Some 200 Turkish investors currently operate in Egypt. But Hasan Akyuz, whose consultancy business has been advising Turkish investors wishing to enter the Egyptian market for years, is upbeat about Egypt's prospects and hopes to multiply that number.
He recently spoke to Ahram Online and gave his take on the Egyptian economy in the wake of the January revolution that swept Hosni Mubarak from power and had an immediate effect on the economy and business as a whole.
Ahram Online: Are there any similarities between the Egyptian and Turkish economies?
Hasan Akyuz: Yes, of course. Thirty years ago, Turkey had an outdated system, but it has reinvented itself. And Egypt is doing the same. Things are going to be easier for Egypt, for a lot of things now depend on technology. And Egypt has no trouble attracting foreign investors who can bring modern technology to the country.
New investors are bound to train Egyptian labour. And once the workers have been exposed to modern technology, they will be in a position to start their own businesses. This is what happened in Turkey. It can happen in the garments industry for example, or the automobile industry. Turkey has achieved a lot in the past 20 years. But Egypt needs only 10 years or so to catch up -- with the help of foreign expertise.
AO: Your company achieved 1,298 per cent profits in 2010. How did you do it?
HA: Unlike Egyptians who tend to imitate the business next door, we have an unconventional approach. Our main aim is to bring in innovative investors, which is good for the investors and everyone else.
For example, one of the investors I had the chance to work with makes glass powder. This is an industry that Egypt does not have. The cost of setting up a glass powder factory is not much, and the factory is now being built in Borg Al-Arab.
It will be the first factory in the Middle East to make glass powder, a substance that is used in roads to reflect the light at night. Egypt usually imports this substance from Austria and last year it imported it from Turkey. So we thought that it would be better, instead of bringing in the product, to bring in the investor from Turkey.
We brought the investor here so he may meet the needs of the local market and then export some to neighbouring countries, in the COMESA (Common Market for Eastern and Southern Africa) for example. It is a profitable business too; glass powder is made from scrap glass, or discarded glass products. In other words, we take something useless and make something useful out of it. And there are many raw materials that are usually exported in a raw state and then come back to Egypt as a processed product.
Take for example silicon. We export it raw for US$20 a tonne and then import it for $900. The processing is just a matter of sifting the sand and removing the unwanted ingredients.
Egypt has the best gypsum in the world. The best sand in the world is that of Sinai. And the best calcium is in Minya, among other things. But who is benefiting from them? The investors abroad buy the raw material, process it, and sell it back to us.
Our consultancy seeks to attract new options and industries that would benefit Egypt, create jobs and stimulate exports. The phrase 'Made in Egypt' is not a familiar one yet. We want this phrase to become common in Africa and Europe and even in Turkey, because there are products in Egypt which are superior to Turkish ones.
For example, we export raw salt to Turkey and other countries. Meanwhile, Egypt imports processed salt from Saudi Arabia. We export the raw salt for $20 a tonne and then we import the processed salt -- which has been washed and distilled -- for $120. Tell me, who is making all the money?
AO: Does Egyptian law discriminate between Egyptian and foreign investors?
HA: We hope that after the January 25 Revolution, foreigners would be allowed to import. Foreigners are currently not allowed to import anything from abroad, either raw materials or finished products. This is an outdated policy.
AO: The aim is perhaps to protect the local industry?
HA: That would make sense only in the case of a final product. But stopping someone from importing raw material does not protect the local industry. It only prevents you from processing the material and re-exporting it. Foreign investors in Egypt are all interested in exports and not just in selling to the local market. Our aim is to enhance the quality of Egyptian products, whether intended for the local or foreign markets.
AO: Do you believe that agreements between Egypt and other countries are being fully utilised?
HA: Not at all. Take the Egyptian-Kenyan trade relations for example. According to the COMESA agreement, any merchandise leaving Egypt or brought from Kenya to Egypt is exempted from customs. But there are no more than three or four businessmen benefiting from this arrangement. We should be thinking of what Kenya has that we need, and what it does not have that we can export. We must benefit from such agreement. For example, if I export garments from Egypt to Kenya, I will not be paying customs, although in other countries I will have to pay 30-40 per cent. So if today I export anything to Kenya, I will be making 30 per cent more money than other countries I would export to.
The agreements we signed with African and Arab countries are very good, but have not been utilised fully before 25 January. Things are changing now, and the prime minister has visited Kuwait and before that he went to Sudan. As more attention is paid to Arab and African markets, new horizons will open up. And the investors in Egypt, whether Egyptian or foreign, will upgrade their products and become more competitive.
AO: What were the impediments that existed before 25 January and should now disappear?
HA: Two words: red tape. The investor who wants to set up a company can go to the Investment Authority or the General Organisation for Industrial Development and get the necessary permits quite easily. But to get an invoice stamped from the Investment Authority, you will have to wait for two to four days. Meanwhile, the shipment is waiting at the port and the investor is paying storage fees. So I suggest that special desk be created to handle the invoice process. This will make it clear that Egypt is moving in the right direction.
Turkish investment in Egypt before 25 January was around $2 billion. By 2012, I expect the figure will reach $7.5 billion. Why? Because other countries are having trouble with labour and need to move their investment to Egypt or any other country. We believe in Egypt because we live here and know what a treasure this country is. This treasure is not going only to benefit the investor. It will benefit the Egyptian economy and people -- and it will create jobs. And the day will come when we will not need foreign investors. The investors will come out of the ranks of the Egyptians. After getting the right training in modern technology and disposing of the endless red tape, Egyptians will do what foreign investors are doing now; they will start new factories and new ventures.
AO: Have you met with members of the new government to discuss Turkish investment and commercial exchange?
HA: The new government knows that by September it will leave office, which is a problem. Considering what happened before, officials are thinking, "why should I sign this and get in trouble?" The fears are real. Therefore, I believe that investment, from all countries, will increase in Egypt only after September and after the elections. That is when the future trends of investment in the Middle East will become clear.
Egypt is attractive to investors. Why do investors come to Egypt? Because of the various bilateral and multilateral agreements it is signatory to as well as because of energy and labour. So long as you have those things, investors will come and set up shop. I always say that the population of Egypt is not 80 million. The population in Egypt is 250 million, for Egypt is the gate of all Arab countries. Every time someone buys an Egyptian product and sends it home, another market opens up. If Egypt gets into the African market, business in Egypt will prosper without even the need for advertising.