1/Q: Can you give us the background and the role of the Tourism Development Authority?
The Tourism Development Authority (TDA) was established according to Law number 7 of 1991. It was a presidential decree that organized the TDA and the supervision of the land extending along the entire Red Sea coast, the Gulf of Aqaba, the Gulf of Suez, and parts of the North Coast that include Fayoum and the Oasis area. The concept was to start development in the remote desert areas through the private sector. We have partners in the private sector. Our project is 100% financed by the private sector. Since then, we developed a study with international experts and that is the Priority Action Plan. We identified the priorities and started with promotion material. There are now 812 tourist projects in those remote areas. They were divided into centers so that for each one of the 14 projects there was a center that was a small town or city and it was supported by all the needed infrastructure, facilities and components like housing. The major 15 projects are accommodation and attraction. Each center is managed by a company that maintains the common facilities and infrastructure. Each small project also has another company. We provide them with incentives to operate in those remote areas. We give them land for nominal prices, $1 per square meter and on installments for 10 years. They have three years holiday then they pay installments for seven years. They also have a tax holiday for 10 years and for some areas like Toshka the tax holiday is 20 years. They are also exempted from customs; they pay only 5% for all the needs of the hotels and the tourist projects. On the other hand they are required to completely develop the area and provide the superstructure as well as the infrastructure. The role of the state is to give them the guidelines and to monitor their work. But they provide all the investment to the extent that their task is also to build the airports. The Marsa Alam airport, for example, was built by a private sector company through the BOT system. Since 1974, the concept of moving away from the Nile Valley to the remote areas was stated in the official documents. Egyptians occupy only 4% of their land. At first it was difficult to move away from the big cities because you need a market in order to start any other activity. For example, if you have to build a factory in a remote area you will have to transport your product to the nearest city and you are competing with other factories that are closer to those cities. So, you must find the market. The same applies to agriculture because their products must be transported to the market. It is only in tourism that the consumer must go to the site of production to consume the product. You can not transport the Red Sea, for example, to Europe but rather Europeans have to come to the Red Sea. So, the product is still competitive. We provide employees for each hotel and they live in small communities. They need housing and services. Then, you have the market because these hotels will need furniture, food items and so on. When you have 30 or 40 hotels in those areas this will create a demand for their products that are expensive to get from Cairo. So, this will encourage investors to open up a factory close to these hotels to supply them with their needs. This is the concept that we apply : tourism has to be the spearhead for other development factors. Untill now it has been successful.
2/Q: The Ministry once declared that tourism is more than the Nile and the Pyramids. So, does this mean that the tourism sector in Egypt is undergoing a process of diversification?
Yes, that is true. Egypt is endowed with a lot of natural resources and cultural resources. You can not find a lot of countries that have such variety of resources. There are a lot of beaches along the Red Sea with coral reefs for about 1000 km. You do not find it in the Great Barrier Reef in Australia. It is also very far from Europe, our main market. You have to fly three hours to Hurghada or Sharm El Sheikh compared to 12 hours if you are going to the Great Barrier Reef which means more money and more time.
In addition, we have the safari in the Western Desert where you can see the remains of World War II. You can also see the routes of the great explorers.
All these resources need to be polished and properly shown and marketed. They need to be developed. We have to develop natural parks and theme parks to attract people. There also has to be accessibility so that they can go to these places. So, there has to be more roads, more airports and marinas. We have Nile cruises but we still need Yachting in the Red Sea and the Mediterranean Sea. Eco-tourists would not like to come to high towers in the city but rather to lodges within nature and we have to provide these accommodations for them. We also have to provide the required infrastructure. All those remote areas are deprived from the necessary infrastructure. We also have to provide the basic services like health services, rescue services, restaurants and so forth.
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3/Q: According to the economic figures, one can say that Egypt is on the right path and it is due to growth. Consequently, business will increase as well. Still, there is a lack of five stars hotels to welcome businessmen. So, what are the measures taken to increase the occupancy rate?
