1/Q: Could you give us your opinion on the current situation in Egypt today?
You can refer to all international reports to get first hand information about the international business community and international business organizations that were examining our economy and its development. They are unanimous in their conclusion that Egypt went through a very successful program of economic reform starting by a huge investment effort in infrastructure and monetary and financial reform through the cooperation of the Egyptian government, the IMF and the World Bank. The program is one of a kind because it has been the only successful program of its kind to be done by the IMF. After this era of financial and monetary reform we went on with the privatization process. This program has started and been tremendously sustained through the last three years. We have a ministerial committee headed by the Prime Minister that is taking care of the privatization policies. We have achieved a lot so far. Regarding the tourism sector, it has been a leading sector and a pioneer in terms of privatization because the tourism activities, by nature, are much more oriented towards the private sector management rather than public sector management. Therefore, since 1993 there has been 100% contribution of the private sector in terms of investment and development. Since then, the government does not interfere in such activities. We have a policy that the government we encourage, provide incentives, set a legal and administrative framework to attract investors. They take over everything including infrastructure. We give the lands at very low prices, $1 per square meter, which will be paid in ten years after a grace period of three years. They have exemption from all taxes in remote areas for ten years starting from operation of the project. Extensions are granted. We have a unified tax law for imports for the requirements of those hotels, resorts and tourist establishment. It is a unified 5% for any article. It goes from a certain type of wood to computers if they will be used for the tourism project. There are also guarantees that there will be no nationalization or confiscation of property by the constitution and bylaws. The Law of Foreign Exchange is very liberal now. So, you can easily liquidate and sell the project and make capital gains without any restrictions. This is the package of incentives and we also have a Tourist Development Authority (TDA) within the Ministry of Tourism, which provides them with studies and technical assistance for no fees. This is important in terms of soil quality, flood flows and maps. On the other hand, the investors are responsible for the superstructure and infrastructure under our technical supervision for the requirement of environment protection where the state can interfere in a liberal country. They also have to abide by an agreed-upon schedule. They just can not keep the land without developing it. Whenever they finish the project they have the right to appropriate and not before that. That is the legal, technical and economic framework of incentives for tourism development.
2/Q: The tourism sector went through difficult times as a result of the Luxor attack and the Gulf war when occupancy rates declined dramatically. Could you tell us what the situation is today?
Let me start by giving an introductory remark. We witnessed a real boom in tourism since peace was established in the region. That is why regions like Sinai and the Red Sea that used to be battlefields have been development sites. The policy of Mubarak and the government since the 80s was to build infrastructure in those areas. We spent more than $65 billion on infrastructure and it has been very beneficial especially to the remote areas and that is where the essence of tourist development is currently taking place. Investors were able to go there and invest their money because there is a national network of infrastructure, like electricity, water supply, sewage, telecommunications and so on. In 1982 we had only 18,000 rooms. This number reached 78,000 in 1997. Tourists visiting Egypt in 1982 were 1 million. This number increased to 4 million last year. Revenues used to be $300 million in 1982 and it went up to $3.7 billion in calendar year 1997. This should give you an idea about the volume of development. Under construction there are 812 new projects. We are going to bring our capacity to 200,000 rooms within a period of 3-5 years. You might think that 200,000 rooms are not an extraordinary number. But, we are keen to conserve the environment and we do not want to put a pressure on natural resources. You might say that countries like Turkey and Greece have three times that number. It is true but in five years we will have less than half of their carrying capacity. We know that but we have learnt from experiences of over-development and pressuring the natural resources. Going back to your question, I believe that those incidents are something that take place in almost every country. This type of violence, unfortunately, is a characteristic of our modern world. I can not pretend that Egypt is less insecure than any advanced country. These are the results of the fact-finding mission that we invited to come to Egypt. We are now back to normal by October 1997. We are heading towards more functions, activities, diversification of our product and more promotion in addition to more events. The next year, 1999, will be a turning point for tourism. We have very important functions on our tourism agenda. We are preparing an impressive program, including the revival of the holy family in our country, for the millenium celebrations. We have some celebrations carried out by the Ministry of Culture regarding the millenium celebrations at the Giza Plateau. There will be festivities, arts and music for 12 hours. We have 30 sports, cultural and entertainment events that will take place all year to make our product attractive. Since 1982 we started to add this product such as the Red Sea and Sinai resorts. These are new. Tourism in Egypt used to be just about the Pyramids and the Pharaonic sites in Upper Egypt. Then, we started to diversify our product to include also eco-tourism, international conferences and exhibitions, Nile cruises and Safaris. Our slogan is "Egypt has it all".
