Building bridges in Asia
President Abdel-Fattah Al-Sisi is scheduled to start a two-leg tour of India and China next week when he will also be attending the G20 Summit in Hangzhou in China. While this is not the first visit by the president to either country, the visits are the first since Egypt launched an economic reform programme with the blessings of the International Monetary Fund and the promise of a $12 billion IMF loan over three years.
“The G20 Summit is a golden opportunity for Egypt to present its case to the international community,” said Gamal Bayoumi, secretary-general of the Federation of Arab Investors.
Al-Sisi has been invited by Chinese president Xi Jinpin to be a guest at the G20 Summit this year. Bayoumi believes the summit is a chance for Egypt to highlight the many projects the country has embarked upon that present potential investment opportunities, while presenting the agreement with the IMF as reassurance that Egypt is serious about reform.
The summit, which brings together leaders of countries representing 85 per cent of the world economy to discuss global financial and economic issues, will also be an opportunity to address the global slowdown in trade which has affected Egypt by slowing growth in Suez Canal revenues, Bayoumi said.
Accompanied by a business delegation, the president will promote investment in Egypt and encourage partnership opportunities with the business communities of India and China during his visits to these countries.
The visits are a way of strengthening relations between Egypt and the Asian countries, explained researcher Ibrahim Al-Ghitani, an expert in Egyptian-Asian relations. He said that they did not necessarily signify a turning away from Egypt’s traditional inclination towards the West, including the EU and US, but helped create balance in Egypt’s relations with the rest of the world.
While Egypt wanted to rekindle its historical relations with China, China wanted to increase its economic presence in the Middle East, Al-Ghitani said. Egypt was the first country in the Arab world and Africa to recognise the People’s Republic of China.
Al-Ghitani said the Chinese presence in the Egyptian economy had been increasing steadily, predicting that in 10 years’ time China would be one of Egypt’s strongest investment partners.
Chinese investments in Egypt currently amount to around $6 billion, though official figures put them at $500 million. Han Bing, minister-counsellor for economic and commercial affairs at the Chinese embassy in Cairo, told Al-Ahram Weekly earlier this year that some of the Chinese investments were from companies registered in Hong Kong and were not necessarily recorded as Chinese.
The TEDA Industrial Zone in the Gulf of Suez houses many Chinese companies, and there are various industrial investments across the country and some construction projects in the New Capital.
In order for Egypt to achieve a true strategic partnership with China, Al-Ghitani said, there needed to be collective effort by ministries, not just the presidency and the business community.
Both Egypt and China had a lot to gain from such a partnership, Diaa Helmy, secretary-general of the Egyptian-Sino Chamber of Commerce, said. Egypt should look at Chinese experience with small and micro businesses to help lift people out of poverty, he said.
Investment in renewable energy is very advanced in China, and it could be more suited to Egypt’s needs than technologies employed in Europe. Egypt could also learn a lot from the Indian information technology sector, as well as agricultural processes, Helmy said.
He said that marketing Egypt abroad would not be enough on its own, however. While a lot has been done in terms of improving infrastructure and energy, other issues remain unresolved. Policy-makers need to get down to solving the challenges that have been facing investors in recent years, such as the investment law, he said.
Consistency in relationships is also important, and thus far these have sometimes been “seasonal” and have depended on high-profile visits by presidents. While 2016 has been earmarked as Year of Egyptian-Chinese Culture, this has not been apparent to some, for example. An Egyptian-Chinese Dialogue Forum was launched this week to boost political, economic, social and cultural relations.
The success of visits by the president abroad cannot be measured by the number of deals signed alone, Bayoumi warned. “The deals are an added extra, but that is not what the visits are about. They are about creating partnerships,” he said.
He added that there was a lot of interest in the Egyptian economy among Chinese and Indians, Al-Ghitani adding that the bottom line was a stable investment environment in Egypt. The country was facing tough competition from other countries such as Morocco because of the latter’s investment-friendly environment, he said.
Al-Ghitani sees promising Chinese investments in the areas of renewable energy, construction and logistics. Partnerships with Indian businesses are likely to be in the pharmaceuticals and information technology industries, he said.
Indian investments stand at around $3 billion according to the Indian embassy in Cairo website. These span a wide array of industries including automotives, engines and textiles. Egyptian exports to India amount to around $1.5 billion compared to $2.5 of Indian exports to Egypt. The trade balance with China is much wider with Egypt exporting only $1 billion worth of goods in 2015 compared to imports worth $12 billion from China.
The G20 Summit brings together leaders from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union.
Other invited guests include Chad, Kazakhstan, Laos, Senegal, Spain, and Singapore, said Chinese news agency Xinhua.