Your question raises three points. The first one is the occupancy rate. With the kind of services that are currently being offered, we can receive only 4 million tourists. If you provide the necessary accommodation, infrastructure and services, then you can expand. The product with its existing situation can attract only 4 million tourists. But, this is not the ceiling. There is still more potential. In addition, if you wanted to go to one of the natural parks, how will you get there and where will you stay? You will ask yourself if you are safe there. So, all these services must be provided. In addition, the tour operators are not working there. These services must be developed. Therefore, we used the private sector to develop these services. These centers have management companies that are run by the private sector. The private sector can help to maintain the required standards. It is easy to establish those centers but it is very difficult to maintain them. So, the private sector is our key to develop the tourism sector. Cairo has all the concentration of activities and therefore suffers from pollution, traffic and so on. No one will tolerate to stay in such areas with air pollution and water pollution. So, people will be attracted to the remote areas. I think that there are lots of opportunities. We have a number of projects with the World Bank and the USAID in the Red Sea. We also have the best practice manuals. We have the EIA manuals. I think we are working in the right direction. In 1978 about 76% of the tourism revenue in Egypt came from Cairo and Alexandria. Now, this percentage fell to 34% in Cairo, 4% or 5% in Alexandria. This means that new destinations are attracting more tourists. This is a change of direction. Hurghada is suffering a little bit from concentration of activities like what happened to Cairo. So, we would like to spread to new destinations.
4/Q: The American investment potential is huge. In which areas or projects will you be interested in attracting foreign investments?
I think that the Southern parts of the Red Sea are very attractive. I know from the studies that were done by the USAID that they believe that the Red Sea is a sacred place and it is considered as a part of the heritage of the world. Parts of the Caribbean and the Great Barrier have deteriorated. In the southern parts of the Red Sea, however, the nature there has never been touched. We would also like to attract foreign investors in the area from Marsa Alam to Ras Banas. There are a lot of attractions there. There are about 6 centers in that area and any one of those centers can be an attractive package for the American investor, whether as a major development or to undertake a project in any of those centers. I think that the Red Sea represents a comparative advantage of Egypt because we have a lot of competitors in the Mediterranean Sea. In the Red Sea, we are almost monopolizing it because in Saudia Arabia there are cultural and religious barriers that prevent them from expanding tourism on their beaches. Eilat is a small stretch and it is already overdeveloped. The same thing applies to Aqaba. Therefore we have a comparative advantage of about 1500 Km.
5/Q: What is being done to increase the links between the Egyptian and American business communities regarding the development of tourism?
Each community has what we call ’pattern language’. We are trying to operate according to those norms and standards that they are familiar with. We did a project with the USAID and we came out with a lot of manuals that would guarantee that the product is according to the international standards and the American standards in particular.
6/Q: Last week you collaborated the Environmental Association. Could you tell us more about this?
It would guarantee that they understood those manuals. The TDA told them that if they are interested in maintaining the environment we would like to work with them on those manuals. But, we can not deal with every single investor. We need them to be associated. We wanted to make sure that their colleagues would do no harm to the environment because it is a shared responsibility that must be managed collectively.
7/Q: The U.S. visitors are fewer than European visitors. What are you doing to boost this number?
We are doing regional packages. If you are coming from the United States, this would be a long way to visit only one country. You can visit other countries in the Middle East. Cooperation between countries in the Middle East and Europe is the way to make packages attractive to the American tourist. The same applies to the Australian visitor.
8/Q: Keeping in mind that Forbes magazine reaches more than 4 million readers, what will be your final message to them?
It is a very critical time for Egypt now but you can compare it with the time when it was flourishing and you can also compare it with the time of great projects when the necessary infrastructure were built in the 19th century like the Suez Canal. So, now is the time for big ideas and big investments to take place in Egypt. In the 1960s it was impossible to think that the TDA and the private sector will carry out projects in remote areas of about L.E. 32 billion. Now, is the time for investment in Egypt. |
EGYPT
