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OCTOBER 2016
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OCTOBER 2016 VOLUME 33
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ISSUE 10
Cover Stor y Trumped up The American presidential slugfest shines a spotlight on Egypt’s strained friendship with the United States.
Cover Design: Nessim N. Hanna
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Inside 8 10
Editor’s Note Viewpoint
The Newsroom 12
In Brief The news in a nutshell
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Region Notes News from around the region
© Copyright Business Monthly 2016. All rights reserved. No part of this magazine may be reproduced without the prior written consent of the editor. The opinions expressed in Business Monthly do not necessarily reflect the views of the American Chamber of Commerce in Egypt.
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Market Watch
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Stock Analysis Wait and you still might not see
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Capital Markets A glance at stocks and bonds
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Money & Banking Forex and deposits
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Key Indicators The economy at a glance
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Egypt-U.S. Trade Imports and exports
In Depth 18
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Rising sugar prices leave a bitter taste Business and consumers suffer in the wake of commodities shortages New VAT sparks chaos Egypt finally implements tax reform
Business Monthly – October 2016
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Executive Life 40
Dining Out TV Dinners
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Travel A whale of a tale
The Chamber
Corporate Clinic
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Events
Under pressure The growing problem of stress in the workplace
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Member News
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New Members
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Classifieds
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Media Lite An irreverent glance at the press
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Editor’s Note
Director of Publications & Research Khaled F. Sewelam
TOMORROW
Editor-in-Chief Rachel Scheier
P
resident Abdel Fattah el-Sisi’s latest solution for Egypt’s ailing economy, collecting spare change from citizens, made international news last month. The president’s creative money-raising scheme, announced during a speech to launch a state-sponsored housing project, suggested rounding up on bank transactions and putting the difference in one big national piggy bank. Egypt needs change—but not in the form of piastres or even pounds. As this magazine went to press in early October, the latter’s unofficial exchange rate against the dollar had soared to dizzying new highs, with black market traders selling greenbacks for more than LE 14. The market continued to hold its breath in anticipation of an imminent official devaluation, which has been expected for weeks. But the Central Bank continued to hold the pound steady at LE 8.8 to the dollar, putting off a move that economists almost universally agree is inevitable if Egypt is to restore investors’ faith and start down the road toward economic recovery. We all have a tendency to postpone things we know will be difficult or painful—even when we know that doing so will only make it worse. When it comes to hard currency, Egypt has been living beyond its means for years, spending more than it brings in—the trade deficit stood at $37.6 billion in the last fiscal year. But while the country burned through its foreign currency reserves following the turmoil of 2011, as tourism and foreign investment dried up, officials have allowed only limited devaluations of the pound, seeking to avoid the politically unpalatable price hikes that accompany a plunging local currency. Unfortunately, Egypt’s strategy of delaying these hard choices while instead battling symptoms of the problem—shuttering forex traders, restricting imports—hasn’t worked. Not only that, it has now backed fiscal decision-makers into a corner where they have few options left. Meanwhile, the only real solutions to the dollar shortage—foreign investment and increased productivity—have become major casualties of the crisis. While local factories struggle to get dollars to import supplies, there are mounting complaints from multinationals that can’t repatriate profits—none of which is encouraging to prospective investors. In July, even Central Bank Governor Tarek Amer, who took over last November, acknowledged that propping up the pound over the past five years had been a “grave mistake.” Amer added: “We have two choices: either keep the pound stable or get factories working.” Now the only thing left to do is act.
R ACHEL S CHEIER
Contributing Editors Kate Durham Tamer Hafez Staff Writer Edmund Bower Contributing Writer Deana Elimam Senior Art Director Nessim N. Hanna Graphic Designer Emy Emile Advertising & Business Development Director Amany Kassem Advertising Coordinator Nada Auf Cartoonist Joseph Hakim Photographers Soha El Gabi Said Abdelmessih Production Supervisor Hany Elias Market Watch Analyst Amr Hussein Elalfy Chamber News Contacts Nada Abdalla, Azza Sherif, Susanne Winkler
U.S. address: 1615 H Street, NW • Washington, D.C. 20062 Please forward your comments or suggestions to the Egypt editorial office:
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Viewpoint
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CAIRO/NEW YORK/ WASHINGTON
n September 21, 2016, three of us representing AmCham Egypt and the Egypt-U.S. Business Council were privileged to attend President Abdel Fattah el Sisi’s meeting with 19 CEOs in New York City. The president came across, once more, as a credible, honest patriot. He recognized the problems and shortcomings of Egypt before anyone had the opportunity to highlight them; he also presented the progress made to overcome these issues – business, fiscal, economic – as well as on human rights concerns. The discussion covered security improvements in the country at large and in the Sinai, the challenge of population growth, the energy success story, infrastructure, investment opportunities and the correction of the religious discourse. The Q&A session triggered discussions about important topics such as the FX problems we are facing today, and the soon-to-be-signed IMF agreement. Although I would have liked to get into the details of this most constructive conversation, I feel compelled to move to the second part of our trip, which took us to Washington, D.C., where we joined a few more fellow members to meet with senior administration officials, think tank representatives, multilateral institutions, the famous International Monetary Fund (IMF) and a few politicians. I will not get into the individual meetings but rather go over a brief overview of the IMF, its mandate and history – as there is an unjustified fear among Egyptians concerning the forthcoming IMF loan agreement. The IMF’s fundamental mission is to ensure the stability of the international monetary system. It does so in three ways: By keeping track of the global economy and the economies of member countries; lending to countries with balance-of-payments difficulties, and giving practical help to members.
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The IMF oversees and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on the needed policy adjustments. On August 11, 2016, the IMF reached a staff-level agreement on a three-year US$12 billion Extended Fund Facility (EFF). The following is a direct quote from a press release (No 16/375) which was issued by the IMF. • The staff-level agreement is subject to approval by IMF’s executive board, which is expected to consider the request in coming weeks. • EFF supports the authorities’ comprehensive economic reform programs approved by the parliament. • The program aims to improve the functioning of the foreign exchange markets, bring down budget deficit and debt, and raise growth. It also includes strengthening the social safety net to protect the poor and vulnerable groups. Social protection is a cornerstone in the program. (End or quote). The statement above is quite reassuring, moreover in my opinion the fear of currency floatation, which means exposing the exchange rate to market forces, is greatly diminished by the fact that the market price is already reflected in the value of most goods as they are, directly or indirectly, affected by imports. We also know that dearly needed Foreign Direct Investment (FDI) will never flow into the country as long as we have two exchange rates, meaning that floatation would help generate the economic growth and job creation that are critical to the survival of Egypt by leading to a unified exchange rate. We should all support the efforts of our government and be reasonable in our expectations. Governments and central banks cannot succeed without the private sector contributions. A NIS A. A CLIMANDOS
President, AmCham Egypt
Egypt backs down on ergot ban, again
Egypt seeks loan from China
Officials said they were in talks with Chinese officials on a multi-billion-dollar financing package. Minister of International Cooperation Sahar Nasr told the state news MENA news agency Sept. 19 that Egypt was negotiating a prospective $4-billion loan, $3 billion of which would be spent on development projects, mostly in the power sector, with the remaining $1 billion to be used to bolster foreign reserves. A finance ministry official put the figure at $2 billion, reported Reuters. Egypt must secure at least $5 billion in bilateral financing in order to secure approval from the board of the International Monetary Fund on a
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$12-billion loan package to help overhaul Egypt’s ailing economy. During a Middle East tour by Chinese President Xi Jinping last January that was meant to bolster the country’s influence in the region, the Asian powerhouse pledged billions in aid and investment to Egypt.
Inflation reaches new highs in August
Egypt’s annual inflation rate accelerated to 15.5 percent in August, reaching its highest level in seven years thanks to a weakening currency and a hike in electricity prices. The bulk of the monthly increase was driven by higher prices of regulated items, primarily power, in addition to butane cylinders getting more
BUSINESS MONTHLY ARCHIVES
Backtracking on a controversial policy that threatened to set off a national food shortage, the government agreed to reverse its ban on ergot, a common grain fungus. The Sept. 21 announcement was the latest in a series of official reversals on the issue that have baffled traders and rocked the global wheat trade. Since last December, when Egypt, the world’s largest wheat importer, first announced a new zero-tolerance policy on ergot, Egypt’s conflicting policies on the fungus have thrown the world’s wheat trade into uncertainty. Three successive state tenders were cancelled in August after officials withdrew and reinstated the ergot ban. The decision to apply it retroactively infuriated traders, halting 540,000 tonnes of wheat that were already en route to Egypt, reported Reuters. Russia, a top supplier of wheat, temporarily banned produce imports from Egypt shortly after one of its grain cargoes was rejected. Backing down on the issue last month, officials said Egypt would return to the international standard of allowing levels of up to 0.05 percent of the fungus, which can be deadly in large amounts but is harmless in small quantities.
expensive due to distribution bottlenecks, according to the Central Bank. This was on top of spikes in the prices of fresh vegetables and red meat, increases that were partly offset by a decline in poultry and rice prices. The monthly rate was up by 1.93 percent compared to 0.74 percent in July. Meanwhile, annual core inflation increased to 13.25 percent in August from 12.31 percent the previous month, making for a month-onmonth increase of 0.61 percent. Reham El-Desoki, senior economist at Dubaibased investment bank Arqaam Capital, told Bloomberg that inflation could reach 20 percent by the end of the year. “You have a very strong negative base effect at this point, and it’s going to get worse,” she said.
In Brief
Local telecoms pass on 4G licenses
Egypt will consider shopping 4G licenses to the international market after all three local telecoms turned down an offer from the government. Telecom regulators confirmed that Vodafone, Orange and Etisalat had rejected the deal, saying the terms were not viable. In May, officials offered local telecoms first dibs on the fourth-generation licenses, which would theoretically have enabled them to offer Egyptian customers the faster mobile internet speeds available in other parts of the world. The only taker was state-owned landline operator Telecom Egypt, which in August paid more than LE 7 billion for a 4G license, with which the firm plans to break into the mobile market. The other local telecoms said that the deal didn’t offer enough spectrum to enable international-quality 4G service and cited the state’s requirement that they pay half of the cost in dollars. An ICT ministry official said in July that state-owned telecoms in China and Saudi Arabia as well as Kuwait’s Zain had expressed interest in buying the licenses.
Lagging tourism feeds BoP deficit
For the first time, Egyptians spent more money traveling abroad than foreign tourists spent in Egypt, according to Central Bank figures from the most recent fiscal year. Declining tourism revenue contributed to a deficit of $2.8 billion in Egypt’s transactions with the outside world in 2015/16, compared to a surplus of $3.7 billion the year before, reported the Bank. Tourism revenues dipped by 48.9 percent to $3.8 billion from $7.4 billion in 2014/15, while Egyptians’ overseas expenditures climbed to $4.1 billion from $3.3 billion the previous year, largely caused by an increase of $657.1 million in visa card payments. Remittances from abroad also fell by nearly 30 percent, registering $16.9 billion in 2015/16 versus $21.9 billion the previous year—thanks in part to an 11.7-percent drop in the amount of cash sent home by Egyptians working
overseas. Meanwhile, Egypt’s current account deficit yawned to $18.7 billion from $12.1 billion the previous year. The trade deficit narrowed slightly on low global oil prices, with both petroleumrelated and merchandise imports declining more dramatically than exports, which also fell. Net foreign direct investment increased to $6.8 billion from $6.4 billion the year before, thanks mainly to a hike in net inflows from greenfield investments, amounting to $4.5 billion (versus $3.8 billion last year) and $1.6 billion in oil sector investments.
Dollar breaks LE 13 on black market
The price of the U.S. dollar on the Egyptian black market hit a new high, surpassing LE 13 last month. The dollar, which had hovered at around LE 12.70 to LE 12.80 on the parallel market throughout September, jumped following a Sept. 26 speech by President Abdel Fattah el-Sisi in which he promised to lower the prices of basic commodities, “regardless of the dollar exchange rate.” The pound slid further in subsequent days, with traders reporting that the rate had hit LE 13.85 amid widespread anticipation of a devaluation of the pound, which has officially remained at LE 8.88 since March. In July, CBE Governor Tarek Amer called defending the pound over the past five years “a grave mistake.”
Egypt improves slightly on GCI
Egypt moved up one spot in the World Economic Forum’s annual Global Competitiveness Index, coming in 115th among 138 countries in fiscal 2016/7. Last year marked the first time since the 2011 revolution that Egypt’s standing improved, according to the WEF’s Global Competitiveness Report, which assesses countries on a number of factors driving prosperity and productivity. Egypt scored an overall 3.67 out of a possible 7, up from 3.66 in 2015, winning points for its large market size (25th), its relatively sophisticated
Business Monthly – October 2016
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In Brief
ST RE E T SE N SE Trump or Clinton?
If we want America’s economic and political policies to be friendlier to Egypt, then it’s definitely Donald Trump. I have listened to his speeches and what he talked about when he met with President Sisi. They seem to be on the same page on many topics. However, I personally prefer Hillary Clinton because when she was here she talked about political rights and freedom of speech. I don’t want to sacrifice our freedom for a chance to have a healthier economy and better relations with the United States. We tried that under President Hosni Mubarak and it led to the 2011 revolution. Ahmed Gamaleldin, 50, architect I would definitely pick Donald Trump. He and President Sisi both want the same things—for their countries to become powerhouses. This alignment in priorities and vision will work wonders for Egypt’s economic relations with the United States, and right now this is what we need more than anything. Hillary Clinton makes fair points, but if she wins, Egypt-U.S. relations will deteriorate fast. Mina Adel, 42, kiosk owner God help us if Americans choose Donald Trump as their next president. For one thing, his views sound like those of a dictator from the Middle Ages who sees the United States as an empire he needs to expand. People should give up a lot of their freedoms to serve the greater good, according to Trump. Of course, U.S. policy towards Egypt isn’t going to change overnight if Trump wins, but it will signal to Egyptian authorities that they don’t need to address political liberties any time soon. With Hillary Clinton, the issues would at least be on the table. Wafaa Yousry, 69, housewife I really don’t care who wins. The United States has longstanding relations and benefits from countries around the world and will not allow anything to change that. Trump and Clinton’s meetings with Sisi were nothing more than window dressing to show voters how they’ll deal with other countries. But we really need to stop focusing on what is happening in the biggest economy in the world and focus on our own flailing economy. Gamila Hassan, 35, translator Our president has shown great support for Donald Trump over Hillary Clinton. Therefore, for Egypt, I think it would be better for Trump to be president because then Egypt would have an easier time influencing U.S. policies to favor Egypt. History has shown that if the leaders of two countries get along, their economic relations benefit. Right now, this is what we want more than anything. Tamer Fahmy, 63, retired army general
COMPILED BY TAMER HAFEZ
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BUSINESS MONTHLY ARCHIVES
For Egypt, it doesn’t really matter who the president of the United States. That’s because the U.S. presidency is an institution that works with guidelines and regulations that change very little; a new president won’t change much. A lot of Egyptians had high hopes that Barack Obama would change U.S. policy to become friendlier with the Arab world and Palestinians in particular. But in the end, his policies remained the same as his predecessors. Yasmine Rashed, 36, journalist
KLM WILL HALT FLIGHTS TO CAIRO IN JANUARY.
business sector (85th) and its proximity to Europe. “Egypt needs to step up its reform efforts and address the major rigidities that plague its goods, labor, and financial markets, on which the country ranks 112th, 135th, and 111th, respectively,” noted the report. It also scored near the bottom of the index for its quality of education (134th) and overall security situation (133rd) “which remains fragile and imposes significant costs for businesses.”
