Connecting with Asia (Al-Ahram Weekly (Egypt))
Al-Sisi met Singapore President Tony Tan early this week on the first leg of his Asian tour (photo: AP)
Egypt continues to work on diversifying its economic and political partners, and this week president Abdel-Fattah Al-Sisi began a visit to Singapore, China and Indonesia, his second visit to China since December 2014 and the first to both Singapore and Indonesia.
Trade and investment top the president’s agenda, with the visits being used to showcase government efforts to improve the investment climate. The accompanying delegation will be drawing attention to the investment opportunities in Egypt, particularly in the Suez Canal region.
Egypt must capitalise on the experience of Asian countries, says Samir Borhan, a former assistant to the minister of foreign affairs. “Only a few decades back Egypt was on an equal footing with these economies, but look where they are today. We are light years away,” he said.
Borhan believes that Egypt is doing well by departing from its focus on the West, something that has been in place for many years. “The Asian countries have become the major movers and shakers of the global economy, and we should seek closer relations with them,” he said.
Having the weight of the president behind the visits should indicate to all the players in the economy that they need to turn their attention to the region and encourage greater cooperation between businessmen from both sides.
The significance of economic cooperation between Egypt and these three Asian countries is driven by the status of China and Indonesia as the main suppliers of moderately priced goods and equipment across the world, while Singapore has become a role model in developing a first world services economy, adds Mohamed Metwalli, deputy CEO at HC Securities and Investment.
Egypt is also set to cooperate with China on an initiative aimed at boosting infrastructure, financial cooperation and cultural exchange between Asia, Europe and Africa. This initiative, the Silk Road Economic Belt and 21st-Century Maritime Silk Road, was proposed by Chinese president Xi in 2013, according to Xinhua, the Chinese news agency.
Metwalli believes that Egypt could benefit from stronger trade ties with China and Indonesia that could help it control the inflation of imported goods and develop the trade and tourism industries. Egypt could engage Chinese companies to develop the transportation network in Egypt, he suggests, building high-speed bullet trains from Alexandria to Aswan which could take less than two hours or from Sharm El-Sheikh to Luxor or Cairo.
A reliable, accident free and time-efficient transportation network of this sort would give a strong boost to the tourism industry and stimulate the economy across the country, he explains.
“There is great potential to boost exports to Indonesia,” says Sherif Al-Gabali, head of the Egypt-Indonesia Business Council. This is a market of 250 million consumers that Egyptian exporters are eager to penetrate, especially since it would also be their entry point to the markets of the Association of South East Asian Nations (ASEAN) of which Indonesia is a member.
Al-Gabali told Al-Ahram Weekly that the Federation of Egyptian Industries had studied the needs of the Indonesian market and was interested in beginning to provide for these. He also said it was possible to attract Indonesian investment to areas where Egypt has a comparative advantage and where the Indonesians have expertise, such as mining and the extraction of phosphates or the production of car tyres.
As for Singapore, Metwalli believes that Egypt could learn how to develop the logistics industry and could engage leading Singapore companies to develop this industry in the Suez Canal region.
Singapore is also known for its world class medical services, he points out, which presents an opportunity to encourage Singapore hospitals to establish high-quality medical services in Egypt that could develop medical tourism and save hundreds of millions of dollars in offshore medical expenses.
Singapore has also been a leader in water desalination which Egypt needs for its cities along the Red Sea and Mediterranean. The development of this industry could help Egypt to pre-empt water shortages as a result of the increasing population and generate electricity. A memorandum of understand has been signed between the Suez Canal Authority and the Singapore company Hyflux Ltd for the establishment of desalination and electricity production projects in Egypt.
This is the first ever visit by an Egyptian president to Singapore since diplomatic relations were established in 1966. This year also marks Singapore’s 50th year of independence.
“Singapore is the ultimate turnaround case study of a country that went from a third world economy to first world status in 30 years under the leadership of the late prime minister Lee Kwan Yew,” adds Metwalli.
He is not worried about the effects of the recent turmoil in the Chinese economy and the devaluation of the Chinese currency, the yuan. In fact, he believes that Egypt could benefit from the devaluation of the yuan in controlling price inflation in Egypt.
“The slowdown in the Chinese economy could make Egypt an attractive destination for the investments of Chinese companies operating in the transportation, logistics, and technology sectors,” Metwalli says.
Borhan says that the benefits from the three countries are “endless”, but what is more important is to make sure that the concerns of investors are properly tackled, including the availability of land to set up projects, electricity, skilled labour, dispute settlement and bureaucracy.
“Serious grass roots and business development of relations with these countries is needed beyond the president’s visit,” Borhan says.