UNEVEN CHANCES INSIDE - AMCHAM EGYPT INC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
www.amcham.org.eg/bmonthly NOT FOR SALE
SEPTEMBER 2020
UNEVEN
CHANCES
Nations try to avoid the fallout of global trade war.
INSIDE
PHARMA’S NEW DIRECTION
▲ ▲ ▲ ▲
▲ ▲ ▲ ▲
FAVORING THE DOLLAR?
CITIES 2.0
FEWER POSSESSIONS
EXCLUSIVITY IS PRICELESS Discover true luxury with CIB Private; your gateway to an exclusive world, tailored for you. Discover our new segment, offering you the best banking and investment solutions and lifestyle benefits that no one else can access. To know more visit www.cibeg.com
Sep TOC.qxp_TOC.qxd 6:39 20/13/9 PM Page 1
SEPTEMBER 2020
VOLUME 37 | ISSUE 9
Inside
4 Editor s Note
6 Viewpoint
18
8 InBrief Cover Story
Trading in globalization
for protectionism
Countries look to redefine
10
American Impact
their trade relations with
long-standing partners.
Cover Design:
Nessim N. Hanna
Losing faith in the dollar?
The dollar s decline in value
may cause currency investors
to look elsewhere.
32
At a Glance
14 Suggested
amendments to
InDepth Egypt s VAT law.
COVID19- recasts the
pharmaceutical industry
How are local pharmaceutical
firms adapting to a
34
post-COVID19- world. Market
Watch
It s a small
world, still.
28
Changing World
The evolution of cities
Governments and urban
36
planners design cities that curb The High Life
the spread of COVID19-. Is a minimalist
business right for you?
Focusing on a limited
number of products and
services could be key to
unprecedented success.
The Chamber
40 Events
43 Exclusive offers
44 Media Lite
© Copyright Business Monthly 2020. All rights reserved. No part of this
An irreverent glance magazine may be reproduced without the prior written consent of the
at the press. editor. The opinions expressed in Business Monthly do not necessarily
reflect the views of the American Chamber of Commerce in Egypt.
2• Business Monthly - SEPTEMBER 2020
Editor’s Note
Director of Publications & Research
Khaled F. Sewelam
Acting Managing Editor
Best laid plans Tamer Hafez
Contributing Editor
Kate Durham
T
he third decade of the 21st century started on the right foot. Many were Consulting Editor
forecasting that economies and incomes would grow, the uphill battle to Bertil G. Peterson
combat climate change would become smoother and trade wars would be
Writers
limited to the United States and China. Ola Noureldin
Things didnt turn out that way. Instead, the world suddenly found itself grappling Adam Skaria
with the upheaval from a pandemic that no government or business was prepared for.
Nor is there a clear path forward. Senior Art Director
Nessim N. Hanna
Our cover story p. 18 looks at how trade disputes, which started in 2019 as a
relatively straightforward fight between the two largest economies, are now raging Senior Graphic Designer
across the world. Motivations for erecting trade barriers go beyond mere economics to Emy Emile
include geopolitical aspirations that threaten long-established alliances and free trade Graphic Designer
agreements. The Sidebar p. 26 and American Impact p. 10 examine how far those Verina Maher
changes might go.
Meanwhile, COVID-19 will likely require governments and urban planners to rethink Advertising & Business Development Director
Amany Kassem
the sustainability of cities, where this pandemic is spreading the most. The Changing
World p. 28 highlights some of the things governments and city planners are already Advertising Specialist
implementing along with potential future alterations that would complete the Lamia Seleit
transformation. Those changes would require much careful planning, time and money. Advertising & Ad Traffic Coordinator
Governments more than ever are relying on the pharmaceutical industry and sup- Rowan Maamoun
ply chains to return society to a pre-COVID-19 state. Global leaders talk about the
need for a safe and effective vaccine as a prerequisite for returning to normal. Photographers
Karim el Sharnouby
That would entail not only developing it, but massive production capabilities and
Said Abdelmessih
distribution logistics as experts say at least 60 percent of the worlds population
must be inoculated to reach herd immunity. Our InDepth p. 14 looks at how Production Supervisor
COVID-19 affects the pharmaceutical landscape. Hany Elias
In the end, though, the big question is how long any new landscape will last. The Market Watch Analyst
next crisis could be just around the corner, World Economic Forum founder Klaus Amr Hussein Elalfy
Schwab said in July.
