met with AmCham members Farid Saber, vice chairman and managing director of AIG Egypt Insurance Company; Giel-Jan M. Van Der Tol, CEO of Emirates National Bank of Dubai; and Maggie N. Nassif, executive director of the Binational Fulbright Commission in Egypt.
AmCham’s May 28 orientation meeting welcomed Ambassador John Casson of The United Kingdom, Ambassador Troy Lulashnyk of Canada, Ambassador Gilles Heyvaert of Belgium, Minister Counselor for Economic Affairs Han Bing and Economic and Commercial Counselor’s Office Second Secretary Cathy Zhu of the People's Republic of China. AmCham members in attendance included Aidan Murphy, the vice president, chairman and managing director of Shell
Egypt; Brian Twaddle, country manager and director of TransGlobe Energy Corp.; Mohamed El Etreby, chairman of Banque Misr; Yasser Abdul Malak, chairman and CEO of Nestlé Egypt; Heba Elmahdy, country manager of the Johnson & Johnson Group of Consumer Companies; and Yasser Yehia, head of global markets at HSBC Bank, Egypt. Also present was Dalia Wahba, AmCham’s vice president of membership and the chairwoman of CID Consulting.
The Oct. 29 orientation meeting for diplomats included Ambassador Julius Georg Luy of Germany, Ambassador Sten Arne Rosnes of Norway, Ambassador Mushtaq Ali Shah of The Islamic Republic of Pakistan and First Secretary John Cavanagh of Australia. AmCham members present included Abdelkrim Seghir, dean of the School of Business at The American Uni-
versity in Cairo; Amjad Laimoun, general manager of Abbvie; Byron Skaggs, director of alumni and community relations and development at Cairo American College; Hans-Georg Roehrbein, general manager at the Cairo Marriott Hotel; Karim Kamel, CEO of Chemipharm; and Tamer ElNaggar, CEO North Africa at TNS, attending as the incoming AmCham Egypt CEO.
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CEO roundtable in New York
AmCham Egypt Annual Report
U.S. CHAMBER AND AMCHAM HOST PRESIDENT SISI AT CEO ROUNDTABLE IN NEW YORK
The U.S. Chamber of Commerce’s U.S.-Egypt Business Council in cooperation with AmCham Egypt and the EgyptU.S. Business Council hosted President Abdel Fattah el-Sisi at a roundtable discussion in New York with American CEOs and other executives to discuss the business environment for American companies in Egypt and the two countries’ overall economic relationship. Sisi was accompanied by Minister of Foreign Affairs Sameh Shoukry; Minister of Investment Ashraf Salman; Yasser Reda, the Egyptian ambassador to the United States; and Amr Aboulatta, Egypt’s ambassador to the United Nations. Representing the U.S. Chamber were John Christmann, chairman and CEO of Apache Corp. and chairman of the U.S.-Egypt Business Council; and Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber. Representing AmCham Egypt were President Anis Aclimandos, CEO Hisham Fahmy and Board Member Omar Mohanna, who is also chairman of the Egypt-U.S. Business Council. Sisi stressed that supporting economic growth in Egypt and encouraging American businesses to invest in the country is a priority for his administration. The president opened by noting the long-standing relationship between the U.S. and Egyptian business communities. He pledged that U.S. companies are “always welcome to invest and participate in projects in Egypt.” He cited work being done by Blumberg Grain and General Electric as two examples of American companies that are making important contributions in food security and power generation, respectively. Sisi spoke not only of accomplishments but of the many promising opportunities Egypt has to offer investors, including the Suez Canal economic and industrial zones, and he noted that the government continues to work to create a more attractive climate for business and investment by reforming regulations governing capital, taxes, industry and labor. The president asked to hear directly from company representatives on whether his government was fulfilling its promises to implement reforms that make it easier to do business and invest in Egypt. He pointed out that the country is ideally situated geographically as a hub for Africa and the Middle East, and companies can draw upon a skilled and educated workforce. “We are determined to move fast and want to work with American companies,” said Sisi. The president’s encouraging message to U.S. businesses set a positive tone for the U.S. Chamber’s and AmCham Egypt’s continuing work program focusing on promoting the strategic bilateral relationship between the two nations.
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AmCham Egypt Annual Report
C
ommunicating economic developments taking place in Egypt has been the mission of AmCham’s Doorknock delegations for 32 years. However, this year’s 35-member delegation carried an exceptionally sanguine message, one of hope for a better future. The message was clear: Egypt is now on a positive trajectory toward full economic recovery and seeks to further strengthen its longstanding strategic relationship with the United States. During the five-day mission, the delegation met with dozens of members of Congress, the executive branch, multilateral institutions and think tanks. They shared their experience as business leaders working in Egypt as well as their perspectives on reforms undertaken by the government and commemorated by the Egypt Economic Development Conference, the new investment law, new mega-projects such as the Suez Canal Development Project and the new Cairo capital. They also shared some of Egypt’s encouraging economic news, specifically: Egypt was among the best-performing stock markets in the world in 2014, with returns exceeding 30 percent. GDP growth reached 6.8 percent in the third quarter of 2014, the highest since 2008; the government expects GDP growth for fiscal 2014/15 to reach 4 percent, twice the level seen exactly a year ago in June. Both Fitch and Moody’s have positively assessed and upgraded Egypt’s rating. Throughout their meetings, the delegation sensed a large degree of appreciation for the proactive reforms undertaken by the government to jumpstart the economy and create jobs. Policymakers specifically commended Egypt on its proactive steps
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to tackle the budget deficit, including the partial removal of energy subsidies, tax reforms and other macroeconomic measures. Several decision makers—whom we consider to be friends—with knowledge of Egypt, inquired about the vision behind the current reforms. Addressing that, delegates highlighted the current government’s priorities of creating jobs and providing stability and security. Specific bilateral trade and investment issues were the focus of discussions with senior officials at the U.S. Department of Commerce, the office of the U.S. Trade Representative and the U.S. Trade Development Agency. Prospects for scheduling a Trade and Investment Framework Agreement (TIFA) Council meeting with the Egyptian side were discussed as well as the proposed role of the private sector in TIFA negotiations. The Bilateral Investment Treaty (BIT) is said to be scheduled for signing in the near future. The Qualifying Industrial Zones (QIZ) agreement, which allows duty-free access for certain Egyptian products into the United States, remains popular, and several delegates emphasized the need to expand the QIZ program beyond the textile industry, which currently dominates QIZ exports. The issue of standards and other hurdles to trade between the two countries were discussed, and American officials from the commerce and trade departments seemed exceptionally willing to cooperate on resolving such issues. Also, many of the officials the delegates met on the Hill were interested in promoting trade and investment with their states and congressional districts, and they encouraged the delegation to engage with the business community and key stakeholders beyond Washington.