Egypt gets $1 billion from World Bank
On Sept. 9, The World Bank transferred $1 billion to Egypt, the first tranche of a $3-billion loan meant to support the government’s economic development plan. The money will be used to “create job opportunities and improve citizens’ living standards,” said Minister of International Cooperation Sahar Nasr in a statement. The loan is part of a $21-billion international financing package that aims to restore investor confidence and revive an economy that has failed to rebound since the 2011 revolution. Prime Minister Sherif Ismail told Reuters that Egypt is hoping to get the second tranche of the loan before the end of the year. The country is also waiting on the
second installment of a $1.5-billion loan from the African Development Bank, after receiving the first $500 million at the end of 2015.
KLM to suspend flights to Cairo
In the latest bit of economic fallout as a result of Egypt’s ongoing forex shortage, KLM Royal Dutch Airlines announced that it will halt flights to the Egyptian capital starting in January. Citing “economic reasons,” the airline said in a statement that “the devaluation of the Egyptian pound and the decision of the Central Bank of Egypt to impose restrictions on the transfer of foreign currency out of Egypt have had a negative impact on results.” International firms from airlines to cement factories have complained of mounting difficulties repatriating profits, as the CBE has sought to preserve dwindling forex reserves for essential items such as food, fuel and medicine. In February, the government fielded public complaints from KLM’s parent company, which told Reuters that it had been waiting for months to send some $13 million outside the country in order to keep pace with costs. Other major carriers have echoed their complaints. �
Region Notes Caspian Sea
Black Sea
TURKEY
TUNISIA
MOROCCO
Mediterranean Sea
CYPRUS LEBANON
SYRIA
IRAN
IRAQ
ISRAEL JORDAN LEBANON
ALGERIA LIBYA
SYRIA
KUWAIT PALESTINIAN TERRITORIES
ISRAEL EGYPT JORDAN
Persian Gulf
BAHRAIN QATAR
UAE
SAUDI ARABIA
OMAN
Red Sea SUDAN
YEMEN
Arabian Sea
Map intended for illustrative purposes only and may not accurately depict national boundaries or disputed territories.
SOUTH SUDAN SUDAN
Atlantic Ocean
� OPEC agrees to cut production In a bid to boost lagging oil prices, the Organization of Oil Producing Companies agreed to scale back production slightly for the first time since 2008. On Sept. 28, following meetings on the sidelines of the International Energy Forum in Algiers, OPEC said it would reduce output to 32.5-33.0 million barrels per day, down from 33.24 million currently. “We have decided to decrease production by around 700,000 bpd,” Iran’s oil minister, Bijan Zanganeh told Reuters. Oil prices jumped almost 6 percent to $49 a barrel following the news on hopes that the deal represents a shift for OPEC, which until now has refused to cut petroleum production levels despite a global glut that has dragged down prices for two years. Saudi Arabia, OPEC’s de facto leader, has instituted economic austerity measures after registering a budget deficit of almost $100 billion last year. OPEC is expected to consider specific limits for member countries at a Nov. 30 meeting in Vienna.
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� America allows airplane sales to Iran The United States government has given the go-ahead for firms to sell commercial airplanes to Iran. Europe’s Airbus and U.S.-based Boeing announced Sept. 21 that they had received licenses from the U.S. Treasury’s Office of Foreign Assets Control, clearing the way for the aircraft manufacturers to access one of the last untapped aviation markets in the world. Both companies have announced separate, $25billion deals to sell planes to airlines operating in Iran. The licences contain strict conditions that the planes must be used exclusively for commercial passenger use and cannot be resold or transferred. Iran's 2015 nuclear deal with world powers, which limited its enrichment of uranium in exchange for the lifting some international sanctions, spurred a race for Iran’s newly opened, 80-million strong aviation market.
� Turkey to build new homes Indian Ocean
Turkey will build 64,000 new homes worth $2.5 billion by the end of this year, said state-backed housing agency Toki. The new residences will amount to some 10 per cent of new homes built in Turkey annually, Toki President Ergun Turan told Bloomberg, adding that nearly all of this year’s units are being built for the low and middle class. Affordable housing is a core business for Toki, which was founded more than three decades ago but became a real driver of the Turkish economy after the ruling AK Party came to power in 2002. Toki owns nearly half of the country’s biggest developer, Emlak Konut, and they’ve sponsored a recent campaign to boost sales by offering lower down payments and mortgage rates to help boost the economy, which took a hit following July’s failed coup attempt. Government auditors are preparing to produce an annual report on the agency, whose financial oversight has been criticized by government opponents. �
SOHA EL GABI
COMMODITIES SHORTAGE
RISING SUGAR PRICES LEAVE A BITTER TASTE
U
BY TAMER HAFEZ
p until a couple of months ago, Sanaa Mahmoud, a 39-year-old housewife who lives in Ard el Lewa, an informal neighborhood near Mohandeseen, was able to buy seven or eight kilograms of state-subsidized sugar every month from her local outlet.
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As well as helping to feed her family of seven, Mahmoud used the cheap sugar to bake cakes for sale at her husband’s local grocery. “The extra money helped us a lot,” she says. But in September, the government slashed the individual allowance for subsidized sugar by half, meaning Mahmoud was only eligible to buy three kilos for the month. That means that to continue
baking her cakes, Mahmoud would have to buy sugar at the current market price of around LE 9 per kilo—a cost she says would erase her profits. Still, officials had little choice but to slash the subsidized sugar allowance in the face of dwindling supplies, which are down by some 75 percent, according to Milad Mina, manager of the Ard el Lewa subsidized foods outlet. “Now
In Depth
we get just enough sugar to supply only 500 of the 2,000 people who come to the outlet during the month,” he says. Nor is sugar the only staple that’s running short in recent months. Cooking oil and rice have also been disappearing from shelves, especially in state-run outlets for the poor, as the ongoing hard currency shortage has exacerbated a lawless supply chain rife with market manipulation. Industry insiders say traders in search of dollars are exporting semi-finished goods, while others have been hoarding, driving up local market prices. “In June, we calculated that all state-owned sugar refineries would have no raw sugar in November and December if the Ministry of Supply couldn’t get us more,” says Abdul Hamid Salama, chairman and managing director of the state-owned Delta Sugar Co., which produces refined sugar from beets. With the government cracking down on the forex black market, it’s been increasingly difficult to source dollars in order to pay for imports, while the government has directed banks to reserve their precious greenbacks for crucial commodities. While sugar is considered a staple, it’s below wheat, oil and other critical items on the priorities list. If this state of affairs continues, the local sugar industry could be in trouble. This wouldn’t just hurt consumers like Mahmoud, it could jeopardize sweet shops, bakers and factories that rely on sugar as a key raw material. Like many basic commodities in Egypt, sugar production is predominantly controlled by the government, which owns all eight of Egypt’s sugar cane refineries and four of the six factories that process beet sugar, running some 75 percent of the country’s production. Egypt produces 2.4 million tons of sugar annually, 1.3 million tons coming from beets and 1.1 million from sugar cane, while consumption over the past two years has remained stable at between 3 and 3.2 million tons per year, according to Central Bank figures. “So anyone would expect that we would only import 700,000 to 800,000 tons to cover our shortage,”
says Salama, adding that the cost of these imports should also be lower than usual as global sugar prices are down. Between 2011 and 2015, the price of sugar dropped from $600 a ton to a low of $200 a ton in August 2015, according to the New York Mercantile Exchange. It has since crept back up to around $400. As state-owned local producers have seen their costs top LE 4,000 per ton of refined sugar thanks to inefficient and outdated machinery and methods and reduced economies of scale, imported sugar got cheaper. As a result, in 2014 and 2015, Egypt imported around 1.3 million tons of sugar annually, while domestic sugar producers stockpiled their unsold stock in storage facilities. The problem starts in the fields, explains Salama, where sugar beet and cane production is dominated by small farmers who lack the modern equipment and high-yield seeds that would enable them to boost profits. Sugar cane cultivation is down from 330,000 acres in 2015 to 280,000 acres this year, according to Farid Wasel, head of the Farmers and Agricultural Producers Syndicate. In the developed world, the syndicate head points out, government-supported seed and cultivation research has helped farmers increase their yields, while Egyptian farmers continue to rely on subsidized fertilizer and seeds. Farmers prefer to deal with large traders who can buy their entire harvest and offer more competitive prices. The same goes for state-owned factories, which also rely on middlemen. Unfortunately, this state of affairs gives these traders a lot of power. “I think that there are a total of eight traders who control this entire process. So it’s very easy for them to manipulate the market by controlling how much sugar passes through each stage,” says Amr Asfour, deputy chairman of the food products and commodities division in the Cairo Chamber of Commerce. By June, production at all stateowned refineries was about a million tons below its annual production target. Industry insiders blame traders for hoarding sugar as well as exporting
rather than selling to the local market, as the global price of sugar has slowly crept up again. “Traders want foreign currency,” says Salama. While Egypt was forced to import sugar between June and August, some 250,000 tons of raw and refined sugar were sold abroad, according to the General Organization for Export & Import Control. In early September, the government slapped a LE 900 per ton fee on all sugar exports to stem the outflow. “This calmed exports a bit, but they are still high relative to the shortage in the domestic market,” says Salama.
“THERE ARE A TOTAL OF EIGHT TRADERS WHO CONTROL THE ENTIRE PROCESS, SO IT’S VERY EASY FOR THEM TO MANIPULATE THE MARKET.”
Meanwhile, with sugar in short supply, the local retail price jumped 64 percent between early July and late September, from LE 5.5 to LE 9 per kilogram currently. “Import restrictions added to the demand for locally produced sugar, and local companies were not able to increase production to cope,” says Khaled Fathallah, deputy head of the Alexandria Chamber of Commerce. “You ended up with more expensive sugar and a scarcer supply.” Meanwhile, the high price of sugar has pushed more consumers to government discount-food outlets. “At the start of September, we were pumping 150 tons a day into our outlets,” says Adel el Khatib, chairman of Al Ahram Consumer Outlets Co., a state-owned chain that sells subsidized goods. “Sugar is disappearing off the shelves every day,” says Khatib. In response, the General Authority for Supply Commodities, which oversees subsidized food outlets, cut the per person sugar allowance from two or three kilos per person to one to prevent hoarding.
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Adding to the supply shortage crisis is the Gam’ety program, launched in late 2015 with the aim of increasing consumer access to affordable, semisubsidized goods. Under this Ministry of Supply initiative, certified private sector outlets receive priority to purchase state-produced sugar and other commodities at cost on the condition that they sell at a government-approved price that’s higher than at the outlets but below the free market. However, the program backfired, “because at the first signs of a shortage, the Gam’ety outlets purchased large quantities of sugar,” says Ahmed Bakr, a member of the grocers division at the Mansoura Chamber of Commerce. “Their panic helped exacerbate the shortage.” All this has led to price volatility in a jittery market, as shortages have also put private-sector retailers under pressure. At least two major supermarket chains, Ragab Sons and Carrefour, sugar prices have been fluctuating weekly in response to news and rumors. “We sometimes change the price on a daily basis because we received worrying news midday,” says a stock supervisor at a Carrefour outlet in Cairo. He explains that while the chain prides itself on selling goods slightly below the market retail price, they can’t go too low or the chain will face a run on the product as people buy up their cheap sugar to resell at a profit. At the end of the day, “No one benefits from a manipulated market,” says the source. He also noted that in recent weeks, cheaper sugar brands had been in noticeably short supply. “I have been hearing that many of those sugar-packaging firms are reducing output because of the higher prices,” says the Carrefour employee. Meanwhile, producers of packaged sweets are facing rising costs and supply issues, says Hassan el Fendi, managing director of Freedom Food Industries (Freedom 2000) and head of the Sugar Industries Division in the Food Industries Chamber of the Federation of Egyptian Industries. “We saw a massive drop in sugar production and imports happen in August. But
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SOH EL GABI
In Depth
because factories usually order ahead of time, it might be a few weeks or months before the higher prices are translated to the consumer,” says Fendi. Ahmed el Rashidi, managing director of packaged dessert producer El Rashidi El Mizan, says the firm had to pay LE 6,500 per ton of sugar in September, compared to LE 4,000 per ton for the July delivery. “We really have no option but to transfer this added cost to the consumer,” says Rashidi. Other sweeteners, like honey, are also likely to rise: Sugar is the most expensive component in refining Egyptian honey for the consumer market. In Gharbia governorate, Egypt’s honey-producing hub, sugar is now selling at LE 7,000 a ton, and the steep cost has driven many small honey makers permanently out of business, says Fouad Badran, chairman of the Honey Makers Association, a local industry group. “This is adding a lot of cost pressure,” says Badran. While many of Gharbia’s honey makers export their products in exchange for hard currency, their success has been based on access to cheap sugar. “If they have to buy imported sugar, their products will become too expensive to be competitive,” says Badran.
