surprisingly broad trade relationship with The Netherlands is a
partnership in the truest sense of the world.”
The tourist magnet also sees nearly 70
million tons of cargo per year at four area ports. Home base for ABN
Leader in biotech research.
"Cheese capital of the world."
World's largest flower auction now includes offerings from
Seat of the Dutch government and world justice, with
UN-sponsored courts including the newly ratified International
Criminal Court and the UN war crimes tribunal now trying Slobodan
Aspires to be the Silicon Valley of the Netherlands with
industrial parks for telemarketing, IT and medical technology
World's largest port sees more than 300 million tons of cargo
per year, a third of that crude oil, generating 12% of the nation's
income. On land: Reebok, major petrochemical multinationals and a
robust media industry.
Home office for multinationals with Egyptian presence
including Philips, DAF bus and truck.
The site of the EU Treaty signing is Holland's oldest city
and auto manufacturing hub.
A founding member of NATO and the EU. Since the Second World
War, it has shed most of its colonial possessions and is today a
diverse service- and export-based economy. Dutchman Wim Duisenberg
is the first head of the European Central Bank.
Population: 16.98 million (July 2001 estimate). Mostly
Dutch, but sizeable Indonesian, Turkish, Moroccan and African
Terrain: Temperate maritime climate with four seasons.
More than 25% of the country is below sea level. One of Western
Europe's most densely populated nations, but has few natural
resources beyond natural gas, of which the country is Western
Europe's largest producer. Dependent areas include Aruba in the
Caribbean and the Netherlands Antilles.
Government: A constitutional monarchy headed by Queen
Beatrix. Amsterdam is the capital, but the seat of government is in
The Hague. Highly decentralized, with 12 provinces and 538 municipal
authorities. Bicameral parliament includes upper house (75 members
elected by provincial authorities) and lower house (150 members by
general suffrage). General elections are slated for 15 May.
Pressure Groups: Liberals, Christian Democrats and
Social Democrats are the primary political parties, although small
right-wing parties are gaining popular support. Labor unions,
employers' associations and multinationals are important power
GDP: $388.4 billion in 2000. 4% agriculture; 23%
industry; 73% services.
GDP Growth: Slowed to 1.1% in 2001 against 3.5% in
2000. EU average for 2001 was 2.2%.
Economy: A highly diversified economy with strengths
in manufacturing, transportation, agriculture, horticulture,
banking, printing and electrical engineering. Home to major global
players including Philips, Shell, Unilever. ABN Amro, ING and
Rabobank rank in the world's 25 largest banks. More than 50% of GDP
is from foreign trade, contributing to strong surpluses. Inflation
hit a 20-year high in 2001 at 5.2%, although unemployment dipped to
2.4% against 7.7% throughout the EU.
Sources: CIA World Factbook, CBS, MinBuza
Egypt exporting flowers to Holland? It sounds about as likely
as selling egg rolls to China. Or at least it did in 1999, when a
group of Egyptian agribusiness entrepreneurs and researchers
traveled to Holland. The delegation visited Aalsmeer, the Wall
Street of the international floral business, where ¤1.5 billion (LE
6.1 billion) worth of flowers from around the world are auctioned
off every year in a massive complex that has its own trolley
Abou Dahab, a Cairo University professor who led the group,
met with the auction's manager and asked how many Egyptian flowers
were sold in Aalsmeer. None, the official said. "I asked him how we
could come to see Egypt represented here," Dahab continues. "He
said, 'You should produce a good product and you should make a good
Three years later, Egypt has a name in Aalsmeer. This season,
Egyptian flower growers are on track to sell 25 million flowers in
the Holland auction -- 10 varieties, from green amaranthus and
asters to purple trachalium and yellow limonia, produced by a
vanguard of 22 Egyptian growers.
"Now our name is well known. Some buyers even ask us to have
flowers specially produced," Dahab reports.
The blossoming of a new global export crop for Egypt was the
result of a concerted effort by Egyptian growers and academics,
supported by the Egyptian Ministry of Agriculture and funded by the
United States Agency for International Development. The quality
control, expert advice and seeds came from Holland. And as Egypt
races to get in shape for the new world trade order, the nation also
known as The Netherlands is providing more critical expertise than
most observers realize.
On one hand, the Dutch government is changing its donor
relationship with Egypt, moving away from traditional program aid
and toward subsidies for specific private-sector partnerships
involving Dutch and Egyptian businesses. At the same time, it is
deepening its involvement in modernizing Egypt's transportation
infrastructure, with projects to increase shipping on the Nile and
extend passenger trains to Cairo's industrial cities.