Senator John McCain (R-Arizona), chairman of the Armed Services Committee
Congressman Don Young (R-Alaska), chairman of the Natural Resources Subcommittee on Indian, Insular, and Alaska Native Affairs
Congressman Hank Johnson (D-Georgia)
Congressman Louie Gohmert (R-Texas), vice chairman of the Judiciary Subcommittee on Crime
Congressman C.A. Dutch Ruppersberger (D-Maryland)
Congresswoman Diane Black (R-Tennessee)
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Congressman Joseph Pitts (R-Pennsylvania), chairman of the Energy and Commerce Subcommittee on Health
Congressman Scott DesJarlais (R-Tennessee)
Senator Ben Sasse (R-Nebraska)
52 • Doorknock Mission 2015
The bilateral strategic dialogue called for by the state department is scheduled to take place within the coming months and is expected to include strong representation from both the state and commerce departments. The economic issues that might be discussed include trade facilitation measures, the status of bilateral trade agreements, standards issues and labor and environmental issues. The recent resumption of U.S. military aid to Egypt was much discussed, as the U.S. administration is becoming increasingly aware of the need to support Egypt in its fight against terrorism. The role of Egypt as a beacon for stability in the region was a common topic in almost all meetings, especially in Congress and among policymakers and analysts who understand the national security importance of the bilateral partnership. Egypt's commitment to political reforms was a topic of interest to many of the policymakers the delegation met with on the Hill and especially among the think-tank community. The issue of upcoming parliamentary elections was discussed, and the constitution of the next parliament was highlighted. Delegates noted that as Egypt is still a nascent democracy, the majority of its political parties have small constituencies and lack the required experience to take part in the next parliament, though the parliamentary elections law is bound to change as the process evolves over the next few years. Recent developments in Egypt pertaining to the mass life imprisonments, death sentences and judicial verdicts in cases against political activists did not dominate the meetings, but they doubtless colored them. That said, they did not detract from the messages the delegation had come prepared to discuss. The AmCham Egypt Doorknock delegation held a total of 84 meetings in Washington, D.C. from May 10 to May 15. Among them were 50 meetings with members of Congress and 11 meetings with representatives of the executive branch, including senior officials at the Department of State, Department of Defense, Department of Commerce, Department of the Treasury, National Security Council, Office of the United States Trade Representative, Agency for International Development, U.S. Trade and Development Agency, the Overseas Private Investment Corporation and the Export-Import Bank. The delegation also met with senior officials from prominent think tanks and multinational financial institutions including the World Bank, the International Monetary Fund, International Finance Corporation, Woodrow Wilson Center, Carnegie Endowment for International Peace, Brookings Institution, Washington Institute for Near East Policy, Atlantic Council, Scowcroft Group, Center for American Progress, National Foreign Trade Council, Freedom House and the Center for New American Security. A special breakfast event was hosted on May 12 by the U.S. Chamber of Commerce at the Willard Hotel and featured Egyptian Minister of Social Solidarity Ghada Waly as the keynote speaker. The event included welcoming remarks by Alaa Hegazy, chargÊ d’affaires at the Embassy of Egypt, Washington, D.C., and Ambassador David Thorne, special advisor to the U.S. secretary of state, who commended AmCham for its commitment to enhancing the bilateral relationship between the two countries and for its role in organizing the U.S. trade mission to Egypt last November.
Amb. David Thorne, senior advisor to the secretary of state
Minister of Social Solidarity Ghada Waly
Anis Aclimandos, president, AmCham Egypt
Khush Choksy, vice president, Turkey, Middle East and North Africa Affairs, U.S. Chamber of Commerce; Alaa Hegazy, charge’ d’affaires, Egyptian embassy in the United States; and Omar Mohanna, AmCham Egypt member of the board and chairman, Egypt-U.S. Business Council
Minister of Social Solidarity Ghada Waly, M. Gamal Moharam, AmCham Egypt past president and Nevine Loutfy, AmCham Egypt member of the Board
Hisham Fahmy, CEO, AmCham Egypt, and Minister of Social Solidarity Ghada Waly
Doorknock Mission 2015 • 53
During her well-received speech, Waly told what she described as a “story of a society and a country being transformed and being reshaped to conquer its future,” iterating the series of economic reforms, outcomes of the EEDC and positive economic indicators signaling that Egypt is “back to business” as a leading economy in the Middle East. Most importantly, Waly affirmed that “an economically stable Egypt happens only in a socially inclusive Egypt where regional disparities and inequalities are addressed.” She went on to describe the key features of the government’s program, which has social protections for the poor and vulnerable at its core. Guided by international best practices from Latin American programs such as Bolsa Familia, Opportunidades and Prospera in Mexico and Chile Solidario in Chile, Egypt’s Ministry of Social Solidarity has initiated a number of programs to improve targeting those eligible for government benefits and subsidies, map the poorest areas to highlight disparity and marginalization and increase the value of already existing cash transfers by 50 percent, reaching a million and a half families. The ministry has also launched its Dignity and Solidarity program, which offers conditional cash transfers for women who commit to keeping their children in school with attendance rates of not less than 80 percent and undergoing regular checkups and other provisions of primary preventative health care. Waly said that 139,000 families have registered for this program in six months. The ministry has also worked to increase the efficiency, quality and access to food and universal bread subsidies, which are relied upon by some 50 million Egyptians. Savings in wheat consumption reached 20 percent. According to Waly, an important aspect of social protection is financial inclusion of the poor and access to finance. Egypt’s poor have a financing gap of 85 percent and one of the world’s lowest bank penetration rates, at about 7 percent. The long awaited microfinance law is set to encourage private companies to offer financial services to the poor and provide financing to micro-enterprises. Other Ministry of Social Solidarity programs aim at increasing job opportunities with a number of labor-intensive programs in the 15 poorest governorates for rehabilitation, maintenance, small road pavement and stoning river banks. These are expected to generate around 600,000 temporary jobs. Waly also described other programs adopted by the current government to ensure women’s participation in economic activity, reduce government bureaucracy and build the capacity of Egyptian labor. After nearly 85 meetings during the Doorknock week, the delegation left the U.S. capital with a sense that the bilateral relationship was headed in the right direction, noting a major shift in positions of members of Congress and administration officials toward Egypt along with a clear conviction about Egypt’s leading role as a beacon of stability in the region. Importantly, it was obvious that policymakers in Washington, D.C. continue to see AmCham Egypt as an independent and credible voice—especially as our delegation included representatives of several major multinationals, Doorknock veterans and a number of young businessmen and women. This fact made our arguments in support of Egypt’s progress even more powerful and generated many requests that more Doorknocks and missions be organized in conjunction with an aggressive outreach and public relations effort in Washington and other states to increase understanding. ■
54 • Doorknock Mission 2015
Senator David Perdue (R-Georgia), chairman of the Foreign Relations Subcommittee on State Department and USAID Management, International Operations, and Bilateral International Development
Congressman Steve Russell (R-Oklahoma), vice chairman of the Oversight and Government Reform Subcommittee on National Security
Breakfast sponsors, members of the delegation, and senior officials representing the Egyptian embassy
MISSION MEMBERS Mr. Anis A. Aclimandos, AmCham Egypt President; and President, Transcentury Associates Mr. Curt Ferguson, AmCham Egypt Executive Vice President, and President – Middle East & North Africa Business Unit, The Coca-Cola Company Mr. Omar Mohanna, AmCham Egypt Member of the Board; Chairman, Egypt-US Business Council; and Chairman, Suez Cement Group of Companies Ms. Dalia Wahba, AmCham Egypt Vice President Membership; and Managing Partner, Director for Communications & Development, CID Consulting Mr. Said Hanafi, AmCham Egypt Vice President Legal Affairs; and Chief of Staff and General Counsel, Orascom Hotels & Development Mr. Amr Allam, AmCham Egypt Member of the Board; and Managing Director, Misr Sons Development – Hassan Allam Sons Ms. Nevine Loutfy, AmCham Egypt Member of the Board; and Acting Chairman, CEO and Managing Director, Abu Dhabi Islamic Bank Egypt Mr. Thomas Maher, AmCham Egypt Member of the Board; and Vice President and General Manager, Apache Egypt Companies
Amb. Dennis Ross, counselor and William Davidson distinguished fellow, The Washington Institute