To address the shortage, the government announced in September that it will sell 50,000 tons of imported raw sugar to state-owned companies starting in October, with plans to import another 700,000 tons down the line. But Salama, for one, is skeptical that the state will be able to execute these plans on time, given the dollar shortage. The fast moving consumer goods section of the Federation of Egyptian Industries is pushing the Ministry of Supply and the Food Industries Holding Co.—the umbrella firm that oversees all state-owned sugar factories—to require greater transparency at various stages in the supply chain and to do away with middlemen. “We really need to find a different way of moving sugar from farmer to refinery to customers,” says Rashidi. “We can’t operate with such a high risk of sudden price hikes to an essential raw material in our industry.” Others in the industry agree that throwing money at the problem for additional imports will only be a Band-aid on a broken system that desperately needs better oversight. Says Salama: “I feel that the state is just as surprised as we are when a crisis happens.”
TAXES
SOH EL GABI
NEW VAT SPARKS CHAOS AND CONFUSION BY TAMER HAFEZ
“We are going ahead with reforms and will never look back,” said house speaker Ali Abdel Aal, announcing the passage of Egypt’s value-added VAT Sept. 7. President Abdel Fattah el-Sisi ratified the VAT the same day, capping months of wrangling between MPs and officials over the details of the new tax law, which is supposed to broaden Egypt’s tax base—nearly doubling tax revenue within the first year—helping to ease the country’s yawning budget deficit. A key part of
the government’s fiscal reform program, VAT is levied at each stage in the production chain of goods and services, making it harder to evade taxes. Many, however, worry that a new tax regime will add another financial burden at a time when many Egyptians are already struggling to make ends meet. Critics argue that rather than representing reform, the VAT is a convoluted process riddled with loopholes and inconsistencies. Businesses do not have much time to sort the
process out. The VAT went into effect Sept. 8, and companies have three months to amend their contracts, pricing and books. “A lot of businesses will be thrown into chaos,” predicts Nady Azzam, a finance professor at Ain Shams University. “This law will hurt the economy at large.” The International Monetary Fund has been pushing since the 1990s for Egypt to switch to a VAT, which is a key condition of the $12-billion financing package the IMF has tentatively agreed
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In Depth
to loan Egypt. Since 2013, officials have said the switch was imminent. For the last three years, the government has been on a VAT road show, trying to explain the new tax structure to industry groups and other members of the business community. Four different drafts of the VAT law went before parliament before it was finally approved at a rate of 13 percent for the first year compared to the old 10-percent general sales tax. Finance Minister Amr el Garhy argues that VAT—which is used by virtually every major economy in the world, with the notable exception of the United States—allows for fairer taxation. “We are not inventing the wheel with this VAT law,” he said at press event last month. The legislation also paves the way for the approval of the three-year loan package by the IMF’s executive board in the coming weeks. During fiscal 2016/17, officials project that the VAT will bring in an additional LE 26-27 billion in tax revenue, while the subsequent year—when the rate will rise to 14 percent—is expected to yield an extra LE 32 billion, according to officials, who argue that Egypt has been undertaxed for years. “Under the outgoing GST tax, revenue as a percent of GDP was very small compared to the global average,” says Amr el Monayer, a deputy at the finance ministry. In most advanced economies, tax revenue amounts to around 20 to 25 percent of GDP. In Egypt, by contrast, tax revenue in recent years has totaled less than 13 percent of GDP. “With the VAT, we aim to increase tax revenue by 1 percent of GDP every year until fiscal 2021/22, when it will be 18 percent,” said Monayer at an AmCham breakfast late last month. Executives voiced concerns at the event that certain aspects of the law— such as a clause granting tax exemptions for items that are “necessary for production”—are ambiguous and open the door to corruption. As its name indicates, a VAT is an attempt to tax businesses at each stage of production on the value added each time a good
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changes hands as it goes up the chain, from raw material to consumer product. Businesses can claim a credit for taxes they paid earlier in the supply chain. The same principle applies to imported goods, which are taxed when they arrive in the country and each time they change hands after that. Because the VAT has a higher revenue threshold at which businesses are subject to tax, the Tax Authority estimates that 120,000 small local businesses that were subject to sales tax under the old system won’t have to pay VAT. On the other hand, some 200,000 service providers—which weren’t subject to the general sales tax—”are now eligible to pay VAT,” says Mohamed Shawky, head of central operations at the Tax Authority. Like the old general sales tax, the VAT involves a complex formula for what is and isn’t supposed to be subject to tax. Products that are totally exempt include so-called essentials including baby food and pasta, sesame-based desserts and fruits and vegetables. Natural and butane gas, gold and paper used to print books and magazines are also exempt, as is tuition for international schools and the construction of mosques and churches. Certain products, meanwhile, including plant-based oils and flour-based baked goods and fertilizers will continue to be subject to a flat excise tax rather than the valueadded tax. So-called luxury products, like mobile telecom services and carbonated beverages, are subject to both taxes. While everyone agrees that the value-added tax will make things more expensive, the government argues that exempting basic commodities will cushion the impact on Egypt’s poorest citizens. Even products that are ostensibly tax exempt however, may go up as a result of the VAT, as a result of increasing taxes on manufacturing inputs and services that go into making them. For example, packaged organic fruits and vegetables might get more expensive because although the produce isn’t taxed, the packaging is.
What the overall effect of switching from a general sales tax to a VAT will have on consumer prices remains to be seen. Since early September, when the new tax system went into effect, certain mobile telecom services have gone up, subject to a 22.2-percent levy compared to 15 percent previously. The price of prepaid mobile calls, texts and 3G internet has jumped by around 10 percent across the board. “This will affect a huge proportion of mobile users because around 80 million lines are prepaid subscriptions, and they usually belong to low-income individuals,” says Ehab Said, head of the telecom division at the Cairo Chamber of Commerce. He notes that landline telephones and ADSL internet service are exempt from VAT, however. “The bills will remain the same as before,” says Said.
“WE ARE NOW ENTERING A WORLD OF UNPRECEDENTED PRICING CHAOS.”
Meanwhile, tobacco went up by 20 percent to as much as 40 percent for certain flavored products. The price of steel—critical for the real estate and construction sectors— increased by around 5 percent under the new system. However, the taxes on imported passenger cars, traditionally considered a luxury item subject to high taxes, have decreased slightly under the VAT— with vehicles taxed anywhere from 15 to 44 percent depending on the engine capacity. Locally made passenger cars will now enjoy the advantage of being taxed at a maximum rate of 29 percent compared to 44 percent for their imported counterparts. Air conditioners, refrigerators under 16 feet and TVs with smaller than 32-inch screens also enjoy a slight reduction in tax.
SOH EL GABI
In Depth
Many analysts are still puzzling over which products and services the government has chosen to tax at a higher rate under the new system. “In many cases, we don’t see any distinction between the tax rate for the smallest and the biggest consumers,” Atef Yacoub, chairman of the Consumer Protection Agency, told Al Watan News last month. Yacoub points out that this is not just illogical but unconstitutional, as Article 38 of Egypt’s constitution explicitly states that tax systems must be progressive—in other words, the rich are supposed to pay more than the poor. Meanwhile, even experts are confused about whether certain services, such as health and education, are taxed under the new law. Products and services related to health care, a basic right, are exempt, for example. However, pharmaceutical factories use packaging and other products that are subject to higher taxes. “I expect that 50 percent of locally made medicines will go up due to the VAT,” says Ahmed
al-Ezaby, chairman of the pharmaceutical section at the Federation of Egyptian Industries. Hospital fees themselves are tax exempt, but doctors and nurses—whether in public hospitals or private clinics—must pay VAT every time they treat a patient. In one of the more mystifying facets of the new VAT law, multinational firms doing business in Egypt must now pay tax on loans or services from their parent companies. Online purchases, even from companies located outside Egypt, are liable to pay VAT in Egypt— a rule that may be virtually impossible to enforce. Finance minister Amr El-Garhy predicted in July that the VAT would cause overall price hikes ranging between 0.5 percent for low-income Egyptians to 2.3 percent for the upper class— though widely varying forecasts have been thrown around by officials. This overall sense of confusion doesn’t bode well for consumers— especially given that one of the main arguments for instituting tax reform in
general and the VAT in particular over the years was to simplify Egypt’s labyrinthine sales tax structure, which had evolved in an ad hoc fashion to satisfy the demands of businesses and consumers and included a confusing array of special tax rates. But far from simplifying things, the VAT has so far left consumers more bewildered than ever. “We are now entering into a world of unprecedented pricing chaos,” says Mohamed el Sadat, an MP who is leader of the Development and Reform Party. “We have seen prices of a lot of things go up in the past week or 10 days, yet no one can determine whether these increases are because of the greed of traders or the dollar crisis or because of the application of VAT.” Good, bad or ugly, the new tax is here to stay, however. “The government promised the IMF that Egypt will have a VAT,” says Adel Amer, director of the Egyptian Center for Legal, Economic and Social Studies. “And we definitely need their money.”
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Trumped up
As the strangest U.S. presidential race in history enters its final days, Egyptians ponder the increasingly complicated relationship between America and its largest Arab ally.
By Deana Elimam
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L
ast December, following a mass shooting in San Bernadino, California, Donald Trump called for a “total and complete” ban on Muslims entering the United States. The then Republican frontrunner’s proposal was impractical (it would violate the First, Fourth and Fifteenth Amendments of the U.S. Constitution guaranteeing religious freedom and due process, among other things) and illogical (the San Bernadino murders were masterminded by a Pakistani-American who had been born and raised in the United States). But Trump’s proposal—one of his most outrageous— aimed to be just that; it played successfully to simmering post-9/11 anti-Muslim sentiment. In any case, it did not faze President Abdel Fattah el-Sisi—leader of the Arab world’s most populous country and home to some 80 million Muslims. In fact, the Egyptian leader had only positive things to say following their September meeting on the sidelines of the United Nations General Assembly in New York. In an interview with CNN several days later, Sisi dismissed Trump’s controversial comments on Muslims. “During election campaigns, many statements are made and many things are said,” said the Egyptian president, who instead stressed their shared hardline stance on terrorism. For his part, the Republican candidate for president of the United States called Sisi a “fantastic guy” and touted their positive “chemistry.” To clear up any lingering doubt on the matter, Trump’s campaign issued a statement stressing his “high regard for peace-loving Muslims.” Sisi’s meetings with Trump as well as with Democrat Hillary Clinton the same day were of course more about politics than substance. For Trump, meanwhile, a billionaire developer and former reality show star who has never held public office,
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the meeting with the Egyptian president was calculated to help him look presidential. A photo op with an Arab world leader who is tough on terrorism held obvious plusses for the GOP candidate. For Clinton, who has served as both first lady and secretary of state during her 30-year political career and met with Arab leaders from Hosni Mubarak to Palestinian leader Mahmoud Abbas, the meeting served to highlight her significantly more substantial credentials as a stateswoman. However, Sisi was less effusive about Clinton, who raised the issue of Egypt’s human rights record during the sit-down. The Democrat pressed the Egyptian president for the release of Egyptian-American Aya Hegazy, a U.S. citizen who has been imprisoned here since 2014 on what rights groups claim are false charges connected to running an NGO for street children. Still, for now, Sisi avoided saying anything publicly critical of Hillary, who would be the first female American commander-in-chief if she’s victorious in November. He sidestepped a question from CNN about whether Clinton, who he has met several times before, would make a good president: “Political parties in the United States would not allow candidates to reach that level unless they are qualified to lead a country the size of the United States.” Many American election observers would beg to disagree. The 2016 U.S. presidential election has featured accusations and clashes unlike any other in history. While one of his more outrageous suggestions, the Muslim ban wasn’t out of character for Trump, who has also warned against Mexican “rapists” and suggested building a wall to keep out illegal immigrants. In 2007, there were an estimated 195,000 Egyptian Americans, according to census data. Thanks to a recent spike in immigration, however, demographic researchers believe the number has swelled to upwards of 450,000.
Nonetheless, as the election entered its final weeks, many Egyptian lawmakers praised Trump. The 20-member parliamentary delegation that went to New York in September to rally support for Egypt’s political and economic reforms told reporters that Donald Trump would be a “good friend” to Egypt in comparison with Hillary Clinton, reported state-owned Ahram Online. “Sometimes it’s better if a candidate doesn’t have predisposed positions towards Egypt, because it gives us a chance to establish new relations,” says Mohamed El-Orabi, who heads the Egyptian parliament’s Foreign Relations Committee. Such statements reflect the tense state of affairs that has prevailed between Sisi’s Egypt and the Obama administration, which has been critical of Egypt’s current government. Following the mass protests that culminated in the ouster of President Mohamed Morsi in July 2013, the United States restricted military aid to Egypt, citing a U.S. law barring such assistance for unelected governments. In March 2015, the United States restored its annual $1.3 billion in aid to Egypt, citing U.S. national security, restoring its status as the second-largest recipient of American aid after Israel. The Egyptian regime has given high priority to its war on terror, fighting religious extremists in the Sinai Peninsula and elsewhere. Whoever wins the U.S. presidency, “Counterterrorism will be one of the most important issues facing the EgyptU.S. relationship in the future,” says Nabil Fahmy, a former Egyptian ambassador to the United States and foreign minister, echoing the view of many Sisi supporters that “it would be easier to tackle these issues with a Republican rather than a Democrat.” In contrast to Trump’s hawkish stance, a Hillary Clinton administration would likely be more or less a continuation of the foreign policies of Barack Obama, a president who
Cover Story
has been unpopular in Egypt, where there is a widespread perception that the American president backed Morsi and his Islamist administration. Seeking to capitalize on this sentiment, Trump blames Clinton for— among many other things—the political ascent in 2012 of the Muslim Brotherhood, which is now outlawed as a terrorist organization in Egypt. During a speech last summer at the Republican National Convention in Cleveland, Ohio Trump charged that “Egypt was peaceful,” before Hillary Clinton took the helm of the state department, when the country was then "turned over to the radical Muslim Brotherhood, forcing the military to retake control.” Clinton, who was secretary of state at the time of the 2011 uprising, looks back on the Arab Spring in her memoir, “Hard Choices.” While Obama backed Tahrir Square protesters’ demand for President Hosni Mubarak, a longtime U.S. ally, to step down, Clinton counseled pushing for a more gradual transition, offering the president what now seems like a “prophetic warning,” writes David Ignatius in The Washington Post. “It all may work out fine in 25 years, but I think the period between now and then will be quite rocky for the Egyptian people, for the region, and for us,” Clinton recalls telling Obama. “Senior Cabinet officials, including me, counseled caution,” she writes. “Those of us who favored the stodgysounding ‘orderly transition’ position were concerned that the only organized forces after Mubarak were the Muslim Brotherhood and the military.”
