- Using an Agent or Distributor
- Establishing an Office
- Franchising
- Direct Marketing
- Joint Ventures/Licensing
- Selling to the Government
- TENDERS LAW
- Practical Problems of the Tenders Law
- Other Practical Considerations in Selling to the Government
- Distribution and Sales Channels
- Selling Factors/Techniques
- E-Business
- Trade Promotion and Advertising
- SELECTED MEDIA LIST DAILY NEWSPAPERS
- Pricing
- Protecting Your Intellectual Property
- IPR Resources
- IPR Climate in Egypt
- Due Diligence
- Local Professional Services
- Web Resources
Using an Agent or Distributor
Egyptian law concerning commercial agency agreements is among the most liberal in the Middle East. The law is neutral concerning exclusivity, compensation is not required to cancel an agency, and there is no minimum notification period for cancellation. There is no requirement that the agent authorize the import of the foreign principal's products into Egypt, or that the importation take place through the agent. Importers of any product must be separately registered, under another law. Commercial agents must register the existence of their agency with the Ministry of Trade and Industry’s Commercial Registry Department, giving basic facts about the agreement, including the amount of commission to be received on sales. The foreign firm itself faces no local registration requirement. The commercial agency law is also neutral about dispute settlement procedures leaving this to the parties to decide, preferably in writing at the time of appointment of the agent, and in advance of a dispute and on the amount of commission due an agent.
Commission rates vary according to the type of product or service, volume of sales, and effort needed by the agent. The larger the volume of sales is, the smaller the commission. For commodities such as rice, wheat, sugar, lumber or cotton, the commission ranges between 1-3%; for chemicals and foodstuffs 3-5%; for medical equipment, earthmoving equipment, office/business equipment, about 10%; and for expensive laboratory and scientific equipment, 15%. For major projects such as a complete civil engineering project, the commission is typically 1-3%. In tenders, the commission is calculated in the quoted bid. If a bidder reduces the bid price, the agent typically is asked to share in the reduction. Commission rates must be reported in bid packages for government tenders, with the government reserving the right to reduce any commission it deems extravagant. Commission rates also must be noted in the Ministry of Trade and Industry’s Commercial Registry documents signed by the Egyptian agent. Agent exclusivity is not required by law; the majority of U.S. firms have one or two Egyptian agents for different products, although a few have more.
Agencies can be split geographically and/or by product, although this is generally avoided in a country like Egypt, where activity is centralized around the capital city of Cairo. If there is a geographic split, it is generally Alexandria with or without the Delta cities on one hand, and Cairo and the Nile valley on the other. Agencies also can be split between private and public customers, with one agent specializing in tenders and other handling private sector customers. Agents often appoint subagents to cover smaller cities.
The U.S. Commercial Service offers the Gold Key and International Partner Search programs that are designed to assist U.S. companies identify local agents/distributors for their products. For further information, U.S. business representatives should contact the nearest Department of Commerce Export Assistance Center in the United States or the Commerce Department's Trade Information Center at 1-800-USA-TRADE (1-800-872-8723) or click on http://www.export.gov.
Recommended business networks in Egypt include the American
Chamber of Commerce in Egypt and various associations of Egyptian
entrepreneurs including the Egyptian Businessmen's Association,
the Egyptian Junior Business Association, the Alexandria Business
Association, the Federation of Egyptian Industries, and the
Egyptian Exporters Association. There are investor
committees in the large industrial cities of Tenth of Ramadan,
Sixth of October, Borg El Arab, and a chamber in Ismailia
promoting projects in the Sinai. Please see the Contacts
Section of this guide.
Establishing an Office
As in any other country, seek early legal counsel from one or more attorneys and tax counsel from a professional accounting/auditing firm. Lists of such firms are available on the Internet from the Commercial Service website in Egypt http://www.buyusa.gov/egypt/en/bsp.html?bsp_cat=80120000.
The General Authority for Investments and Free Zones (GAFI) has set up a one-stop shop for registering companies. This office is now able to process all paperwork for setting up a business in Egypt and can do so in a matter of 3 working days. http://www.gafinet.org/
Franchising
Franchising has developed quite extensively in Egypt over a short time, especially in the fast-food sector. There are 40 international franchisees in Egypt at present, including 25 food franchises, and 15 non-food franchisees with hundreds of individual outlets.
The Egyptian fast food market, dominated by American chains, has experienced notable expansion since it began in 1970, and market sources expect the growth to continue at an annual rate of 10-20% over the coming years. The current food franchise market size is estimated at more than $300 million. Some of the popular chains include: Chili’s, TGIF, Hard Rock Café, KFC, Little Caesars Pizza, McDonald’s, Pizza Hut, and Baskin Robbins. During the 1990s, non-food sectors started to develop and it now have a large market potential. A limited number of companies in the fields of hotel management, car rental, language education, health and fitness, electronics, and computer training are currently franchised in Egypt.
