Egypt's economic profile is changing just as rapidly. In the past few years, Egypt has undergone a complete economic metamorphosis. Under the guidance of President Hosni Mubarak, now in his third term, and Prime Minister Kamal el-Ganzouri, Egypt has steered its economy from the doldrums of post socialism to a thriving emerging market that recently graduated from IMF supervision.

Mohamed Taymour, chairman of EFG-Hermes, Egypt's leading investment house, said, "We have seen an almost total transformation of the Egyptian economy in the last six or seven years. It has gone from being literally in shambles to having an almost ideal macro economics profile. We have a private sector that is thriving and growing by leaps and bounds. It is entrepreneurial." What remains of the public sector is in line for privatization. About 80 percent of the economy should be in private hands by the end of 1999. Full privatization is scheduled for 2001.

"The biggest challenge is to make up for lost time," said Dr. Atef Ebeid, minister of Egypt's business sector. "We have to modernize as fast as possible because the competition is being felt. If we don't do it today, we'll regret it tomorrow. We cannot afford any delays."

While the government has pushed the throttle on economic reforms, it has not done sot at the expense of stability. Egypt's current economic indicators remain sound. Its gross domestic product growth is pushing 6 percent and is expected to increase further in the next few years. The budget deficit is only 1 percent of GDP. The country's foreign debt is well-financed, and inflation is under 4 percent.

With such success, one may ask why it is taking so long for Egypt to enter the ranks of the developed nations. The answer apparently lies with Egypt's topographical limitations and its dependence on the Nile. The country is only able to use about 5 percent of its land area - that made habitable by the Nile. In order to promote further development, the Egyptian government is trying to expand the area that can be populated and create new industries, infrastructure, tourism opportunities and jobs.

The Nile river runs its incessant course under an Egyptian sunset, where images of modern and ancient civilization abound.

The next Nile Valley In the sweltering heat of Egypt's southwestern desert, trucks and bizarre-looking cranes lay pipe in the sand. In the next few years, the scorching sand will be replaced by water, vegetation and eventually people. The pipeline now under construction will someday have the world's largest pumping station and be one of several conduits bringing water to this barren land. This is the ambitious Toshka Project, or New Valley Project as it is commonly called. It is part of the government's socioeconomic plan to move people out of the Nile Valley.

Work is already well under way. Since 1990, more than 10 new industrial cities have been established in the desert. The best known of these are called Sixth of October City and Tent of Ramadan City, both named after victories in the 1973 October War against Israel. These towns have attracted factories, businesses and thousands of new residents.

Whether Egypt can attain all its economic goals through its reforms remains to be see. But one thing is sure: The face of this land is changing day by day. In a few years, Egypt will be a new civilization - economically, demographically and culturally.

An ideal partner

In an interview with World Eye Reports, Dr. Youssef Boutros-Ghali, minister of the economy for the Arab Republic of Egypt, shared his insights on Egypt's economic growth and relations with Japan.

WER: In light of the volatility displayed by emerging markets in recent years, what are the indicators that Egypt's current growth is stable and sustainable?

Boutros-Ghali: None of the traditional causes of volatility in emerging markets are found in the Egyptian economy. There is no short-term debt. There are no short-term financing needs. Volatility in the international markets does not translate into volatility in the domestic economy because we do not borrow from the international markets.

Our economy is dependent on foreign investment only to a small extent. This is simply because we are new at attracting foreign investment. Foreign investment currently amounts to only $1.5 billion.

We also do not have a major deficit in balance of payments. Our budget has a deficit of just 1 percent of GDP, which is very small. Inflation is around 3.5 percent to 3.8 percent. There is nothing to elicit worry about the fundamentals of the Egyptian economy, and therefore the volatility of the capital markets does not translate into volatility in Egypt.

WER: With such strong macroeconomics in place, what do you feel are Egypt's main economic challenges?

Boutros-Ghali: Know-how. We need people who know what they are doing, and we need them everywhere in the economy. They are changing the regulatory institutions. We are a market-based economy. Half of the work is regulated; the other half is making sure the market functions properly.

Right now the competence that we have is adequate. It is enough to regulate and properly monitor various markets, such as the capital markets, the commodity markets and the stock market. But as the economy grows, as the instruments and market become more sophisticated, and more importantly as the players become more sophisticated, we need more sophisticated regulations. The growth of these variables will hinge on the growth of sophisticated regulations. We need technicians in the ministries, in the central bank, in the Capital Market Authority and in the insurance supervisory bodies. They must be clever enough to atleast guess what the other parties are doing, if not outrun them.