Chamber News Contacts
That doesnt give governments much time to regroup from COVID-19, let alone
Nada Abdalla, Azza Sherif,
build sustainable societies in preparation for a new crisis. The key is to start thinking Susanne Winkler
about radical change today to prepare for the day after tomorrow.
TAMER HAFEZ
Acting Managing Editor
U.S. address: 2101 L Street, NW Suite 800 • Washington, D.C.
20037
Please forward your comments or suggestions to the Egypt editorial office:
Business Monthly
American Chamber of Commerce in Egypt
33 Soliman Abaza Street, Dokki 12311 • Cairo • Egypt
Tel: (20-2) 3338-1050 • Fax: (20-2) 3338-0850
E-mail: publications@amcham.org.eg
www.amcham.org.eg/bmonthly
@BusinessMonthlyEg @BusinessMonthly @BusinessMonthly
4• Business Monthly - SEPTEMBER 2020
BIG BANG INTEGRAL Titanium case with integrated bracelet. In-house UNICO chronograph movement.
Viewpoint
A greener Egypt is a key step on the
road to sustainable development
A
s the typical term for sustainability, green is a and ecological efforts, I sincerely hope to see, as a start, a
relatively broad and diversified concept change in our green cover, i.e., our trees and green areas. For
comprising almost all economic sectors, example, one tree planted for every Egyptian would mean
including but not limited to energy, water, over 100 million trees across Egypts 27 governorates. Couple
construction, agriculture, manufacturing and the this with investments in green walls and vertical forests on
environment. The concept relates to many jobs, balconies and rooftops, which can be irrigated with water-
professions, organizations, products and services and is efficient technologies, and this would have multiple,
coupled with an eco-friendly direction such as green jobs, accumulated positive impacts including decreasing air
buildings, procurement, etc. The only common element pollution and mitigating climate change. I understand that
among them all is that they can effectively and collectively there are numerous initiatives to plant trees across the
contribute to creating a greener economy, which would nation, including planting one million trees in public
support a resource-efficient, equitable and economically gardens. Egypt has come to recognize that it deserves more
sustainable society. green spaces, and with the emergence of innovative
Egypt Vision 2030 aims to achieve nationwide sustainable technologies, it is becoming increasingly possible to
development to promote a better quality of life for all integrate green spaces as a component of urban planning.
Egyptians and position the country as a global player in The challenge lies not in planting the trees but in securing
mitigating the evolving climate change challenges. One the proper irrigation system, especially as Egypt faces water
critically important factor is to engage the government, challenges in the coming years.
private sector and civil society in accelerating, expanding and Ultimately, the move from just being green to being truly
spreading sustainability literacy, awareness and education sustainable should include a comprehensive, diversified
through a coordinated effort supported by K-12 schools, portfolio of activities such as deploying an energy mix
universities and other institutions across the country. strategy with an emphasis on renewables, promoting a
Sustainability-focused education will help Egyptians paperless environment, consuming less plastic, emphasizing
transform the traditional approaches to resolving day-to-day recycling, using lean manufacturing, minimizing waste and
challenges into greener, more efficient, climate-sensitive installing filters in factories to reduce pollution and decrease
approaches; it will also help grow a culture that understands gas emissions.
the importance of sustainable living as a fundamental There has been an increase in Egypts green activities,
transformation towards a holistic framework for sustainable especially those conducted through philanthropic work and
development. As the nation confronts the COVID-19 driven by corporate social impact and responsibility
pandemic, the resulting challenges have further platforms. Greener materials, systems and technologies are
demonstrated the urgent need for a coherent approach to being introduced to the construction, transportation and
integrating environmental, social and governance factors industrial sectors. The objective is to grow an eco-living
into the decision-making process. culture by adopting more eco-friendly products, sustainable
The government was at some point promoting the idea of technologies and responsible decisions to help protect the
having at least one person in every household work in environment and collectively foster a healthier, greener and
tourism, one of its prime economic sectors, as part of sustainable Egypt for future generations.
broader plans to develop a resilient and sustainable industry
Next month, another viewpoint…
through structural reforms that will further its
competitiveness globally. To boost Egypts environmental SHERIF KAMEL
President, AmCham Egypt
6• Business Monthly - SEPTEMBER 2020
What is it that drives someone to greatness?