Troubled times
Since the Camp David Accords and the signing of the Egypt-Israel Peace Treaty in 1979, Egypt has been a key American ally in a volatile region. However, “The changes of the last five years have shaken the U.S.-Egyptian relationship to its core,” writes Middle East analyst Jon Alterman of the Center for Strategic & International Studies in Washington, D.C. in a report titled
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“Making Choices: The Future of the Egyptian-U.S. Relationship.” Alterman observes that “many Egyptians have come to believe that the United States was too accommodating to an elected government that was abusing its power and too critical of an unelected government with clear popular support.” Americans, meanwhile, felt that “Egyptians were squandering valuable opportunities” to build real democracy and tackled entrenched problems like poverty and corruption. Among Egyptians, resentment of what’s perceived as American meddling in Egypt’s affairs is at an alltime high. Under President Obama, says Orabi, the country has “suffered from a U.S. administration that does not understand the will of the Egyptian people.” Egypt’s cold but lasting peace with Israel has clearly benefited both Egypt and the United States over the years, argues Alterman, who writes that “the bedrock of the U.S.Egyptian relationship is the security ties that link the two countries.” U.S. military assistance accounts for about a quarter of Egyptian defense expenditures, and its friendship with the United States has boosted the country’s regional clout as well as its military might. Egypt now owns more than 200 F-16 warplanes and more than 11,000 M1 tanks. America, meanwhile, has benefited from Egypt buying its weapons. In regional affairs, Egypt “has often been a multiplier of U.S. power, and the United States has been a multiplier of Egypt’s power in return,” writes Alterman. As for what Hillary Clinton’s policies in the Middle East might look like, it’s worth noting that Clinton was an architect of one of Obama’s key foreign policy initiatives, the “Asia pivot,” which was largely meant to signal an end to the Bush administration’s obsession with the Middle East and terrorism (although the term has rarely been heard in the waning days of Obama’s presidency.)
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Trump, on the other hand, has vocalized very little in the way of a regional foreign policy apart from stamping out “radical Islam.” After two incidents in September—a bombing in New York that involved a suspect who praised the Islamic State and stabbings in Minnesota for which the Islamic State claimed credit— Trump pledged to “utterly destroy ISIS.” But he has refused to give any coherent specifics on what his strategy would be on the issue (or on many others)—apart from bombing “the hell out of those oil fields” controlled by the Islamic State. Alternately, Trump has called at different times for “very few troops on the ground” and deploying 20,000 to 30,000 troops to fight ISIS. His suggestion to solve to the global refugee crisis is to relocate Syrians fleeing the war to a “safe zone” financed by Gulf states “who are not spending any money and are rich as can be.” Indeed, Trump has singled out America’s Gulf allies, especially Saudi Arabia, for not doing enough to fight Islamist fanatics. On the Israeli-Palestinian issue, Trump initially advocated taking a “neutral” stance, but more recently, he’s tried to toe the traditional GOP line, speaking in favor of new Jewish settlements and calling himself “a big fan of Israel.” In a meeting with Prime Minister Benjamin Netanyahu of Israel that took place a week after his chat with Sisi, Trump went so far as to say he’d recognize Jerusalem as the capital of the Jewish state, a move that would represent a dramatic shift in U.S. policy not to mention alienate many in the Arab world. National security and foreign policy experts on both sides of the political spectrum have expressed alarm at Trump’s proposals, which have often been “contradictory, impossible and even illegal,” as the The Washington Post put it recently. “I don’t think he has a well-thought-through position on anything,” Eliot Cohen, a top state department official under President
George W. Bush, said to the paper. Cohen helped organize an open letter denouncing Trump earlier this year that was signed by more than 100 Republicans. “I don’t think he’s read much, I don’t think he’s studied these issues. I think, like with so many other topics, he’s just emoting,” he said. In a recent op-ed in the Wall Street Journal, Robert Gates, a former secretary of defense under the Bush and Obama administrations, called the Republican candidate “willfully ignorant about the rest of the world, about our military and its capabilities, and about government itself.”
Investing in the future
This often surreal American presidential race comes at a moment when U.S. foreign investment in Egypt is crucial to righting the country’s battered economy. More than 1,000 U.S. firms do business in Egypt, in sectors from energy to manufacturing, including multinationals like CocaCola, IBM, ExxonMobil, Citigroup, Microsoft, and Apache Corp. In 2015, U.S. investments in Egypt totaled more than $20 billion. Analysts generally agree that bolstering FDI is the only long-term solution to a spiraling foreign currency shortage that has spurred rocketing prices, hurt businesses and scared off investors. Last month, the pound hit a new low on the black market, trading at well above LE 13, compared with the official Central Bank rate of around LE 8.8. Foreign reserves have shrunk to near critical levels in this heavilyimport dependent country, registering around $19.6 billion in September compared to some $36 billion on the eve of the 2011 uprising. Egypt’s trade deficit remains close to $38 billion annually. Trade between Egypt and the U.S. amounted to more than $6 billion in 2015, with the surplus weighted heavily toward the United States—Egypt exported $1.4 billion worth of goods from the United States and imported
$4.7 billion that year, according to U.S. government statistics. Since 2007 Egyptian textile exports have benefited from the Qualified Industrial Zones deal, which enables companies operating within QIZ zones to export their products duty free to the American market in exchange for using a certain percentage of Israeli components in the manufacturing process. In August, Egypt struck a preliminary deal with the International Monetary Fund for a $12-billion loan package, which officials hope will send a reassuring signal to foreign investors that Egypt is on the right track to economic reform. The deal, which is still subject to the approval of the IMF executive board, is to be part of a larger, $21billion bailout package over the next three years that includes international bond issuances, support from the World Bank and African Development Bank and floating shares in public sector enterprises. The local business community is looking to the international loan package to help right the struggling Egyptian economy. Hisham Fahmy, former CEO of AmCham and the current head of AmCham Inc., the Chamber’s Washington, D.C. arm, said that the IMF aid is “coming at the right time and should give confidence to investors from the United States and elsewhere.” He added that “it will also resolve the foreign currency issue.” Critics, however, have raised concerns about how hard the policies of austerity on which the loans will depend— including subsidy cuts and higher taxes—will hit the Egyptian population, particularly the poor. Another question is whether the Egyptian economy can generate enough foreign currency to service its mounting debt, which is already eating up nearly a third of public spending. During his recent visit to the United States, Sisi touted recent efforts to make Egypt more business friendly by reducing its notorious
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levels of red tape, among other the General Authority for Investment recent interview that Egypt aims to
upgrades to roads and power infrastructure. “Egypt has had a very difficult five years preceded by a historical baggage of things that needed to be done and were not done,” he said. Meanwhile, much of the commenEgyptian press reveals a deeply cynical view of Egypt-American relations. Morsi Attallah, former editor in-chief of state-owned Al Ahram, writes in an September op-ed in the paper that Clinton and Trump are
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“two sides of the same coin” when it comes to the Arab world—but at least Trump is more upfront about his animosity. Trump’s anti-Muslim Brotherhood statements have also helped him score points with MPs and other members of the Sisi government. Ahmed Gad, a member of parliament’s Foreign Relations Committee, told the rightwing website Breitbart News that “90 percent of Egyptians would prefer Trump because he will not cooperate with terrorists.” Solaf Darwish, an MP from the Nile Delta governorate of “There is no question that President Sisi also saw Trump as representing a new political trend which stands political Islam and estrangement with Egypt under his rule.”
Such statements illustrate how dramatically local sentiment has changed President Barack Obama spoke before an emotional crowd at Cairo Beginning” with the Muslim world. “It is easier to start wars than to end them. It is easier to blame others than to look inward, to see what is different about someone than to find the things we share,” Obama then told a cheering Egyptian crowd. In the landscape of 2016, the words of the soon-to-be departing American president seem darkly prescient, no matter who wins in November. reset the relationship,” says Fahmy of AmCham. “There will have to be better communication between the two countries.”
Stock Analysis
Wait and you still might not see
A
ll eyes have been on the IMF lately, as investors wait for that first $4-billion of the three-year, $12-billion loan the agency has tentatively approved for Egypt. However, the cash comes at a cost—one that will mostly be borne by Egyptian consumers. With inflation rocketing and government debt and fiscal and current account deficits ballooning, Egypt has little room to absorb an imminently expected currency devaluation. Against this backdrop, investors were in a wait-and-see mode following the nearly week-long Eid holidays last month, which registered below-average daily trading. In the period between Aug. 15 and Sept. 15, all the main market indices fell. The benchmark EGX 30 was down 5.6 percent to 7,979.3, the EGX 70 was down 2.3 percent to 356.6 and the EGX 100 was down 0.1 percent to 808.6. All three had been in positive territory during the previous period, which just highlights how rocky the market has become. In this climate, the market also welcomed a newcomer (sort of.) The Misr Fertilizer Production Co., or MOPCO, which went public 18 years ago, saw its shares traded for the first time last month. Technically, the stock delivered a stellar 222-percent rise to LE 32.22 per share from its IPO price of LE 10 per share, set when the firm went public in 1998. However, when compared to its first opening price of LE 47.99, the stock was down 33 percent.
Another stock that made it to the top performers list was the Arab Drug Co. (ADCI), a member of the long-forgotten pharmaceutical sector. With a market cap just shy of LE 43 million, the company saw its shares advance 19 percent to LE 7.08. Not only is the stock trading below its par value of LE 10, but it is also valued at only triple its 12-month earnings and 35 percent below book equity. Another stock trading below its book equity is fertilizer company EFIC. The stock jumped 19 percent to LE 7.63 on the news the firm was planning to raise its subsidiary’s capital through an IPO, which would see it valued at around LE 1 billion—double EFIC’s market cap. Meanwhile, Oriental Weavers Carpet (ORWE) continued to press ahead, its shares up 12 percent at LE 7.84, bringing the stock’s winning streak to 57 percent in two months. Still, it’s valued at only 10 times its TTM earnings. While investors wait for the IMF to write its check, payday is around the corner for highyield listed flour milling companies scheduled to distribute their annual dividends in the next few months. Led by Middle & West Delta Flour Mills (WCDF)—up 21 percent—six of seven stocks ended the period in positive territory, except for South Cairo Mills (SCFM), which was down 9.7 percent. At press time, investors were still waiting for a devaluation that has been coming any minute for weeks.
IN THE SPOTLIGHT
Middle & West Delta Flour Mills Middle & West Delta Flour Mills (WCDF) stock jumped 21 percent from LE 49.25 to LE 59.78 during the period, ahead of milling companies’ dividend pay season, which usually comes in October or November. Another illiquid stock, WCDF, traded in 17 out of 20 sessions, with 37,559 shares worth LE 2.0 million changing hands. More than half the shares traded in the last six trading sessions of the period. The company’s board of directors has proposed a dividend distribution of LE 7 a share for fiscal 2015/16, implying a dividend yield of around 12 percent.
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Market Watch
Capital Markets Egyptian price indices - EGX 30
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EGX 30
Egyptian price indices - EGX 70
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Selected sector performance
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Capital Markets Corporate News EFIC seeks to take Suez subsidiary public The Egyptian Financial & Industrial Co. (EFIC) is taking solid steps to unlock the hidden value of subsidiary Suez Co. for Fertilizers Production (SCFP) through an IPO. SCFP’s initial estimated value is said to be around LE 1 billion, with EFIC planning to sell a 40-percent stake in the firm through an IPO or a strategic buyer.
German cement firm explores local opportunities A delegation from Heidelberg Cement is set to visit Egypt in October. The German cement manufacturer’s executives plan to explore investment opportunities in Egypt’s cement sector. In July, the company completed the acquisition of a 45-percent stake in Italcementi, which in turn owns a 55percent stake in Suez Cement (SUCE), making the latter part of the Heidelberg Cement Group.
Attijariwafa and Emirates NBD bid for Barclays Egypt Morocco-based Attijariwafa and UAE-based Emirates NBD reportedly submitted bids for Barclays Egypt at the end of August. The British bank is seeking to sell its African operations as part of a plan to simplify its structure and improve shareholder returns. Barclays Egypt has 56 branches and serves around 127,000 customers. Sources have previously quoted the equity value of Barclays Egypt at around $400 million.
Orascom Construction to buy back a million shares The board of Orascom Construction (OC) has approved a proposal to buy back up to 1 million shares. Dually listed on Nasdaq Dubai and the Egyptian Exchange, Orascom proposed buying its own common stock through an exclusive offer to Egyptian shareholders. The purchase price for the shares was to be determined by the board based on regulatory requirements and after obtaining shareholders’ approval at
a Sept. 28 extraordinary general meeting. OC currently has 117,761,379 outstanding common shares with a par value of $1 each. In June, OC had cancelled 280,113 shares, or 0.24 percent, of its issued stock at the time.
Eastern Co. and MB Engineering raise capital Eastern Co. (EAST), Egypt’s tobacco monopoly, will increase its issued and paid-in capital from LE 750 million to LE 1.5 billion through a 100-percent stock dividend. Eastern’s authorized capital will increase from LE 1.5 billion to LE 3 billion. Meanwhile, MB Engineering (MBEN) will increase its capital from LE 11 million to LE 33 million through a 200-percent stock dividend to be financed via legal reserves and capital surplus resulting from Phase 1 of its capital increase as well as retained earnings.
MOPCO’s shares finally trade after 18 years Trading on Misr Fertilizers Production Company (MOPCO) shares began on Sept. 7, 18 years after its IPO back in 1998, when the firm was an oil company. The stock opened at its par value of LE 10 and traded at as high as LE 50 per share after price limits were lifted. However, it’s worth noting that the company’s financial advisor set the stock’s fair value at LE 52.18 a share. MOPCO had reported an annual increase of some 216 percent in its earnings report for the first half of 2016 to LE 404 million on revenues of LE 482 million, up 114 percent.
Heliopolis Housing invites bids for new compounds Heliopolis Housing & Development (HELI) asked contractors linked to the Holding Co. for Construction & Development (HCCD) to bid for the implementation of two new mini-compounds. The developments, in the Fifth District in New Heliopolis City, total 11,965 square meters, including 20 twin villas in addition to four stand-alone villas.