WER: What are the Egypt's greatest assets?

Boutros-Ghali: Our human resources, both in terms of sheer numbers and in terms of the capacity of the average Egyptian to adapt. Egypt has been a cosmopolitan country for the past 7,000 years. If anybody knows how to adapt, it is us. We have had everybody and his brother come through here. We have absorbed everybody's culture and everybody's habits. We have taken the best of each of the peoples who have crossed back and forth - from the Hitites all the way up to the French and British. We have had Albanians cross through Egypt. In fact, my family is of Albanian stock.

Our greatest asset is the adaptability of Egyptians and our capacity to absorb new technologies, languages and methods. Almost two out of three Egyptians can speak a foreign language.

Dr. Youssef Boustros-Ghali, minister of the economy

WER: What type of economic cooperation would you like to see between Japan and Egypt in the future? Boustros-Ghali: I have always had a soft spot for Japan. I have worked with Japanese officials in several capacities, namely during my work with international organizations. I got to know Japan and Japanese culture from very close, and I think Japan is one of the few countries that have an innate ingenuity and capacity for innovation. I know that the coupling of Japan's capacity to adapt is an ideal combination. Japan has high labor costs. We have excellent human resources at a very attractive cost. Japan has little potential for expanding its domestic markets; we have large markets. So we are the ideal partner for Japan. Europe is right across the water. Therefore, for penetrating Europe with a cheap, well-made, cost-effective and competitive product, the natural base is Egypt. We have industrial depth and industrial diversity. We have the workforce to allow Japanese know-how to penetrate markets such as Europe and the United States much better and faster. So we are the ideal partner.

Boustros-Ghali: Agro-industries, because we can manufacture what Japan consumes, such as consumer durables, construction materials, all wood products, rudimentary electronics, chemicals and automobile parts. And we can do it according to their specifications. We could be a major provider of car parts and components for Japan if only they would take the time to give us the industrial base to do it. We can do it cheaply and with quality comparable to anywhere in the world.

WER: What is your proudest achievement during your career?

Boustros-Ghali: It is difficult to isolate one event or achievement. Basically, I am proud of what we have achieved over the past 12 years. I have had the privilege of being involved in the reform program from its beginning in 1986. I began as a lowly economic adviser to the prime minister at that time, but I had a hand in drafting the first outline of our plan to reform Egypt's economy. So I have seen the reform program that Egypt is basking in now from its very first steps. For this I feel a great sense of pride.

A long time in coming

When Egyptian President Hosni Mubarak stepped off the plane in Tokyo last spring, it marked the beginning of a new era in relations between Egypt and Japan.

During his three-day visit to Japan, Mubarak was received in audience by His Imperial Majesty the Emperor and held discussions with Prime Minister Keizo Obuchi, with the aim of increasing political and economic cooperation. The Egyptian president was accompanied by a high-profile delegation of government representatives and business leaders.

Business people from the two countries signed nine agreements and letters of mutual understanding for cooperation in the areas of electronics, steel, ceramics and engineering. Although relations between Egypt and Japan have always been sound, this was the first time a business delegation has accompanied a presidential visit to Japan. And the visit was a long time in coming.

Economic ties between the two countries go back to the early 20th century. Among the first business links were Japanese trading companies such as Mitsui and Marubeni, which set up offices in Egypt to facilitate the export of fine Egyptian cotton for Japan's infant textile industry.

Over the past few decades, Japanese companies have entered the Egyptian market through sales of consumer goods, mainly electronics and home appliances. Companies such as Toshiba and Matsushita found local manufacturing partners to take advantage of Egypt's healthy market for appliances and color TVs. In the automotive industry, Suzuki and Isuzu have both invested heavily in manufacturing plants in anticipation of a growing market for passenger cars. Japan has also participated in current large scale infrastructure projects, such as irrigation and pumping stations, desalination plants, power projects and tunnels and bridges. Approximately 52 Japanese companies are represented in Egypt today.