To take on the unknown, venture into the
unseen and dare all? This is
the spirit that gave birth to
TUDOR. This is the spirit
embodied by every TUDOR
Watch. Some are born to
follow. Others are born
to dare. 39 millimetre case
in 316L stainless steel
Snowflake hands
A hallmark of TUDOR
divers’ watches
since 1969
Manufacture calibre
MT5402 with 70-hour
“weekend-proof”
power-reserve, silicon
hair-spring and
COSC-certification
Five-year transferable
guarantee with no
registration or periodic
maintenance checks required
BLACK BAY FIFTY-EIGHT
CITYSTARS MALL HELIOPOLIS - T. 24802299, 01282708899
JW MARRIOTT, MIRAGE CITY - T. 24111444, 01271119272
HEAD OFFICE EL NOZHA EL GEDIDA - T.26200000, 1227489936
WWW.FELOPATEERPALACE.COM - FELOPATEER@FELOPATEERPALACE.COMAmerican Impact
Losing faith in the
The COVID-19 pandemic accelerated many
trends that experts thought wouldn’t dominate the
scene for years. Could it speed the replacement of
the dollar as the world’s favorite currency?
By Tamer Hafez
dollar
F
or years, there has been debate over whether the dollar countries, to agree on an international monetary system to
should remain the primary currency used in internation- replace the gold standard. 3That cemented the dollar as the cen-
al commerce. In 1960, economist Robert Triffin wrote tral global currency,4 said Daniel Hui, a global FX strategist at
that America would only have current account deficits if other JPMorgan, to the Wall Street Journal in August.
countries relied on the dollar, which would offset the benefits The dollar0s value became the main factor when pricing
of zero exchange rate risks and heightened political clout. commodities, and several developed and emerging
During the 2008 financial crisis, China argued the dollar economies GCC countries, for example, and Lebanon
couldn0t continue as the global reserve currency because started pegging exchange rates to the greenback. Other
America0s lending and financial practices nearly caused a world- countries, including Egypt, actively manage their currency0s
wide economic meltdown. When Donald Trump took office in value against the dollar. Meanwhile, international business
2017 with his 3America First4 agenda and ensuing trade wars transactions have been mainly using dollars for decades, creat-
See story p.XX, economists again were concerned. 3It is only ing a strong correlation between the currency0s value and global
under President Donald Trump that America has used its pow- market movements. 3When the dollar is up, gold and foreign
ers routinely and to their full extent, by engaging in financial developed and emerging market stocks tend to perform poorly.
warfare,4 wrote The Economist in January. 3The results have And when the dollar is down, gold and foreign developed and
been awe-inspiring and shocking. They have, in turn, prompted emerging market stocks tend to perform admirably,4 wrote
other countries to seek to break free of American financial Carlson. 3The dollar is, of course, not the only variable that
hegemony.4 affects these markets and prices, but it plays a larger role than
The advent of COVID-19 laid bare how currency investors most investors realize.4
perceive the dollar. 3The world0s reserve currency benefited in a According to the Bank for International Settlements, 62 per-
big way from a flight to safety, which drove it to a three-and-a- cent of central banks0 international currency reserves is in dol-
half-year high in March as the coronavirus pandemic spread to lars, while 20 percent is in euros. Meanwhile, 47.4 percent of
the United States,4 reported Patti Domm, CNBC0s markets issued debts treasury and corporate are in the U.S. currency.
editor, in July. 3As the world0s focus has shifted back to funda- As of December, 60 percent of international trade was in dol-
mentals, the dollar has rapidly slumped to a two-year low.4 lars. Additionally, Jefferies Financial Group Inc. estimated that
Economists now question how long the slump will last. sales of 40 percent of non-American companies worldwide are
3Some investors wonder if this is a sign of a long-term trend affected by dollar fluctuations.
