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A
GLOBAL COUNTRY REPORT
ON
FINDINGS OF EGYPT
SUBMITED TO:
OXFORD SCHOOL OF MANAGEMENT, BALIYASAN
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ASMINISTRATION
IN
GUJARAT TECHNOLOGICAL UNIVERSITY
GUIDED BY: SUBMITED BY:
PROF. PRAJAPATI MAHENDRA PATEL PARTH [11800592037]
PATEL MAYANK [118000592038]
PATEL JAIMIN [118000592039]
PRAJAPATI ARVIND [118000592040]
PRAJAPATI CHANDRESH [118000592041]
DESAI JITENDRA [118000592042]
Batch: 2010-12
OXFORD SCHOOL OF MANAGEMENT, BALIYASAN
MBA PROGRAMME III
Affiliated to Gujarat Technological University
Ahmadabad
Month, Year
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Students Declaration
We,MAYANK,JAIMIN,PARTH,ARVIND,CHANDERH,JITENDRA . hereby declare that
the report for Global/ Country Study Report entitled .EGYPET is a result of our own
work and our indebtedness to other work publications, references, if any, have been
duly acknowledged.
Place: .. (Signature)
Date: (Name of Student)
PARTH PATEL:
MAYANK PATEL:
JAIMIN PATEL:
ARVIND PRAJAPATI
CHANDRESH PRAJAPATI
JITENDRA DESAI
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Institutes Certificate
Certified that this Global /Country Study and Report Titled FINDING OF EYGEPT is
the bonfire work of Mr.PARTH,MAYANK,JAIMIN,ARVIND,CHANDRESH,JITENDRA ,
1180005321037/118000592038/118000592039/118000592040/118000592010/118000
592042 who carried out the research under my supervision. I also certify further, that to
the best of my knowledge the work reported herein does not form part of any other
project report or dissertation on the basis of which a degree or award was conferred on
an earlier occasion on this or any other candidate.
Signature of the Faculty Guide
(Name and Designation of Guide)
(Certificate is to be countersigned by the Director/HoD)
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PREFACE
We are living in the supersonic area. Today word becomes global village due to
globalization, economic development, and liberalization in the industrial area. So more
and more demand of able and practical manager won are able to solve the problem and
to face any kind challenges. Today industries demand an outstanding ability to lead.
Keeping this in mind schools of management has incorporated practical studies
important for the industrial requirements. Practical are vital for a management student
because he/she is going to control and to handle all the responsibilities as manager in
the future. And also, as a student, training is the great opportunity to apply theoretical
knowledge in the real life.
In the report I have focused on POLITICAL, ECONOMICAL, SOCIO CULTURE and
technological analysis and also made SWOT analysis on FINDINGS of EGYPT at
Africa. I have tried to include all essential information plus our survey results. This report
will be certainly beneficial to me.
I have tried to include all the important information in project report.
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ACKNOWLEDGEMENT
I am very much thankful to university and our HOD Mr. JAPANBHAI SHAH for
conducting a GCR report and providing such an opportunity to get practical knowledge.
I would also like to express many thank to our honorable HOD MR.JAPANBHAI
SHAH,OXFORD SCHOOL OF MANAGEMENT for giving me an opportunity to makeanalysis ofEGYPT COUNTRY .
I am also thankful to PRO.MAHENDRABHAI PRAJAPATI who gives us guidance as
well as methods regarding the GCR report.
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CONTENT
SR NO. PARTICULARS PAGE NO.