Egyptian Franchise Development Association (EFDA) represents and serves the franchise industry in Egypt. EFDA promotes the concept of investment through franchising, encourages training and quality control, and works to solve common problems in the industry. Moreover, EFDA sponsors a local Franchise show every year in the spring or early summer. Please contact the Commercial Service in Egypt for more details. http://www.efda.org.eg/
Direct Marketing
Direct marketing in Egypt, such as catalog sales or television sales is also advancing as the use of credit cards and checking accounts from foreign banks is increasingly accepted. In addition, the risks of from mail and warehouse theft are decreasing as well as the high customs duties. Purchasing goods through the Internet is growing for the same reasons. The Egyptian Government encourages e-commerce and passed e-commerce legislation and an e-signature law in 2004.
Joint Ventures/Licensing
The details of joint venture or licensing agreements between Egyptians and their foreign partners are a matter of mutual agreement, defined by their contract, not by special law. Liberalized foreign exchange regulations since 1991 permit the free transfer abroad of profits and dividends. Invested capital may be repatriated without prior approval of the government's investment authority, the General Authority for Investment and Free Zones (GAFI). Foreign equity in joint ventures can be as low as a few percentage points, depending upon mutual agreement. Egyptian Law No. 8, the Investment Incentives and Guarantees Law, allows foreign investors to own any amount, up to 100%, in projects in most sectors.
Approval is not required for licensing agreements involving trademarks and technical know-how other than "process secrets." A stiff withholding tax is levied on royalty payments unless a double taxation treaty exists. There is a U.S.-Egyptian treaty for the avoidance of double taxation, which limits tax on royalty payments to 15% of the gross amount of such royalty. Numerous government and private companies have licensing agreements with foreign firms under which royalties and other fees are freely transferred abroad pursuant to individual corporate agreements. Examples of licensed production in Egypt include name-brand clothing, personal care products, kitchen utensils, pistols, laser alignment equipment, and military vehicles. Service licenses include diving training, and franchised services including personal care and restaurants.
Some U.S. investors have looked to Egypt as an investment site in order to benefit from U.S. Government procurement preferences. Under the U.S. Federal Acquisition Regulations (FAR), Egypt is a "designated country" (among many others) from which certain goods theoretically could be procured by the U.S. Government as if they were made in America. However, this rule does not apply because the FAR requires such countries to sign the GATT/WTO Procurement Code, and Egypt has not done so yet.
Selling to the Government
In selling to the Government of Egypt (GOE), companies will need
to deal directly with the client agency. Egyptian
procurement is conducted utilizing either national budgetary
funds or aid funds from USAID, the Foreign Military Fund (FMF),
or other donors.
In the case of USAID and FMF, information can be obtained on
http://www.fedbizopps.gov/. USAID and the
Office of Military Cooperation can answer questions about
upcoming procurements directly by contacting the U.S. Embassy in
Egypt.
Other donor-funded projects open to U.S. bidders are from the
Government of Japan's United Overseas Development Assistance
(ODA), or multilateral assistance from entities such as the World
Bank, African Development Bank, or Arab and Islamic development
funds.
The following information pertains to contracting directly with
the GOE. It is also relevant for donor-financed projects to
the extent that Egyptian law applies to them.
TENDERS LAW
The Tenders Law No. 89/1998 now governs GOE procurement by all civilian and military agencies (“ministries, departments, local government units, and public and general organizations”) unless they are excused from this law. It has replaced the former Law 9 of 1983. The improvement is evident mainly in these areas:
(1) No negotiation of bids after bid opening (“momarsa,” in Arabic). A tender may not be transferred into a momarsa.
(2) No cancellation of an order without reason. Moreover, rejected bids and awarded bids will contain the reasons on which the decision was based.
(3) Bid bonds will now be refunded immediately upon expiry of validity of tender.
The law has not changed the following features:
(1) Open competition with publication for at least 30 days;
(2) 15% price preference for Egyptian bidders. There
is one exception, however.
Ministry of Defense tenders are treated differently due to the
Reciprocal Defense Procurement Memorandum of Understanding. This
rule allows Egyptian companies to compete as U.S. companies on
DOD procurements and U.S. companies to compete for MOD tenders as
Egyptian companies. If a U.S. company is competing with an
Egyptian company on an MOD procurement, regardless of funding
source, they must be treated the same. If an Egyptian
company receives a 15% price preference, so does the U.S.
company. Not all DOD procurement committees are aware of
this requirement. In the event of a dispute, please contact
the U.S. Embassy’s Office of Military Cooperation to inform them
of MOD non-compliance with this provision of the Memorandum of
Understanding;
(3) A two-phase decision-making process: a bid-opening committee that convenes a public session to which all bidders are invited and bid prices are read aloud; and a decision-making (settlement) committee that reviews the technical bids and either makes a decision or, if the value is over $50,000, recommends a decision to the minister concerned;
(4) Bid bonds of one or two (generally two) percent and a performance bond by the winning firm of (generally) 5%. Preference is given to Egyptian public sector companies and Egyptian cooperatives, both of which are exempted from the bonding requirements, provided they do the work themselves and do not request an advance payment;
(5) Fraud, bribery ("either personally or through a third party, directly or indirectly"), or bankruptcy by the contracting party annuls the contract and allows any outstanding bid or performance bond to be confiscated;
(6) Sole-source decisions are permitted in special instances: monopoly sources of supply; goods whose import is monopolized; specialized products or services; and goods and services needed urgently;
(7) Advance payments are permitted, against a letter of guarantee. U.S. standby letters of credit (which can be insured for political risk by the U.S. Overseas Private Investment Corporation) are acceptable in Egypt.
