« from previous page

Big changes are also afoot in civil aviation. Government licenses to operate domestic flights have recently been issued to two carriers: National Air Services (NAS), which began operations in 1999, and Sama, which was founded at the end of 2005. Both are Low Cost Carriers (LCCs) that are expected to give Saudia, the national airline, a run for its money. At the end of 2006, NAS announced that it will purchase 75 new aircraft by 2010.

Information and Communications Technology (ICT) has been growing steadily in Saudi Arabia, representing an important market opportunity for U.S. firms. Cisco Systems recently characterized the Kingdom as the “fastest growing region in the world,” posting 127 percent growth from 2005 to 2006. Cisco President John Chambers pledged more than $250 million toward programs in the Kingdom, which will establish 100 Cisco Networking Academies, an innovation institute, labs and demonstration centers, and a commitment to increase Cisco staff in Saudi Arabia from 70 employees to 600.

In the same spirit, chipmaker Intel Corporation announced in December 2006 that it will train more than 50,000 teachers in Saudi Arabia to take advantage of technology applications to improve classroom learning. One year ago on a visit to Saudi Arabia, Chairman Craig Barrett launched the Digital Transformation Initiative – which promotes technology skills, knowledge transfer, and employment.

Small and medium-sized U.S. exporters are well positioned to take advantage of opportunities in food & beverage and commercial sectors. Saudi imports of processed fruits and frozen juices from the U.S. have grown on average 27 percent annually over the past four years. Jewelry and precious metals imports should reach $45 million as Saudi consumers seek high quality U.S. products.

Last but not least is the issue of visas, one of the most sensitive topics in U.S.-Saudi commercial relations. The U.S. Government has taken steps in the past two years to mitigate some of the most onerous visa requirements instituted after 9/11, and there is general consensus that the situation has improved. But further reform is necessary. On average, it takes two-and-a-half months for the U.S. Embassy to grant an appointment and process a business or tourist visa in Saudi Arabia – among the longest durations in the world. Many Saudis no longer apply for U.S. visas because they consider the procedure to be unreasonable and degrading, and because they are concerned about being subjected to ethnic profiling in the United States. Moreover, a growing number of Saudis are in “visa limbo”: Visas are neither granted nor officially rejected, and applicants are encouraged to reapply in the future with no specifics about their status.

Under these circumstances, many private sector leaders in Saudi Arabia have decided to forgo the United States and take their business elsewhere. With this in mind, more work needs to be done by the U.S. Government and America’s private sector to remove hurdles for executives, tourists, and students – all of whom have a multiplier effect on the U.S.-Saudi trade relationship.

Egypt

Under the leadership of Prime Minister Ahmed Nazif and his team, Egypt is experiencing some of its most extensive economic reform in the past 50 years. Red tape is being slashed, corruption is being curbed, foreign direct investment (FDI) is on the rise, and imports from the United States jumped almost 30 percent in 2006 – despite the absence of a Free Trade Agreement (FTA) with the United States.

In a speech at the National U.S.-Arab Chamber of Commerce, Egypt’s Minister of Investment, H.E. Mahmoud Mohieldin, announced that real economic growth in Egypt is expected to exceed seven

percent in 2007, higher than IMF forecast growth. Trade in Egypt jumped 40 percent in 2006, he said, and investments rose 37.5 percent during the same period. He noted that FDI in Egypt surpassed $6 billion in 2006, up from $2 billion in 2004, with 70 percent of this FDI coming from outside the Arab world.

The Egyptian economy is also undergoing extensive diversification. A few years ago, 80 percent of FDI was restricted to the oil sector. Today, 70 percent of FDI is in non-oil sectors. Noted Mohieldin, “Egypt is minimizing the risks associated with doing business in the region by minimizing the costs to do business, reducing the country’s risks, and maximizing an investor’s returns.”

H.E. Rachid Mohamed Rachid, Egypt’s Minister of Foreign Trade and Industry, told NUSACC that corporate income taxes have been trimmed to 20 percent across-the-board, and personal income taxes are capped at the same level – a reduction of 50 percent. Rachid told a Chamber audience that more than 150 state-run companies are in the process of privatization and that half of the banks in Egypt will be eliminated through mergers and acquisitions. “We must also tackle our trade policies,” he said, “which means reducing our tariffs, eliminating non-tariff barriers to trade, and moving beyond previous protectionist policies that left Egypt exporting only four percent of its production.”

Egypt – 2007 Forecast Top Ten Manufactured U.S. Imports ($ Billion)

(SOURCE: IRmep)

One of the main reasons why the economy is turning around is that Egypt leads the region in tapping private sector leaders to spearhead key government offices. More than half a dozen business leaders now serve as ministers – including Ministers Mohieldin and Rachid – and this has led to some of the most business-friendly policies Egypt has ever seen. The Investment Ministry, for example, now boasts a “one stop shop” that coordinates among 34 government agencies – allowing foreigners to launch a business in Egypt in 72 hours, down from 140 days in the year 2000. The Investment Ministry is also in the process of creating a small cap stock exchange and a commodities exchange, to be operational by early 2008. »