This is not just international friendship. Holland's highly
advanced economy is now dominated by the service industry, which
accounts for more than 70% of GDP. The service firms -- engineers,
consultants, project managers -- need new territory for the Dutch
economy to expand. As the entire European Union looks across the
Mediterranean, Dutch firms are trying to keep ahead of their
Dutch government officials say their shift in aid from the
public to the private sector is a sign of their confidence that
Egyptian business will be ready for the coming free-trade zone with
"We think the association agreement with the EU provides an
opportunity that is much more important than all the aid programs
together," reports Dutch Ambassador to Egypt Sjoerd Leenstra. "We
think that trade relations, increases in exports, and concentrating
on modernization, industrialization, regional cooperation and
regional trade, is the future for Egypt. It would be pathetic if
they would have to rely on outside financing."
Yet trade observers warn that Egypt's growth is restrained by
institutional problems such as customs bureaucracy. More frustrating
is that Egyptian shipping firms say they now often find themselves
with willing buyers in The Netherlands and high-quality goods to
sell -- but not enough cargo space. The catch-22, even as Egypt
strives to shift its balance of trade more toward exports, is that
outbound shipping space is limited by the level of inbound
On the farm
While the flower project was supported by USAID and the
Egyptian Ministry of Agriculture, the group chose Dutch advisers in
recognition of The Netherlands' preeminence in horticulture. The
experts assessed shipments and gave feedback on how best to grow and
ship the species of flowers that were in demand in Europe and, more
importantly, that could be grown in Egypt during Europe's off-peak
season. The Dutch government has also funded training courses for
owners and managers of Egyptian growing operations over the last two
In a more direct imprint on Egyptian agriculture, the Dutch
government has spurred five partnerships between Dutch and Egyptian
private businesses over the last two years by granting 1 million
guilders (LE1.84 million) to each of the joint ventures:
* Sweet peppers for export are now produced at a greenhouse
near Ismailia by Technogreen of Egypt and Hagé of Holland.
* A cluster of poultry farmers in Bilbash are served by a new
feed production facility launched by Montrac and United Engineers of
Egypt with Hi-Feed of the Netherlands. A similar co-op facility is
planned in Kafr el-Sheikh by Kappo of Egypt and the Dutch concern
* A seed potato farm northeast of the Cairo-Alexandria road
just got under way, run by HZPC of Holland and Alpharano of
The grants are typical of Holland's new approach to assisting
agriculture in Egypt: Subsidizing specific private-sector ventures
rather than funding government programs.
By the end of 2004, the Dutch government plans to phase out
the agricultural development aid of the past. Funds to train potato
farmers in Tanta, Nubaria and Salheya expired in March. A mentoring
program for female farmers in the Fayoum ended last year, although
an initiative will continue through fall 2003 to gear national
agricultural policy to support female farmers.
But funds for more direct business grants are likely to be
available in the near future after a review this month, says Broer
van der Meer, agricultural counselor at The Royal Netherlands
embassy in Cairo. "If that evaluation is positive, then probably
there will be new funding in 2003," van der Meer says.
The Dutch private sector, meanwhile, launched what became one
of the Middle East's biggest successes in processed food. Farm
Frites, launched in 1988 and 35% owned by the Dutch company of the
same name, now exports 70% of the potatoes and other vegetables that
it grows on 5,000 acres around Egypt and processes in Tenth of
Ramadan City. Farm Frites-Egypt expects to export 20,000 tons this
year to the Gulf region, primarily frozen pre-fried french fries for
supermarkets and the fast-food chains of its 55% owner, Americana
Group of Kuwait. (The remaining shares are held by private
The company briefly cracked the Far Eastern market, export
manager Mohammed Abd el Hamid says, selling 600 tons of french fries
to the Japanese conglomerate Mitsubishi last year. But with the
volatility in potato prices, it's tough to compete with European
growers: Mitsubishi, shopping around, hasn't placed another order
yet. Farm Frites may yet try to export to Morocco and Tunisia, he
In the port
For all the enthusiasm in Egypt's agricultural export sector,
there are snags. In 10 years of exporting produce to Holland, Sherif
El-Beltagy has never been more confident about Egypt's ability to
produce fruits and vegetables that meet Holland's demands or that
could be re-exported to elsewhere in Europe. But he's deeply worried
about Egypt's ability to get the products to market.
El-Beltagy owns Belco, the Egyptian Company for International
Trade in Zamalek, exporting green beans, onions and grapes to
Holland. Transporting by plane is quick but costly: 65 to 75 cents
per kilogram, or about LE 3.25. Shipping by sea costs as little as
20 cents per kilo, or less than LE 1.