Practical Problems of the Tenders Law
There is no time limit for the decision-making committees to meet, make, or announce their decision. If a bidder withdraws its bid prior to bid opening, it forfeits the bid bond. Bidders often are "held hostage" to a government agency that stalls the bid opening for varied reasons, including running out of funds for the project. Costs of extending bid bonds are borne by the bidders. If a winning firm withdraws from a project before beginning or completing a project, its performance bond similarly will be confiscated. This has happened when a client has delayed start-up because of budget shortfalls, expecting the contractor/supplier to carry the burden of maintaining the performance bond.
Government agencies often delay giving the "final acceptance" of goods or works projects. This holds up final payment and final retirement of the performance bond. There are no time limits for making payment from the date of acceptance of a bid, nor any provision for implied or automatic acceptance of a supplied good or service. The client must explicitly acknowledge “final acceptance” before the contractor can receive final payment and retire the performance bond.
If award decisions are delayed beyond the validity date specified by a bidder, extra costs incurred by the delay cannot routinely be passed on. If the client adds new requirements to an ongoing contract, any extra monies requested by the supplier/contractor must be endorsed by a special "price study committee" which sometimes takes years to approve. In the meantime, of course, the supplier/contractor is expected to fulfill the revised contract without delay or complaint.
The Tenders’ Law makes no reference to dispute resolution, which therefore must be negotiated prior to contract signing. Arbitration in Egypt or abroad (the latter can include foreign law and foreign arbitral procedures) is preferred to the court system, although enforcement of arbitral awards is not assured because the losing party can appeal Egyptian or foreign arbitral decisions in Egyptian courts. If no specific dispute settlement procedure is mentioned, any future dispute with a government party will go to the government's Council of State. This is a government agency that both reviews the constitutionality of proposed laws and regulations and functions as a court for all non-criminal matters to which the government is a party. If the government party does not honor an arbitration decision, the tender’s law does not permit the winning party to use the arbitration settlement documents to settle claims with other government entities (customs, tax, social insurance, etc.).
There is no provision allowing the supplier to delay work if payments are delayed. There is no provision to reduce the performance bond progressively according to the rate of completion of the work.
For Letters of Credit/Guarantee offered as a performance bond, it is advisable to have separate L/Cs for each procured commodity or distinct order, in order to avoid delaying the entire shipment if there is a dispute over one item. The Tenders’ Law has increased the ceiling on direct orders to LE 50,000 (approximately $9,000).
In the Tenders’ Law, tenders and bids are not to be transformed into “momarsa” unless otherwise explicitly mentioned in the tender advertisement. Maintenance and after-sales technical service is to be given significant consideration in deciding and evaluating offers. The job is to be given to the lowest bidder only if the requirements for technical and maintenance support are fulfilled.
Amendments to Dispute Settlement Law 27 of 1994 regarding contracts between public enterprises and private (domestic and international) sector suppliers allow both parties to agree to appoint any accepted legal body. In the past, the only body overseeing disputes with public enterprises was the State Council, which was taking years in some cases to settle disputes. Parliament approved these amendments in May 1997.
In July 2006, the Tenders’ Law was amended to allow state property to be sold by direct agreement in cases where a public auction would be impractical. In September 2006, the executive regulations of the Tenders’ Law were also amended, to streamline contracts procedures. The changes shorten the period required for announcing tenders and evaluating bids; lower charges for tender documents; oblige clients to hold pre-bid meetings to clarify items in tenders; and include model contract terms clearly establishing rights and obligations of contractors. The amendments allow small-and medium-sized enterprises to acquire tender documents at cost, in order to help such firms win business. An amendment to the Tenders’ Law was issued in May 2006, requiring the contracting governmental entity to change the agreement value with the contractor, pursuant to the increase or decrease in cost, which took place after the date determined for opening the technical envelopes or after the date of concluding the agreement. The amendments also require the contracting entity to disburse to the contractor advance payments for work-in progress. The amendment also stipulates compensating contractors for price fluctuations that might occur during the first year of the contract.
The new laws correct some of the most serious flaws in Egypt’s current government procurement procedures. Egypt is also now playing a positive role in international discussions of procurement practices, including those of the World Trade Organization. You may also engage the staff of the Commercial Service in Egypt, as well as the Advocacy Center at the U.S. Department of Commerce in Washington, D.C. to advocate on your behalf for projects and in disputes. Please note that if you have retained legal counsel and began legal proceedings, the U.S. Government cannot interfere.
Other Practical Considerations in Selling to the Government
Poorly written specifications may force bidders to guess what the
customer wants. U.S. firms must stay in close touch with
client agencies to minimize doubts and uncertainties.
