The American Chamber of Commerce in Egypt
Annual Doorknock Mission to the United States
(April 17-22, 2016)
Conveying key economic advancements and the overall business climate in Egypt to different stakeholders was the primary goal of AmCham Egypt’s Doorknock mission to Washington D.C. during the week of April 17-22.
This visit came against the backdrop of U.S. presidential election campaigns and just two weeks after Senator Lindsey Graham (R-South Carolina) led a Congressional delegation to Egypt and called for a ‘Marshall Plan’ to support Egypt. Senator Graham’s visit was followed by another visit in April by U.S. House of Representatives Speaker, Paul Ryan who called for continued support to Egypt. Both visits paved the way for constructive discussions around objective ways in which the U.S. could continue to assist in Egypt’s development.
This year’s 40-member delegation aspired to make the case that Egypt is continuing its economic reform despite many challenges that still exist, clear some misconceptions regarding Egypt’s transition, called for ways to further strengthen the bilateral relationship during the remainder of 2016 and “re-boot” the relationship as the new administration comes into office next year.
Over the course of five days, delegates took part in 93 meetings with members of the U.S. Congress, Administration officials, think-tanks, media and leaders from the U.S. business community, these covered: 57 meetings with Members of Congress (House and Senate), 9 meetings with the Executive Branch, including meetings with senior officials at the Department of State, Department of Commerce, Department of the Treasury, Department of Agriculture, National Security Council (NSC), Office of the United States Trade Representative (USTR), Agency for International Development (USAID), the Egyptian American Enterprise fund and the Export-Import Bank of the U.S. (Ex-Im Bank).
The delegation also met with senior representatives at many of Washington’s prominent Think Tanks and Multinational Financial Institutions, including; the World Bank, the International Monetary Fund (IMF), International Finance Corporation (IFC), Woodrow Wilson Center, Albright-Stone Bridge Group, Carnegie Endowment for International Peace, Washington Institute for Near East Policy, Atlantic Council, Center for American Progress, Council on Foreign Relations, National Foreign Trade Council, Freedom House and the Center for New American Security.
This year’s delegation included representatives of several major multinational corporations, Doorknock veterans, and a number of young businessmen and women. The diversity within the delegation made our arguments in support of Egypt’s progress even more powerful. The eagerness of the younger voices among the delegation and their willingness to engage in open discussion with different stakeholders in Washington was highly remarkable.
It is also noteworthy that AmCham Egypt continues to be perceived as an independent and increasingly credible voice among policymakers in Washington.
To that end, this year’s mission carried forward a number of messages; these can be outlined as follows:
- Despite the challenges of the past few years, the private sector has experienced a consistent level of growth, and the economy mirrors the resilience of its people; Egypt remains one of the most diversified economies in the region.
- Egypt is revisiting its laws and making necessary legislative reforms to create the proper enabling business environment, new and improved tax laws, investment regulations, labor and social insurance laws are underway.
- Egypt’s government embarked on a series of subsidy reforms aimed at reducing the budget deficit, as well as adopted policies that promote job creation and attracting foreign investment.
- Egypt has successfully taken measures to encourage private investment in renewable energy, such as the introduction of a feed-in tariff. Some pipeline projects aim at increasing electricity production by 150%.
- Egypt has demonstrated its commitment to the political road map, by holding parliamentary elections as scheduled last December.
The delegation reiterated the private sector’s commitment to support the Government of Egypt’s efforts in developing policies to confront its immediate challenges; a process that requires the strong support of Egypt’s friends and allies particularly the United States.
U.S. company representatives among the delegation including; ExxonMobil, Apache Corporation, Procter & Gamble, Coca-Cola, Pepsico, Microsoft and others shared their first-hand knowledge operating in Egypt, their experience cruising Egypt’s transition during the past three year and expressed their ongoing commitment to supporting Egypt’s development.
Overall, the delegation sensed that while there still are some groups that are critical of Egypt, alluding to some human rights issues; their collective opinions by no means constitute the majority. To the contrary, AmCham members were pleasantly surprised to witness an increased level of appreciation to the role that Egypt plays as a beacon of stability in the region. That was especially reiterated in Congress, where the national security importance of the bilateral partnership is well comprehended.