PREFACE I ACKNOWLEDGEMENT II
1. MAPS OF EGYPT 7
2. PEST ANALYSIS OF EGYPT 8
2.1 KEY FACTS ABOUT EGYPT 8
3. POLITICAL ENVIRONMENT 9
3.1 POLITICAL STRUCTURE 9
3.2 MAIN POLITICAL PARTIES 9
3.3 ENVIRONMENTAL LOW 9
3.4 FOREIGN TRADE 10
3.5 TAX RATE 10
3.6 WITHHOLDING TAX 10
3.7 CORPORATE TAX EXEMPTION AND DIDUCTION 11
3.8 TAXABLE INCOME 11
3.9 LABOUR FORCE 11
3.10 ECONOMIC ENVIRONMENT 11
4. ECONOMICAL ENVIRONMENT 12
4.1 EGYPT RISK ASSESSMENT 13
5. SOCIO CULTURE ENVIRONMENT 14
6. TECHNOLOGICAL ANALYSIS 15
7. EGYPTS SWOT ANLYSIS 16
8. FINDINGS 18
9. CONCLUSION 21
10. BILBIOGRAPHY 22
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MAPS OF EGYPT
Map of Egypt:
Flag of Egypt(1984present)
http://en.wikipedia.org/w/index.php?title=File:Flag_of_Egypt.svg&page=1http://en.wikipedia.org/w/index.php?title=File:Egypt_(orthographic_projection).svg&page=1http://en.wikipedia.org/w/index.php?title=File:Flag_of_Egypt.svg&page=1http://en.wikipedia.org/w/index.php?title=File:Egypt_(orthographic_projection).svg&page=1http://en.wikipedia.org/w/index.php?title=File:Flag_of_Egypt.svg&page=1http://en.wikipedia.org/w/index.php?title=File:Egypt_(orthographic_projection).svg&page=1http://en.wikipedia.org/w/index.php?title=File:Flag_of_Egypt.svg&page=1http://en.wikipedia.org/w/index.php?title=File:Egypt_(orthographic_projection).svg&page=17/29/2019 chan $ may
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EGYPT PEST ANALYSIS
Key FACTS about Egypt:
Full name:Arab Republic of Egypt Capital: Cairo
Population: 80.3 million
Area: 1 million sq km
Major language:Arabic
Major religions: Muslim 90% , Coptic 9% & other Christian 1%
Currency: Egyptian Pound
Main exports: Petroleum, petroleum products, cotton, Textile, Metal product and
Chemicals.
Geographical Location: Northern Africa, bordering the Mediterranean Sea,
between Libya and the Gaza Strip, and the Red Sea north of Sudan, and
includes the Asian Sinai Peninsula.
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POLITICAL ENVIRONMENT
Political structure:
The Egyptian Constitution provides for a strong executive. Authority is vested in an
elected president who can appoint one or more vice presidents, a prime minister, and a
cabinet. The president's term runs for 6 years. Egypt's legislative body, the People's
Assembly, has 454 members--444 popularly elected and 10 appointed by the president.
The constitution reserves 50% of the assembly seats for "workers and peasants." The
assembly sits for a 5-year term but can be dissolved earlier by the President. There also
is a 264-member Shura (consultative) Council, in which 88 members are appointed and
174 elected for 6-year terms.
Main political parties:
The multi-party system was restored in 1976 by the then president Sadate. However, in
practice it is the ruling National Democratic Party (NDP) which completely dominates
the political arena. The Muslim brothers, a brotherhood created in 1928 by Hassan El
Banna is the main opposition party of the country.
Environmental laws:
According to the Law 4/1994 for the Protection of the Environment, the Egyptian
Environmental Affairs Agency (EEAA) was restructured with the new mandate to
substitute the institution initially established in 1982. At the central level, EEAA
represents the executive arm of the Ministry.
The Principal Functions of the Agency Include:
Formulating environmental policies.
Preparing the necessary plans for Environmental protection and Environmental
development projects, following up their implementation, and undertaking Pilot
Projects.
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The Agency is the National Authority in charge of promoting environmental relations
between Egypt and other States, as well as Regional and International
Organizations.
Foreign trade:
The Egyptian market is gradually opening up, especially after signing an agreement
with the European Free Trade Association (EFTA) in 2006, and a free trade treaty with
the United States. Its three primary export partners are the European Union, which
represents more than a third of the trade, United States and Syria. Its three primary
import partners are the European Union, the United States and China. Egypt mainly
exports mineral fuels and oil, cotton, iron and steel. It imports mainly consumerelectronic goods and capital goods, nuclear reactors and nuclear-powered boilers,
cereals, food products and chemical products. Import volume has doubled and is twice
the export volume, a fact which contributed to the deterioration of the country's trade
balance.
Tax Rate:
The standard rate of corporate income tax is 40%. The rate is 32% on profits arising
from export operations and on profits of an industrial company as long as they arise
from its industrial activities.
Withholding Tax:
Contracting and supplying: 1%
Services: 3%
Commissions: 10%
Professional fees (under LE 500): 10%
Professional fees (over LE 500): 15%
Leasing of property or selling of goods for trading or manufacturing: 1% - 5% (to be
added on the payee's tax liability account.