Do not assume the "best" is desired, since superior features may
not be understood or the price may be too high. The law is
silent about who writes tender specifications and neither
encourages nor discourages hiring of consultants to do so.
Foreign firms that are trusted by government officials often
voluntarily propose tender specifications to prospective bidders,
which give them a chance to determine the specifications.
In the decision-making committee, the technical representative
(typically an engineer) must concur in the award decision.
Such persons have much influence.
Government entities expect performance bonds to cover the full warranty period for the product or work in question, and drawdown proportionally to work completed are not usual. U.S. suppliers, by contrast, generally want performance bonds limited to safe delivery and/or set-up. Therein lie grounds for much misunderstanding and complaints over alleged delays in releasing performance bonds.
Influence peddling in procurement decisions is a much-discussed phenomenon. What is certain is that decision-makers must feel comfortable with a supplier. They will not select a low-bidder unknown to them. Personal friendships and frequent visits to decision-makers by foreign principals and their local representatives are important marketing factors. While “sweetheart deals” are known to take place, many Egyptian sources affirm that the majority of decisions are openly competitive and straightforward. While the decision-making process may seem opaque, details of bids are readily obtainable through informal channels.
Distribution and Sales Channels
Foreign firms can sell directly within Egypt if they are
registered to make direct sales. Many do so as part of a
manufacturing or assembly operation in Egypt. A few foreign
firms use free zones or bonded warehouses to store goods and hire
their own employees to sell door-to-door consumer goods.
Most foreign firms, however, rely on Egyptian companies for
wholesale and retail distribution, ensuring their effectiveness
through staff training programs in Egypt and abroad, supplying
short-term home office personnel to work with the Egyptian firm,
and making regular visits by marketing and technical support
staff. Although the concept of "marketing", as compared to
simply selling, or waiting for the customer to find and come to
you, is new to Egypt and weakly practiced, there are a growing
number of good Egyptian marketing firms who know how to market
the products in which they specialize.
Egyptian commercial agents are required for foreign firms to bid
on most civilian government tenders. By contrast,
commercial agents cannot be used to bid on military tenders,
although use of Egyptian "consultants" may be allowed if the
arrangement is properly structured. Commercial agents are
optional when bidding on tenders issued by the petroleum
companies, when selling to the private sector, or when selling
under USAID-financed programs.
There are many choices for distributors, dealers, and agents in
Egypt. There are a few firms with modern management,
including "profit center" staff responsible for success in
specialized departments. There are more traditional
"general trader" type companies, some of which have developed a
certain specialization (e.g.: lumber, building products, canned
goods, fresh and frozen meats), and some of which handle
"everything." Also, there are smaller firms specializing in
only a few product lines or only a handful of foreign suppliers.
According to Egyptian Customs authorities and the Ministry of
Industry & Foreign Trade, in 2007 (the latest statistics
available) Egypt had 5,800 registered importers, 9,600 exporters,
4,330 commercial agents representing 106,200 foreign firms, and
4,250 factories licensed to import components. Most of
these firms are privately owned, but the government sector
includes some 279 separate companies affiliated with 16 holding
companies; nearly 30 military factories that also make civilian
products; and 1,500 companies owned by one of the 26 provincial
authorities (governorates).
Many retailers of consumer goods tend to import their own needs
directly rather than pay high markups to wholesalers - sometimes
a suitcase or trunk load at a time. A corollary is that
many Egyptians prefer getting quotes directly from the overseas
supplier rather than from the local agent on the theory that the
price will be better. This habit suggests that U.S.
principals be sensitive to the role and presumed cost of their
Egyptian agents. One way to strengthen that role is to
refer customer inquiries back to the Egyptian agent or to a
regional representative outside Egypt.
Only registered commercial agents can work on government
tenders. Often such persons have retired from the
government agency to which they are now specialized in
selling. This system is especially common among persons
selling to the military, security, and police agencies. In
the extreme, some of these people literally operate out of their
homes and have neither office nor staff, but they can be
effective.
Egyptian law requires that all commercial agents and importers
have Egyptian nationality. If it is a company, the chairman
and all members of the board must be Egyptian, and it must be
100% Egyptian-owned. Agents also must have resided
continuously in Egypt for at least five years with specified
exceptions for expatriate Egyptians having an overseas work
permit; be certified by a local chamber of commerce or
professional association; not be a civil servant or worker in a
public sector company (i.e., not moonlighting), nor a member of
the People's Assembly; not be a "first grade relative" (i.e., a
member of the immediate family, or uncle, aunt, niece, or nephew)
of a civil servant of the rank of Director General or higher, or
of a member of the People's Assembly. This prohibition
against agents with family members in government is rarely
enforced. Public sector firms can be agents, as can private
firms and individuals.
Distributor-type companies with any foreign ownership can market
goods, including imported goods, in the following circumstances
(although they cannot handle the import operation, per se):
(1) General Partnership Companies, or Limited Partnership
Companies: In these types of companies, there may be a
foreign partner, provided that the Egyptian partner(s) have at
least 51% of the capital and the general manager or head of the
company is an Egyptian national. In these instances, such a
distributorship company cannot be an "importer" nor act as
commercial agent unless it is 100% Egyptian owned and
managed.