Egypt's edge is its growing season. But to the east, Morocco,
with the same season, now enjoys the cheap transportation costs of a
land link across the Gibraltar Strait into Europe. To the south,
Senegal and Ethiopia rely on airfreight, but their products are
cheaper, especially when their longer season lets them grow crops in
open air while Egypt is turning to greenhouses and tunnels.
That means Egyptian exporters need boats. But the competition
is growing even as Egypt finds international shipping lines reducing
"This is a big challenge now if I consider the future of
Egypt," says El-Beltagy, who also serves as secretary-general for
the Horticultural Export Improvement Association. "If you cannot
ship by sea to Holland, I think in a very short time we will be out
of the market."
In recent months, at least three major operators of
refrigerated container vessels have reduced or suspended trips to
Egypt and rerouted their vessels to Turkey, Israel or the Far East.
The Chinese shipping line Cosco suspended its visits to the Port of
Alexandria early this year. Hyundai of Korea and Yang Ming of Taiwan
followed suit in March, the latter heading to Malta instead.
It's a business decision. Ships are profitable when they're
full of cargo on the way into port and on the way out. The weakening
Egyptian pound can buy fewer foreign products, so the shippers found
their vessels light on the way in. On top of that, imports of
European meat were restricted, and war-risk insurance made operating
in the region more costly. Meanwhile, strong economies such as
Singapore, Hong Kong and South Korea are luring ships with full
loads inbound and out.
"The shipping lines are not focusing on the Egyptian market.
They're focusing worldwide, where their benefit is," said Sherine
El-Hakim, general manager of Falcon Freight Systems in Alexandria.
"This year, we have the problem that we have cargo and we haven't
enough containers in the time needed."
While Egyptian shipping agents were hopeful that some of the
service would soon be restored, El-Hakim was getting a little
anxious as the mid-May beginning of the grape harvest approached.
"Till now, I don't know what shipping lines we're going to use, and
nobody can confirm that he will have the [containers] that I will
need," El-Hakim said in April.
The capacity to send those exports will only return when
imports into Egypt increase. In the meantime, Feisal Nouh, general
manager of KLine Agency in Dokki, suggests that instead of pursuing
shipping space on their own, Egyptian exporters could band together
to charter a line for mutual use. El-Beltagy suggests Egyptian port
authorities could study competing ports with an eye toward emulating
what incentives or facilities they're providing for shipping
"There must be a way to make these shipping lines come to
Egypt. The problem is not the volume. The product is there and is
increasing," El-Beltagy said.
Then there is the complaint customarily voiced by Egyptian
export-import businesses -- that Egypt's customs bureaucracy is a
burden that hinders commerce. The Egyptian government is responding
to the long-running complaint. Cabinet is preparing a decree to be
issued in coming months that will aim to pare down the customs
bureaucracy, according to Nashwa Saleh, commercial attaché for The
Netherlands in the Egyptian Ministry of Foreign Trade.
On the water
While the two countries are geographically removed and
politically opposite, it's not hard to understand how The
Netherlands came to present itself as Egypt's partner in upgrading
maritime transportation. As the home of the world's busiest port and
a highly developed system of inland shipping canals, Holland
certainly has the credentials. It also has a large industry of
marine services and supply firms that are hungry for new markets.
Dutch funds for Egyptian projects have spawned contracts for Dutch
* With the Nile River difficult to navigate at night, the
Netherlands paid more than LE 2 million last year to figure out what
it would take to make the Nile navigable 24 hours a day. For the
portion from Cairo to Aswan, the answer is LE 25 million worth of
buoys, beacons, upgrades to locks and a bit of dredging. The Dutch
government has agreed to pay 40% of the cost; Egypt's share is
contingent on approval by the People's Assembly. The work would be
carried out by the large shipping firm Egytrans and several Dutch
* Improved navigability would lead to increased commercial
traffic from Mediterranean ports onto the Nile. A container barge
that would stay on the Nile is now under construction at Arab
Contractors' shipworks near Helwan; the Dutch government is paying
the bill. The Dutch also paid to study shipping from seaports to a
proposed inland container terminal at Athar el Nabi near
The Port Said container terminal is envisioned as a major hub
for "trans-shipment" -- large, long-distance vessels unpacking their
cargo into multiple smaller vessels for delivery to further ports.
Dutch officials hope the terminal will evolve into a duty-free zone
where shipments by multinational companies will receive value-added
services from local companies as they pass through. At the
suggestion of the Dutch embassy, the EU's newly activated Industrial
Modernization Center may fund a study into the best way to institute
that sort of special economic zone.