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Corporate Tax Exemptions and Deductions:
Almost all business expenses are deductible including depreciation, interest, royalties,
rent, profit sharing payments to employees, legal expenses, pension and Egyptian state
social insurance contributions.
Profits of companies located in the free zones.
Capital gains are applicable in some cases of asset replacement.
All tax holidays granted under Investment Law No.8/1997.
Personal Income Tax:
Taxable Income:
Tax Law No. 187 of 1993 distinguishes among the following categories of income of
individuals (as well as partners in partnerships):
Salaries and wages.
Commercial and industrial profits
Income from immovable property
Income from movable capital
Noncommercial profits.
Labor force and laws
Labor force
Government, armed forces & public sector: 36%
Agriculture: 34%
Private sector: 30%
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ECONOMICAL ENVIRONMENT
Occupying the northeast corner of the African continent, Egypt is bisected by the highly
fertile Nile valley, where most economic activity takes place. Egypt's economy was
highly centralized during the rule of former President Gamal Abdel NASSER but has
opened up considerably under former President Anwar EL-SADAT and current
President Mohamed Hosni MUBARAK. Cairo from 2004 to 2008 aggressively pursued
economic reforms to attract foreign investment and facilitate GDP growth, but is
postponing further economic reforms because of global economic turmoil. With the
installation of the 2004 Egyptian parliament, the Government of Egypt began a new
reform movement, following a stalled economic reform program begun in 1991, but
moribund since the mid-1990s.
The international economic downturn slowed Egypt's GDP growth to 4.5% in 2009,
predominately affecting export-oriented sectors, including manufacturing and tourism.
Unemployment is rising. In 2009 the government implemented a $2.7 billion stimulus
package favoring infrastructure projects and export subsidies, and is considering up to
$3.3 billion in additional stimulus spending in 2010 to mitigate the slowdown in
economic growth.
In September 2009 - Egypt was ranked among the worlds 10 most active reformers for
the fourth time. The country moved up to 106 from 116 among 183 economies
worldwide in the overall ease of doing business ranking. According to the recently
released report by IFC and the World Bank Doing Business 2010: Reforming through
Difficult Times, Egypt made business start-up less costly, expedited the construction
permit process, expanded the information available from the private credit bureau, and
created commercial courts to speed up contract dispute settlements.
Being a former global leading reformer and a regional leading reformer in 2008/09,
Egypt continued to make it easier to deal with construction permits by issuing executive
articles for the 2008 construction law and eliminating most preapprovals for construction
permits. Contract enforcement was expedited with the creation of commercial courts.
http://www.doingbusiness.org/default.aspxhttp://www.doingbusiness.org/default.aspxhttp://www.doingbusiness.org/default.aspxhttp://www.doingbusiness.org/default.aspxhttp://www.doingbusiness.org/default.aspxhttp://www.doingbusiness.org/default.aspx7/29/2019 chan $ may
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Egypt Risk Assessment:
Rating: B
Risk Assessment
The economy has also benefited from oil country boom via their investments andemigrant worker remittances. In this context, the business environment is improving with
the Coface payment incident index remaining below the world average. While the gas
sector has continued to develop, manufacturing, construction, tourism, and
communications have achieved excellent performance. The outlook for 2008 is bright
with growth likely to reach between 7.0 and 7.5 per cent. .
The external financial situation remains healthy amid the good trend on foreign currency
earnings and the increase in foreign direct investment fuelled by the privatizations. Debt
service is low and Egypt is building up foreign exchange reserves. However, the fiscal
deficit and public sector debt remain a source of concern. Controlling public spending
and reducing the debt necessitates a spending overhaul that will take time. Regional
conflicts and poverty have strengthened Islamist opposition movements. In this context
social climate is tense and officials have exercised caution in pursuing reforms.
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SOCIOCULTURAL ENVIRONMENT
Egypts total population stood at 80.3 million. Out of this approximately 90% are
Muslims while the remaining are Christians. Most of the population inhabits the area
near the Nile River and almost half of Egypts population is urban, living in the densely
populated cities such as Cairo and Alexandria.
The education indicators of Egypt project a poor image of the education system. Only
about 58% of the population is literate and there is a big difference in the literacy rates
for males and females. Male literacy rate is around 68%, while female literacy rate is
just about 47%, indicative of gender disparity. The National Council for Women, a nodalgovernment agency that works for the welfare of women in Egypt, aims to completely
eradicate illiteracy among females.