International stock price indices Sept. 15
Aug. 15
June 15
April 15
value
% change
value
% change
value
% change
DOW
18,212.48
18,636.00
-2.27%
17,640.17
3.24%
17,897.46
1.76%
NASDAQ
5,249.69
5,262.00
-0.23%
4,834.93
8.58%
4,938.22
6.31%
S&P 500
2,147.26
2,190.15
-1.96%
2,071.50
3.66%
2,080.73
3.20%
FTSE 100
6,730.30
6,941.19
-3.04%
5,966.80
12.80%
6,343.75
6.09%
NIKKEI 225
16,405.01
16,869.56
-2.75%
15,919.58
3.05%
16,848.03
-2.63%
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Business Monthly – October 2016
Market Watch
Money & Banking INTEREST RATES
BANKING & RESERVES (in millions of LE) 2015
2016
November
December
January
February
March
Apri
May
June
Reserve Money
431,665
420,638
418,881
410,150
430,378
442,281
464,664
478,082
Int'l Reserves (net, US$ mln)
16,445
16,478
16,534
16,586
17,011
17,521
17,546
15,536
Domestic Liquidity
1,876,828
1,905,464
1,909,422
1,922,685
1,987,839
2,006,632
2,044,293
2,094,500
Foreign Assets (net)
1,361,759
1,384,872
1,391,490
140,230
1,457,994
1,466,460
1,491,322
1,521,565
Domestic Assets
1,876,828
1,905,464
1,909,506
1,922,685
1,987,839
2,006,632
2,044,293
2,094,500
17.49
17.28
17.29
17.03
18.77
18.83
18.61
18.53
End of
Dollarization Rate (%) Discounted Bills (except CBE)
4,419
4,844
4,602
4,623
4,749
4,660
4,963
5,601
780,417
786,655
793,064
799,755
847,574
860,783
920,697
937,126
Securities (except CBE)
1,067,142
1,105,680
1,112,928
1,121,730
1,179,715
1,199,345
1,254,065
1,283,616
Currency in Circulation
323,893
324,569
326,179
325,132
331,977
342,842
352,896
369,321
Bank Loans (except CBE)
EGYPTIAN POUND EXCHANGE RATES Currency Australian Dollar Bahraini Dinar British Pound Canadian Dollar Chinese Yuan Euro Indian Rupee Japanese Yen (100) Jordanian Dinar Kuwaiti Dinar Lebanese Pound (100) Russian Rouble Saudi Riyal Turkish Lira UAE Dirham US Dollar
Sept. 15 6.626 23.355 11.701 6.730 1.328 9.957 0.132 8.630 12.463 29.368 0.578 0.136 2.362 2.972 2.413 8.865
Aug. 15, Amount 6.774 23.491 11.439 6.835 1.335 9.882 0.132 8.740 12.456 29.339 0.575 0.137 2.360 2.989 2.411 8.858
2016 change -2.20% -0.58% 2.29% -1.54% -0.48% 0.75% -0.08% -1.26% 0.05% 0.10% 0.52% -0.42% 0.11% -0.55% 0.07% 0.08%
June 15, 2016 Amount change 6.528 1.50% 23.3312 0.10% 12.5412 -6.70% 6.898 -2.43% 1.344 -1.15% 9.963 -0.07% 0.131 0.49% 8.356 3.28% 12.454 0.07% 29.339 0.10% 0.579 -0.17% 0.134 1.24% 2.361 0.06% 3.024 -1.73% 2.411 0.09% 8.858 0.08%
April 16, 2016 Amount change 6.799 -2.55% 23.332 0.10% 12.536 -6.66% 6.896 -2.40% 1.366 -2.77% 9.977 -0.20% 0.133 -0.54% 8.103 6.50% 12.458 0.04% 29.305 0.22% 0.584 -1.03% 0.134 1.57% 2.361 0.07% 3.102 -4.20% 2.411 0.10% 8.857 0.09%
Sept. 15, 2015 Amount change 5.549 19.40% 20.530 13.76% 12.038 -2.80% 5.887 14.32% 1.223 8.60% 8.837 12.67% 0.117 12.52% 6.484 33.10% 10.970 13.60% 25.796 13.85% 0.511 13.11% 0.115 17.97% 2.079 13.64% 2.553 16.40% 2.123 13.64% 7.801 13.64%
Business Monthly – October 2016
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35
Market Watch
Key Indicators DEMOGRAPHICS 2008
2009
2010
2011
2012
2013
2014
2015
Total Population (millions)
79.1
83.5
84.5
88.0
90.2
92.2
94.7
96.1
Labor Force (millions)
24.7
25.4
26.2
25.8
27.0
27.6
28.4
28.5
Labor Force / Population (%)
32.8
33.1
33.4
33.0
32.7
32.7
31.3
32.2
8.7
9.4
9
12.0
12.7
13.2
13
13
Unemployment Rate (%)
SOURCE:
CENTRAL BANK OF EGYPT
BALANCE OF PAYMENTS (in millions of U.S. $) 2015/16
2014/15 Trade Balance
Q1
Q2
Q3
Q4
End of year
Q1
Q2
Q3
-9,742.1
-10,430.3
-9,385.4
-9,227.6
-38,785.4
-9,985.9
-9,561.6
-9,858.5
Exports
6,469.2
5,769.7
4,617.7
5,201.6
22,058.2
4,646.1
4,399.1
4,275.5
Imports
-16,211.3
-16,200.0
-14,003.1
-14,429.2
-60,843.6
-14,632.0
-13,960.7
-14,134.0
Services (net)
2,109.8
1,775.8
341.6
500.6
4,727.5
1,686.8
543.7
177.9
Receipts
6,448.8
6,008.3
4,385.0
5,182.5
22,024.6
5,142.9
4,131.6
3,513.9
Payments
4,339.0
4,232.5
4,043.4
4,682.2
17,297.1
3,456.1
3,587.9
3,336.0
Balance of Goods & Services
-7,632.3
-8,654.5
-9,043.8
-8,727.3
-34,057.9
-8,299.1
-9,017.9
9,680.6
Transfers
6,188.6
5,797.2
4,963.1
4,926.8
21,875.7
4,318.8
3,992.7
4,131.4
Balance of Current Account
-1,443.7
-2,857.3
-4,080.7
-3,800.5
-12,182.2
-3,980.0
-5,025.2
-5,549.2
Capital & Financial Account
811.4
72.4
6,067.2
10,682.6
17,633.6
1,500.5
7,816.9
8,224.8
Foreign Direct Investment
1,773.2
960.0
2,947.9
689.9
6,371.0
1,385.5
1,718.5
2,772.9
410.0
-1,427.0
-29.1
4,771.0
3,724.9
3,656.7
-251.6
235.4
Overall Balance
SOURCE:
CENTRAL BANK OF EGYPT
NON-PETROLEUM TRADE (in millions of U.S. $) Exports (Q3 2015-16) Total
Imports (Q3 2015-16)
Balance ( Q3 2015-16)
4,275.5
14,134.0
259.6
634.7
-375.1
1,354.5
4,531.0
-3,176.5
Other European countries
286.7
1,135.9
-849.2
Russian Federation & CIS
59.1
832.0
-772.9
1,401.6
2,426.0
-1,024.4
Asian countries (non Arab)
489.7
2,797.6
-2,307.9
African countries (non Arab)
119.5
165.5
-46.0
4.5
73.4
-68.9
300.3
1,537.9
-1,237.6
U.S.A. E.U.
Arab countries
Australia Other countries
-9,858.5
SOURCE:
INFLATION
The CPI (Consumer Price Index) and PPI (Producer Price Index) are based on the results of surveys of expenditure and consumption and relevant baskets of goods and weights. SOURCE:
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CENTRAL BANK OF EGYPT
Business Monthly – October 2016
GDP GROWTH
Gross Domestic Product (GDP) growth rates are based on 2001-02 prices.
SOURCE:
CENTRAL BANK OF EGYPT
CENTRAL BANK OF EGYPT
TOURISM VISITS
Year 2014-15 2013-14 2012-13 2011-12 2010-11
Tourists 10.24 million 7.97 milion 12.21 millon 10.95 millon 13.7 millon SOURCE:
Change 28.6% -34.7% 9.2% -8.2% -12.9%
CENTRAL BANK OF EGYPT
Market Watch
Egypt-U.S. Trade EGYPTIAN EXPORTS TO THE U.S. (in millions of U.S. $)
EGYPTIAN IMPORTS FROM THE U.S. (in millions of U.S. $)
U.S.-EGYPT TRADE DEFICIT (in millions of U.S. $)
EGYPTIAN EXPORTS TO THE U.S. DURING JULY 2016
EGYPTIAN IMPORTS FROM THE U.S. DURING JULY 2016
SOURCE:
US INTERNATIONAL TRADE COMMISSION (USITC)
Business Monthly – October 2016
I
37
Stress on the job
UNDER PRESSURE The growing problem of stress in the workplace Published by the International Labour Organization Analysis by Edmund Bower
E
arlier this year, Bloomberg ranked 74 countries according to how stressful they were, from the most stressful (Nigeria) to the least stressful (Norway.) Egypt scored relatively high on the list, weighing in as the 15th most stressful most country in which to live. After all, the 20 million or so of us who live in Greater Cairo must contend with some of the world’s highest levels of pollution, crowding and noise (A 2007 study by the Egyptian National Research Center concluded that the average noise level in the streets of Cairo streets was 85 decibels—the equivalent of standing 15 feet from a moving freight train.) Meanwhile, workers all over the world are experiencing record levels of stress on the job, according to study on workplace stress released earlier this year by the International Labour Organization. According to “Workplace stress: a Collective Challenge,” factors like increased competition, higher expectations and longer working hours are all contributing to a more stressful working environment, with grave consequences to people and society. “If health at work is threatened, there is no basis for productive employment and socio-economic development.” Stress, a universally discussed concept in 2016, is in fact a relatively new one. The term was first used in 1936 by endocrinologist Hans Selye, who defined it in biological terms as “a non-specific response of the body to any demand of change.” A stressor could be “a biological agent, an environmental condition, an external stimulus, or an event,” according to Selye’s definition, and could be positive or negative. These days, however, “stress” has an almost universally negative connotation. The ILO
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defines stress as a “harmful physical and emotional response caused by an imbalance between the perceived demands and perceived resources and abilities of individuals to cope with those demands.” Stress in the workplace has been in the spotlight since the 1990s, as researchers and policymakers have increased their focus on occupational health and safety. The ILO argues that the issue is more relevant now than ever, as the workplace has undergone enormous shifts. With work increasingly “dictated by instant communications and high levels of global competition, the lines separating work from life are becoming more and more difficult to identify.” Globalization and technology have changed the nature as well as the pace of people’s jobs, subjecting them to longer hours, more competition and pressure. Communications advances designed to ease our jobs are in fact stressing us out more than ever. Increasingly, technologies like email and smartphones have meant that professionals are often expected to work long, unsociable hours, sending emails and checking reports long after leaving the office. We are less and less able to switch off from work and separate their personal and professional lives, which the ILO identifies “as a potential source of stress, particularly for dual career couples and those experiencing financial difficulties or life crises.” Changes in the way the world does business are also putting more stress on workers. Corporations, subject to the demands of a global economy, are pushing employees to their limits to stay competitive, while changing employment patterns involving more part-time, temporary and freelance workers mean “higher job demands and job insecurity.” These trends have been highlighted during recessions and
Stress on the job
other periods of economic stagnation, such as the 2008 global financial crisis. Businesses were forced “to scale down their economic activity in order to remain competitive, with a boost in restructuring, downsizing, merging, outsourcing and subcontracting, and massive layoffs.” Many of today’s workers live in fear of being “downsized,” or having to cope with reduced hours, heavier workloads or less pay in order to cope with large-scale restructurings. “Both quantitative workload (the amount of work to be done) and qualitative workload (the difficulty of work) have been associated with stress.” Other hazardous factors include “low value of work, low use of skills, lack of task variety and repetitiveness in work, uncertainty, lack of opportunity to learn, high attention demands, conflicting demands and insufficient resources.” Another problem is “role ambiguity,” in which workers aren’t sure what’s expected of them or how well their work is being received. Poor communication between employees and employers can result in needless stress, even if workloads are adequately assigned. Violence and abuse “can affect not only the victims but also the witnesses, particularly in jobs involving a great deal of teamwork and customer orientation.” While most of us tend to associate stress with working too hard, doing work that isn’t challenging enough can also be stressful. Monotonous tasks can exacerbate workplace stress; so can the low job satisfaction and low self esteem associated with insufficient workloads. Conversely, employees who have a sense of agency and feel invested in their work tend to be happier. “Overall, research indicates that greater opportunities for participating in decision-making are associated with greater satisfaction and a higher feeling of self-esteem.” According to the ILO’s Expert Opinion Study, which surveyed 324 experts from 54 countries, workplace stress is a global problem, though its causes vary by region. Respondents in the Americas, Europe and parts of Asia listed work overload as the number one problem, while “poor organizational culture” was the biggest concern in Africa and Arab states. In fact, Arab countries were the only ones that did not to cite work overload and time pressure as major concerns. Rather, “poor management, low reward and low recognition feature high in Africa and the Arab States.” Moreover, experts in these regions “highlighted the lack of prioritization of physical violence, harassment and discrimination issues” in the workplace. The symptoms of excessive stress at work include exhaustion, anxiety, depression and burnout. The latter, a syndrome that was identified in 1974 by psychologist Herbert Freudenberger, is defined by the ILO as “a state of physical, emotional and mental exhaustion that results from long-term involvement in work situations that are emotionally demanding.” It is characterized by “emotional exhaustion, cynicism (negative, dehumanized, and insensitive attitudes towards people who are the recipients of one’s services), depersonalization, lack of involvement at work, low level of personal accomplishment and inefficiency.” The symptoms of burnout are similar to those of depression, and can
often lead to equally unhealthy coping mechanisms like alcohol and drug abuse, smoking, a bad diet and sleeping poorly. Moreover, a growing number of studies have established a link between a “poor psychosocial work environment and workrelated stress” with an increased risk of occupational accidents. One of the better-known symptoms of workplace stress is absenteeism, a phenomenon that has been widely researched, “owing to its widespread prevalence and its associated cost to enterprises and society.” The other side of the coin is presenteeism, in which sick employees come to work rather than taking leave—a problem that not only spreads disease but can “lead to burnout over time.” Both absenteeism and presenteeism are common symptoms of stress, often indicating job unease, “poor social relationships at work” and “limited career progression.” Stress and burnout can seriously impact the lives of workers and ultimately lead to “physical impairments such as cardiovascular disease [the largest single killer worldwide] and musculoskeletal disorders” in addition to exhaustion, anxiety and depression. In Japan, a nation with a particularly zealous work ethic, there is a word for working oneself to death as well as one for work-related suicide. The latter is often caused by extreme stress at work, and statistics indicate that such deaths are on the rise in Japan. Of course, employees are not the only ones to bear the costs of excessive stress on the job; it also takes a heavy toll on businesses and the economy. The adverse effects on companies often include an “increased staff turnover, internal transfers and retraining” and a poor public image. In Europe, work-related depression costs an estimated €617 billion a year (in loss of productivity due to absent or sick workers and health and social welfare expenses). A 2012 report on mental health in the workplace found that in OECD countries, the cost of mental illness in the workplace amounted to an average of 3.5 percent of GDP. While it assiduously tabulates the high costs of job stress, the ILO does not offer much in the way of specific advice for tackling the problem. “In times of change in the world of work coping successfully with psychosocial risks in the workplace is essential for protecting the health and wellbeing of workers while enhancing the productivity of organizations,” it concludes. Achieving this should involve a “multi-faceted approach” involving the prevention of job-related diseases and injuries, better working conditions and higher levels of organization. The only clear take-away of the report is included in the title: stress in the workplace is “a collective challenge” rather than a burden for workers to bear alone. Nor does the responsibility for reducing stress lie solely with employers. A greater awareness about workplace mental health is needed to create a framework in which individuals and institutions work together. “The prevention of occupational accidents and diseases, the promotion of a healthy working life and the building of a preventive culture is a shared responsibility of governments, employers and workers, health professionals and societies as a whole.”