reversal ... or if it0s changing for no other reason than currency
moves are cyclical,4 wrote Ben Carlson, the director of the insti- Downward pressures
tutional assets management at Ritholtz Wealth Management, Since the World Health Organization announced the COVID-
in a blog on the Fortune website in August. The answer will pro- 19 pandemic on March 11, the dollar has been on a roller-coaster
foundly affect Egypt and other emerging markets that depend ride. The greenback0s value jumped 8.6 percent between March
on the dollar to import essential goods. 9 and 20. However, when New York Governor Andrew Cuomo
announced a state-wide lockdown for all but essential workers,
Understanding the system the dollar began a downward spiral. 3After gaining initially as a
Toward the end of World War II, America met with its allies, safe haven in the pandemic, the U.S. dollar is getting clobbered
including Russia then the USSR, the U.K. and other European against global currencies,4 wrote Domm.
10• Business Monthly - SEPTEMBER 2020American Impact
Business Monthly - SEPTEMBER 2020 •11American Impact
Another factor hurting demand for the dollar is a volatile stock market. The Dow Jones
Industrial Average declined from 28,992 points on February 21 to 18,591 points by March 23 to
recover to 23,775 a month later. 3The fastest selloff in risk assets in history followed by the
fastest rally showed extraordinary volatility tied to currency markets,4 noted George
Boubouras, head of research at K2 Asset Management in Melbourne, as reported by
Yahoo! Finance in August. 3You do have to be cognizant of currency risks far
more.4
The relative stability in the index that followed on August 28, the Dow
reached 28,653 points wasn0t comforting for stock market investors.
3The disconnect from basic human suffering is shocking,4 said
Robert Jenkins, global head of research at Refinitiv Lipper
Research, to CNBC in June. Howard Silverblatt, a senior index
analyst at S&P Dow Jones Indices, agreed: 3The market is
saying, we know where we are today, but where are we
going tomorrow?0 In this case, tomorrow is 2021.4
Meanwhile, other currencies look more attrac-
tive. 3The Eurozone continues to show mas-
sive economic recovery. The monetary
stimulus has caused a fresh uptick in the
bloc, improving the euro currency
rate significantly,4 noted an analy-
sis by Foreign Exchange Live,
a trading platform, in July.
Despite the Japanese
government0s efforts
to keep its cur-
rency from
strength-
ening,
the
12• Business Monthly - SEPTEMBER 2020American Impact
yen0s value has increased due to rising global demand. 3The growing U.S. deficits caused by the stimulus packages,
escalating U.S.-China trade war and the yen0s rise are negative which will have to be paid for with more and more Treasury
factors for Japan0s economy,4 said Yoshiki Shinke, chief econ- debt,4 wrote Domm in an August blog on CNBC.
omist at Dai-ichi Life Research Institute, in August. 3There0s
a pretty good chance the timing of a pick-up in exports could Investors at crossroads
be delayed.4 The dollar0s fall has investors conflicted over whether to
Meanwhile, the yuan has also attracted currency investors. commit to holding onto the greenback or invest abroad
3In each and every category of fundamentals, China beats using other currencies. 3Headwinds caused by the COVID-
the U.S. and given the vast Chinese outperformance in cop- 19 pandemic have made investors reconsider the traditional
ing with the COVID-19 pandemic it should continue to risk-return dynamic of asset classes,4 wrote Adriaan Pask,
move further ahead,4 wrote Uwe Parpart, chief strategist at chief investment officer at PSG Wealth, in a blog on Money
Ideanomics and chairman of Asia Times Holdings, in August. Web, an investment portal. 3They realized that risks can be
John Authers, a senior editor for markets at Bloomberg, found anywhere in the investment world … even in devel-
believes 3the critical flaw in the dollar ... has been deteriora- oped markets considered a safe bet in the previous cycle.4
tion in the public health situation in the United States, while Pask believes that emerging markets are a better bet. For the
other countries continued to have the COVID-19 virus past 10 years, stock exchanges have been 3underperforming4
under some kind of control,4 he wrote on the company0s due to the 3strength of the U.S. dollar,4 he wrote in his blog.