"We're saying, don't look at export sectors, look at export
projects," said Hans van Nieuwkerk, economic and commercial
counselor for the Dutch embassy in Cairo. "You've got this wonderful
container terminal. If you have purely trans-shipment, you're
letting the largest container flow in the world pass by. What you
want is an added-value logistical zone around it, because that will
attract foreign investment. If properly run, you'll have the local
content from the Egyptian SMEs [small and medium-sized enterprise]
to do the simple services, and because of the demands of
multinationals -- standards of quality, reliability -- they will
grow into a modern SME sector."
On the tracks
Dutch firms are following Dutch aid into Egypt in the area of
rail transit, as well. For Alexandria's tramway, The Netherlands
last year paid for the prominent Amsterdam firm HTA Transport
Consultants to study how best to upgrade the Raml line. HTA formed
MENARail as a partnership with Tecnico Contracting & Trading Co.
of Heliopolis, a longtime engineering contractor for the Egyptian
National Railway Authority. The Netherlands is paying ¤500,000 (LE 2
million) for the follow-up this year: completing designs, trying out
equipment upgrades at two crossings, and looking into extending the
tramline in 2004.
MENARail quickly secured another major project from the
railway authority. The authority last June signed a memorandum of
understanding for MENARail to study adding light rail passenger
service from Ain Shams to Tenth of Ramadan City. Tracks already
extend halfway there, but they need to be upgraded and extended
another 10 km.
If the extension happens, the cost of the work will total an
estimated LE3.5 billion. So closer Dutch involvement in the Egyptian
economy clearly has benefits for the more developed nation, as well.
www.BusinessTodayEgypt.com May 2002 bt 65
Aid may be dipping, but bilateral trade is
Lack of cargo space out of Egypt is a serious
Marine: Dozens of Dutch firms retain Egyptian agents
to sell their diesel engines, navigation lanterns and other marine
equipment. Dredging firms Boskalis and Van Oord have offices in
Heliopolis and Port Said, respectively, while HAM and Ballast Nedam
retain local representatives. The joint venture Amsterdam Alexandria
Marine/Elamir & Co. imports boat equipment, while Smit Swire
Shilbaya supplies marine services in Maadi.
Water management: The Netherlands' aid for
environmental projects in Egypt has lured Dutch firms to set up shop
here, including IWACO in Zamalek (consulting), Steenbergen
Hollanddrain in Mohandiseen (drainage equipment) and Nijhuis Pompen
in Ahram Garden (sewage treatment pumps).
Agriculture/processed food: One-third Dutch-owned,
Farm Frites Egypt exports nearly 20 million tons of frozen
vegetables through its Tenth of Ramadan City factory.
Rotterdam-based giant Unilever sells food, drinks and household
products via Alexandria subsidiary Unilever Egypt and manufactures
fats and oils at its Loders Croklaan factory in Tenth of Ramadan.
Quest International makes flavorings and food additives in Sixth of
October City. In Heliopolis, EGY-Holland imports nutritional
supplements; Hage International, fruits and vegetables. Several more
have local agents selling farm equipment to hatcheries and feed
Health: Organon/Akzo Nobel develops antidepressants,
contraceptives and fertility drugs with a scientific office in
Heliopolis. Pharmaceutical biggie Janssen-Cilag has a local presence
while local representatives sell specialized Dutch medical equipment
from ultrasound scanners to ophthalmic surgical instruments.
Oil: Royal Dutch Shell extracts oil and natural gas
through its joint venture with the Egyptian government, Badr
Petroleum Company (BAPETCO), and maintains additional offices for
exploration, marketing and chemical services. Saybolt International
provides inspection services for the oil and petrochemical
industries from an Alexandria office. Onstream Group/E.C.M.A.
Engineering Co. for Marine Affairs in Maadi supplies vessels and
recruitment services for the sector.
Financial services: Holland's biggest banks have
operations in Egypt. ABN Amro bought into Delta Securities and Asset
Management in Mohandiseen in 1999, the same year ING entered the
MIBC partnership with Misr Bank and others.
Tech: Lucent Technologies Inc. sells telecom equipment
from a Cairo branch. Draka Kabel sells high-tech communications
cable via subsidiary Tecalex in Heliopolis.
Other: JAC Group in Heliopolis assembles and sells bus
products for DAF Bus International. Royal Philips Electronics
markets consumer electronics from Mohandiseen.
