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INTEGRATING A CHANGING EUROPE INTO GLOBAL BUSINESS STRATEGIES MOHAMED ASHMAWY Vice Chairman and Managing Director COMME

INTEGRATING A CHANGING EUROPE INTO GLOBAL BUSINESS STRATEGIES MOHAMED ASHMAWY Vice Chairman and Managing Director COMMERCIAL INTERNATIONAL BANK EGYPT.

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INTEGRATING A CHANGING EUROPE INTO GLOBAL BUSINESS STRATEGIES MOHAMED ASHMAWY Vice Chairman and Managing Director COMME

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  1. INTEGRATING A CHANGING EUROPE INTO GLOBAL BUSINESS STRATEGIES MOHAMED ASHMAWY Vice Chairman and Managing Director COMMERCIAL INTERNATIONAL BANK EGYPT

  2. The European Community, has a long history of fruitful co-operation with the Mediterranean countries and Egypt in Particular. The year 2010 has been set as "the target date for the gradual establishment of the Euro-Mediterranean Free -Trade Area. • It is becoming clear now that, as stated by Mr. Manuel Marin; “the EU cannot maintain its prosperity and deepen its integration without stability and prosperity in its immediate neighbourhood. Necessary too for the Mediterranean Partners who expect from the union not only market access, investment and transfers of know how, but also a better understanding as regards to culture, civilisation and human affairs.”

  3. EGYPT EU Business Partner

  4. Area:1,001,450 km2land: 995,450 km2water: 6,000 km2 • Coastline: 2450 km • Natural resources: petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, zinc • Land use:arable land:2.85%permanent crops: 0.47% other: 96.68% • Irrigated land:33,000 km2

  5. Egypt has the largest population in the region (71.2 million 2003), whereas 20% are below 20 and 6% are over 60, resulting in a huge workforce. It is the second largest economy in the region, dominated by services, which account for about 50% of GDP (cf € 88 bn). Although tourism has not fulfilled its potential in recent years as a result of regional conflicts, but nevertheless it has shown considerable resilience, having recovered strongly after both September 11th 2001 and the US war on Iraq in 2003. The Suez Canal has suffered as a result of the substantial decline in oil traffic. Although only 3% of the total land area is arable, agriculture accounted for 16.4% of GDP in fiscal year 2002/03 (July 1st-June 30th) and 26% of total employment in 2002/03. Manufacturing, accounting for 19.7% of GDP in 2002/03, and is heavily concentrated in Cairo and the Nile Delta, and employs with mining around 24% of total employment. Petroleum and natural gas are also mainstays of the economy, accounting for 8% of GDP in 2002/03 and nearly 40% of exports, despite the gradual decline in crude oil production, natural gas production increased. A large informal sector is estimated to be around 30% of total economic activity.

  6. Foreign trade, 2002/03 (%) Major exportsMajor imports Fuel, mineral oils & products 38.9 Fuel, mineral oils & products 6.7 Cotton 2.4 Raw materials 18.1 Raw materials 3.5 Intermediate goods 29.7 Semi-finished commodities 8.0 Investment goods 21.4 Finished commodities 36.8 Consumer goods 17.5 Other goods 10.3 Durable, non-durable & other goods 20.0

  7. “Egypt is a pivotal Arab, African, and a Euro-Med power. The EU has major policy objectives in all these regions and supports Egypt’s role as a reliable and constructive regional partner in these areas.”Egypt CSP Trade Relations with the EU The EU is Egypt's largest trading partner, accounting for around 35-40% of Egyptian foreign trade in terms of Exports and Imports. Main Exports to EUMain Imports from EU Oil and oil products Power generation machinery Textiles and clothing Chemicals Agricultural products Food & agricultural products Engineering products Transportation equipment * Trade Composition with the rest of the world:- ExportsImports USA 15% 20% Asia 25% 25% Arab Countries 15% 5-7% Rest of the World 5% 5%