(2) Limited Liability Company: A foreign partner in this
type of distributorship company faces no limit on the percentage
of ownership, provided that at least one manager of the company
is an Egyptian national (there can be one or more managers
depending upon the articles of incorporation), there are at least
two shareholders or partners, and the capital of the company is
not less than LE 50,000 (approximately $9,000). A
distributorship company of this type also cannot be an
"importer", nor act as commercial agent.
(3) Joint Stock Company: Provided that at least 49% of the
shares are offered to Egyptians upon formation, foreign
shareholders ultimately can own up to 100% of the company,
provided that a majority of the board of directors are Egyptians,
the capital of the company is not less than LE 250,000, and there
are at least three shareholders. Again, a distributorship
company of this type may not import or act as a commercial agent
unless it is 100% Egyptian owned and managed.
Foreign firms that form a distributorship as mentioned above
often permit the Egyptian partners to form a separate company to
act as "importer" or agent. The latter delivers the goods
to the distributorship company for marketing within Egypt.
Products enter Egypt through the main ports of Alexandria, Dekheila, Damietta, Port-Said, and the comparatively new port of Ain Sokhna. Goods are then cleared by the importer or end-user and are stored in the main distribution centers located in Alexandria and Cairo. From there, well-organized distribution companies with networks covering the entire country will distribute to wholesalers and retailers.
Selling Factors/Techniques
Egyptians with whom an American will deal in business are often trilingual (English-French-Arabic), well-traveled individuals who pride themselves on ferreting out good deals at decent prices. Mid-level government officials with whom a foreigner may deal may be less sophisticated and less well traveled, but no less able to negotiate.
Negotiations for a sale, whether with a government agency or a
private individual, will be bound by certain unspoken Egyptian
cultural requirements. One is that there is no final best
price that cannot be reduced further by negotiating. A
corollary is that only a neophyte would offer one's best price,
or anything close to it, early in negotiations. Government
employees are judged on their ability to squeeze the final penny
from the lowest bidder. This happens repeatedly, at every
level of decision-making, and is the Egyptian version of the
"Dutch auction", called in Arabic "momarsa". Momarsas have
been popular because they give Egyptian officials the appearance
of trying to get the best deal for Egypt, and they reduce charges
of cronyism.
Momarsas, however, are viewed by companies subjected to them as
potentially unfair, without clear rules or procedures, and a
violation of Tenders Law No. 8's mandate to negotiate with the
lowest qualified bidder only. The U.S. Embassy and some
business groups, including the U.S.-Egypt Business Council, have
urged the government to ban "momarsas." A recent positive
development is that the practice of "momarsas" has now been
prohibited in the Public Tender new tenders law (Law 89 of 1998),
approved in May 8, 1998, and enacted, effective June 9, 1998 (see
Pricing, later in this chapter).
The Commercial Service in Egypt publishes a Directory of U.S. Businesses in Egypt. The directory lists U.S. companies with offices and representatives in Egypt, as well as the Egyptian representatives and agents. To obtain a copy, please send an inquiry to Cairo.Office.Box@ . mail.doc.gov
E-Business
Egypt’s Electronic Signature Law 15 of 2004 established the Information Technology Industry Development Agency (ITIDA) to act as the E-signature regulatory authority and to further support and empower the IT sector in Egypt. The executive regulations of this law were issued in 2005.
ITIDA’s first mandate is to build and operate the Root
Certificate Authority (Root CA). The Root CA will be the
trust anchor for all relying parties within that domain.
Furthermore, the Root CA will issue digital certificates to
subordinate Certificate Service Providers (CSP) to provide the
proper infrastructure for the use of E-Signature in Egypt.
ITIDA’s second mandate is to license a limited number of CSPs to
issue digital certificates and corresponding electronic
signatures for citizens and private sector companies’ clients.
www.itida.gov.eg
E-Business websites:
http://www.otlobward.com/
http://www.otlob.com/
Telecom Egypt:
http://www.telecomegypt.com.eg/
Real Estate Website:
http://www.betna.com/coldwellbanker/nu/eng/index.asp
http://www.e-dar.com/
Government Websites:
http://www.itida.gov.eg/
http://www.egypt.gov.eg/english
http://www.alhokoma.gov.eg
Trade Promotion and Advertising
Strategically placed newspaper and magazine advertisements are good marketing tools in Egypt. Egyptians read newspapers voraciously, and all literate people will see or hear advertisements placed in the widely circulating Al Ahram daily (http://www.ahram.org.eg).
Television is watched by all Egyptians, and advertisements reach and influence wide audiences. TV advertising has continued to increase in sophistication and prominence. Two partially privatized pop radio stations have also been created and already have captured a large part of the youth market. Other forms of advertisement in Egypt consist of roadside billboards, flashing neon signs on building roofs, building walls completely painted with advertising signs, "junk mail" advertisements, faxed advertisements, and messenger/courier-delivered direct mail campaigns.