website in August. 3The resurgence being seen in the virus is 3The impact of the strong U.S. dollar has placed massive strains
posing a speed bump in the reopening and recovery process.4 on emerging market economies and investments.4
According to Johns Hopkins University, the United States
Now that the dollar0s value has been slipping for six
is still witnessing growth in confirmed cases, from 309,699
months, emerging market stock exchanges may reap some
April 4 to 5.8 million August 26. That translates to poor eco-
benefits. Egypt0s EGX 30, for example, fell from 12,347
nomic recovery as businesses can0t go back to work as usual.
points on March 8 to 8,756 on March 18, roughly the period
3We have some kind of global recovery going on and some
when the dollar was gaining strength. From then on, its value
countries are doing better than others. The United States is
increased to 11,462 points as the dollar lost value against
among those doing the worst,4 said Jens Nordvig, CEO of
global currencies. 3Cheap dollar funding encourages risk-tak-
Exante, an investment firm, to CNBC in July.
ing and money flows into perceived higher growth0 locales,4
As a result, fewer investors and countries want to use the
said Thomas Hayes, chairman of Great Hill Capital LLC.
dollar, which causes a decline in its value. 3The move against
That risk is looking like less of a concern as more emerging
the dollar is now broadening, not only more countries, like
economies come out of COVID-19. According to the
emerging market currencies, but also ... asset managers, spec-
International Monetary Fund in its April 2020 note:
ulators and the other big groups ... are joining the bearish-
3Emerging markets should outperform their developed
on-the-dollar party,4 said Marc Chandler, chief market strate-
counterparts and recover much faster.4
gist at Bannockburn Global Forex, to CNBC in July.
3The dollar being weaker is a sign of positive risk senti- Other investors argue the dollar0s decline increases its
ment,4 said Amo Sahota, executive director at currency advi- value and, therefore, they prioritize investing in America.
sory firm Klarity FX, to CNBC in August. 3The market is 3We focus on quantitative factor data and fundamentals ...
moving to places that would give a better return and more currency and fund flows can confirm strength in a particular
comfortable in buying the Australian dollar, euro and even region or country,4 said Philip Kim, a portfolio manager at
the British pound.4 Morgan Stanley Investment Management in Chicago.
Another obstacle facing America0s economic recov- JP Morgan published a report in July saying the declining
ery is the inability of Congress to agree on a second dollar makes U.S. stocks more valuable than those listed on
stimulus package. 3The stalemate ... is trou- foreign exchanges. 3With strong domestic demand and sus-
bling,4 said Sahota. 3Sticking more band-aids tainable earnings growth from certain sectors, we believe the
over it, which is what the administration is U.S. equity market is still favorable now and the currency
trying to do right now, is not enduring.4 effect could be offset by the return from capital,4 said Nixon
Still, another $2 trillion in assis- Mak, a strategist at Invesco Ltd.
tance won0t do the greenback any Authers of Bloomberg stressed the 3issue is how long it
favors. 3The dollar may also takes to bring the COVID-19 virus back under control.4
be paying the price of The longer it takes, the less likely the dollar will recover to
pre-pandemic levels, he warned. n
Business Monthly - SEPTEMBER 2020 •13In depth
COVID-19 RECASTS
the pharmaceutical industry
Three executives discuss challenges and their action plans for the pandemic and beyond.