  8. Information Technology and Telecommunications The government has identified development of information and telecommunication technology (ICT) industry as a national priority. ICT in Egypt continued to grow in 2003 despite the overall sluggish economy. Internet penetration almost doubled from 2002 to over one million by early 2003, mainly due to the launch subscription-free Internet service in 2002. E-commerce, however, is not evolving as such pace basically due to the conservative nature of the Egyptian market place and lack of public awareness. The Egyptian Government is aggressively working in an effort to stimulate rapid development. Laws to govern e-commerce are in the works, including the e-signatures law, to reach the legislature this year. The growth of cellular phone service in Egypt is perhaps a more reliable indicator of IT market growth and potential in Egypt. Despite the weak economy over the past three years, the number of mobile phone subscribers has risen steadily, from 650,000 in Oct. 1999 to 6 million in Nov 2003. This compares with only 7 million fixed telephone lines in the country. In June 2002, Egypt became a member of the WTO Basic Telecommunications Agreement (BTA), which commits it to allowing greater competition in its telecommunications market. In April 2003, the country joined the WTO Information Technology Agreement, which will lead to an eventual phasing out of tariffs on all IT products.

  9. In June 2001, Egypt signed an Association Agreement with the EU, which was ratified in April 2003 by the Egyptian parliament and five parliaments of the EU. The agreement will come into effect next month. When in force, it will immediately grant Egyptian exporters increased access to the European market, particularly for agricultural products and agricultural manufactured products. Tariffs and other barriers to European exports to Egypt will be phased out in 4 stages over 12 years. Tariffs on raw materials and capital goods for industry will drop to zero three years after the agreement enters into force; on semi-finished goods after 10 years; on consumer goods and finished products after 13 years; and on automobiles after 15 years. The agreement includes €615 million in project assistance grants and €1.1 billion in loans from the EIB, designed to help modernize Egyptian industry. A transitional Egypt-EU agreement designed to speed the implementation of the Association Agreement is currently being negotiated.

  10. Investment Tax Incentive Corporate Tax Exemption Incentives Life of Project Public Free Zones Private Plants Specific Free Zones 20 Years Regional Development Toskha/East Owaynat Oases Kharga/Farafra/Baris 10 Years Investment in New Communities Land Reclamation & Agricultural Cultivation 5-10 Years Projects Under Law 203 Poultry Cattle & Fisheries Hotels & Tourist Projects 5 Years Industrial Projects (More than 50 employees)

  11. Suez Canal Facts and Figures The Suez Canal is 193KM long. The Canal was built to connect the Atlantic Ocean and thus the Mediterranean to the Red Sea and thus the Indian Ocean. The two main points at either end of the Canal are Port Said at the North end and Port Suez at the Southern end. Constant dredging operations being undertaken as ships around the world get bigger, faster and deeper. Projects over the years have increased the dimensions of the Canal so much so that in 2001 a large project to deepen the Canal so that it could receive vessels of up to 210,000 tons with a depth of 19m, to reach 22m by 2010. In 2003, 15667 ships carrying 549 million tons of cargo on an average of 42.9 ships/day went through, making it the busiest canal in the world.

  12. Suez Canal 2 Facts and Figures

  13. EGYPTIAN PORTS Maritime All these ports are fully equipped with latest technology and have duty free warehousing areas. International Inspection and warehouse management companies are operating in most of these ports such as (SGS and Cotecna).

  14. EGYPTIAN PORTS Roads & Airports RailwaysHighwaystotal: 5,105 km total: 74,000 km paved: 58,000 km unpaved: 16,000 km Airports –93- Airports - with paved runways Airports - with unpaved runways total:79 total:14over 3,047 m:11under 914 m:7 2,438 to 3,047 m:422,438 to 3,047 m:11,524 to 2,437 m:191,524 to 2,437 m:2under 914 m:3914 to 1,523 m:4 Acurrent project is under going to triple the Refrigeration facilities in the Cargo Terminal of Cairo International Airport from 180 to be 540 tons/day. A new terminal  and cargo village is also an under going project with the cost of 120 million dollars over an area of 18 km2 in Borg El Arab 30 km west of Alexandria Port and 60 km north of the main Export agricultural production area of Egypt.

  15. Banking Sector • 4 Public Sector Banks Total Net Worth: $4 billion • 60 Private Banks % to Assets: 4.3% • Total Assets: $ 93.0 billion • % to GDP: 115% CIB Position • 5th largest bank in Egypt (Assets) • 4th largest bank in Egypt (Net Worth) • The highest in Profitability • Best Bank in Egypt by Euromoney for the 10th year • Best Bank in Egypt by Global Finance for the 6th year

  16. Thank You

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