Mr. M. Gamal Moharam, AmCham Egypt Past President; and Chairman, MGM Financial and Banking Consultants Mr. Hisham Fahmy, CEO, AmCham Egypt Dr. Adel Danish, Chairman & CEO, Smart Villages Co. Mr. Ahmed Abou Ali, AmCham Egypt Chair Legal Affairs Committee; and Partner, Hassouna and Abou Ali Law Offices Dr. Ahmed El-Sharkawy, CEO, RAMW for Tourism & Hotels Mr. Aladdin El-Afifi, AmCham Egypt Chair Investment and Capital Market Committee; and Managing Director, Qalaa Holdings Mr. Alex Shalaby, Chairman, Egyptian Company for Mobile Services (Mobinil) Mr. Amr Kabil, AmCham Egypt Co-Chair Transport and Logistics Committee Mr. Ashraf Bakry, Managing Director, Unilever Mashreq Ms. Emma El Meligi, AmCham Egypt Co-Chair Legal Affairs Committee; and North East Africa Business Unit Legal Counsel, Pepsi-Cola Egypt Mr. F. Scott Gallo, Security & Asset Protection Manager, Coca-Cola Egypt – Atlantic Industries Mr. Girgis Abd El Shahid, AmCham Egypt Co-Chair Legal Affairs Committee; and Attorney at Law, Sarwat A. Shahid Law Firm Gen. Guy Bourn, Vice President, Defense Systems, ATK Washington Operations Mr. Hamish Banks, Director Public Affairs and Communications, Middle East & North Africa, Coca-Cola Egypt – Atlantic Industries
Congressman Tom Cole (R-Oklahoma), chairman of the Appropriations Subcommittee on Labor, Health and Human Services
Mr. Hashem El Dandarawy, AmCham Egypt Co-Chair Entrepreneurship and Innovation Committee; and Chairman, Team 4 Security Mr. Hatem Kheir, General Manager, Kheir Group Mr. Hesham El Amroussy, Chairman and Managing Director, ExxonMobil Egypt Mr. J. Michael Lacey, Managing Partner, DENTONS Dr. May El Batran, Chairperson and Founder, People Development Foundation (PDF) Mr. Mohamed Abdalla, AmCham Egypt Chair Real Estate Committee; and Chairman, Coldwell Banker Affiliates of Middle East & Greater Africa Mr. Mohamed El Kalla, AmCham Egypt Chair Corporate Sustainability and Responsibility Committee; and Managing Director, Cairo for Investment and Development Mr. Mohamed Serry, Managing Partner, Serry Law Office Mr. Nadir Shaikh, AmCham Egypt Co-Chair Banking and Finance Committee; and Managing Director, Citi Country Officer, Citibank Mr. Seif ElDin ElSadek, AmCham Egypt Co-Chair Agriculture and Food Security Committee; and CEO, Agrocorp For Agriculture Investment Ms. Somaya El Sherbini, AmCham Egypt Chair Human Resources Committee; and Middle East & Africa Talent Acquisition Lead, Microsoft Corporation Mr. Tarek Mohanna, Associate, White & Case LLP Mr. Tarek Tawfik, AmCham Egypt Chair Agriculture and Food Security Committee; and Vice Chairman and Managing Director, International Company for Agricultural Production and Processing
Congresswoman Cynthia Lummis (R-Wyoming), vice chairman of the Committee on Natural Resources
Mr. Thomas Thomason, AmCham Egypt Past Executive Vice President
Doorknock Mission 2015 • 55
AmCham MENA Regional Council
AmCham Egypt Annual Report
2015 Activities
AmCham chairmen and CEOs from Egypt, Bahrain, Jordan, Lebanon, Morocco, Tunisia, Palestine and Abu Dhabi-UAE
2015 Activities As the Permanent Secretariat of the MENA Council of Regional AmChams, AmCham Egypt is a key link connecting more than 3,500 members from nine different AmChams in the Middle East and North Africa region, including Abu Dhabi-UAE, Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Palestine and Tunisia. The Council fosters collaboration and cooperation among the members, promoting greater business opportunities between the United States and the Middle East North Africa region. In addition to supporting AmCham MENA events with planning and logistics, the council secretariat and the AmCham Egypt Business Studies and Analysis Center (BSAC) also produced the annual “MENA-U.S. Trade and Investment Guide,” distributed at the Council’s annual conference and to AmChams across the region. The council secretariat also publishes MENA Watch, a quarterly e-newsletter covering the latest MENAU.S. trade and investment trends, as well as news from member AmChams.
Annual Board Meeting On January 30, AmCham Abu Dhabi, the 2013-2015 Chair of the MENA Council, hosted the Annual Board Meeting, assembling the chairmen, presidents, members of the Board and directors of eight AmChams from across the region to discuss the council’s plans during 2015. Discussions focused on joint programs between the different AmChams, including cooperation with the U.S.-Arab Bilateral Chamber of Commerce to offer a webinar series on “Doing Business in
56 • AmCham MENA Regional Council
the MENA Region.” The series features successful business leaders from across the region sharing their perspective on the regional business environment and potential opportunities for U.S. investments. Special guest Khush Choksy, director, Middle East Department, U.S. Chamber of Commerce, expressed the commitment of the U.S. Chamber of Commerce to support the MENA Council and advocate for issues of priority to its members.
AmCham MENA Council Women in Business Awards In conjunction with the Annual Board Meeting, the MENA Council members honored the winners of the third AmCham MENA Council Women in Business Awards, part of the AmCham Abu Dhabi’s fifth Excellence Awards and 15th Annual Charity Gala. The MENA Council Women in Business Awards highlight the achievements of Middle Eastern women leaders in the corporate world, entrepreneurs and civil society leaders. The 2015 awards introduced a new category to recognize companies with effective gender diversity programs within the MENA region.
The 2015 Women in Business Award winners are: Best Woman in the Corporate Sector: Nadia Al Saeed, CEO, Bank Al Etihad (Jordan) Best Woman Entrepreneur: Sarah Beydoun, founder and creative director, Sarah’s Bag (Lebanon) Best Woman in the Non-Profit Sector: Rania Fahmy, executive director, Banati Foundation (Egypt) Best Company for Women to Work for: General Motors (Egypt)
AmCham Egypt Annual Report
“Boosting Cross-MENA Business Ventures and FDI from the United States”
AmCham Egypt CEO Hisham Fahmy speaks at the AmCham MENA Council’s annual conference
A
s the AmCham MENA Council secretariat, AmCham Egypt helped AmCham Abu Dhabi organize the Council’s Annual Conference on April 8 in Abu Dhabi, featuring four panels led by top government officials and industry executives. The first session, titled “CrossMENA Trade & Investment: Present Realities—Future Potential,” featured Juma Al Kait, assistant under-secretary for foreign trade and industry, UAE Ministry of Economy, and Badr Al-Olama, CEO of Strata Manufacturing, UAE, and was moderated by Mohamed Bataineh, AmCham Jordan chairman and CEO of BADR Developments in Jordan. The panelists discussed the importance of promoting inter-regional cooperation and shared insights on how the MENA region could become a competitive trading bloc, emphasizing job creation as a key to the region’s growth. The second session, “Angels, Accelerators, VCs & Private Equity: Hype or Viable Funding Sources?,” brought together panelists Kamal Hassan, president and CEO of i360, UAE; Rabih I. Khoury, chairman of Middle East Venture Partners, Lebanon; Tarek Sadi, managing director of Endeavor, Lebanon; and Ahmed El Alfy, founder and chairman of Sawari Ventures, Egypt, to share their expertise on the state of the region’s entrepreneurship and innovation industry. The session was moderated by AmCham Morocco President Walter Siouffi, who described his chamber’s ‘incubator lab’ for successful entrepreneurs to train and empower others. Panelists discussed challenges such as the growing population, economic instability, labor market inflexibility and lack of funding, and also discussed consolidating their efforts as a sector to overcome market challenges.
AmCham Egypt CEO Hisham Fahmy moderated the third session, “U.S. Investments in the MENA Region: Boosting Intra-regional Business Cooperation through Enhanced Supply Chain Systems,” which featured supply chain experts representing U.S. companies operating in the MENA region. Panelists included Timothy Richards, managing director, government affairs & policy, MENA Region, General Electric, UAE; John Smith, bottler supply chain and development director for The Coca-Cola Company, UAE; and Andreas Schmitt, global supply chain director for Dow Chemicals, Egypt. The panel covered the Supply Chain Model, outlining the end-to-end supply chain process; how U.S. companies engage with local suppliers to manage risk and boost innovation and growth. The final session, “U.S. Government Initiatives for Private Sector Growth” looked at U.S. government special economic support programs and recommendations for advancing economic cooperation between the United States and the MENA region. Moderated by John Habib, board secretary and Legal Affairs Committee chair of AmCham Abu Dhabi and managing partner of Qasimi Law Partners MENA, the panel included Saud Al Nowais, commercial counselor at the UAE Embassy in Washington DC; Said Baransi, chairman of AmCham Palestine and founder and managing director of BCI, Palestine; John Simmons, regional senior commercial officer for the Gulf and counselor for commercial affairs at the U.S. Embassy in Abu Dhabi; Michael Ratney, consul general at the U.S. Consulate, Jerusalem; and Josh M. Kram, director, Turkey and Middle East Affairs, for the U.S. Chamber of Commerce.
AmCham MENA Regional Council • 57
AmCham Egypt Annual Report
Constitution & Bylaws Article I: Name
5. Individual Affiliate Members
This organization shall be known as the American Chamber of Commerce in Egypt and is hereinafter referred to as “the Chamber.”
Membership in this category shall be open to individual staff or other categories of members except Honorary Members.
Article II: Objectives
Membership in this category shall be limited to select distinguished persons who are invited by the Board of Governors to be Honorary Members. The American Ambassador to Egypt and the American Commercial Counselor in Egypt shall be Honorary Members by virtue of their positions.