Business Monthly – October 2016 I
39
COURTESY OF OAK GRILL
Dining Out
TV DINNERS
T
BY EDMUND BOWER
he Conrad Hotel, with its brutalist architecture and red neon sign, could be a set for “Miami Vice,” the classic 1980s detective show. One imagines mustachioed gangsters with dollar-stuffed suitcases holed up in the rooms or playing poker in the smoky casino. Walk into the lobby with its 30-foot indoor palm trees and valets buzzing about in matching gold-buttoned jackets, and you half expect to see Pablo Escobar strolling through with his entourage.
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Business Monthly – October 2016
In reality, however, the Conrad—like many of Cairo’s five-star hotels—is pretty quiet these days, the Panama-style lobby populated by sparse groups of besuited businessmen rather than high rollers. In an apparent attempt to jazz things up, the hotel recently announced a rethink of The Oak Grill, its signature second-floor eatery, replacing its runof-the-mill Continental-California cuisine with a “modern Lebanese” menu designed by celebrity chef Joe Barza, the star of the Middle East edition of “Top Chef.” A 20-foot cutout of Barza, with his white goatee and pork-pie hat,
somewhat disarmingly greets patrons walking into the hotel. According to the Conrad’s website, Barza is injecting the menu with an “Arabian-Mediterranean touch,” with signature dishes such as Fattouch with grilled halloumi, Bourgoul with OAK smoked chicken and OAK smoked Sea Bass Shawarma (caps theirs.) Apparently, the Oak Grill isn’t just keeping its name, it’s decided to go literal with the concept. With its giant mirrors and cream-colored leather chairs (cream is big at the Conrad), the décor is also unchanged. Walking into the dining room at 8:30
p.m. on a recent Monday, we found only two other tables occupied, one by a lone Western gentleman in white shirtsleeves, working his way through a series of Stellas. The “soothing live entertainment” that’s another new feature consisted of a female singer in a black dress crooning Lebanese pop hits into a microphone. Business Monthly’s last visit to the Oak Grill, nearly two years ago, was overshadowed by the bar’s failed, repeated attempts to mix a martini, the world’s most famous cocktail. So we decided to begin with a test round of martinis (LE 62). We were served straight sweet vermouth—the bar repeating the same mistake from last time of mixing up the classic James Bond drink with the Italian liquor brand. The food got off to a better start, with a basket of freshly baked thyme and sesame-seed bread accompanied by two simple but tasty dips, one of chili cheese and the other featuring chopped tomatoes in fish oil. So far, so good. Then came the starters, from which we’d chosen the Grilled Cheese Samosa (LE 45) and the Hummus Trilogy (LE 75), which, despite the name, did not turn out to be a story about hobbits trekking across the Levant. Rather, it consisted of three flavorful variations on the classic chickpea-tahina dip: original; red bell pepper; pesto hummus. The other dish was met with skepticism by my Lahoreborn companion—who argued that it’s impossible to find good samosas outside of Pakistan. Unlike their subcontinental counterparts, which are usually filled with vegetables or meat, the samosas at The Oak Grill were prepared Lebanese-style, the four deep-fried triangles of filo dough filled with a mixture of melted halloumi, feta and mozzarella cheese. They earned my Pakistani colleague’s reluctant approval. The mains were less successful. To be fair, we didn’t pre-order them with the starters, but even so, the singer managed to get in four Yasmine Hamdan tunes between courses. God knows how the kitchen might cope if it had to deal with more than three tables. Still, we’d have been willing to overlook the
COURTESY OF OAK GRILL
Dining Out
slow service if the food had been better. Wanting to sample the new house specialities, we had ordered from the Chef Barza Suggests section. The Duck and Chicken Duo (LE 175), a grilled leg of duck and a chicken breast with orange tahina sauce on the side, felt like a Lebanese take on the 1960s French classic duck à l’orange, which, although a neat idea, failed in the execution. Both birds were dry, and the bitterness of the tahina overpowered the fruit’s sweetness. The Mediterranean Jumbo Shrimps (LE 210)— half a dozen king prawns cooked in their shells with sliced onion and parsley—were also overdone. The dry white meat of the shrimp was hardly worth the effort of peeling the fish from their shells. Apart from few limp slices of grilled courgette and eggplant, the highlight of the dish was the cheesy flatbread creation that lay beneath the pile of overpriced shellfish. By the time our mains had been cleared, we were the only table left in the place—apart from the beer-nurser still stoically drinking in the corner. The singer in the black dress carried on, bravely reeling off Fairuz hits to the nearly empty room. Eventually, our dessert arrived. one Chocolate Fondant (LE 60). The fondant was served with a scoop of creamy vanilla ice cream that could have been homemade. However, the fondant, which is supposed to be
chocolate sponge pudding with a warm, liquid center, was cakey. By the time it reached the table, the liquid center had all but vanished, soaked up by the cake. The Saffron Mouhlabiyah (LE 60), a variation on the starchy milk pudding with rose water that is more or less like a Lebanese crème caramel, was served in a wide-rimmed glass and topped with chopped pistachios. Although very fragrant—I wondered momentarily if the waiter had overdone it on the aftershave—it also missed the mark texture-wise. Rather than creamy, the mouhlabiyah was well on its way to the consistency of Turkish delight. With cooking shows like “Top Chef” gaining a huge following in countries like Egypt in recent years, the Conrad’s celebrity-chef strategy is a shrewd marketing move—particularly as competition for Cairo’s dwindling five-star hotel clientele has left many of these restaurants resorting to desperate measures. But despite all the hype, we couldn’t help feeling underwhelmed as we paid the bill and prepared to descend the Conrad’s “Dynasty”-worthy spiral staircase. The girl in the black dress was crooning Kifak Inta, and the man in the white shirt had ordered another Stella. At the end of the day, most diners in fivestar hotels aren’t there for the food— they’re looking for a couple of hours of luxury make believe.
Business Monthly – October 2016 I
41
A WHALE OF A TALE BY KATE DURHAM
I
t was the last leg of our dive at Marsa Bereika, just offshore in Ras Mohamed National Park at the southernmost tip of the Sinai Peninsula, and we were doing what scuba divers usually do—serenely admiring the coral. (Working hard underwater makes you breathe faster, meaning a shorter dive.) I had just noted the half-full mark on my own oxygen tank when the water erupted in the rattles and clangs of the noisemakers divers use to get their underwater buddies’ attention. Ahead of me, half a dozen divers were sprinting toward the edge of the plateau, frantically pointing like idiots. What could it be, I wondered, as I flippered into overdrive to catch up with the crowd? Little did I suspect that it was a real live whale shark—the Mt. Everest of the marine world. Whale sharks are not only the world’s biggest shark species, they’re the biggest fish. Adults
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Business Monthly – October 2016
can grow to as many as 12 meters long and weigh around 20,000 kilograms. And yet, as I discovered, this undersea giant is a model of grace and beauty. As I reached the edge of the plateau, I caught sight of him gliding calmly along, pectoral fins outstretched like airplane wings. In fact, the whale shark appeared to be the only creature in the vicinity that was calm, as divers with cameras jockeyed for the best angle. My own heart was racing with excitement. Our friend appeared to be a youngster, at around six meters long and dotted with white leopard spots up and down the length of his enormous gray back. (I actually have no idea whether the whale shark was a male or a female, but he struck me as a he.) His square wedge-shaped head resembled the front end of a muscle car, the grille being his wide mouth, which he kept slightly ajar in order to suck in as much
tiny sea life as possible. His ridged back tapered into a powerful waist that swished his boomerang-shaped, twoand-a-half-meter high vertical tail from side to side. Whale sharks have a docile nature and have even been known to play with divers and even give them rides. Seeing one up close is a rare treat, despite the fact that dive operators like to tout May to July as whale shark season in the Red Sea. Ahmed Fouad, south regional manager for the Hurghada Environmental Protection and Conservation Association, says he’s only had the privilege of spotting a whale shark three or four times in his 17-year diving career. “They are quite shy,” says Fouad, who is based in Marsa Alam. “You have to be very lucky to see one.” They are also classified an endangered species by the International Union for Conservation of Nature.
Summer offers the best chance to spot the sharks, as they migrate in search of warm waters and abundant plankton. In mid-September, the sea at Marsa Alam was still 27 to 29 degrees Celsius. Indeed, I counted four different Red Sea whale shark sightings reported online during the holiday week of Eid Al-Adha. It’s not hard to see why our whale shark liked Marsa Bereika. This 3.2kilometer bay on the east side of the Ras Mohamed peninsula is relatively still and rich with marine life and diverse seascapes. Our boat moored at a site known as The Canyon, marked by coral pinnacles about 12-13 meters deep. I kept my eye on a group of 10 lionfish—with their long, feathery poisonous fins—that lurked amid the pinnacles. (Lionfish don’t go out of their way to attack you, but they also aren’t inclined to get out of your way if you get too close.) Descending into the crevice, we saw a resident school of glassfish and a green sea turtle who did not look happy to be awakened from his nap. The canyon opens out near a coral arch 27 meters down, offering a fun fly-through. Descending with the canyon floor were two socalled technical divers, deep-sea explorers equipped with multiple tanks that contain special gas mixtures to enable their bodies to withstand depths in order to explore things like shipwreck ruins. For our part, we started a gentle ascent to check out a coral pinnacle jutting from the steep slope, where another thick school of glassfish swarmed. Reef-covered slopes and walls often attract pelagic hunters like trevallies and tuna, which hope to make a meal of tiny species like the fiery orange anthias. Reaching the drop-off, we explored the sandy plateau with its sporadic coral formations. One sharp-eyed diver spotted a clear cleaner shrimp, and let the transparent, two-centimeter critter inspect his hand. Schools of redtooth triggerfish also like to flutter around flat areas, and slow divers can get a closeup look at the tiny vampire fangs that give the fish its name. That’s what I was doing when someone spotted the whale shark, which was without a doubt the pinnacle of my 12-year
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scuba diving career, along with highlights that include encounters with a dolphin and a barracuda. The whale shark eventually swam off, and we headed back to the boat. But after lunch, when our guide asked if we wanted to do another dive at the site, I didn’t hesitate—daring to hope that my timid, gargantuan acquaintance might make another appearance. On our second dive, we followed the coast before moving to shallower waters to slalom among the corals. I had my nose to the sand checking out a patch of well-camouflaged pipefish, an elongated cousin of the seahorse,
when, once again, someone began banging on his tank like a madman. Sure enough, the whale shark was swimming right toward us. We managed to paddle alongside him for a few seconds, giving me a closer glimpse of his white belly and powerful tail, before he outpaced us on his way back into the blue. Figuring we couldn’t top two separate whale shark sightings in a single day, we signalled the boat to take us home. While we waited, we spotted two tiny squid who were also having a lucky day, having managed to avoid becoming a snack for the gentle giant cruising the bay.
SWIM, BUT DON ’T TOUCH The world’s largest fish is a filter feeder, subsisting on a diet of plankton and tiny sea creatures. Like most marine life, whale sharks have far more to fear from humans than we do from them. The species is listed as vulnerable to extinction on the IUCN Red List of Threatened Species, and the whale shark is legally protected in Egyptian waters. Amid multiple whale shark sightings reported in the Red Sea last month, the Hurghada Environmental Protection and Conservation Association released conduct guidelines for interacting with these impressive creatures: * Don’t touch. Stay at least three meters away if you are in front of the whale shark and four meters if you are near its tail. * Avoid flash photography; the light might disturb the shark. * Never chase whale sharks with boats or use water sports devices near them.
Chamber news BOARD OF GOVERNORS
PRESIDENT Anis A. Aclimandos, Transcentury Associates
EXECUTIVE VICE PRESIDENTS Curt Ferguson, Coca-Cola Egypt – Atlantic Industries Ahmed Abou Ali, Hassouna and Abou Ali Law Offices VICE PRESIDENT, MEMBERSHIP Amr Allam, Misr Sons Development – Hassan Allam Sons VICE PRESIDENT, PROGRAMS Tarek Tawfik, International Company for Agricultural Production & Processing VICE PRESIDENT, LEGAL AFFAIRS Said Hanafi, Orascom Hotels & Development
MEMBERS OF THE BOARD Aladdin El-Afifi, ASEC Company for Mining (ASCOM) Hashem El Dandarawy, Team 4 Security Nevine Loutfy, Abu Dhabi Islamic Bank Egypt Omar Mohanna, Suez Cement Group of Companies David Chi, Apache Egypt Companies PAST PRESIDENT M. Gamal Moharam, MGM Financial & Banking Consultants
COMMITTEE LEADERS
(July 2016 to June 2017)
Insurance Chair: Alaa El-Zoheiry, Arab Misr Insurance Group (gig) Co-Chair: Elena Butarova, MetLife Alico (Pharaonic American Life Insurance Co.)