Trade promotion is becoming more sophisticated. Trade shows are frequent, aimed either at targeted business audiences or the general public; several take place each month at one or more of the downtown hotels or the Cairo International Conference Center (CICC). The annual Cairo International Trade Fair, held in the spring of every year, is the historical centerpiece of Egyptian trade promotion events. http://www.cairofair.com/Front/main.asp
For a listing of trade events and fairs in Egypt, please visit the CS Egypt website at: http://www.buyusa.gov/egypt/en/tradeevents.html
SELECTED MEDIA LIST
DAILY NEWSPAPERS
Al Ahram: (circulation 900,000 Sunday - Thursday, 1,000,000
Friday)
---Egypt's most prestigious daily and most prosperous of the
country's five largest publishing houses. In addition to
publishing, the company has interests in many business services
including computerization, billing services, and ID card
services.
Al Akhbar: (circulation 850,000)
---More informal news (crime, human interest) than Al
Ahram. Simpler language. Harshly antagonistic toward
U.S. policies.
Al Wafd: (circulation 220,000)
---Mouthpiece of the New Wafd Opposition Party. Leading
opposition paper, but much smaller and limited in coverage and
scope than the major pro-Government dailies above.
Egyptian Gazette: (circulation 4,500)
---The English-language daily. Part of the Gomhouriya
publishing house. Caters almost exclusively to foreigners
living in Egypt and tourists.
ECONOMIC PUBLICATIONS
Al Ahram Al Iktisadi weekly magazine: (circulation
10,000)
---Egypt's leading economic magazine, modeled after the British
"Economist", is read by academics and government economic
officials and has numerous readers outside Egypt.
Business Monthly: (circulation 9,000)
---English-language magazine published by American Chamber of
Commerce in Egypt.
Egypt Today and Business Today: (circulation 17,500)
---Glossy English-language magazines related to social/business
life in Egypt published by International Business Associates.
Pricing
Egypt traditionally is a price-sensitive market, where quality often takes second place to cost. Exceptions to the generalization that "price sells" are sales financed by USAID and other foreign/international donors such as the African Development Bank. When funds are provided by these donors, Another exception is consumer goods: people will pay for quality if they perceive it. However, the same affluent Egyptians who may buy a Mercedes car will tend to outfit their new factories with used equipment if they can cheaply transport a "complete" factory from abroad. Imported machinery is charged in addition to customs duty, a 10% Sales Tax, 3% Service Tax, and 1% Industrial and Commercial tax
Sales Service/Customer Support
U.S. sellers should aim to create and support a sales/service network in Egypt by training their distributors and dealers. Firms that sell directly to government agencies need to do the same - ensure training of the workforce using the product or it will fail through ignorance of proper maintenance and the foreign supplier will be blamed for poor quality. Total Quality Management (TQM) interest has skyrocketed among producers in recent years with a number of them now working toward ISO 9000 certification.
Protecting Your Intellectual Property
Introduction
Several general principles are important for effective management
of intellectual property rights in Egypt. First, it is
important to have an overall strategy to protect IPR.
Second, IPR is protected differently in Egypt than in the
U.S. Third, rights must be registered and enforced in
Egypt, under local laws. Companies may wish to seek advice
from local attorneys or IP consultants. The U.S. Commercial
Service can often provide a list of local lawyers upon request;
however we cannot make any recommendations.
It is vital that companies understand that intellectual property is primarily a private right and that the US government generally cannot enforce rights for private individuals in Egypt. It is the responsibility of the rights' holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. While the U.S. Government is willing to assist, there is little it can do if the rights holders have not taken these fundamental steps necessary to securing and enforcing their IPR in a timely fashion. Moreover, in many countries, rights holders who delay enforcing their rights on a mistaken belief that the USG can provide a political resolution to a legal problem may find that their rights have been eroded or abrogated due to doctrines such as statutes of limitations, laches, estoppel, or unreasonable delay in prosecuting a law suit. In no instance should USG advice be seen as a substitute for the obligation of a rights holder to promptly pursue its case.
It is always advisable to conduct due diligence on partners. Negotiate from the position of your partner and give your partner clear incentives to honor the contract. A good partner is an important ally in protecting IP rights. Keep an eye on your cost structure and reduce the margins (and the incentive) of would-be bad actors. Projects and sales in Egypt require constant attention. Work with legal counsel familiar with Egyptian laws to create a solid contract that includes non-compete clauses, and confidentiality/non-disclosure provisions.
It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IPR and stop counterfeiting. There are a number of these organizations, both Egypt and U.S.-based. These include:
- The U.S. Chamber and local American Chambers of
Commerce
- National Association of Manufacturers (NAM)
- International Intellectual Property Alliance (IIPA)
- International Trademark Association (INTA)
- The Coalition Against Counterfeiting and Piracy
- International Anti-Counterfeiting Coalition (IACC)
- Pharmaceutical Research and Manufacturers of America
(PhRMA)
- Biotechnology Industry Organization (BIO)
- The Egyptian Center for Intellectual Property and
Information Technology (ECIPIT)
IPR Resources
A wealth of information on protecting IPR is freely available to U.S. rights holders. Some excellent resources for companies regarding intellectual property include the following:
- For information about patent, trademark, or copyright
issues -- including enforcement issues in the US and other
countries -- call the STOP! Hotline: 1-866-999-HALT or register
at www.StopFakes.gov.