The objectives of the Chamber are: • To promote the development of commerce and investment between the United States and Egypt; • To be a direct liaison with the Chamber of Commerce of the United States and other chambers of commerce and business organizations, and to express the views of the local American business community to public and private interests in the United States; • To provide a forum in which American business executives in Egypt and Egyptian business executives with American interests may identify, discuss and pursue common interests regarding their activities; • To work with individuals and organizations in Egypt on matters of mutual interest. The Chamber may do all lawful things which may be incidental or conducive to the attainment of the foregoing objectives. The Chamber shall not attempt to restrict or in any manner interfere with any lawful activity undertaken by any member in Egypt. The Chamber shall not engage in any political activity in Egypt or allow its funds or facilities to be used for political purposes in Egypt.
Article III: Membership
■ Section A. Categories of Membership 1. General Members Membership in this category shall be open to: a. American companies with branches, agents or representative offices in Egypt; b. Egyptian companies with American equity; c. Egyptian companies or individuals who have significant business relationships with the United States, and registered Egyptian agents of American companies; d. United States citizens who are residing in Egypt and have significant business or professional relationships with the United States.
2. Associate Resident Members Membership in this category shall be open to companies or individuals in Egypt who do not qualify to be General Members.
3. Associate Non-Resident Members Membership in this category shall be open to American companies or individuals who have significant business relations with Egypt and do not qualify to be General Members.
4. Not-for-Profit Members Membership in this category shall be open to organizations that have significant relationships with Egypt and the United States, and which are organized for charitable, educational or eleemosynary purposes, and not for profit.
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6. Honorary Members
■ Section B. Determination of Membership 1. The acceptability of any application to membership or for change in classification of membership shall be determined by the Board of Governors. The Bylaws may establish guidelines for determining standards of membership so long as such guidelines are not inconsistent with this Article. 2. Application for membership shall contain the name, address, and business activity or occupation of the candidate, and such other information as may be requested by the Board of Governors. 3. Membership shall be for one year, subject to renewal.
■ Section C. Right to Vote 1. Only General Members who have been General Members for at least 90 days may vote. 2. Each General Member who is not an individual shall nominate one or more individuals residing in Egypt to be its representative(s) in the Chamber, one of whom must be designated as its voting representative. 3. Any General Member may authorize only one other General Member or voting representative to vote on his/her behalf at any meeting of the membership of the Chamber, except for elections of the Board of Governors. The number of proxies to be held by any General Member or voting representative at any meeting of the membership of the Chamber is limited to one. Notice of such proxy authorization in writing must be received by the Board of Governors not later than 24 hours before the time and date of the meeting at which such proxy is to be voted. 4. Any General Member may vote at an Annual General Meeting for the election of the Board of Governors by absentee ballot in accordance with the rules and procedures provided for in the Bylaws. Upon written request of a General Member, which shall be made within 15 days of the date of the Annual General Meeting, but not later than 48 hours prior to such day, the Nominating Committee shall make absentee ballots available to such General Member and shall implement the process provided in the Bylaws to confirm the authenticity and confidentiality of voting by absentee ballot.
■ Section D. Privilege to Hold Office Any voting representative may hold elective office in the Chamber.
AmCham Egypt Annual Report
■ Section E. Resignations In order to resign a membership, written notice must be given to the Board of Governors. The Board of Governors must confirm the resignation of any membership.
Article IV: Meetings of the Chamber ■ Section A. Annual General Meeting 1. (The Organizational Meeting of the Chamber shall be held in January 1983, and shall be governed by rules affecting the Annual General Meeting.) 2. An Annual General Meeting shall be held in May 1986 and in the month of May in each year thereafter. Written notice of such meeting shall be given by the President to the membership at least one month before each Annual General Meeting. 3. The following business shall be conducted at the Annual General Meeting: a. Report of the Board of Governors; b. Report of the previous year’s accounts; c. Election of officers, elective members and/or the President of the Board of Governors; d. Other matters which are placed on the agenda.
■ Section B. General Meetings 1. There shall be at least six General Meetings each year. No more than three months shall pass without a General Meeting. 2. Notice of all General Meetings must be given to the membership by the President at least two weeks before each meeting. 3. Any member who wishes to place an item on the agenda of a General Meeting may do so provided he/she gives notice to the President at least one week before the meeting.
■ Section C. Quorum and Voting 1. The quorum for the Annual General Meeting and all General Meetings shall be 30 percent of the total number of General Members of the Chamber. A quorum shall be required at all times during any meeting if official actions are taken. (A General Member’s proxy or absentee ballot will be counted and included to determine whether a quorum exists.) 2. In the event of there being no quorum present at any Annual General Meeting or General Meeting, the meeting shall be adjourned for one hour and reconvened at the same location with the same agenda. Should the number then present be insufficient to form a quorum, those present shall be considered a quorum, but they shall have no power to alter, amend or make additions to any proposed resolution appearing on the agenda of the adjourned Annual General Meeting or General Meeting. 3. Voting shall be simple majority of all votes cast unless otherwise specifically stated in this Constitution.
Article V: Officers ■ Section A. Designation of Officers The Officers of the Chamber and their nationalities shall be the following:
Title / Nationality 1. President: US or Egyptian citizen 2. Executive Vice President: Egyptian citizen 3. Executive Vice President: US citizen 4. Vice President, Membership: No requirement 5. Vice President, Programs: No requirement 6. Vice President, Legal Affairs: No requirement 7. Treasurer: No requirement
■ Section B. Duties of Officers 1. The President shall exercise general supervision over the affairs of the Chamber, represent the Chamber in external relations, and preside over all meetings of the Chamber and the Board of Governors. 2. The Executive Vice Presidents shall perform the duties and responsibilities assigned by the President or the Board of Governors. The Executive Vice President who is an Egyptian shall preside over meetings in the absence of the President who is an American. The Executive Vice President who is an American shall preside over meetings in the absence of the President who is an Egyptian. 3. The Executive Vice President who is an American shall preside over meetings in the absence of both the President who is an American and the Executive Vice President who is an Egyptian. The Executive Vice President who is an Egyptian shall preside over meetings in the absence of both the President who is an Egyptian and the Executive Vice President who is an American. 4. The Vice President, Membership shall be responsible for membership development and membership services, and shall perform other duties and responsibilities assigned by the President or the Board of Governors. 5. The Vice President, Programs shall be responsible for the programs of meetings and events of the Chamber, and shall perform other duties and responsibilities assigned by the President or the Board of Governors. 6. The Vice President, Legal Affairs shall be responsible for all documents and records of the Chamber and all relationships with legal counsel or legal consultants, and shall perform other duties and responsibilities assigned by the President or the Board of Governors. 7. The Treasurer shall be responsible for all financial receipts, disbursements, accounts, records and reports, and shall perform other duties and responsibilities assigned by the President or the Board of Governors.
■ Section C. Designation of Board of Governors The Board of Governors shall consist of the following: 1. The seven officers elected every two years by the membership; 2. Three members elected every two years by the membership; 3. Two members appointed by the newly elected President upon consultation with the Board of Governors; 4. The immediate past president of the Chamber, who shall serve ex-officio, with full rights of participation in all activities and deliberations of the Board of Governors but no vote.
Constitution & Bylaws • 59
AmCham Egypt Annual Report
■ Section D. Nominating Committee and Nominations 1. There shall be a Nominating Committee of five General Members or voting representatives, at least one of whom must be an American and at least one of whom must be an Egyptian. 2. The Nominating Committee shall be appointed by the Board of Governors and shall be announced at a General Meeting at least four months before the Annual General Meeting. 3. The Nominating Committee shall nominate at least one qualified and consenting candidate for each elective position on the Board of Governors, and shall announce its nomination at the General Meeting immediately preceding the Annual General Meeting. 4. Any two General Members or voting representatives may nominate one or more qualified and consenting candidates for any office and for elective positions on the Board of Governors at the General Meeting immediately preceding the Annual General Meeting. At the close of that General Meeting, nominations shall be closed. No person shall be nominated for more than one of the seven designated offices. 5. Members of the Nominating Committee shall not be candidates. (However, this limitation shall not apply to the first Nominating Committee, whose duties shall terminate in January 1983). 6. Paragraphs 3 and 4 above must be read in conjunction with Section E below.
■ Section E. Terms and Vacancies 1. All officers and members of the Board of Governors shall serve for terms of two years or until their successors take office. 2. All officers and members of the Board of Governors may only serve on the Board for two consecutive terms, in any capacity, after which time they will step down. 3. Vacancies in any office or elective position on the Board of Governors shall be filled by the Board of Governors. The Board shall determine when a vacancy exists and shall fill every vacancy within three months.