ADVISOR TO THE BOARD Hisham A. Fahmy CHIEF EXECUTIVE OFFICER Tamer El Naggar
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TREASURER Sherif El Kilany, Allied for Accounting and Auditing- Ernst & Young
Investment Chair: Hazem Badran, CI Capital Holding Co. Co-Chair: Sherif El Kholy, ACTIS
Agriculture and Food Security Chair: Abdel Hamid Badawi Demerdash, Magrabi Agriculture Company Co-Chairs: Hatem El Ezzawy, PICO Agriculture Seif ElDin Saad ElSadek, Agrocorp For Agriculture Investment
Energy Chair: Khaled Abu Bakr, TAQA Arabia Co-Chairs: Ali Bakr, ExxonMobil Egypt Ayman Khattab, General Electric International Operation Emad Ghaly, Siemens Ian LePetit, Total Egypt
Banking and Finance Chair: Nadir Shaikh, Citibank Co-Chairs: Ahmed Issa, Commercial International Bank (CIB) Zeinab Hashim, Abu Dhabi Islamic Bank - Egypt
Entrepreneurship and Innovation Chair: Alaa Hashim, Egyptian Center for Economic Studies (ECES) Co-Chair: Dina Sherif, Ahead of the Curve
Capital Market Chair: Karim Awad, EFG-Hermes Holdings Co-Chair: Sharif El Akhdar, Beltone Private Equity
Corporate Sustainability and Responsibility (CSR) Chair: Mohamed El Kalla, Cairo for Investment & Development Co-Chair: Shereen Shaheen, Pepsi-Cola Egypt
International Cooperation Chair: Sherif Kamel, The American University in Cairo (AUC) Co-Chairs: Rafeh Saleh, CID Consulting Sherif El-Tokali, UNDP
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Marketing Chair: Dalia Wahba, CID Consulting Co-Chairs: Karim El Tawil, Orange Tamer El-Araby, Nielsen Egypt Real Estate Chair: Mohamed Abdallah, Coldwell Banker Affiliates of Middle East & Greater Africa Co-Chairs: Abdalla El-Nockrashy, Majid Al Futtaim Properties-Egypt Magued Sherif, SODIC
Health & Pharmaceuticals Chair: M. Maged El Menshawy, Manapharma Co-Chairs: Mohamed Roushdy, Amoun Pharmaceutical Co. Ramy Koussa, MSD Egypt Tamer Said, GE Healthcare Human Resources Chair: Somaya El Sherbini, Microsoft Egypt Co-Chair: Maisa Galal, General Motors Egypt
Customs and Taxation Chair: Hassan M. Hegazi, Master Trading Co-Chair: Hossam Nasr, Allied for Accounting and Auditing- Ernst & Young
Industry and Trade Co-Chairs: Ashraf Bakry, Unilever Mashreq Karim Kamel, Proctor & Gamble Egypt, Ltd. Mostafa El Halwagy, The Egyptian Company for International Touristic Projects (Americana) Omar El Derini, FAOM Consult/Red Wing
Education Chair: Tarek Khalil, Nile University Co-Chair: Shahinaz Ahmed, Amideast Egypt
Information and Communications Technology Chair: Amr Talaat, IBM Co-Chairs: Ayman ElGohary, Cisco Systems International Reem Asaad, Raya Holding
Legal Affairs Chair: Hani Sarie-Eldin, The Middle East Center for Law & Development Co-Chairs: Girgis Sarwat Abd El Shahid, Shahid Law Firm J. Michael Lacey, Dentons
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Transport and Logistics Chair: Marwan El Sammak, Worms Alexandria Cargo Services Co-Chairs: Ahmed Elfangary, DHL Express Osama Fawzy Hegab, Triangle Trading & Engineering Tarek Fahmy, Mediterranean Shipping Company Willfried Wienholt, Siemens
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Travel and Tourism Co-Chairs: Cees Ursem, Air France KLM Karim El Minabawy, Emeco Travel Nelly El Kateb, Astra Travel Radek Cais, The Nile Ritz-Carlton, Cairo Women in Business Chair: Dina El-Mofty, INJAZ Co-Chair: Yasmine Mowafy, Beltone Financial
American Chamber of Commerce in Egypt – Tel: (20-2) 3338-1050 – Fax: (20-2) 3338-1060 For more information about AmCham services and news, please visit www.amcham.org.eg or our US mirror site www.amcham-egypt.org
Events CUSTOMS AND TAXATION
The VAT is here “We were taken by complete surprise to learn that the implementation of the all-new VAT would be on Sept. 8, just one day after announcing it passed parliament. We were expecting implementation in October,” said Hossam Nasr, co-chairman of AmCham’s Customs and Taxation Committee, at a Sept. 26 workshop on the new value-added tax held at the Four Seasons Hotel Cairo at Nile Plaza. “This caused, and still is causing, a lot of confusion.” The VAT has been under discussion for years, with countless iterations almost going through before the final version was finally passed last month. Under VAT, producers pay taxes at every level of the value chain, but they can subtract the cost of production inputs, including taxes paid at earlier points. In effect, they are paying tax only on the value they added to the product. The law also extends the VAT to all services, whereas under the old general sales tax, only 17 services were subject to tax. There are four tax categories: First, 57 products and services are tax exempt, from staple foods to banking transactions. In the second category are products and services subject to excise tax rather than VAT, including petrol, edible oils and machines used in factories. The third category lists products and services subject to both the VAT and excise tax, such as cars, cigarettes and alcohol. For example, telecom services are now subject to an 8-percent excise tax plus the 13-percent VAT, for a total tax rate of 21 percent. The fourth category encompasses all other products and services, which are subject to only the VAT.
Producers can discount from their tax bill only the inputs that are subject to the VAT. So, for example, if a finished product uses edible oils, which are subject only to excise tax, and other components that are subject to the VAT, the producer cannot deduct the cost of the edible oils, only the costs of VAT-eligible components. Also, if a producer does not pay the VAT on his final product, for example, because it is subject only to excise tax, then he cannot write off any of his input costs, even if they are VAT-eligible, from his tax bill. “Simply stated, anything that is not subject to the 13-percent tax can’t be discounted,” said Nasr. The VAT law states that if a service provider is not registered in Egypt, then either a registered firm that’s receiving the service must pay VAT on behalf of the unregistered firm or the foreign vendor must establish an office in Egypt to pay the tax. Firms in free zones are exempt from all Egyptian taxes as long as their inputs and outputs don’t come from or go into the local market. Under the VAT law, auditors will also have more room to determine which costs to deduct.
MEMBERSHIP
Orientation for new members
On Sept. 29, AmCham hosted a group of more than 30 new members for an orientation meeting on activities and projects at the Chamber. AmCham CEO Tamer El Naggar 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
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improve Egypt’s business climate. Mostafa El Halwagy, co-chairman of the Industry & Trade Committee, shared his experience being involved in AmCham committees. The Chamber hosts orientation meetings on a regular basis to familiarize and engage new members with its services and programs.
INVESTMENT/CUSTOMS AND TAXATION
Fixing the tax system Prospective investors the world over look for the same things, said Amr el Monayer, a vice minister of finance, at a Sept. 27 AmCham breakfast. “One of the most important is a stable and efficient tax system.” Organized jointly by the Chamber’s Investment and Customs and Taxation Committees, the theme of the event was “Tax Reforms and the Impact on the Investment Environment in Egypt.” Monayer explained that tax revenue, which it vital to solving the country’s fiscal woes, currently accounts for less than 13 percent of Egypt’s GDP. “In developed countries, this percentage is between 20 and 25,” he said. The last round of major tax reforms took place in 2005, when the income tax code for individuals and corporations as well as the stamp tax for companies was changed. Monayer said that the government is more serious than ever about reforming taxes. The first step was to convert the General Sales Tax system to a fullyfledged value-added tax system, a necessary move to increase tax revenue and plug Egypt’s budget deficit, which is nearly 10 percent of GDP. The old sales tax was 10 percent while the VAT rate will be 13 percent through fiscal 2016/17, increasing to 14 percent after that. “Companies will have three months to transition their documentation from GST to VAT without any penalties,” said Monayer, noting that the new VAT law allows more leeway for late payments but involves tougher penalties and jail time for tax evaders. Future reforms will include a customs law and a new income tax law, both of which are currently being drafted. Also, a new tax code is being developed for microenterprises clearing less than LE 500,000 in annual revenue, the minimum threshold for VAT. “We are currently looking into taxing them a fixed sum plus a small percentage of revenue,” said Monayer. Ultimately, the government’s aim is to increase overall tax revenue by 1 percent of GDP every year through fiscal 2021/22. In the past, the government would offer firms a tax holiday as an incentive for setting up in Egypt. Monayer said that a new tax-based incentive system is being developed in which companies will pay lower taxes in exchange for creating new local jobs and contributing to research and development here. “There will be key performance indicators that will determine how much in tax-based incentives a company can earn,” said Monayer. The deputy minister admitted that there will be challenges to implementing many of these reforms given
Egypt’s large informal economy. “The major challenges facing VAT and other reforms in Egypt is that we are largely a cash-based economy, which makes it difficult for the ministry to trace payments,” said Monayer. “We are currently looking into ways of making Egypt a less cash-based economy; for example, developing a registry that would link traders to the Tax Authority database.” Another challenge is resolving tax conflicts, which is currently very time consuming. The Tax Authority has a backlog of 160,000 outstanding disputes worth an estimated LE 45 billion to LE 60 billion in unpaid taxes. “We are currently finalizing a draft law that will allow for much quicker and efficient conflict resolution,” said Monayer, explaining that under the new system, a panel of independent tax experts, a state council judge and tax officials would decide conflicts. “We are also working on unifying related processes and procedures to make conflict resolution more efficient and streamlined.” Ensuring that these reforms create a better taxation environment is crucial to attracting investors to Egypt. FDI has dwindled precipitously in recent years. “Investors care more about the implementation of the tax rather than the actual tax rate,” argued Monayer. Accordingly, the Ministry of Finance has signed training agreements with agencies such as the United Nations, the International Monetary Fund and the World Bank to train government employees who will enforce the new tax code. The vice minister said there will be investment in new technologies to help create a database with accurate information on Egypt’s tax community. “We have a team that will only work on surveying the market for the information we need for the database. This will be very important in setting our tax policies in the short and long terms,” he said.
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Member News ORANGE Orange Egypt has appointed Jean Marc Harion as its new CEO. Succeeding Yves Gauthier, Harion brings more than 25 years of experience to the post. Most recently he was CEO of Orange Belgium, one of the French telecom.s largest European subsidiaries. Before that he was the CEO of Orange Dominicana as well as holding top posts in the USA, France and London.
BARCLAYS British banking chain Barclays is selling its Egyptian retail and corporate banking branch to Morocco.s state-owned Attijariwafa Bank for an undisclosed amount. The sale of the bank, which has approximately 1,500 employees and 56 branches, is expected to happen by the end of the year. It is part of Barclay.s larger strategy to exit the African continent.
CRÉDIT AGRICOLE Crédit Agricole Egypt signed a $50-million deal with the European Bank of Reconstruction and Development in which the EBRD is guaranteeing transactions undertaken between Crédit Agricole Egypt and other international banks. The deal is part of EBRD.s Trade Facilitation Program, which currently involves 120 partner banks in 27 countries, providing some €1.5 billion in guarantees.
MEDITERRANEAN SHIPPING COMPANY MSC Egypt, the local arm of the Switzerland-based Mediterranean Shipping Co., has christened its new 19224 TEU vessel, one of the world.s largest container ships, the MSC Ingy after the daughter of MSC Egypt Chairman Tarek Fahmy. There are only five other similar MSC vessels around the world.
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New Members Building Materials
Petroleum
Titan Cement (Alexandria Portland Cement & Benisuef Cement)
Apex International Energy
Medhat Girguis Stefanos Vice Chairman- Titan Cement (Alexandria Portland Cement) & Egyptian Cement Association
Thomas Maher President & Chief Operating Officer
Address: El Sheikh Ali Gad El Haq Street, Sheraton Heliopolis, Florida Tower, Floor 7. Membership Type General Tel.: (202) 2696-7000 Fax: (202) 2268-6192 Website: www.titan.gr/en/
Construction/Engineering
Address: Plot 233, Floor 5, City Center, Second Sector, 5th Settlement. Website: www.apexintl.com
Membership Type General
Affiliate Members
Energy & Contracting Solutions Co. “ECS”
Automotive
Ossama Guenedy Chairman & CEO
Address: 25, Street 10, El Mahata Square, Maadi. Tel.: (202) 2358-6740/ 2380-1163 Fax: (202) 2380-1163 Membership Type Associate Resident Website: www.ecseg.com
Omar A. El Shafei Senior Manager- Marketing – Almansour Automotive Co. Mansour Chevrolet
Construction/Engineering
Helmy Gamal Elsaeed Business Development Manager – Sadco Engineering Works
Food & Beverages
Hagar Ibrahim Kamal HR Manager- Spinneys Egypt
Investment
Industrial Machinery & Equipment
PACT Real Estate Development
Nader Abdellatif Vice President- Strategic Accounts- Egypt & Lybia - General Electric International Operation
Mohamed Gamal Nasr Founder and Chairman of the Board Address: 108 Hassan El Maamoun Street, Nasr City. Tel.: (202) 2677-4300/4777 Membership Type Fax: (202) 2677-4777 Associate Resident Website: www.pact.com.eg
Information Technology
Ahmed El Watany Sales Manager - InfoFort Egypt, SAE
Investment
Mohamed Ali Commercial Manager - PACT Real Estate Development Mahmoud Said Finance Director- PACT Real Estate Development
Legal Services Levari in Association with Pitmans
Moaaz Wessam Managing Director- PACT Real Estate Development
Sherif Mohamed Hefni Partner
Address: Street 79, Villa 1, Ground Floor, Area 1, District 3, 5th Settlement. Tel.: (202) 2562-8926 Website: www.levarilaw.com
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Legal Services
Mohamed Raslan Partner - Levari in Association with Pitmans Membership Type Associate Resident
Tamer Mansour El Hennawy Lawyer-Partner - Matouk Bassiouny
Membership New Replacements in Member Companies
Change in Member Company
Sarah Refaat
Executive Director for Human Resources, The American University in Cairo
Henri Ruiz
General Manager, Kempinski Nile Hotel
Category: Affiliate Sector: Academic/Educational/ Research & Development (R&D) Category: General Sector: Hospitality/Tourism/Travel
Hans Joerg Kreitner
General Manager, Sheraton Cairo Hotel & Casino
Category: General Sector: Hospitality/Tourism/Travel
Sefano Gastaut
Vodafone Egypt CEO, Vodafone Egypt Telecommunications, SAE
Changes
Category: General Sector: Information Technology
Soha El Turky
Chief Financial Officer - Abu Dhabi Islamic Bank - Egypt
Change in Company Information Kato Flavors & Fragrances 'KFF’
Head Office: 32 Shooting Club Street 10th & 11th Floor – Dokki, Giza 112311 Telephone: (202) 3761 0373 / 0374 / 0375 / 0376 / 3760 9795 Fax: (202) 3761 0377
Change in Company Name
Metlife, Life Insurance Company (formerly Metlife Alico) For any change to contact information, please contact the Membership Services Department at the Chamber’s office Tel: (20-2) 3338-1050, ext. 0016 – Fax: (20-2) 3338-1060 E-mail: membership@amcham.org.eg
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Announcements Jobs AMCHAM RECRUITMENT CENTER Code
Vacancies
Company Name
103548 103613 103706 103535 103628 103713
Business Development Manager Import and Export Sales Supervisor Fleet Manager Health and Safety Supervisor Digital Marketing Executive Microsoft Services Team Leader
CID Consulting Raya Holding Group Paradise Capital Holding for Financial Investments S.A.E SUMMIT Toyota Egypt Advanced Computer Technology - ACT
For more information about these jobs and others, visit: www.amcham.org.eg/recruitment – e-mail: recruitment@amcham.org.eg, Tel: (20-2) 333 88 220 Ext. 1513 - 1514 Fax: (20-2) 333 73 779
Top Tenders
TOP TENDERS
FROM
TAS
Client
Description
Deadline
Bid bond Specs fees
Sectors
Supply of printers, toner & optical scanners in ten lots. Pre bid meeting set for Ministry of Planning, Follow Up & Administrative 10/9/2016. Bid bonds are L.E. 5,000, L.E. 50,000 & 19,000 & 5,000 & 5,000 & Reform - Ex Administrative Development - New 500 & 21,000 & 15,000 & 8,000 & 13,000.