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3/Q: You once declared that Egypt is more about the Nile and the Pyramids. Does it mean that tourism will be diversified?
We have already started to diversify. The cultural process itself is very exciting and it is supervised by President Mubarak to revive the remains of the old civilizations including the Pharaonic, Greco-Roman, Christian and Islamic monuments. Now, there is a big movement for restoration and conservation of monuments.
4/Q: Could you tell us more about the new tourist project in South Sinai?
The major part of the project is along the Red Sea coast. In South Sinai, we have 250 km of beaches and more than half of them are conserved as natural parks. We have four natural parks. In our projects there is great attention paid to protection to the environment. The maximum of construction allowed by the Ministry is
12.5% if the project is on the coast and 20% if it is more into the desert. We do not want to congest the Red Sea area. The Red Sea is 1800 km long and the major projects are there. - What about the North Coast?
We have started to develop the North Coast only recently. There has been a construction boom in the North Coast for Egyptian residential villas. This alleviated the pressure from Alexandria. They were not, however, established for tourist development. Now, about 100 km west of Alexandria, the government decided to stop any allocation of [-] for private or residential purposes so that it can be developed as a tourist location. The project will start from 100 km west of Alexandria until the western border with Libya.
5/Q: In which ongoing project would Egypt be interested in attracting foreign investments?
We welcome all investors. This is a liberal economy. We provide, not only tax holidays, but also technical assistance. So, we are representing all the administration in terms of providing facilities to investors. Those investors are applicable to Egyptian and foreign investors alike. In the new 812 projects we have an estimated cost of LE 33 billion ($10 billion) of which 10% is left to foreign investments including Arab (Gulf), Italian, American, German, French and British.
6/Q: Egypt won the ESTA award in Los Angeles. Does this mean that you are targeting the United States?
Yes, of course. The USA is a huge and important market. We do not have our fair share in the American market. The maximum number of American tourists that we have ever had was 180,000 visiting Egypt. This is a very tiny segment. It is due to a number of reasons. The distance between Egypt and the USA is very long. In addition, North America is a huge continent with many tourist attractions within the continent itself. When they travel abroad, most Americans would prefer Latin America, the Bahamas or the Caribbean islands. If they go further they might go to Europe. But, we are very much interested in the American market and we have already contracted an American firm within our promotion and advertising campaign which runs our advertising and promotion efforts in the USA. We have only one problem. The U.S. government issued an advisory warning travelers not to come to Egypt because of the bombing of the U.S. embassies in Kenya and Tanzania, which are thousands of kilometers far from Egypt. Therefore, we believe that it is unjustifiable. We have good contacts with the administration officials and therefore we feel that the situation will change.
7/Q: The tourism sector is still publicly owned in majority. How is it organized?
The minority of the tourism property is owned by the public sector. Privatization in the tourism sector started in 1993. 100% has been privatized. Anyway, the management has always been private or by international management companies. For example, Hilton property is owned by the government but it is managed by Hilton International.
8/Q: Could you provide us last year’s revenue figures?
We get the figures at the end of the year. but, as I told you things are back to normal less 2 points. We had a very strong recovery due to a lot of factors. First, we had a very strong and advanced security plan. This plan has been communicated to fact-finding missions. Third, it was convincing. Tour operators resumed their work.
9/Q: Keeping in mind that Forbes magazine reaches more than 4 million readers, what will your final message to them be?
I would tell them that Egyptians are warm and friendly. They are welcome to Egypt, the cradle of civilization. We have all the variety in nature. Egypt is very safe. No American tourist experienced security problems in Egypt.
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EGYPT