With information from Royal Netherlands Embassy senior
economic and trade advisor
The Dutch are pushing for a new cargo zone in Port
Sectors to Watch
Fresh produce: Holland's consumers are buying fruits,
vegetables and flowers when they're out of season in Europe.
Industry experts say the sector could keep booming -- if troubles
with shipping capacity and customs delays can be worked out.
Transportation: Dutch experts are playing a major role
in Egypt's transportation plans, from a Metro spur to Tenth of
Ramadan City, to night shipping on the Nile, to the new Port Said
East Bank container ship terminal.
Oil and gas: Royal Dutch Shell wants a bigger piece of
Egypt's natural gas reserves. The firm has proposed building a
cash-intensive facility to liquefy natural gas for domestic
consumption and export.
Water projects: Work to improve Egypt's water supply
will get a boost from Dutch aid through 2004. The projects provide
technical support for drainage, community participation in water
conservation, groundwater protection and Fayoum drinking water
Leather/textiles: Both sectors are to be assisted by
the EU's newly activated Industrial Modernization Program. Dutch
officials are encouraging their country's consulting and services
firms to become contractors in the program by forming partnerships
with Egyptian counterparts.
"Egypt doesn't need to be advised."
Some voices from Europe verge on browbeating as they urge
Egypt to modernize its economy, but The Netherlands is not
interested in nagging. Speaking of the World Bank's donor conference
for Egypt in Sharm El-Sheikh in February, Dutch Ambassador to Egypt
Sjoerd Leenstra says he's confident that Egyptian officials know
what they need to do to resolve the country's economic
"It's our experience that the Egypt government doesn't need
to be advised," Leenstra told bt.
Holland is also showing its confidence in a less desirable
sort of way: As the country concentrates its foreign aid budget on
the neediest nations, Egypt was deemed not poor enough. After 2004,
Egypt is slated to stop receiving Dutch development aid that has
averaged more than ¤19 million (LE 77 million) per year.
But Leenstra says Dutch diplomats are quietly preparing a
proposal to prolong the aid for water management projects, if at a
reduced level. The Dutch government's reaction is impossible to
predict: National elections on May 15 will usher in entirely new
leadership after the government stepped down in April over its
failure to prevent the 1995 Srebrenica massacre in Bosnia.
Regardless, Leenstra says The Netherlands will continue to lend
expertise to transportation projects in Egypt and subsidize joint
ventures between Dutch and Egyptian businesses.
Leenstra, who was ambassador to Tanzania before his
assignment to Cairo in October 2000, spoke with bt's
Dan Bernard in April about the changing Dutch-Egyptian relationship.
BT: Why is The Netherlands ending development aid to
Leenstra: The present minister for development
cooperation felt we were engaged in too many countries and wanted to
do a sort of exercise to narrow down the number of countries with
whom we would have a more in-depth, direct and more concentrated
development relation. One of the criteria was per capita income.
Egypt did not qualify.
We are at present discussing internally with Egypt to
continue in the water management sector under the umbrella of
environmental programs. We in the embassy hope that we will be able
to continue. We have an excellent working relationship with the
Egyptian Ministry of Water Resources and Irrigation, which we think
is a very mature way of operating.
BT: Why has water management become the Netherlands'
specialty in Egypt?
Leenstra: Because of a lot of similarities
geographically and our history in dealing with water management, we
have a lot in common. I mean, they're different -- here, it's a
matter of making the most efficient use of the available water; in
Holland, it's getting rid of too much water. But for that reason, we
have a quite intricate setup of research institutions, implementing
agencies, and a number of institutions that cater to outsiders,
organizing international courses. Over the years a lot of Egyptian
students have come for courses, and the contacts have been
BT: Is The Netherlands advising the Egyptian government on
how it should fix its economic structural problems?
Leenstra: It's our experience that the Egyptian
government doesn't need to be advised. There are sufficient people
in the country. The problem, as I see it, is there seems to be a
lack of decisiveness in taking decisions, realizing that there are
hard and tough decisions that need to be taken. Also realizing that
Egypt has come sort of to the end -- they now have to move into the
next phase of reform.
In my statement at Sharm El-Sheikh I said, 'Hey, your policy
proposals are excellent, no complaint about it. What it boils down
to is, implement it.' For all sorts of reasons, Egyptian officials
are hesitant. They worry about change.
We think that the Egyptian economy is growing. Of course, we
all realize that there is stagnation and some structural problems
that were exacerbated by the effects of 11 September on tourism and
the Suez Canal. Egypt is a country that has a sufficient economic
base to continue to grow and make its own decisions, have its own
policy. The potential is there. The possibilities are
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