Specific bilateral trade and investment issues were the focus of discussions during meetings with officials at several U.S. agencies; including the U.S. Department of Commerce and U.S. Trade Representative (USTR). There was a call for larger economic reform measures to be adopted and for Egypt’s government to heighten its level of engagement with its U.S. counterparts in pursuit of a deeper level of economic engagement. U.S. officials updated members of the delegation on the outcomes of the latest Trade and Investment Framework Agreement (TIFA) discussions which took place earlier in January 2016. Delegates also discussed the possibility of reducing the Israeli component in the Qualified Industrial Zones (QIZ) agreement, which allows duty free access of Egyptian products into the U.S. In response to that, the office of the USTR had no objection and recommended that this issue be raised on the bilateral level between Egypt and Israel. Several members also emphasized the need for expanding the QIZs beyond the textiles' domination.
The delegation engaged in constructive dialogue with the think tank community on political and economic reform measures. During their meetings with the Administration, the delegation called for continued support to Egypt despite some bottle necks experienced recently by civil society-an issue raised during several meetings. The need for an increased level of communication in order to address areas of misunderstandings was emphasized during several meetings. Members also called for mobilization of international development agencies to support Egypt as well as the extension of economic support programs.
Policy-makers specifically commended Egypt’s proactive steps in tackling the budget deficit including; the partial removal of energy subsides, tax reforms and other macroeconomic reforms. Several decision makers with knowledge of Egypt - and whom we consider to be friends, inquired about the vision behind the reforms being undertaken. To that, delegates highlighted the priorities of the current government being job creation and provision of stability and security. It was discussed that Egypt needs to more widely share its vision, ensuring the alignment of all government bodies.
Some of the key issues that were brought up in meetings included, Egypt’s foreign currency shortage, its effect on investments and ways in which the government is dealing with this issue. Concerns related to repatriation of profits were also brought up.
The visit included a breakfast event on April 18th hosted by the U.S. Chamber of Commerce, featuring Egypt's Minister of Finance, Amr El Garhy, who shared the outcomes of his meetings with the International Monetary Fund (IMF), including the proposed assistance with the implementation of the Value Added Tax (VAT). During his speech, Minister El Garhy outlined some of the reasons behind the recent currency devaluation, being the need to redirect foreign currency towards the banking system as well as limit what he referred to as ‘unproductive’ importation in order to protect local industries; sharing the spinning and weaving industry as an example. Minister El Garhy went on to share some of the financial reform measures adopted by the government to reduce budget deficit and to limit expenditure. He explained some of the sources of government revenue and compared this year with previous years sharing that in the current fiscal year (FY) 2015/2016, budget revenues from taxes are expected to amount to EGP 422.4bn (14.9% of GDP), compared to EGP 364.2bn in FY 2014/2015, a growth rate of approximately 13%. Within the same context, revenues from sales taxes in the budget are also estimated to increase from EGP 118.4bn in FY 2014/2015 to EGP 159.8bn (5.6% of GDP) this year. Meanwhile, revenues from general taxes are expected to increase from EGP 207.4bn last fiscal year to EGP 213.5bn (7.5% of GDP) in the current fiscal year.
A special dinner was hosted in honor of the AmCham delegation on April 20th by Egypt’s Ambassador to the United States, Yasser Reda. His hospitality and generosity was much appreciated.
On April 22nd a special panel entitled “The Changing Role of Egypt’s Private Sector” was hosted by the Middle East Institute (MEI) on the occasion of the AmCham Doorknock and featured three members of the delegation as panelists, including; Tarek Tawfik, Vice Chairman of the Federation of Egyptian Industries, Dina Sherif, Director, AUC Center for Entrepreneurship and Said Hanafi, Chief of Staff and General Counsel, Orascom Hotels and Development. During the panel Ms. Sherif discussed the increasing role played by the private sector in Egypt’s development, where many companies have opted to step up their efforts to fill developmental gaps through building sustainable business models. Mr. Hanafi shared examples of successful projects including Orascom’s social housing project. Mr. Tawfik iterated Egypt’s huge economic potential being the largest consumer market in the region with 90 million inhabitants and went on to reveal several facts indicating that as he said; ‘Egypt’s youth are transforming its economy’.
Having attended almost 93 meetings during the Doorknock week; the delegation left Washington with a sense that despite a few misconceptions that exist, the bilateral relationship continues to be robust, noting the need for an increased level of dialogue between both governments during the coming period in order to fully capitalize on the depth and strategic importance of the existing bilateral relationship between both countries.