Article VI: Board of Governors ■ Section A. Duties The Board of Governors shall be responsible for the dayto-day operations of the Chamber, and shall make all decisions on matters affecting the Chamber when the General Meeting is not sitting, subject to other provisions of the Constitution.
■ Section B. Meetings 1. The Board of Governors shall meet at least once before each General Meeting. 2. The quorum for all meetings of the Board of Governors shall be a simple majority and all actions shall be taken by
60 • Constitution & Bylaws
a simple majority vote of those present, unless otherwise provided in the Bylaws of the Chamber. 3. The Board of Governors shall establish rules of procedure, which shall be stated in the Bylaws of the Chamber.
Article VII: Audit At the first meeting of the Board of Governors after each Annual General Meeting, the Board of Governors shall appoint a firm of public accountants to serve as auditors for the Chamber. The auditors shall audit all accounts and present a report to the next Annual General Meeting. The President or the Board of Governors may require the auditors to audit the Chamber’s accounts for any period at any time and make a report to the Board of Governors.
Article VIII: Dissolution ■ Section A. Means of Dissolution The Chamber shall not be dissolved, except with the written consent of not less than three-fifths of the General Members at a General Meeting convened for that purpose, or by postal vote.
■ Section B. After Dissolution 1. In the event of the Chamber being dissolved, all debts and liabilities legally incurred on behalf of the Chamber shall be fully discharged, and the remaining assets shall be donated to such local charitable organizations as the General Members shall have decided. 2. Notice of dissolution shall be given to the members by the President by registered mail within seven days of the dissolution.
Article IX: Bylaws General Members of the Chamber acting at any General Meeting or the Board of Governors at any meeting may make, alter, supplement and repeal the Bylaws of the Chamber, as long as such actions are properly on the agenda of the meeting and do not conflict with this Constitution or with law. All members will be notified of changes in the Bylaws promptly by the President.
Article X: Amendment of the Constitution No amendment of this Constitution shall be made unless it is approved by vote at a General Meeting after the precise text of the amendment has been distributed to all members at least two weeks before the vote. No amendment shall be effective unless ratified by the signature of at least 50 percent of the General Members within one month after adoption.
Article XI: Adoption of the Constitution This Constitution (shall be) adopted by a majority vote of the General Members convened for that purpose in December 1982, and (shall be) effective when signed by no fewer than 50 members, who shall then be designated “Charter Members of the American Chamber of Commerce in Egypt.”
AmCham Egypt Annual Report
Bylaws
1. Membership Dues Membership dues shall be established from time to time by the Board of Governors. If no dues are otherwise established, the following schedule of dues shall apply:
Category
Entrance Fee
Annual Fee
General Members Associate Resident Members Multinational Members Young Entrepreneur Members Diplomatic & Public Organizations Not-for-Profit Organization Members Associate Non-Resident Members Individual Affiliate Members Honorary Members
$1,500 $1,500 $1,500 _____ _____ _____ _____ _____ _____
$1,400 $1,400 $1,400 $1,400 $1,400 $650 $750 $475 _____
2. Determination of Membership a. Every application for membership shall subscribe to the objectives of the Chamber and state the category in which the applicant is seeking membership. An applicant may state an alternate category of membership, if he/she wishes, so long as it clearly states which category is preferred. Each application shall be accompanied by a check for the full amount of the membership entrance fee and annual fee which has been established for the category of membership requested. If the applicant does not qualify for the category (or categories) of membership for which he/she has applied, the applicant shall be so informed and the check shall be returned to the applicant for resubmission in another category if he/she wishes. b. Every applicant for general membership shall state the basis for qualification in that category. If the basis for qualification for an Egyptian company is “significant business relationships with the United States,” those relationships must be described. In such a company, if a portion of the equity of the company is held or controlled by persons who are neither Egyptian nor American, the applicant must satisfy the Board of Governors that his/her membership would be of special benefit to the Chamber. If the basis for qualification for a United States citizen is “significant business or professional relationships with the United States,” those relationships must be described. No company or individual shall be considered to have “significant business relationships with the United States” unless such relationships are present and ongoing. c. Every application for associate resident membership must be accompanied by the written recommendation of two general members who have known the applicant for a period of not less than two years. Applicants in this category will be considered only if the Board of Governors determines that their membership will be of special value to the Chamber. i) Egyptian companies who are not presently doing business with the United States and wish to do so. ii) Multinational non-voting companies having branches in at least three other countries besides Egypt and the United States. The
number of multinational companies in the Chamber is limited to 10 percent of the total general members. Membership under this subcategory is for one year, to be renewed by majority Board decision. iii) Individuals whose status and membership would enhance the Chamber’s image and effectiveness. Approval of such membership must be by unanimous Board decision. Membership under this subcategory is for one year, renewable annually by majority Board decision. d. Every application for not-for-profit organization membership shall state whether it is qualified to receive contributions that are tax deductible by the donee under the United States Internal Revenue Code. If not, the basis for qualifications as “charitable, educational or eleemosynary” shall be described. e. All applications and renewals are to be submitted to the Vice President, Membership for his/her review and recommendation. Final approval and acceptance of the application will be given by the Board of Governors based on the above standards and on their review of the character and reputation of the applicant. f. Membership can be revoked by the Board of Governors at any time, and a portion of the fees may be returned, if appropriate. g. If a voting representative elected or appointed to the Board of Governors leaves the company he/she was representing when elected or appointed, then his/her membership on the Board of Governors ceases immediately but could be considered for reappointment by the Board if he/she becomes a voting representative of a member company.
3. Membership Lists Lists of members will be maintained, and may be published or distributed by the Board of Governors.
4. Committees The President, with the approval of the Board of Governors, may appoint any committees of members needed, and duties or powers of the Board of Governors may be delegated to such committees without necessity of amending these Bylaws. Such committees may be dissolved by the same action.
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AmCham Egypt Annual Report
5. Agents and Representatives The Board of Governors may appoint any persons needed to assist in achieving the objectives of the Chamber. Appointments that will extend beyond the next Annual General Meeting must be approved by the membership.
6. Parliamentary Procedure Procedure at the Annual General Meeting, General Meetings and meetings of the Board shall be governed by the most recent published edition of Robert’s Rules of Order unless otherwise provided in the Constitution or these Bylaws.
7. Minutes of Meetings Minutes of each General Meeting and each meeting of the Board of Governors shall be recorded and made available to all members upon request.
8. Election Procedure for Officers and Elective Members of the Board of Governors
a. The role of the Nominating Committee is to establish selection criteria for prospective nominees; announce the nominations process; proactively solicit potential candidates for the nominations process; name a slate of candidates for all elected positions on the Board of Governors; oversee the nomination and voting processes; administer the counting of the election ballots; and certify the results of the elections. The Nominating Committee will establish procedures to ensure the privacy, validity and accuracy of all ballots. The rules set by the Nominating Committee shall comply with this Section 8 of the Bylaws. Once these rules are announced to the membership they cannot be changed but can be clarified, if necessary. b. Letters to the General Members soliciting expressions of interest to serve on the Board of Governors shall be sent by the Nominating Committee prior to February 15 of each election year. Interested General Members shall be asked to submit their expression of interest, together with an election statement and brief biographical information about each candidate within one month from the date of issuance of the solicitation letters. Candidates are responsible for meeting this deadline. c. In selecting its list of proposed candidates, the Nominating Committee will nominate one or more qualified and consenting candidates for each position. In selecting the final slate of candidates, the Nominating Committee shall ensure that situations of conflict of interest between a candidate and the Chamber are avoided. In particular, no candidate shall be proposed to the membership who is either employed by the Chamber or who receives remuneration from the Chamber. Candidates’ materials for distribution to the membership should be prepared according to the guidelines included in the solicitation invitation. The Nominating Committee shall cause such information to be distributed to the membership at least two weeks prior to the General Meeting immediately preceding the Annual General Meeting. d. All voting shall be secret and shall be on paper ballots prepared in advance by the Nominating Committee. Verifications of eligibility, validity or entitlement of all ballots received will be done by the Nominating Committee. If two candidates are within 10 votes an automatic recount will be carried out. e. One single ballot shall be prepared, including the President, the officers and the members of the Board of Governors. This ballot
62 • Constitution & Bylaws
should list the uncontested and contested positions. Ballots will show each candidate’s name and candidates will be listed in alphabetical sequence of their last name under each Board of Governors’ position. f. When requested in writing by a General Member pursuant to Article III of the Constitution (Section C. “Right to Vote”, Paragraph 4), the Nominating Committee will provide an absentee ballot. The General Member will receive either by mail or in person an envelope addressed to it (marked with an identification number). This envelope will contain another envelope (with the same identification number) inside which will be a folded ballot. The General Member will mark the ballot, seal the envelope placing his/her signature over the envelope flap (the inner envelope will not be opened except by the Nominating Committee when the votes are counted) and return it to the person and location designated in the absentee ballot instructions. On the day of the Annual General Meeting, the Nominating Committee will (1) confirm the identification number on the envelope and (2) confirm the signature on the absentee ballot request with the signature on the flap of the envelope containing the ballot. The Nominating Committee will then open the envelope and place the folded ballot into the ballot box to be counted with all other ballots. g. The counting of ballots will take place on the election date, in a manner and at a time and place established by the Nominating Committee. At least three members of the Nominating Committee shall be present at the counting of the ballots. Candidates who receive the largest number of votes for each position will be elected to that position. In the event of a tie vote for any position, a coin toss in the presence of the two candidates and at least three members of the Nominating Committee will be used to determine the order of the tied candidates. h. Any formal communications between the Nominating Committee and the membership or the candidates shall be in writing and will use the standard communication methods used by the Chamber. i. Matters of a legal nature that arise during the election process and disputes arising from the election or nomination process shall be ruled upon by the Board of Governors.
