Identifier
Created
Classification
Origin
05CAIRO9293
2005-12-15 08:23:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Cairo
Cable title:  

EGYPT TELLS EB/CBA MERMOUD IT'S "OPEN FOR BUSINESS"

Tags:  ECON ECPS EINV CVIS EG 
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UNCLAS SECTION 01 OF 02 CAIRO 009293 

SIPDIS

SENSITIVE

NEA FOR ELA
EB FOR CBA AND CIP
NEA PLEASE PASS USTR

E.O. 12958: N/A
TAGS: ECON ECPS EINV CVIS EG
SUBJECT: EGYPT TELLS EB/CBA MERMOUD IT'S "OPEN FOR BUSINESS"


Sensitive But Unclassified. Please Protect Accordingly.

-------
Summary
-------

UNCLAS SECTION 01 OF 02 CAIRO 009293

SIPDIS

SENSITIVE

NEA FOR ELA
EB FOR CBA AND CIP
NEA PLEASE PASS USTR

E.O. 12958: N/A
TAGS: ECON ECPS EINV CVIS EG
SUBJECT: EGYPT TELLS EB/CBA MERMOUD IT'S "OPEN FOR BUSINESS"


Sensitive But Unclassified. Please Protect Accordingly.

--------------
Summary
--------------


1. (SBU) During his meetings with a large sampling of Egypt's
political and business leaders, EB/CBA Frank Mermoud heard
that while Egypt is "open for business" due to positive
policy reforms, significant challenges to business
development remain. Expanding outreach to Egypt's ICT sector
and encouraging more face-to-face encounters between Egypt's
leaders and American business could help foster greater
linkages. Treatment of Egyptian travelers at U.S. border
crossing points is straining our commercial relationship,
despite Post's successes in facilitating business visas. End
Summary.

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Expanding U.S.-Egypt Business Linkages
--------------


2. (SBU) EB/CBA Frank Mermoud visited Cairo November 12 - 15
to engage GOE officials and private sector leaders in
building greater business and investment linkages between
Egypt and the U.S., seek continued cooperation on WTO reform
proposals, and press for Egyptian support on Internet
governance issues at the World Summit on the Information
Society in Tunis. Mermoud met with the Ministers of Foreign
Trade and Industry and Investment, senior officials from the
Prime Ministry and Ministry of Communications, a variety of
business leaders, and addressed assembled members of the
American Chamber of Commerce in Egypt.


3. (SBU) Mermoud also toured the Smart Village, a business
park designed to co-locate ICT companies and foster
incubation of start-up ICT businesses and technologies. The
Smart Village, which also houses the Ministry of
Communications and Information Technology as well as offices
of the Prime Minister, includes regional headquarters of
major U.S. ICT firms such as Microsoft Egypt, as well as the
CultNat exhibit, a project aimed at digitizing and displaying
Egypt's cultural heritage.

--------------
Open for Business
--------------


4. (SBU) Despite remaining challenges, Mermoud's GOE
interlocutors sought to stress that Egypt was indeed "open
for business" and would continue to enact changes designed to
foster private sector growth and investment. A standout

among these initiatives is the Ministry of Investment's "One
Stop Shop" for private business registration. The "Shop"
brings all the steps of business start-up to one location,
resulting in a 72 hour turn-around of startup applications.
Such a development, the GOE hopes, will go far in raising
Egypt from its dismal rating of 141 out of 155 in the
International Finance Corporation's (IFC) ranking of the ease
of doing business in various countries. Minister Mohieldin
noted that an IFC team was due to visit Cairo soon and that
they would certainly be made aware of this positive
development.


5. (SBU) On the R&D front, the Ministry of Communications has
established virtual "Centers of Excellence" which seek to
create synergies in electronic design, wireless technologies,
and data mining for the tourism and oil and gas sectors as
well as increase search capabilities in Arabic text
publications. According to Microsoft Egypt, the IPR
situation in the software field was improving, with laws and
regulations in place and adherence -- particularly in
government departments -- on the rise.

--------------
Challenges Remain
--------------


6. (SBU) Despite the economic reforms enacted under PM
Nazif's cabinet, significant challenges to increased business
development in Egypt remain. Tariff and tax reforms,
monetary policy discipline, and increased privatization of
state-owned enterprises (the number of transactions and size
of proceeds have doubled over the last four years according
to the Minister of Investment),have contributed to increased
capital inflows. During his meeting with Mermoud, Minister
of Investment Mohieldin, however, outlined four primary
obstacles he and his colleagues face in increasing investment
in Egypt: 1) access to finance, 2) access to land by the
industrial and agricultural sectors, 3) lack of acceptable
dispute settlement procedures, and 4) an entrenched and
corrupt bureaucracy. Mohieldin's assessment mirrored those
gleaned from meetings with private sector leaders from a
variety of industries and regions in Egypt.
--------------
Beyond the Beltway
--------------


7. (SBU) Mermoud entreated his GOE interlocutors to add
travel "beyond the beltway" for meetings with American
private sector companies to their itineraries when visiting
Washington, D.C., and offered EB/CBA's assistance in
arranging meetings further afield. The officials recognized
that such meetings, particularly in the ITC sector, would
help cement existing business relationships and expand the
pool of potential investors in Egypt.

--------------
Common Refrain
--------------


8. (SBU) Egyptian travelers continue to face difficulties at
U.S. border crossings, however, which they say are straining
our bilateral commercial relationships. Despite Embassy
Cairo's success in establishing an expedited,
customer-friendly business visa program, Mermoud encountered
consistent complaints about the treatment of Egyptian
travelers upon entering the U.S. from both government and
private sector interlocutors. As an example, Dr. Khaled
Ismail, Senior Advisor to the Minister of Communications,
raised this issue with Mermoud during their 11/13 meeting.
Ismail, an MIT graduate and former IBM employee, said that
the last two times he tried to enter the U.S. he was detained
in secondary and questioned extensively about his and his
family's background, his intentions on traveling to the U.S.,
etc. In each instance he was held for over two hours.


9. (SBU) Ismail noted that while he understands the need for
vigilance at the border, he said that surely there must be
ways to prevent repetitive questioning of evidently
"innocent" travelers, particularly those who resided legally
in the U.S. for extended periods in the past. Several other
interlocutors offered unsolicited commentary on similar
experiences, noting how this is a deterrent to travel to the
U.S.

--------------
Comment
--------------


10. (SBU) The Smart Village grouping presents an opportunity
for U.S. ICT sector companies seeking expansion in the region
and for USG agencies seeking to enhance ICT development and
IPR protection in the region. Post recommends further USG
outreach to the Smart Village entities and looks forward to
facilitating contact.


11. (SBU) USG efforts at facilitating visas for
businesspersons are harmed if travelers repeatedly encounter
ill-treatment at border inspection points. While most of our
interlocutors understand the role of name-check computers and
the possibility of misidentification, they are less forgiving
when every entry to the United States requires secondary
inspection and extensive questioning. This is a deterrent to
travel to the U.S. and puts our companies at a disadvantage
when competing in the global marketplace.


JONES