The healthcare system in Egypt is underdeveloped with only around 29% of the
population covered by governmental health insurance. Egypts public healthcare system
is under-funded, with the government committing only around $1 billion in 200506 for
upgrading the healthcare sector, which represents a meager 2.7% of the total state
budget. The ministry of health is the largest institutional financier providing free
healthcare services in Egypt but its reach is limited. Almost 65% of the Egyptian people
pay for their own insurance through private and other health insurance organizations.
The total spending on healthcare in Egypt is only about 4% of its GDP.
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TECHNOLOGICAL ENVIRONMENT
Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by
2014 and the Egyptian IT market growth is forecasted to remain below pre-economiccrisis levels in 2010, but economic recovery, tenders delayed from 2009 and higher
incomes boosted by pay raises for civil servants and other groups should help to keep
sales on an upwards trajectory.
.
A number of policies have been implemented to attract foreign investment in IT
outsourcing, including local employment subsidies, lower corporate taxes and
deductions for training costs. The Egyptian minister of state for administrative
development has said that 200 government services will soon be available online
through a new e-government portal. The portal will offer 70 services in both English and
Arabic. According to the Ministry for Administrative Development, more than 20
government agencies currently offer services and licenses online.
.
Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast
to reach around US$1.3bn in 2014. Egypt's IT market will stay hardware dominated,
with spending on PCs sustained by initiatives like the 'Computer for Every Student' and'PC for Every Home' programs. Hardware accounted for an estimated 62% of Egypt's IT
spending last year. Households account for 20-25% of unit sales, with almost 1-1.5mn
households said to possess a computer at present. .
Overall spending on software remains rather low, which reflects the relative immaturity
of Egypt's IT market. One market driver has been a significant fall in software piracy,
with the illegal software usage rate, as measured by the Business Software Association,
falling a further 1% to 59% in 2008. While large corporations have long understood the
business case for deploying technology, small and medium-sized enterprises is
increasingly beginning to see such investments as important if they are to avoid being
overtaken by more tech-competent competitors. .
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EGYPT'S SWOT ANALYSISI believe that before embarking on a journey, one should analyze everything carefully
from the starting point, the road/journey and the goal. So, here I begin with the first step
i.e. the starting point. Being a marketing professional, I cannot help but borrow from the
marketing terminology hence the title "SWOT Analysis". I believe it does not help to hide
from the truth; we need to realistically assess our situation in order to position ourselves
well to achieve our goal.
Of course I will start with Strength not only because it's the first letter but also because it
gives a positive push and appeals to my optimistic nature :) As you may know the
elements for strength has to come from within so we need to consider what Egyptsinherent elements of strength are. I have to say at this point that the major element I see
is the people or the human factor (not only because we exceed 80 mil. but because at
this point in time we are a really motivated 80 mil. thanks to the January 25th spirit). I
have to admit that this human factor comes with its inherent weaknesses such as
illiteracy and poverty, however, these weaknesses could be remedied and the start
should be educational reform (and we will discuss this at length in the coming article
about the second step i.e. the journey). Besides the human factor, we also have the
natural resources, Egypt may not be an oil country but still it's not a poor country either;
its main problem was mismanagement and corruption (again to be discussed in the
journey). Our resources, as they have repeatedly mentioned over our school years,
include oil, gas besides the Suez canal and our great resort cities as well as the last but
not least resource the Pharaonic monuments and artifacts.
As for weaknesses, it seems that I have already covered most of them during my talk
about strengths; apparently I am not the optimist I thought myself to be:) To recap,illiteracy, poverty, mismanagement and corruption are the greatest obstacles I see on
the road (I am sure many people can add more to this list but these are the ones I
believe pose the greatest threat and are the root for many of the other problems we
suffer today).
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Opportunities and threats are both external factors. So if we look what's out there at this
particular time, we'll find a mixed picture. On one hand, in terms of opportunities, many
countries seem to be willing to offer help at this stage financially and otherwise to
guarantee achieving democracy in Egypt (if you believe all the rhetoric which I
personally have to take with a grain of salt till it materializes into action). On the other
hand, in terms of threats, I see two major problems that may make these offers of help
vaporize. The first being the state of the world economy which may make a number of
countries unable of helping Egypt because they need to consider their own problems
first (something which I cannot blame anyone for). The second and more troublesome
obstacle is possibility of the rise of politically active Islamists in Egypt to power (not
necessarily the top of the political ladder but at least to the point where they have an
overreaching effect on all decisions) which most probably may automatically lead to
making Egypt a pariah to many countries even though no one cares to discuss this
scenario at length at this particular stage.
