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Egypt is looking for Chinese investment partners in textile, pharmaceutical, tourism and other sectors. Current negotiations for two industrial parks could help China become Egypt’s largest trade partner in the future.

By intern researcher Katina Wong

Chinese entrepreneurs are travelling to Egypt to negotiate terms for two industrial parks that may set the stage for a major wave of Chinese investment in the land of pyramids.

Chinese first hope to partner with Egyptian counterparts with aid from the National Bank of Egypt for a ＄1 billion textile manufacturing project at a yet-to-be-determined site, said Ahmed Abady, Egyptian minister plenipotentiary for commerce in Beijing.

If the deal is sealed, Abady told Caijing, construction could begin by year’s end.

The second potential deal involves a separate Chinese delegation that hopes to build a pharmaceutical industrial park after visiting Egypt in June. Goods manufactured at the Egyptian site would be exported to Africa, Europe and the United States, Abady said, without naming the Chinese parties.

Abady said Egypt is trying to attract big Chinese companies as investment partners in textile, pharmaceutical, maritime, tourism, transport, petrochemical and industrial sectors.

Although none of China’s major companies have invested in Egypt so far, Abady predicted China will become his country’s largest trade partner in the future. Bilateral trade is expected to increase as much as four-fold by 2010, reaching ＄7 billion by 2009, he said.

China currently enjoys a massive, ＄3 billion trade surplus with Egypt, but Abady said the government is more interested in China’s investment level than import-export figures.

Egypt’s Minister of Trade and Industry Rachid Mohamed Rachid has given a green light to use “all facilities” to attract Chinese investment.

The trade minister set up the Chinese-Egyptian Business Council under his office’s direction last year to help Egyptian firms find Chinese partners. Now, Cairo is doing all it can to promote Chinese investment.

“What you need, we will give you,” Abady said.

For example, the National Bank of Egypt’s Shanghai branch will set up an office next fall to provide aid for investment, business and trade to Chinese and Egyptian companies, said Abady. 

Furthermore, he said, Egypt has invited representatives from Chinese companies to attend a construction materials and furniture exhibit in Egypt next month – with all expenses paid.

And for average Egyptians, Abady said, Chinese business is an important symbol of friendship and the phrase “Chinese factory” has a positive connotation.

Egypt is currently expanding infrastructure for a Chinese industrial park in its Suez Special Economic Zone, formed in 2000. The project is a joint investment by Tianjin Tianbao Industrial and Trade Co. (Group) and the Sinai for Investment and Technological Development Co. 

Abady said Egypt is ready for foreign investment with the infrastructure, labor force, natural resources, policies and legal framework to encourage growth.

Its legal framework includes a “one-stop shop” system as well as the Qualifying Industrial Zones and Free Trade Area with Africa agreements, said Abady. The agreements allow tariff waivers for companies exporting from Egypt to the United States and certain African countries.

Moreover, foreign investors in Egypt may obtain all necessary licenses just 72 hours after visiting a single office.

Historically, business relations between the two countries have been modest but positive.

Egypt has had no problems with large Chinese trading partners, although Abady mentioned scandals in his country that have cast a negative light on small, Chinese companies that delivered unsatisfactory goods or disappeared with advance payments from Egyptians buyers.

However, Abady does not worry that these incidents will affect bilateral investment, due to the relationships formed by participating companies and the availability of government help if disputes arise.