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Foreign companies in Egypt worried about business environment

The Islamists' substantial majority in parliament is not a source of concern for business leaders; rather its Egypt’s shaky economic situation that needs to be sorted out quickly

Ahmed Feteha, Monday 20 Feb 2012
Business leaders say they are optimistic about Egypt's Islamist dominated parliament (Photo: Reuters)
Views: 2473
Views: 2473

Leaders of several American or American-related firms expressed their concerns about Egypt’s economy, the future of the Egyptian pound, taxation and the rise of Islamist parties during a business gathering on Monday.

In a fancy conference hall in one of Cairo's luxury river-side hotels, a large group of business leaders gathered for a networking event titled "Supply Chain Opportunities: A partnership for Egypt and the US," hosted by the American Chamber of Commerce in Egypt.

Ahram Online took the opportunity to survey some of the present executives’ opinions on risks they currently perceive in Egypt’s business atmosphere.

As business people, Egypt’s economic situation was top of their risk list.

 "The economic situation is very worrisome," Thomas Thomason, CEO of the Egyptian Refining Company explained. "And it seems that the government is not able to contain the situation."

Egypt’s depleting foreign reserves, which reached $16 billion by end of January, were the common concern of many business leaders Ahram Online talked to. Depleting reserves mean that the Central Bank of Egypt will no longer be able support the local currency and keep it from depreciating versus the American dollar.

"What will the future of the Egyptian pound be like?" Thomason wondered. "And then you have a lot of complex economic issues like making sense of subsidies."

Yasser Abdel Malek, supply and procurement director at Kraft Food, asserted that the company hasn’t yet been affected by the changes happening in Egypt, but also voiced some concerns about Egypt’s economic future.

"Today it’s business as usual," he explained. "But are we going to face a devaluation of the currency and uncontrollable inflation in consequence?"

Nevertheless, he did exhibit some optimism. "All the infrastructure needed for takeoff is there: human capital, companies, government structure."

As for possible changes in basic economic regulations such as the tax rate and the company laws to meet the Egyptian population’s growing needs, some business people were accepting while others were not.

"In general I don’t see that changing the rules that business started on will be good," chairman of Nile Engineering group Ayman El-Ayouty said. "We can’t do much if they change the tax regime, but it will not be beneficial for business."

He adds that instead of making new rules, the government should focus on strictly enforcing the current laws to contain the state of "anarchy" that is hitting the street.

Alongside economic uncertainty, others had politics on their mind.

 "Why should we be worried of a government that is democratically elected and has legitimacy and popular support?" Lionel Johnson, US Chamber of Commerce vice president for the Middle East and North Africa told Ahram Online.

He added that US businesses will be looking to work with an Islamist government and will be looking for new opportunities.

While some were optimistic about the success of the democratic process in Egypt, others were more vocal about their concerns.

Abdel Malek sees a brighter upshot of the outcome of the elections. "It seems that Egypt will be continuing in the right [economic] direction," referring to the pro-market policies embarked on by the Mubarak regime which are seem to be continuing even after his fall.

Thomas Thomason concurs with Abdel Malek. "There is no point of being uncomfortable with the Islamists just for being Islamists," he explains. "Some of the Muslim Brotherhood members are astute business people, so from a business perspective we shouldn’t be worried they are in the parliament."

Mohamed Nour, regional technical director at the Coca-Cola Company, does not see the political issue as relevant to his company’s future in Egypt. "We operate in 170 companies across the world; we have a flexible business model that helps us operate across different systems and cultures."

He believes that companies that are flexible and adaptive will survive whatever changes take place; while others might be forced out of business. "If we can operate in Afghanistan and Iraq, we can pretty much handle other places."

Besides a readiness to cope with change, a clear political agenda is urged by many. "The parliamentary majority must unveil its agenda and tell us where the country is headed," said Nile Engineering group’s El-Ayouty.  

El-Ayouty was referring to the Freedom and Justice Party and the Nour party, who were able to secure more than 70 per cent of seats in Egypt’s parliament.

"We don’t know much about the political future of Egypt," commented Bas Zuidberg, Chief Supply Officer of the  Cairo Poultry Group. "What will be the role of the president? How will power be disseminated between different political institutions?"

Zuidberg adds that it is still early to judge the political situation of Egypt. "We have to wait and see anyway."

The event was kicked off by speeches by veteran US politician John McCain and the American Ambassador to Egypt, Ann Patterson. Next on the agenda were speeches by leaders of Fortune 500 firms such as General Electric, Bechtel and Coca-Cola.

All stressed the importance of Egypt for the stability of the region both politically and economically.

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