9. Financial Control a. The American Chamber of Commerce in Egypt is a nonprofit organization established pursuant to an exchange of letters dated November 16, 1981 between the Government of the Arab Republic of Egypt and the Government of the United States of America. b. On commencement of the term of office of the Board of Governors, the Treasurer will propose to the Board of Governors the limits and signatories on all checks for their approval.
10. Insurance The Board of Governors shall maintain all insurance which is necessary for the prudent conduct of the affairs of the Chamber.
11. Indemnification The Chamber shall indemnify all officers and members of the Board of Governors and hold them harmless against any loss or liability arising out of performance of their duties, including defense of actions, and liability arising therefrom, resulting from their negligence, unless their actions were malicious. ■
Financial Statements
AmCham Egypt Annual Report
Auditors’ Report To: The Members of the American Chamber of Commerce in Egypt Report on the Financial Statements We have audited the accompanying financial statements of The American Chamber of Commerce in Egypt (the “Chamber”) which comprise the statement of financial position as of December 31, 2015 and the statements of revenues and expenditures and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements These financial statements are the responsibility of the Chamber’s management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Egyptian Accounting Standards and applicable Egyptian laws. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The American Chamber of Commerce in Egypt as of December 31, 2015, and of its financial performance and its cash flows for the year then ended in accordance with Egyptian Accounting Standards and the applicable Egyptian laws and regulations.
Report on Other Legal and Regulatory Requirements The Chamber maintains proper books of accounts, which include all that is required by law. The financial statements are in agreement thereto.
Financial Statements • 63
AmCham Egypt Annual Report
Financial Statements Statement of Financial Position as of December 31, 2015 Note
December 31, 2015 USD
December 31, 2014 USD
Property and equipment, net
(6)
2 162 314
2 339 241
Held-to-maturity investments
(7)
1 700 000
--
3 862 314
2 339 241
Non-current assets
Total non-current assets Current assets Accounts receivable, net
(8)
650 805
402 493
Other debit balances
(9)
291 162
98 548
Cash and bank balances
(10)
4 381 618
5 996 728
5 323 585
6 497 769
(11)
292 175
123 524
442 084
239 964
(12)
3 464 856
3 835 641
4 199 115
4 199 129
777 413
842 198
Total current assets Current liabilities Provisions Accounts payable Other credit balances Total current liabilities Non-current Liabilities Deferred revenues - Building
(13)
Total non-current liabilities
777 413
842 198
Net assets
4 209 371
3 795 683
4 209 371
3 795 683
4 209 371
3 795 683
Represented in: Accumulated surplus
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Sherif El Kilany Treasurer
64 • Financial Statements
AmCham Egypt Annual Report
Statement of Revenues and Expenditures for the year ended December 31, 2015 Note
December 31, 2015 USD
December 31, 2014 USD
Chamber revenue
5 448 189
5 415 155
Interest income
169 980
138 221
Gain on sale of property and equipment
--
35 173
Revenues
Other income
--
47 115
Total revenue
5 618 169
5 635 664
Expenditures General and administrative expenses
(14)
(4 692 250)
(5 024 647)
Depreciation
(6)
( 222 586)
( 231 370)
Bank charges
( 29 105)
( 30 251)
Foreign exchange differences
( 79 527)
( 28 145)
( 181 013)
( 14 993)
Total
(5 204 481)
(5 329 406)
Surplus for the year
413 688
306 258
Provisions
(11)
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Sherif El Kilany Treasurer
Financial Statements • 65
AmCham Egypt Annual Report
Financial Statements Statement of Cash Flows for the year ended December 31, 2015 Note
December 31, 2015 USD
December 31, 2014 USD
413 688
306 258
Cash flows from operating activities Surplus for the year Adjustments for: Depreciation
(6)
222 586
231 370
--
( 35 173)
(11)
181 013
14 993
--
( 8 430)
(11)
(12 362)
( 132 588)
804 925
376 430
(Increase) in accounts receivable
( 248 312)
( 74 756)
(Increase) in other debit balances
( 192 614)
( 54 657)
Gain on sale of property and equipment Provisions formed Bad debts written off Provisions used Net surplus before changes in working capital Changes in working capital:
Increase in accounts payable
202 120
6 318
(Decrease) in other credit balances
( 435 570)
( 130 218)
Net cash flows generated from operating activities
130 549
123 117
(1 700 000)
--
Cash flows from investing activities Payments for the purchase of held-to-maturity investments Change in medium term deposits
(3 173 279)
--
( 45 659)
( 133 814)
Proceeds from sale of property and equipment
--
35 173
Payments for acquisition of property and equipment
(6)
Net cash flows (used in) investing activities
(4 918 938)
( 98 641)
Net change in cash and cash equivalents during the year
(4 788 389)
24 476
Cash and bank balances at beginning of the year
5 996 728
5 972 252
1 208 339
5 996 728
Cash and bank balances at end of the year
(10)
The accompanying notes form an integral part of these financial statements and are to be read therewith.
Sherif El Kilany Treasurer
66 • Financial Statements
AmCham Egypt Annual Report
Notes to the Financial Statements for the year ended December 31, 2015 1. General information The American Chamber of Commerce in Egypt (“the Chamber”) is a not-for-profit organization established in October 1982 pursuant to formal authorization from the President of Egypt, and the Chamber became the first American Chamber of Commerce in the Middle East. The address of the Chamber’s registered office is 33 Soliman Abaza Street, Dokki – Cairo, Egypt. The Chamber was created to strengthen economic and business ties with the United States, to boost Egypt’s exports and to provide a forum for business to identify problems and propose appropriate solutions. In addition, the Chamber represents the interests of the private sector to the Egyptian and American governments and offers its members specific business services. Ultimately, the purpose of the Chamber is to promote and develop commerce and investment between the United States and Egypt.
2. Statement of compliance The financial statements have been prepared in accordance with the Egyptian Accounting Standards “EASs” issued by the Minister of Investment Decree No. 243 of 2006 and applicable laws and regulations. The Egyptian Accounting Standards require referral to International Financial Reporting Standards when no Egyptian Accounting Standard or legal requirement exists to address certain types of transactions and events.
3. Basis of preparation The financial statements have been prepared on the historical cost basis except for the valuation of instruments.
