In London for the Euromoney Conference, Assem El-Kersh sounds out the ministers of investment and communications on repeated comparisons between Egypt and India As he was preparing for his flight back home from a still wintry London last week after addressing a buzzing Euromoney Conference on investment prospects in Egypt, Mahmoud Mohieddin, the dynamic investment minister, had probably lost count of the more than 20 interviews he had given, let alone the private discussions he conducted with the journalists, anchormen, investors, bankers, business people and analysts that had gathered for the event alongside diplomats and financial leaders. To his surprise, and that of others, the one question that seemed to pop up wherever he set foot was about India, or more precisely, whether Egypt was on its way to becoming the India of the Middle East. Not that Mohieddin minds the comparison with such a compelling success story. As far as he is concerned, when it comes to Egypt's future the sky is far from being the limit. But ask him directly which country provides the economic model he would most like to see Egypt emulate and he will tell you, perfectly honestly, that it is not India he has in mind. Immediately after addressing the investors' conference Mohieddin began fielding the "Indian question". Asked time and again whether Egypt's booming economy and the profile of its labour force qualified it to become the next India, the questions soon began to resemble variations on a theme. "It is already happening. Deals have been concluded with a number of Indian firms, especially in the field of communications and information technology. And we are trying to capitalise further on our proximity not only to Arab markets but markets in Europe, the Mediterranean and in Africa, all of which provide for a good mix of opportunities," he told one interviewer. "Compared to India, our economy is relatively small and hence the challenges we face are less. But our room for manoeuvre is larger, and we have the advantage of having carved out a niche to the extent that Indian investments are now coming to Egypt in many areas." While full of praise for India's recent progress -- "they have," he says, "engineered a growth rate even higher than they planned" -- Mohieddin argues that comparisons with Egypt are not entirely apt given that Egypt has opted for an inclusive development model. "We intend that no Egyptian be left behind. Every sector, every region and every person -- we have no gender or caste system in Egypt -- should be catered for to the best of our capabilities. We are not a rich society so we do need to open the gates wide for education and better opportunities through training and other means." Mohieddin does not pause for a second when asked about his preferred model. "Japan, of course," he says, "though it is a unique case." India may be growing fast but with a population of more than a billion, it is hardly comparable to Egypt. "I would rather compare Egypt to Mexico in terms of size. Korea also is a good model despite geographic distance. Italy as well is not bad. We need to build our models further," he concludes with a diplomatic smile. Ziad Bahaaeddin, the chairman of the board of trustees of the Egyptian General Authority for Investment (GAFI), understands why India is so often posited as a model to be followed. "After all, it is a country with a huge population and problems yet despite all odds it has achieved an annual growth rate of 10 per cent." Speaking to Al-Ahram Weekly between sessions of the Euromoney Conference, Bahaaeddin cited a number of parallels between Egypt and India, not least the dependence on labour intensive industries and on the IT sector, in which Egypt is poised to achieve a breakthrough without having to wait for improvements in the rest of the economy. But Bahaaeddin has his eyes on an even higher goal. "We should become a member of the Organisation for Economic Co-operation and Development (OECD) within the next five years and be in a position to outdo Turkey and India in some spheres... The notion that we should follow any single model is not necessarily right. We should compare ourselves with more than one country, in terms of growth rates with Turkey, or with Dubai for its excellent service-base, with Spain as a tourist hub, Brazil when it comes to advanced industrial production and, of course, with India as an IT nation." But is there any easy prescription that can guarantee such goals are met? While Bahaaeddin does not underestimate the scale of the challenges he believes the course Egypt must follow is clear. "There cannot be U- turns every two or three years. We must go on and on. Anything else is not going to work." Ania Thiemann, Middle East and North Africa analyst with the Economist Intelligence Unit, agrees that Egypt does have the potential to be the next India. But, she points out, two issues need to be addressed in order for this to happen. "They are bureaucracy and transparency, because it is still difficult for investors, especially with regard to getting land. And depending on the size of investment it is still very hard for them to see where they are going and get through Egyptian bureaucracy. There has been a lot of progress and GAFI has been doing a good job. But I still think that other ministries have not performed as well." Thiemann told the Weekly that pricing structures were a source of confusion, and it remained unclear whether Egypt would be competitive in the long run given the uncertainty over pricing and subsidies. Investors might well think of coming to Egypt believing they will benefit from low energy prices, but then they have to factor in the possibility that those prices are likely to change in the not too distant future. "And at the moment there are still some skill mix-matching. I know that the Egyptian government is working hard to improve education and skills and I think, especially in the IT sector, that Egypt is performing well. IT outsourcing is potentially strong." It is a sector in which Minister of Communications and Information Technology Tareq Kamel is convinced there is room for everyone. Interviewed by the Weekly, he had no objections to Egypt being compared to India, which has had enormous success in off-shoring, outsourcing and business process sourcing as well as with call centres. After 2005, says Kamel, cooperation between India and Egypt grew on the back of the realisation that the global services market had expanded sufficiently to accommodate India and Egypt alongside the Philippines and others. "When it became clear that world markets were in need of diversified investments, Indian companies began opening businesses in Egypt in order to move closer to markets in Arab countries, the Middle East and Europe." Kamel has no doubts as to what constitutes Egypt's relative edge in the sector -- a multi- lingual environment, strong infrastructure embodied in the Smart Village north of Cairo and a new technology and business park to be built on 75 acres in Maadi, south of the capital. The list also includes the competitive cost of Egypt's infrastructure and 250,000 fresh graduates of engineering and commerce who only need to upgrade their skills. "We are capable of meeting the needs of Europe's ageing societies as they turn increasingly to Information and Communication Technology [ICT] for medical, financial, marketing and educational online services while at the same time closing the door in the face of new immigrants. The best option is to provide these services from a distance." While India is seeking to increase its export services to $30 billion by 2010, Egypt's target is a minimum of $1 billion. "They [the Indians] are 20 times bigger, they were there before us, and have been greatly assisted by the presence of Indian communities in Europe," explains Kamel. Kamel, too, has no doubts about Egypt's comparative advantages: its large numbers of skilled cadres; homogenous society; a developed, nationwide infrastructure and a lucrative cost advantage that makes it 10 per cent cheaper than India and 20 per cent less than East Europe. Far more important than comparisons, says Kamel, even with India, is for Egypt to establish a share of the growing market for call centres and business process outsourcing. "By 2017 the global market is expected to be worth $90 billion. We think Egypt is qualified to attract no less than a 10 per cent share of the total, worth between $9 and $10 billion." Having missed the first wave of IT growth during the 1990s Egypt now needs "to select two or three areas where our services and skills are most needed and give them our utmost... that is our best bet."