By Ola Noureldin
W
hile the human cost and economic disruptions of With much at stake, pharma companies are moving
the COVID-19 pandemic have created shock decisively to ensure patient health, manage disruptions
waves around the world, pharmaceutical indus- and develop a vaccine, antiviral or other solution for
try executives have focused on maintaining a steady supply of COVID-19.
vital medicines and innovation. Other sectors have been Business Monthly spoke to EVA Pharma s CEO Riad
more threatened financially, but the business challenges fac- Armanious about the Egyptian company s production of
ing pharma are urgent, such as ensuring that supply chains Remdesivir and Favipiravir, two drugs used to treat
function so patients can get prescriptions filled and remain COVID-19. Christelle Saghbini, chairman and managing
on critical therapies. director of Sanofi Egypt, discussed how her company s
As the coronavirus accelerates worldwide, passing 21 mil- French parent is collaborating on various paths forward,
lion infections on August 17, several countries started to re- and General Manager Mohamed Adel Sweilam of Upjohn
impose lockdown measures over concerns about a second Egypt, a division of Pfizer, talked about how the outbreak
wave of infections. Egyptians are no less worried. Figures and related infection control measures could affect the
from August showed a slight increase to more than 200 new frailest individuals and people with non-communicable dis-
cases daily, bringing the total number of confirmed infections eases NCDs, such as high blood pressure, diabetes and
nationwide to more than 95,000 since the first case was Alzheimer s.
detected in the country in mid-February. Below are excerpts from the three interviews.
14• Business Monthly - SEPTEMBER 2020In depth
How is your company responding to the pandemic? match to proteins present on the viruss surface. GSK will
Riad Armanious: We have worked on three buckets, or groups, provide its pandemic adjuvant technology, used in vaccine
of products. The most important are drugs that target the virus production to stimulate the immune system and raise an early,
itself. We invested millions of dollars in Remdesivir and long-lasting and efficient immune response. An adjuvant
Favipiravir before any data was available or given to us, or any could decrease the amount of vaccine protein required per
guarantee it would work. Those products have been available dose, enabling the manufacture of more doses. Additionally,
for weeks now in Egypt in 30-plus hospitals. We worked on the Sanofi is exploring other options, including work with
drug s development in February, applied in March for registra- Translate Bio, a clinical-stage messenger Ribonucleic acid
tion, started production May 8 and launched six weeks after. RNA biotechnology company.
EVA Pharma, a producer of generic drugs established in 1997, was Sweilam: The past couple of months have been all about collab-
licensed by Gilead Sciences Inc. to manufacture Remdesivir in orations. Global pharmaceutical companies are working around
Egypt and distribute it in 127 countries. It will initially make the clock in four key areas to beat COVID-19. First, they are
500,000 doses a month to be sold for about EGP 2,000 $124 per working in conjunction with other life science companies to
pack, according to media reports. It also started producing 1 million develop new diagnostics to test for the virus. Second, they are
Favipiravir tablets a month. The price is set for EGP 4,500, rapidly screening vast global libraries of medicines to identify
according to Al Watan newspaper. potential treatments and making those medicines available to
patients right now through clinical trials and compassionate
Christelle Saghbini: We prioritize our core purpose, which is use. Third, they also are developing new therapies and treat-
ensuring the supply of our products to Egyptian patients. We ments for those infected with the virus, such as plasma technol-
have lifesaving medicines that are badly needed in the market, ogy and new monoclonal antibodies. Fourth, they are develop-
so the only thing we could afford is ensuring a proper supply of ing a vaccine. Hopefully, there will be multiple vaccines on the
products and services. market before the end of year. The final point is what we have
been working on more closely with government officials and
Mohamed Adel Sweilam: During the lockdown, our priority was policymakers to best utilize innovative practices offered to
keeping our manufacturing site fully operational at the highest patients.
safety standards so patients can find their medications without
any interruption. Moreover, we have been advocating for How is COVID-19 affecting patients living
healthcare reforms and initiatives that could address the chal- with non-communicable diseases?
lenges COVID-19 brings for the healthcare system to support Sweilam: People living with non-communicable diseases are
people living with non-communicable diseases. We also have hurt by disruptions in routine chronic care and difficulties in
been keen on innovating digital channels for engagement with accessing medication and treatment when supplies are disrupt-
healthcare professionals and supporting initiatives that would ed, appointments are postponed and healthcare workers are
support better patient access to medications in a safe and con- diverted to the COVID-19 response. About 120 countries have
trolled way. Finally, we have donated to several NGOs as part of reported at least a partial disruption of services for patients liv-
our commitment to corporate social responsibility. ing with non-communicable diseases. Non-communicable dis-
eases are silent killers and their complications begin to show up
Which countries are ordering Remdesivir over time. In the long run, this disruption of healthcare services
and Favipiravir from EVA Pharma? for patients living with non-communicable diseases is likely to
Armanious: The speed of manufacturing and quality of products impact mortality and morbidity rates, and put additional strain
have helped us forge connections with many countries. on health systems.
