A new trade agreement between Egypt and Kazakhstan initiates the start of extensive economic ties, writes Sherine Nasr The 30-below temperatures at this time of the year in Kazakhstan are hardly indicative of a country that is warmly opening its door to everything Egyptian. Starting on Sunday, Kazakh President Nursultan Nazarbayev headed a senior delegation of ministers and businessmen on a three-day official visit to Egypt. During his stay, Nazarbayev met President Hosni Mubarak and discussed ways of boosting bilateral economic ties. "We are willing to open our door wide for cooperation with Egypt," declared Nazarbayev on Monday, at the signing ceremony of a trade agreement. "We can work on all fronts; political, economic and cultural." Although trade relations with Kazakhstan started in the early 1990s, the volume of trade until last November remained very marginal at an estimated $7 million. An agreement earlier this year to import $225 million-worth of wheat annually from Kazakhstan boosted this figure, and it is expected to further rise thanks to a number of solid steps to shore up cooperation. One step was the signing of a trade agreement on Monday to enhance trade, exchange of information on legislation, regulations and opportunities, as well as connecting and informing business communities in both countries about investment opportunities. By virtue of the agreement, both sides will accord each other "most favoured nation" treatment in custom duties on exports and imports; rules and formalities related to customs clearance; transit, warehousing and reloading; taxes on imported goods; methods and transfer of payments; as well as export and import licensing. "The potential for cooperation between both countries is huge," noted Minister of Trade and Industry Rachid Mohamed Rachid on Monday. "We expect the volume of trade to increase dramatically in the next few years." On the business front, the Egyptian-Kazakh Business Council (EKBC) was also launched on Monday with the aim of establishing direct dialogue between interested business people on both sides. One day after signing the bilateral trade agreement, Rachid announced the establishment of a private sector company to promote joint investments and encourage export between the two countries. "Kazakhstan provides Egyptian businessmen with a golden opportunity to expand and venture into this virgin market," asserted Mohamed Abdel-Fadil, chairman of the Egyptian side of EKBC. Abdel-Fadil was referring to the fact that having recently opened its doors to the international market, Kazakhstan imports a very wide range of products. Since the government moved its political capital from Almata in the southeast to Astana in the north in 1997, "a huge process is underway to build a new city," stated Abdel-Fadil. Very soon Kazakhstan will announce an international tender to build 11 bridges, which is a golden opportunity for Egyptian construction companies. "They can have a good share in this country's modernisation process," added Abdel-Fadil. The Egyptian chairman continued that in addition to participating in large infrastructure projects through construction and engineering services, Egypt is also looking forward to exporting building materials including cement, steel, tiles and ceramics. Moreover, Egypt can also have the lion's share in Kazakhstan's pharmaceutical sector since the latter imports no less than 97 per cent of its medicine. Similar interest is evident in the textile sector, as well as in the exchange of human resources. "While Kazakhstan can be a good market for Egyptian skilled labour, particularly in the hotel industry, nursing and technician spheres, it can also export to Egypt a growing number of tourists," according to Abdel-Fadil. But there is a colossal obstacle facing smooth trade between the two countries, namely deficient trade routes because Kazakhstan is surrounded by countries with no access to harbours. "Although it is very well-connected with Russia through heavy railways, transportation still forms a big percentage of the total cost of Egyptian products," admitted Abdel-Fadil. "This is a fact which reflects negatively on the competitiveness of these products versus those from Turkey, China and Russia." Solutions are currently under study, he added, including the national carrier EgyptAir starting a new direct route to Kazakhstan. Lying in Central Asia, the former Soviet republic obtained its independence in 1991, and has since witnessed huge changes in its economic structure. Experts believe it has the potential of becoming one of the richest Central Asian economies, thanks to a wealth in oil, gas and other mineral resources. "Kazakhstan's economic performance over the past few years has been quite impressive," noted Nazarbayev. Growth rate reached 10 per cent in 2006, income per capita reached $6,000 and is expected to rise further, while foreign direct investment has mounted to $60 billion. In an attempt to capitalise on opportunities as early as possible, a desk for the fastest growing emerging economies was recently created at the Ministry of Trade and Industry to identify these markets and plan penetration. "We decided to start with China, Russia and Kazakhstan as three of the fastest growing markets," said Mohamed Mansour, head of the Export Department at the ministry. Mansour underlined the fact that Kazakhstan is not only growing dramatically, but it also has the political will to enhance its trade relations with Egypt. "One of the creative ideas to overcome the transportation dilemma is to establish a trade hub of Egyptian products near the Kazakh borders," he said. But this suggestion will not materialise until there is a solid trade volume between the two countries. While joint investments between the two countries stood at a mere $2.5 million in 2005, this figure is expected to rise to $250 million over the next five years. Projects under discussion include plans to create the first Egyptian marble, granite and cable factories in Kazakhstan.