- For more information about registering trademarks and
patents (both in the U.S. as well as in foreign countries),
contact the US Patent and Trademark Office (USPTO) at:
1-800-786-9199.
- For more information about registering for copyright
protection in the US, contact the US Copyright Office at:
1-202-707-5959.
- For US small and medium-size companies, the Department of
Commerce offers a "SME IPR Advisory Program" available through
the American Bar Association that provides one hour of free IPR
legal advice for companies with concerns in Brazil, China, Egypt,
India, Russia, and Thailand. For details and to register,
visit: http://www.abanet.org/intlaw/intlproj/iprprogram_consultation.html
- For information on obtaining and enforcing intellectual
property rights and market-specific IP Toolkits visit:
www.StopFakes.gov This site is linked to the
USPTO website for registering trademarks and patents (both in the
U.S. as well as in foreign countries), the U.S. Customs &
Border Protection website to record registered trademarks and
copyrighted works (to assist customs in blocking imports of
IPR-infringing products) and allows you to register for Webinars
on protecting IPR.
o For an in-depth examination of IPR requirements in
specific markets, toolkits are currently available in the
following countries/territories: Brazil, Brunei, China, Egypt,
European Union, India, Italy, Malaysia, Mexico, Paraguay, Peru,
Russia, Taiwan, Thailand, and Vietnam.
o For assistance in developing a strategy for evaluating,
protecting, and enforcing IPR, please use the free Online IPR
Training Module on www.stopfakes.gov.
- The U.S. Commerce Department has positioned IP attachés in
key markets around the world. You can get contact
information for the IP Attaché who covers Egypt at:
Mohamed.shaltout@ .
mail.doc.gov
IPR Climate in Egypt
Egypt is a signatory to the WTO Trade-Related Aspects of
Intellectual Property Rights (TRIPS) Agreement, the Berne
Copyright Convention, the Paris Convention for Protection of
Industrial Property of 1883, the Madrid Agreement Concerning the
International Registration of Marks 1954, and the Nice Agreement
Concerning the International classification of goods and
services, the Stockholm Act of 1967, the Hague Agreement, the
Geneva Act 1999, the Patent Cooperation Treaty (1970 as modified
and amended), and the Trademark Law Treaty.
In recent years, Egypt has made some progress in strengthening
its IPR regime through improvements in its domestic legal
framework and enforcement capabilities. In May 2002, Egypt
enacted a new comprehensive IPR law (Law 82 of 2002) that met
certain key TRIPS requirements, including providing data
exclusivity and exclusive marketing rights and enacting a patent
mailbox. The law also addressed IPR protection in areas
such as patents, copyrights (with enhanced protection for sound
and motion-picture recordings and computer software), trademarks,
plant varieties, industrial design, and integrated circuit layout
design.
Although the law has certain shortcomings, its passage
demonstrated a marked improvement in the major facets of Egypt's
IPR regime. In July 2003, implementing regulations for the
patent, trademark, and botanical variety provisions of the law
were issued. Implementing regulations for Copyright
provisions were issued in 2005. Egypt also ratified the
WIPO Patent Cooperation Treaty in 2003.
From April 2001 until December 2003, the Government of Egypt did
not approve any generic copies of internationally protected
pharmaceuticals. Since then, however, the Minister of
Health has approved local copies of pharmaceuticals, in violation
of Egypt's international property protection obligations.
The international property protection problem appeared to worsen
in late 2004 when the Egyptian Ministry of Health apparently
embarked on the approval of a significant number of copies of
pharmaceutical products for marketing in Egypt. As a
result, the office of the United States Trade Representative
(USTR) in 2004 elevated Egypt from the "Watch List" to the
"Priority Watch List" (where it had been until 2003) during its
annual "Special 301" IPR review. After 4 years on the
Priority Watch List, USTR lowered Egypt to Watch List in
2008. Reasons cited for the movement to Watch List in 2008
included progress in improving Egypt’s IPR regime overall,
especially in the area of pharmaceutical IPRs, and increased
bilateral communication on IPR between the governments of Egypt
and the United States.
A modern, computerized Egyptian Patent Office operating under the
authority of the Ministry of Higher Education and State for
Scientific Research processes patent applications and grants
patent protection. The government has significantly
improved the quality and transparency of Egypt's trademark and
industrial design registration system. In preparation for
the new WTO patent regime, in effect as of January 1, 2005, the
Ministry began hiring new technical examination staff in
2003.
The International Intellectual Property Alliance’s (IIPA) 2008
Special 301 Report estimated that the level of piracy for
business software in Egypt during 2007 had fallen to 60% from 63%
the previous year. IIPA also estimated the level of piracy
for records and music in Egypt to be 75% during 2007, up
from 70% the previous year. False licensing, where a local
unauthorized distributor receives and is permitted to rely upon
Ministry of Culture approval to distribute pirated software,
music, and films, remains a problem and undermines copyright
protection in Egypt. The Egyptian government, however, has
taken steps to revoke or discontinue such approvals for
well-known pirates.