4. Significant accounting policies The accounting policies set out below have been applied consistently to all years presented in these financial statements. A. Property and equipment Items of property and equipment are stated in the balance sheet at historical cost, less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the property items. Grants relating to property and equipment are recognized as deferred revenue at their fair value where there is a reasonable assurance that the grant will be received and the Chamber will comply with all attached conditions. Subsequently, such deferred revenue is recognized as revenue
on straight-line basis over the expected lives of the related assets. Subsequent costs are included in the assets carrying amount or recognized separately, as appropriate, only when it is probable that future economic benefits associated with the item will flow and the cost of the item can be measured reliably. Repairs and maintenance expenses are charged to the profit or loss during the period in which they are incurred. Gains and losses on disposals are determined by comparing proceeds with relevant carrying amount, and are included in the income statement. Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method as follows:
Description
Estimated useful life
Building
20 years
Furniture
5 years
Office machinery and equipment
5 years
Vehicles
5 years
B. Impairment of tangible and intangible assets 1. Impairment of non-financial assets At each balance sheet date, management reviews the carrying amounts of its cash-generating units to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of the cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the cash-generating unit is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash-generating unit in
Financial Statements • 67
Financial Statements prior years. A reversal of an impairment loss is recognized as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 2. Impairment of financial assets Financial assets other than those at fair value through profit or loss (FVTPL) are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. C. Revenue recognition and measurement Revenue is measured at the fair value of the consideration received or receivable. Revenue from membership fees is recognized as revenue for the year. The Chamber treats dues received in advance as deferred income. Membership fees and subsidies are paid by the Chamber’s members to contribute to the cost of issuing the “Business Monthly” magazine, which is not for sale to the public. Interest and other income are accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. D. Foreign currency transactions The US Dollar has been designated as the Chamber’s functional currency, whereby the Chamber primarily generates and expends its cash. Transactions denominated in foreign currencies are translated to the US Dollar using the prevailing exchange rates in effect at the date of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated to the US Dollar at the exchange rates ruling by the Chamber banks at the financial statements date, and the exchange differences are recognized in the income statement in the period in which they arise. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated. E. Recognition of expenses Expenses are recognized in the income statement when a decrease in future economic benefit is related to a decrease in an asset, or an increase of a liability has arisen that can be measured reliably. Expenses are recognized in the income statement on the basis of a direct association between the costs incurred and the earning of specific items of income. When economic benefits are expected to arise over several accounting periods and the association with income can only be broadly or indirectly determined, expenses are
68 • Financial Statements
AmCham Egypt Annual Report
recognized in the income statement on the basis of systematic and rational allocation procedures. Expenses are recognized immediately in the income statement when expenditure produces no future economic benefits or when, and to the extent that, future economic benefits do not qualify, or qualify for recognition in the balance sheet as an asset. F. Provisions Provisions are recognized when the Chamber has a present legal or constructive obligation as a result of past events, and it is expected that the Chamber will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received. The reimbursement is treated as a separate asset, and the amount recognized as reimbursement should not exceed the provision value. G. Cash flow Statement The cash flow statement is prepared applying the indirect method. For the purpose of preparing the cash flow statement, cash and cash equivalents comprise cash in hand, cash at banks and bank deposits. For purposes of the cash flow statement presentation, cash and cash equivalents comprise cash in hand, bank current accounts and bank deposits with maturity that does not exceed three months. H. Financial instruments Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, trade and other accounts receivable and payable. Financial instruments are classified as assets or liabilities in accordance with the substance of the contractual arrangement. Therefore interest, dividends, gains and losses relating to these financial instruments classified as an asset or a liability are reported as expense or income. Financial instruments are offset when the Chamber has a legally enforceable right to offset and intends to settle either on a net basis or to realize the asset and settle the liability simultaneously. The Chamber’s activities are exposed to a variety of financial risks, including the effects of foreign exchange risk, interest rates risk, credit risk and liquidity risk. The Chamber’s overall risk management program seeks to minimize the potential adverse effects of these risks on the financial performance of the Chamber. Financial instruments are recognized in the financial statements when the Chamber becomes a part in a contract or commitment that gives rise to a financial instrument. Financial instruments are represented in:
AmCham Egypt Annual Report
1. Financial assets The Chamber’s financial assets are bank balances, accounts receivables and certain other debit balances. 1.1. Cash and cash equivalents Cash and cash equivalents comprise cash at bank balances and are reported in the cash flow statement net of bank overdraft accounts. 1.2. Receivables and other debit balances Receivables are stated at their nominal values as reduced by appropriate allowances for doubtful amounts that are expected to be uncollectible. 1.3. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Chamber has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are held at amortized cost using the effective interest method, less any impairment. 2. Financial liabilities The Chamber’s financial liabilities represent accounts payable and certain other credit balances including accrued interest balances. 2.1 Accounts payable Accounts payable are stated at their nominal value. 2.2 Accrued interest expenses Accrued interest expenses are reported on an accrual basis. I. Employee benefits 1. Public Authorities for Social Insurance For defined contribution plans, the Chamber pays contributions to the Public Authority for Social Insurance on a mandatory basis. Once the contributions have been paid, the branch has no further payment obligations. The regular contributions constitute net periodic costs for the year in which they are due and as such are included in staff costs. 2. Defined Contribution Plan The Chamber made an agreement with Commercial International Life Insurance Company S.A.E. (CIL) for a life insurance and employees benefit program. CIL will manage the employees benefit program, therefore, there are no liabilities on the Chamber for the employees and the total liabilities have been transferred to CIL. Once the contributions have been paid, the Chamber has no further payment obligations. The regular contributions constitute net periodic costs for the period in which they are due, and as such are included in staff costs.
5. Critical accounting judgments and key sources of estimation uncertainty In the application of the Chamber’s accounting policies described in Note (4), the Chamber’s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not read-
ily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. A. Critical judgments in applying accounting policies The following are the critical judgments made by management in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in financial statements. Revenue recognition In making their judgment, the directors considered the detailed criteria for the recognition of revenue from services rendered set out in EAS 11 Revenue and, in particular, whether it is probable that the economic benefits associated with the transaction will flow to the Chamber. B. Key sources of estimation uncertainty 1. Useful lives of tangible and intangible assets As at December 31, 2015, the carrying value of tangible assets amounted to USD 2 162 314, (Note 6). Management’s assessment of the useful life of a tangible and intangible asset is based on the expected use of the asset, the expected physical wear and tear on the asset, technological developments as well as past experience with comparable assets. A change in the useful life of an asset may have an effect on the future amount of depreciation recognized in the income statement. 2. Allowances for doubtful debts Bad debt allowances are recognized for receivables doubtful of recovery in order to record foreseeable losses arising from events such as a customer’s insolvency. As at December 31, 2015, the carrying amount of allowances on trade accounts and other accounts receivables amounted to USD 208 339 (Note 8). In determining the amount of the bad debt allowance several factors are considered. These include the aging of accounts receivables balances, the current solvency of the customer and the historical write-off experience. The actual write-offs might be higher than expected if these factors are actually different from estimated or there are new factors that were not considered earlier. 3. Provisions and contingent liabilities As at December 31, 2015, the carrying amount of provisions amounted to USD 292 175 (Note 11). This provision is primarily based on an estimate of future costs for claims made by other parties in connection with the Chamber’s operations. As the claims cannot be determined with accuracy, this amount could change in the future.
Financial Statements • 69
AmCham Egypt Annual Report
Financial Statements 6. Property and equipment Buildings* USD
Furniture USD
Office machinery & equipment USD
Vehicles USD
Total USD
Cost as of January 1, 2015
2 912 250
338 972
813 738
268 053
4 333 013
Additions
--
4 497
41 162
--
45 659
Cost
Disposals
--
--
--
(72 596)
(72 596)
Cost as of December 31, 2015
2 912 250
343 469
854 900
195 457
4 306 076
Balance at January 1, 2015
799 812
336 874
745 383
111 703
1 993 772
Depreciation charge
145 612
583
37 670
38 721
222 586
Accumulated depreciation
Depreciation of disposals
--
--
--
(72 596)
(72 596)
Balance at December 31, 2015
945 424
337 457
783 053
77 828
2 143 762
Net book value at December 31, 2015
1 966 826
6 012
71 847
117 629
2 162 314
Net book value at December 31, 2014
2 112 438
2 098
68 355
156 350
2 339 241
* Buildings include an amount of USD 1 295 690 representing the revalued amount of the grant obtained by the Chamber to finance a part of the administrative building of the American Chamber of Commerce in Egypt, according to the valuation conducted in 2008.
7. Held-to-maturity investments The held-to-maturity balance amounted to USD 1 700 000 at December 31, 2015, and represents the value of Commercial International Bank certificates of deposit, carrying a fixed interest rate of 4%, with maturity dates of 3 years ending on different dates in 2018.
