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 Milosevic.

Utrecht

Aspires to be the Silicon Valley of the Netherlands with new

industrial parks for telemarketing, IT and medical technology companies.

Rotterdam

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.

Eindhoven

Home office for multinationals with Egyptian presence including Philips, DAF bus and truck.

Maastricht

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 immigrant communities.

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 centers.

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 system.

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 name'."

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 continental rivals.

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 the EU.

"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 imports.

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 years.

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 Koudÿs.

* A seed potato farm northeast of the Cairo-Alexandria road just got under way, run by HZPC of Holland and Alpharano of Egypt.

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 individuals.)

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 notes.

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 their service.

"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 lines.

"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 firms.

* 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 operators.

* 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 Maadi.

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. bt

www.BusinessTodayEgypt.com May 2002 bt 65

Aid may be dipping, but bilateral trade is expanding.

Lack of cargo space out of Egypt is a serious obstacle.

Companies

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 mills.

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 Said.

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 quality.

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 troubles.

"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. Excerpts:

BT: Why is The Netherlands ending development aid to Egypt?

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 maintained.

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 there.

By Dan Bernard

Back To Top

[ Privacy Policy ]