To wrap it all up, I believe that we may be in a fix right now but we are not doomed to
stay in it forever. We are well positioned for a good start if we can make a realistic and
well-managed plan for our journey. So for the coming article, I will try and collect
many of the plans proposed by experts that build on our strengths and remedy our
weaknesses.
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FINDINGS
POLITICAL ENVIRONMENT :
Political structure:
Egypt's legislative body, the People's Assembly, has 454 members--444 popularly
elected and 10 appointed by the president. The constitution reserves 50% of the
assembly seats for "workers and peasants." The assembly sits for a 5-year term but can
be dissolved earlier by the President.
Main political parties:
They were able to win 88 seats in the People's Assembly in the 2005 elections. The
other opposition parties like Wafd, El-Ghad or the Nasserian Party are minority parties
and were nearly wiped out in the 2005 elections.
Environmental laws:
The Egyptian Environmental Affairs Agency (EEAA) was restructured with the new
mandate to substitute the institution initially established in 1982. At the central level,
EEAA represents the executive arm of the Ministry.
Foreign trade:
Egypt mainly exports mineral fuels and oil, cotton, iron and steel. It imports mainly
consumer electronic goods and capital goods, nuclear reactors and nuclear-powered
boilers, cereals, food products and chemical products. Import volume has doubled and
is twice the export volume, a fact which contributed to the deterioration of the country s
trade balance
.
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Tax Rate:
The standard rate of corporate income tax is 40%. The rate is 32% on profits arising
from export operations and on profits of an industrial company as long as they arise
from its industrial activities.
Taxable Income:
Commercial and industrial profits
Income from immovable property
Income from movable capital
Labor force:
Government, armed forces & public sector: 36%
Agriculture: 34%
Private sector: 30%
ECONOMICAL ENVIRONMENT:
Egypt Risk Assessment:
Risk Assessment
The external financial situation remains healthy amid the good trend on foreign currency
earnings and the increase in foreign direct investment fuelled by the privatizations. In
this context social climate is tense and officials have exercised caution in pursuing
reforms.
SOCIOCULTURAL ENVIRONMENT:
Egypts total population stood at 80.3 million. Out of this approximately 90% are
Muslims while the remaining are Christians.
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The unemployment rate, which has averaged more than 10% over a decade, increased
to over 12% in 201112 with the population growing at 1.8% per annum, the economic
growth of 4.4% is not enough to curb the unemployment rate
The total spending on healthcare in Egypt is only about 4% of its GDP.
TECHNOLOGICAL ENVIRONMENT:
Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast
to reach around US$1.3bn in 2014.
Overall spending on software remains rather low, which reflects the relative immaturity
of Egypt's IT market. One market driver has been a significant fall in software piracy,
with the illegal software usage rate, as measured by the Business Software Association,
falling a further 1% to 59% in 2008.
The Egyptian IT services market is dominated by demand from government, finance
and telecoms sectors, which account for more than 25% of Egypt's total spending.
Freedom and financial freedom. Egypt is ranked 12th out of 17 countries in the Middle
Egypts economic freedom score is 57.9, making its economy the 100th freest in the
2012 Index. Its overall score is 1.2 points lower than last year, reflecting declines in
property rights, business East/North Africa region, and its overall score is just below
world and regional averages.
Egypt has opened its markets to global trade and investment, but non-tariff barriers
continue to constrain trade freedom. The investment regime has been stable, but flowshave slowed significantly due to the challenging economic and political situation. The
state owns about 45 percent of the banking system. The financial system has been
under stress, with negative impacts from the global crisis exacerbated by domestic
turbulence
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CONCLUSION
Based on the above information it is clear that, Egypt have a high potential market in
construction industry which shows an increment in size at least every year, within
this specific industry the government have also done several reforms in order to be
favorable to both the domestic and foreign investors especially when it come to
obtaining construction permit. Also the petroleum sector has outstanding
developments in the past few years, with government trying to integrate renewable
energy technology in a commercial scale.
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BIBLIOGRAPHY
Websites:
www.imf.com
www.indexmundi.com
www.cia.gov.com
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Thank you