8. Accounts receivable Description
December 31, 2015 USD
December 31, 2014 USD
Accounts receivable Less: Impairment loss on receivables
859 144 (208 339) 650 805
610 832 (208 339) 402 493
Description
December 31, 2015 USD
December 31, 2014 USD
Balance as of January 1, 2015 Write-offs during the year Balance as of December 31, 2015
208 339 -208 339
216 769 (8 430) 208 339
Description
December 31, 2015 USD
December 31, 2014 USD
Advances to employees
116 239
68 497
* Impairment loss is analysed as follows:
9. Other debit balances
Prepaid expense
2 250
2 250
Deposits held with others
737
1 508
Other debit balances
171 936
26 293
291 162
98 548
70 • Financial Statements
AmCham Egypt Annual Report
10. Cash and bank balances Description
December 31, 2015 USD
December 31, 2014 USD
Cash at banks - time deposits (monthly)
--
5 108 009
Cash at banks - time deposits (6 months)
3 173 279
--
Cash at banks - current accounts - USD
410 531
638 592
Cash at banks - current accounts - EGP
772 432
170 166
Cash in hand
25 376
79 961
4 381 618
5 996 728
The average interest rate on medium-term bank deposits (6 months) was 1.78% for US Dollar, and 9% for Egyptian Pound. For purposes of preparing the cash flow statement, the cash and bank balances are represented as follows:
Description
December 31, 2015 USD
December 31, 2014 USD
Cash at banks - time deposits (monthly)
--
5 108 009
Cash at banks - current accounts - USD
410 531
638 592
Cash at banks - current accounts - EGP
772 432
170 166
Cash in hand
25 376
79 961
1 208 339
5 996 728
The medium-term bank deposits amounting to USD 3 173 279 at December 31, 2015, were excluded from the cash and bank balances as their maturity exceed 3 months.
11. Provisions Description
Balance as of 1/1/2015 USD
Provisions formed USD
Provisions used USD
Balance as of 31/12/2015 USD
Provisions for claims
123 524
181 013
(12 362)
292 175
123 524
181 013
(12 362)
292 175
12. Other credit balances Description
December 31, 2015 USD
December 31, 2014 USD
Deferred income
1 298 458
1 180 493
American Chamber Foundation - Donation *
877 897
932 765
Accrued bonuses
282 970
435 574
Accrued expenses
77 601
124 285
Tax authority-salaries tax
131 455
46 233
Tax authority-withholding tax
3 533
5 261
Others
792 942
1 111 030
3 464 856
3 835 641
* This amount represents the net book value of the premises located at El Mohandeseen tower, which the American Chamber in Egypt decided to donate to the American Chamber Foundation. Procedures are currently in process to transfer the ownership of such premises to the Foundation.
Financial Statements • 71
AmCham Egypt Annual Report
Financial Statements 13. Deferred revenues – Grant
The value of the grant obtained by the Chamber for financing part of the cost of the administrative building of the American Chamber of Commerce in Egypt, which was revaluated and capitalized in 2008 and amortized over the expected useful life of the asset.
Description
December 31, 2015 USD
December 31, 2014 USD
Deferred revenues - administrative building
842 198
906 983
Amortized portion charged to the statement of revenues and expenditures
(64 785)
(64 785)
777 413
842 198
14. General and administrative expenses December 31, 2015 USD
December 31, 2014 USD
Payroll and personnel costs*
2 821 060
2 978 474
Management workshop programs
608 220
673 655
Business missions
165 072
183 971
Marketing
117 850
132 871
Publishing costs
190 905
154 444
Monthly luncheon
60 536
188 461
Business meeting
157 889
112 402
Telephone and fax
80 034
83 382
Building maintenance
72 062
85 421
Office supplies
58 446
78 432
Information provider and internet connectivity
48 313
57 994
Equipment maintenance
58 086
55 904
Utilities
61 469
59 274
Professional services
83 606
40 044
Online training costs
30 000
30 000
Subscription
9 772
28 134
Transportation expenses
15 190
20 637
Staff training
29 082
41 354
Insurance
8 635
10 557
Postage and courier
4 444
4 558
AmCham MENA Council
10 209
3 057
American Chamber Foundation subscription
672
699
Video conference
698
922
4 692 250
5 024 647
72 • Financial Statements
AmCham Egypt Annual Report
Payroll and personnel costs
Description
December 31, 2015 USD
December 31, 2014 USD
Wages, salaries, bonuses and other fringe benefits
2 655 808
2 816 349
Social insurance employer share
87 676
84 707
Medical insurance
77 576
77 418
2 821 060
2 978 474
15. Fair value of financial instruments According to the basis of valuation of the assets and liabilities followed by the Chamber as stated in Note (4), the fair value of the financial assets and liabilities are not materially different from their carrying values as of the balance sheet date. The carrying values of these financial instruments represent a reasonable estimate of their fair values. Note (4) of the notes to the financial statements includes the significant accounting policies used in recording and measuring significant financial instruments and their related revenues and expenses.
16. Risk Management of financial risks Credit risk This risk represents the inability of debtors with credit terms to pay all or part of their debts. Management extends different credit limits to its customers and makes assessment for doubtful accounts in order to account for relevant allowances for doubtful debts. The assets exposed to this risk on December 31, 2015, amounted to USD 859 144 (USD 610 832 in 2014). Management believes that there are no other credit risks except for what is already impaired. Foreign currency risk This risk represents changes in exchange rates which affect cash inflows and outflows in foreign currency and the valuation of assets and liabilities in foreign currency. To reduce this risk, the Chamber retains sufficient monetary assets in local and foreign currencies to cover liabilities denominated in the same currencies. As disclosed in Note (4), monetary assets and liabilities denominated in foreign currencies were translated using the official rate declared by
the banks dealing with the Chamber as of the balance sheet date.
17. Subsequent events During the subsequent period to the financial statements date, the exchange rate of the Egyptian Pound witnessed remarkable changes against foreign currencies, where the exchange rate of the Egyptian Pound against the US Dollar has increased from 7.83 Egyptian Pounds for 1 US Dollar to 8.95 Egyptian Pounds for 1 US Dollar. If the current exchange rates are applied to the Chamber’s balances as at December 31, 2015, foreign exchange losses of USD 99.5 K would result.
18. Amendments to the Egyptian Accounting Standards On July 9, 2015, the Minister of Investment issued a Decree for Law No. 110 of 2015, whereby amended Egyptian Accounting Standards were issued to replace the current Egyptian Accounting Standards for the preparation and presentation of financial statements. This law was published in the official newspaper, and should be applied on the financial statements of the entities which have fiscal years beginning on or after January 1, 2016
19. Fiscal year The fiscal year of the Chamber commences on January 1 and ends on December 31 each year.
20. Comparative figure Certain comparative figures were reclassified to conform to the current year’s presentation.
Financial Statements • 73
AmCham Egypt Annual Report
Financial Statements
Report of the Independent Auditors on the summary financial statements of the American Chamber Foundation The American Chamber Foundation was audited as of December 31, 2015, from which the below condensed financial statements were extracted, in accordance with the Egyptian Auditing Standards and an unqualified audit report on the financial statements for the year ended December 31, 2015, was issued. The condensed financial statements below present fairly, in all material respects, the full set of financial statements of the foundation as of December 31, 2015. For a better understanding of the financial statements as of December 31, 2015, and the results of the foundation’s performance and cash flows for the year then ended, it is necessary to refer to the full set of financial statements for the foundation as of December 31, 2015, and the related auditors’ report.
Note 1: Surplus for the year 31-Dec-15 EGP
31-Dec-14 EGP
Revenues
20 084
13 060
Expenses
(50 640)
(49 686)
(Deficit) for the year
(30 556)
(36 626) (All amounts expressed in Egyptian Pound)
Note 2: Current assets / liabilities Original currency
31-Dec-15 EGP
31-Dec-14 EGP
Time deposits
USD
286 348
276 789
Current account
EGP
282 125
322 250
Current account
USD
4 723
4 713
573 196
603 752
Total
(All amounts expressed in Egyptian Pound)
Note 3: Fund balance 31-Dec-15 EGP
31-Dec-14 EGP
Accumulated surplus
603 752
640 378
(Deficit) for the year
(30 556)
(36 626)
Fund balance at December 31
573 196
603 752 (All amounts expressed in Egyptian Pound)
74 • Financial Statements