Japan has had a consul in Egypt since 1926. Its embassy in Egypt is the oldest in the region. The current Japanese ambassador, Takeshi Ohara, explained, "Egypt and Japan have a friendly, cooperative relationship in such wide-ranging areas as politics, economics and culture. In a word, the relations are on a very good and sound basis. We have had no political problems at all in the past, nor are there any at present."

Takeshi Ohara, ambassador of Japan

Ohara, who has held his post in Egypt since 1997, has spent most of his diplomatic career in the Middle East region. His post in Cairo is a homecoming of sorts, as his first diplomatic assignment was in Cairo in 1963. "In Japan we have grown to recognize the importance of Egypt in the Middle East. Egypt is the undisputed center of the Arab world, historically," said Ohara. This cooperation is particularly reflected in the amount of financial aid channeled to Egypt. In, fact, Egypt is the eight-largest recipient of official development assistance from Japan. The funds put priority on projects that develop economic infrastructure, such as the expansion and deepening of the Suez Canal. However, attention is also given to humanitarian and human-resource needs. Most visible was the $7.93 million grant given for the expansion of the Cairo University Pediatric Hospital, often called the "Japanese hospital."

A more recent showcase project is the construction of a bridge across the Suez Canal, to be completed by 2001. Supported jointly by Japanese and Egyptian funds, the $140 million project will have a major impact on Egypt's development by creating an important link between the Sinai Peninsula and the mainland.

Although Japan's aid to Egypt has not been newly extended since the 1991 Paris Club debt reduction, it was agreed during President Mubarak's recent visit to Japan that new yen loans would be directed toward projects dealing with alternative energy sources as well as the development of small to medium-size enterprises.

Safety in numbers

Political stability is one of the most important factors in attracting investment to a nation. This has always been an issue in the Middle East, and Egypt's own stability was called into question again most recently after the 1997 terrorist attack on tourists in Luxor.

Following the incident, the Japanese government, and many others, promptly issued a travel ban for its citizens in southern Egypt. This was particularly harmful for Egypt, which relies heavily on tourism for much of its foreign-currency revenue. Egypt's majestic monuments and ancient remains have always been a source of fascination for tourists around the world.

Since the early 1990s, the number of Japanese tourists had been rising steadily. In 1997, the count almost reached the 100,000 mark for the first time. During the travel ban, the numbers naturally plummeted, but fortunately, after a careful assessment of Egypt's new security measures and overall safety, Japan lifted its travel ban in late 1998.

In the short time since then, the number of tourist arrivals has rebounded strongly. "Arrivals should be up to 60 to 70 percent of pre-Luxor numbers before year's end," predicted Bahig El Gohari of Bahi Travel, a Cairo travel agency that specializes in the Japanese market.

Ambassador Ohara confidently added, "We expect to see many more tourists from Japan this year. Tourism has always been a vehicle to learn about Egypt, but I hope interest will go beyond tourism. Egypt merits far more interest from the Japanese people."

In terms of Egypt's regional impact, Ambassador Ohara also said, "Given the importance of Egypt in this region - in the Middle East, in Africa and increasingly in the Mediterranean area - the importance of our relations is on a regional and global scale. I have no doubt that our bilateral and cooperative relations will further develop in the years ahead."

Gift of the Nile
�Hail to thee, O Nile, that issues from the earth and comes to keep Egypt alive!�

Throughout the centuries, people from around the world have been drawn to the golden waters of the Nile. Egypt has been home to massive civilizations that manifest itself today as a panorama of the ancient and modern. Egypt captures the fascination of all visitors.

The pharaohs, the Greeks and Romans, early Christians and Muslims have left awesome monuments and a rich cultural history. The edifices of the past are beyond one�s imagination and are spectacles that attract thousands of visitors every year.

In Upper Egypt, the city of Luxor is an open-air museum with structures built for eternity in sandstone and granite. A glimpse into the jewel-like tomb of Queen Nefertari or a tour of the Karnak temple is unforgettable. Sinai is the meeting point for three great religions, a place of revelation where the desert stops and meets the coral reefs of the sea. In Aswan, the Aga Khan Mausoleum or the temples dedicated to the pharaonic gods lie along the Nile, at its most beautiful. Whether riding on camel-back to the Giza pyramids or silently stepping barefoot into the mosques of the Mamluke and Ottoman sultans, Egypt is an endless adventure into the past.

From oasis treks to Red Sea scuba diving, tourism in Egypt offers far more than monuments.

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