October 24, 2016
141,500 LE LE 1,500
Information & Communications Technology Services Ministries & Agencies
Request of offers from eligible international bidders for the design, manufac- EETC -Egyptian Electricity Transmission Co., the ture, supply, transport, civil works, project management, erection, testing, set- Purchases & Stores Dept., ting to work & commissioning, on turnkey job basis, of Tami El Amdid 3 x 40 MVA, 66/ 11 GIS type, sub station as specified in the tender documents. Said documents are available against a written request & the presentation of a receipt of NBE - Nasr City Branch of $ 4,000 being deposited by the Bank at EETC account No. 11001007177. For more details refer to the EETC published announcement in the media. Ref. 15/ 2016/ 2017.
October 20, 2016
130,000 $ $ 4,000
Electromechanical Works Energy
Beneficiary Sectors
Generating Sectors
www.amcham.org.eg/TAS
For further information, contact the Business Information Center at AmCham Egypt Tel: (20-2) 3338-1050 – Direct: (20-2) 3761-9641 • Fax: (20-2) 3338-9896 • E-mail: info@amcham.org.eg Website: www.amcham.org.eg • US Website: www.amcham-egypt.org
U.S. Exhibitions
Listings are now available on our website:www.amcham.org.eg Exhibitions related to the following sectors are scheduled for the upcoming months. Sector
Show Name
Website
Embassy Contact Person
TEL.
Rania Mekhail
2797-3487
Rania Mekhail
2797-3487
October Baking
International Baking Industry Exposition (IBIE)
www.ibie2016.org November
Dental
Greater New York Dental Meeting 2016
www.gnydm.com
For more information about these exhibitions, please contact: The Commercial Service at the U.S. Embassy Tel: (20-2) 2797-2330/ 40 - E-mail: office.cairo@trade.gov *Please refer to the Commercial Service at the U.S. Embassy for any updates on the exhibitions.
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Classifieds Benefits BARCLAYS BANK EGYPT, SAE Barclays Premier Banking brings a unique banking experience; customizing banking according to your specific needs. Barclays Premier Banking offers you world-class products at preferential interest rates, dedicated team to meet your needs, Exclusive Concierge Services, a wide range of retailers and service providers with distinct Rewards & Benefits, bringing along Peace of Mind to your banking experience and many more … Offer Criteria: Criteria 1: Liabilities Relationship (Opening Current or Saving accounts)Criteria 2: Liabilities & Loans Relationship- Criteria 3: Liabilities & Credit Card Relationship Criteria 4: Liabilities & Business RelationshipRelaxation for 3 months on Premier balance drop fees For more information about the offer, please browse the below link. http://www.barclays.com.eg/premier/overview/index.html
***Discoun ts will be gran ted for AmCham members u pon presen ti ng their AmCham 2016 membership c ard*** For more information, please contact: Amr Wagdy- Barclays Premier Sales Head Mobile: (20-11) 2222-8157•Email: amr.wagdy@barclayscorp.com Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits This offer is valid until December 31, 2016
EGYPTAIR Egyptair is pleased to announce the renewal of the protocol agreement for the year 2016-2017. This agreement entitles all AmCham members and their first degree family members to a special preferential reductions on Egyptair INTERNATIONAL flights ONLY. Up to 30% Discount on IATA rates. Up to 12% Discount over Egyptair’s special fares, depending on the booking class. *This deal is applicable on trips from and to Egypt. *All discounts are not applicable to Jeddah/ Al Madina during Hajj and Omra season during the months of Ragab, Shaaban & Ramadan.
***Discoun ts will be gran ted for AmCham members u pon presen ti ng their AmCham 2016 membership c ard*** Call Center from mobile numbers: 1717 Call Center from land lines numbers: 090070000 Downtown Adly Branch: Tel: (20-2) 2390-6078/ 2392-7680 Zamalek Club Fence Branch: Tel: (20-2) 3347-2027/ 3347-5193/ 3305-1431 Shobra Branch: Tel: (20-2) 2206-9071/3/5 Heliopolis Korba Branch: Tel: (20-2) 2418-3722 Astra Travel Contact: Ms. Hala Tahoun Tel: (20-2) 3749-1469 Ext.137•Mobile: (20-2) 012 2234-8048 Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits
DHL EXPRESS DHL Express is proud to offer all AmCham members an exclusive 30% discount on DHL published rates for outbound international shipping services. N.B: - The discount is not available for domestic shipping. - The discount is not to be used in conjunction with other promotions from DHL. - Only at DHL locations, no pick up service. For further information about the nearest DHL location visit our website http://www.dhlegypt.com/en.html or call DHL hotline 16345
***Disc ou nts wi ll be granted for AmCha m members upon presenting th eir AmCh am 2016 membersh ip card***
Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits This offer is valid until December 31, 2016
THINK FOR PROFESSIONAL & PERSONAL DEVELOPMENT THINK is pleased to offer AmCham members a 15% off on unique PLAY BIG! women leadership program as well as a very special bonus offer! Limited places are available.
***Discounts will be granted for AmCham members upon presenting their AmCham 2016 membership card*** For more information, please contact: Mai Samir; Rania Abu Rabia Phone: (20-10) 0885-8593 E-mail: info@think.com.eg; rania.aburabia@think.com.eg Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits This offer is valid until December 31, 2016
This offer is valid until August 31, 2017 The BUSINESS MONTHLY Classifieds section is open exclusively to AmCham member companies. Text ads are £E 150 for up to 30 words, £E 5 per additional word. Abbreviations, phone numbers and e-mail addresses count as one word. Display ads are £E 100 per cm in height, per column (max. 20cm in combined total height). Discounts are offered for regular advertisers and repeat bookings. Insertion orders, payment and ad content must be received by the 15th of the month preceding publication. All classified ads subject to editorial approval. For more information, or to place a classified ad, contact Amany Kassem at (20-2) 3338-9890, fax (20-2) 3338-0850, e-mail: akassem@amcham.org.eg
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Advertorial NESPRESSO
MARRIOTT
Nespresso has created a new permanent addition, the Envivo Lungo, to its range. The intensity of the Envivo Lungo scores a nine on the Nespresso scale of one to 12, making it the most intense of the Nespresso Lungo range, which also includes five other flavors. The dark-roast coffee is a distinctive blend of Indian Arabica and Robusta from Mexico. Its roasted notes and scents are reminiscent of aromatic woods and gingerbread. Nespresso’s total range consists of 24 coffees.
Marriott International has completed the acquisition of Starwood Hotels & Resorts, creating the world’s largest hotel company. The Marriott’s new portfolio now consists of more than 5,700 properties in 110 countries. In Egypt, Marriott International owns seven hotel properties under the Marriott brand as well as the Renaissance and RitzCarlton hotels in Cairo, Hurghada and Sharm el-Sheikh. Starwood Hotels Egypt consists of 12 properties in Cairo, Alexandria, Dahab, Hurghada, El Gouna and Sharm el-Sheikh operating under the Sheraton, Le Meridian, St. Regis and Westin brand names. The first W Hotel in Sharm el-Sheikh is scheduled to open in 2020.
AVON
AZZA FAHMY
Avon Egypt has announced that its Beauty for Purpose ambassadors will be the Pink Warriors, Egypt’s all-female American-football team, and makeup artist Diana Richy. The objective of the program is to build a shared community of leaders, entrepreneurs, activists and influencers to advance causes that lead to a better world for women. The Pink Warriors embody the spirit of Beauty for Purpose, helping empower Egyptian women and inspire confidence. Richy was selected for her passion and dedication as a professional makeup artist.
Head of Design at Azza Fahmy Jewellery Amina Ghali has been named in Britain’s 2016 Hot 100 competition by Professional Jeweller magazine. “Given the huge pool of talent in Britain’s industry, I am delighted and honored to be recognized for my contribution to the business,” said Ghali. She joined the Cairobased family business in 2005. Azza Fahmy Jewellery is renowned for translating cultural and historical references into contemporary pieces.
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Business Monthly – October 2016
Advertorial DUSIT THANI
RITZ-CARLTON EGYPT
The Dusit Thani LakeView Cairo hotel celebrated the success of their environmental management program after the property was awarded an EarthCheck Silver Certificate for the fourth consecutive year. EarthCheck is a leading global environmental benchmarking and certification agency that provides training, capacity building and consultancy services for some 1,300 sustainable travel and tourism operators in more than 80 countries.
The Latif Group of Companies signed a management agreement to bring The Ritz-Carlton brand to Sharm el-Sheikh as the first such property on the Sinai Peninsula. The all-new Ritz-Carlton Sharm elSheikh will cost $600 million and is expected to open in 2020. It will be located in Sharks Bay, featuring some 250 rooms and 12 villas as well as a shopping complex.
TATWEER MISR
HYDE PARK PROPERTIES FOR DEVELOPMENT
At the 2016 Cityscape Global Awards for Emerging Markets, Tatweer Misr was awarded the best Residential Low Rise — Future Projects development for its flagship project IL Monte Galala in Ein Sokhna. The finalists were chosen by a panel of industry experts and regional professionals. Tatweer Misr was competing against two shortlisted projects, the ID Residences in Brazil and the Fumba Town Development in Tanzania. Tatweer Misr was the only Egyptian real estate developer shortlisted in all 13 categories of the prestigious global award.
Hyde Park Properties for Development has completed the master plan for its flagship project in New Cairo. The development will include three clubhouses in various residential areas, in addition to a private-membership club. Also, two international schools and a nursery are to be located within the complex. The first residential phase of the project is called Park Corner and is set to be completed in three years. It is to be built on 533,000 square metres and will include 205 units including standalone villas, townhouses, and twin houses in addition to 1,400 apartments and 300 duplexes and family villas.
Business Monthly – October 2016 I
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Media Lite
A Glance At The Press
“The LE 50 mobile top-up card is now LE 70,000 including VAT.”
Al Masry Al Youm, Sept. 22
Media Lite is a satirical review of items published in the local and international press. All opinions and allegations made in them belong solely to the original publications and no attempt has been made to ascertain their veracity.
SMARTY PANTS It turns out that wearing cotton isn’t just an effective way to combat power shortages. Dr. Ahmed Shafik, a urologist at Cairo University, conducted research into “the effects of wearing polyester, cotton, or wool trousers on the sex life of rats,” according to the website of the 2016 Ig Nobel Prizes, which are sponsored annually by a U.S. humor magazine. Shafik was among 10 other Ig Nobel winners, including a man who lived as a goat and a team who investigated "whether things look different when you bend over and view them from between your legs.” In his study, Shafik dressed 75 rats in both natural and synthetic-fiber pants, concluding that the former had relations significantly more often than the latter. Unfortunately, this Dr. Ruth of rodents was not around to collect his award; he died in 2007—but not before concluding that his findings could be applied to humans. Various media, Sept. 23
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Business Monthly – October 2016
SWIMMING WITH THE FISHES
Divers and snorkelers, like kids at the zoo, are told to look but don’t touch. One might have thought, though, that a group of swimmers in Sharm el-Sheikh who encountered a 300-pound oceanic white tip shark wouldn’t have to be reminded of this simple rule. Nonetheless, a video recently appeared on social media that showed the group frolicking happily in the sea with the man-eating shark—even taking turns holding onto its dorsal fin for rides. Fortunately, the shark must have already eaten lunch, because nobody was injured. Either that or he was actually an Israeli spy. Various media, Sept. 24
FINDERS KEEPERS?
Two in-flight security guards at EgyptAir were walking down a Manhattan street one evening last month when they came upon a travel bag containing a
pressure cooker connected to wires and a cell phone. So what did they do? Walked away with their new suitcase, naturally, leaving the bomb on the sidewalk. In a Sept. 17 security video taken just hours after another explosive had detonated four blocks away, injuring 31 and setting off nationwide terrorism fears, Hassan Ali and Abou Bakr Radwan can be seen finding the bag on West 27th Street. Looking inside, the pair pull out the homemade explosive device wrapped in a white plastic bag. Ali later told an EgyptAir official that he and his friend thought the travel bag was “nice” so he took it with him. Fortunately for the passengers on the Cairo flight Ali took home to Egypt the following day, he didn’t feel like taking the trouble to fly the pot home. Various media, Sept. 30