Trade and investment between Arab states is set to surge in the next five years, Egypt’s Minister of Trade and Acting Minister of Investment has said.
“The reason why is that we’re seeing more and more regional players and a significant surge concentrated mainly in the Gulf, Egypt and Jordan,” Rachid Mohamed Rachid told Arabian Business on the sidelines of the Arab Economic Summit in Sharm-el-Sheikh.
“Companies are now better able to market and distribute in the region. The strength of our economy will depend on our ability to integrate with our region.”
Commenting on this week’s uprising in Tunisia, Rachid said the political instability would severely affect the Arab country’s economy.
“The Tunisian problem is an economic one,” he said. “Its stability might be a factor that prohibits investment into any country.”
Egypt’s rate of inter-Arab trade was around $800mn in 2005 and is now at $4bn. Trade between the country and Syria was at $250mn that year and is now hitting $1.5bn annually.
Rachid said the country’s biggest trading partners in MENA were Saudi Arabia, Jordan and Libya, which due to its physical proximity takes a huge amount of Egypt’s food exports.
It will continue to accelerate in years to come, with the growth of new industries within MENA. He said those three partners would continue to be Egypt’s top players in the region.
“The chemical industry, particularly petrochemicals, never existed in the Arab world 10 years ago,” Rachid said. “Now construction material, engineering products are happening. Food trade is big across the region.”
Egypt’s import and export rates were nearly even, unless energy products were includes – in which case exports outweigh.
“Egypt was one of the countries keen to implement the Arab Free Trade Agreement and the outcome was very positive,” he said.
Rachid said the top challenge going forward remained the Gulf.
“It’s a challenge because the level of competition is extremely high and [because of its] its proximity to [traders in] Asia,” he said. “The population is limited but their consumption is huge.” Going forward, Egypt hopes to expand trade with the Gulf by reducing cost of product transport.
Rachid said that in order for MENA’s trade to continue to grow, there was a “long list” of improvements to be made to the trade infrastructure – starting with the opening of borders for easier access.
The forum in Sharm will provide a meeting place for private business and government.
“It will allow for dialogue between the private sector and leaders, which has never happened before,” he said. “It helps both sides [the boost] inter-Arab trade.”