The following paragraphs summarize the law's provisions on
different types of IPR:
Patents: The law increases the protection period for a
patent term to 20 years, and for pharmaceuticals includes
provisions on data exclusivity and exclusive marketing rights
which had been adopted by Prime Ministerial decree in 2000.
Egypt has elected to be treated as a Developing Country for
pharmaceuticals and chemicals under the TRIPS Agreement. As
of January 1, 2005, Egypt has been required to be in full
compliance with its TRIPS patent obligations. There were
estimated to be some 4,000 patent applications filed in its TRIPs
"mailbox" for applications relating to pharmaceutical
products. The patent authorities began to review these
applications in 2005 as required. The Egyptian Patent Office now
reports that all applications filed in the WTO TRIPs mailbox have
been processed.
Data Protection: In January 2007, the Government of Egypt
announced its enactment of a new streamlined drug registration
system for drugs carrying a USFDA or EMEA approval. Such a
system would be useful to increase the effective pharmaceutical
data protection period, which is counted as five years starting
from the date the application for registration of a drug is filed
at the Ministry of Health. The system does not yet operate
as intended.
Copyrights: The new law offers copyright protection to
artistic and literary works, computer programs, and audio-visual
works. Books and computer programs are provided protection
for the author's lifetime plus 50 years. Sound recordings
are granted 50 years protection from the recording date.
The specified penalty for copyright violations is a fine of LE
5,000-10,000 per infringement or a prison term of not less than
one month, or both. The 2005 implementing regulations
for copyrights were amended twice in 2006 primarily to address
procedural matters. Significantly, the latest amendments
clarified that registration and enforcement authority for
software and database IPRs rests with the Information Technology
Industry Development Agency (ITIDA) under the Ministry of
Communications and Information Technology (MCIT).
Trademarks: The new IPR law offers trademark protection of
ten years, in accordance with the Trademark Law Treaty.
Penalties have increased to a maximum of 20,000 Egyptian pounds
or imprisonment of not less than one month, or both.
Semiconductor Chip Layout Design: The new law incorporates
a chapter for protecting semiconductor chip layout design.
Previously there was no legislation protecting semiconductor chip
layout design, although Egypt had signed the Washington
Semiconductor Convention.
In recent years the United States has provided significant
assistance through USAID-funded projects to Egypt in order to
establish and strengthen the Government of Egypt’s IPR-related
institutions. A modern computerized Patent Office is now
capable of processing and ensuring the protection of patent
applications, and the quality and transparency of the trademark
and industrial design registration system has been significantly
improved. The Government of Egypt has also taken steps to
ensure the authorized use of legitimate business software by
civilian government departments.
Although progress has been made, further steps must be taken to
strengthen protection of copyrighted material and confidential
test data. High copyright-piracy levels continue to affect
many categories of intellectual property, particularly book
publishing, entertainment software, music recordings, and motion
pictures. Infringement of trademark, textile design and
industrial designs also remains problematic.
For more information, please see Egypt’s Intellectual Property
Unit in the General Secretariat of the League of Arab States
Due Diligence
Due diligence is part of the array of services the Commercial Service provides for the benefit of U.S. business. It is recommended that U.S. firms take advantage of the U.S. Commercial Service International Company Profile (ICP) service before signing an agency agreement with a local concern, choosing a local partner to bid jointly on a major project, or doing business for the first time with a local company. ICPs are prepared at the request of U.S. firms and provide financial and background data on Egyptian companies. U.S. firms can request an ICP through their local U.S. Export Assistance Centers.
Local Professional Services
Local service providers and professional associations can be viewed on the U.S. Commercial Service in Egypt’s webpage at: http://www.buyusa.gov/egypt/en/bsp.html or at the American Chamber of Commerce in Egypt: http://www.amcham.org.eg/
Web Resources
Commercial Service in Egypt: http://www.buyusa.gov/egypt/en/
U.S. Embassy: http://cairo.usembassy.gov
USAID: http://egypt.usaid.gov
American Chamber of Commerce in Egypt: http://www.amcham.org.eg
Federal Business Opportunities: http://www.fedbizopps.gov/
Egyptian Government Web Portal: http://www.egypt.gov.eg/english/
Kompass Company Search: http://www1.kompass.com/kinl/index.php
Egyptian Businessmen's Association: http://www.eba.org.eg/
Alexandria Business Association: http://www.aba.org.eg/
Federation of Egyptian Industries: http://www.fei.org.eg/
Egyptian Exporters Association: http://www.expolink.org
Egypt’s Intellectual Property Unit: http://www.mfti.gov.eg/IP/index.htm
Information Technology Industry Development Agency:
http://www.itida.gov.eg/
General Authority for Investment and Free Zones: http://www.gafinet.eg/
Egyptian Franchise Development Association: http://www.efda.org.eg/