Relationships that will serve us well for many years have been
established in important countries like El Salvador, and big ones How is your company working to alleviate
like the Philippines and Nigeria, the most populous nation in pressure on health systems?
Africa. Sweilam: Despite significant medical advancements in the pre-
vention and treatment of chronic conditions, non-communi-
How is the pharma industry working cable diseases continue to be the leading cause of death and
together to combat COVID-19? disability, requiring agile, quality and affordable solutions. In
Saghbini: We signed a letter of intent with GlaxoSmithKline Egypt, those patients represent almost 84 percent of deaths.
GSK for a partnership focused on developing an adjuvant At Upjohn, we believe we can add value to healthcare systems
COVID-19 vaccine. As part of the collaboration, Sanofi will with solutions that contribute to improving patients lives. Our
provide its S-protein COVID-19 antigen based on recombinant response to the crisis has been to prioritize the continued sup-
DNA technology, which is used to generate an exact genetic ply of medications, supporting healthcare authorities and
Business Monthly - SEPTEMBER 2020 •15In depth
communities around the world, and ensuring the safety of our approvals, environmental approvals, security approvals, land
workforce and the communities where we live and work. approvals, building approvals and technical approvals.
That s why it is comforting to have the EDA Egyptian
Are pharmaceutical companies in Egypt reducing Drug Authority for technical approvals. Egypt also needs
their reliance on active pharmaceutical ingredients to invest more in translating ideas into action by solidifying
APIs from India and China? the links between academia and industry.
Armanious: Not yet, but that is the direction we are working
toward. In the 1980s, 20 percent of global APIs came from Saghbini: In Egypt, 80 percent of what we sell locally is pro-
India and China. In the 2000s, 80 percent did. However, it is duced in Cairo. In the current context, making sure we re
not about percentages or amounts of APIs coming into Egypt, getting the ingredients that meet our production capacity
it is about having alternatives. Secondly, it is having an innova- and ensuring a consistent supply to patients is an industry
tion advantage. Chemical synthesis is an important component challenge. I also believe shifting operations of the industry
of the innovative ecosystem, which is why we invest in it. to digital solutions, increasing the role of telemedicine and
Innovation is where you add value and added value is where better patient management at home will be challenges to
economic improvement happens. The challenge is we lack met- address moving forward. This is where partnerships, collab-
rics to measure progress. We also need an innovation mindset orations between startups and established companies, and
and incentives, both of which are elusive, to say the least, in this the private and public sectors will make a difference.
environment. Innovation also needs to be part of long-term
policy. The constitution protects intellectual property rights, What lessons can the pharma industry learn
but we need economic and strategic directions at the highest
from the pandemic?
levels of government.
Armanious: I think pharmaceutical and healthcare profes-
sionals need to be prepared, just as armies are ready for war.
Saghbini: There are a lot of lessons to be taken from this period
You always need to have a standing army against the next
and maybe one of them is reducing the increased reliance on
possible virus, particularly when it poses the danger of
Asian countries in terms of active ingredients. At Sanofi, we
stopping life as we know it.
announced in February that we plan to create a European com-
pany dedicated to the production and marketing of active phar-
Saghbini: Lessons we are learning during this pandemic
maceutical ingredients. This new entity will continue to
must help spark positive and lasting change. First, the pan-
enhance supply capacities and secure API manufacturing for
Europe and beyond. I believe the key is how markets balance demic gave us a glimpse of what a world without vaccines
between local and global components moving forward. Having could look like. That s why prevention is key. Equally
more sources of active ingredients would benefit patients. important is access to quality healthcare for all. Second, the
whole patient pathway will have to be reassessed from
diagnosis to treatment, especially when it comes to chronic
Whats the outlook on a coronavirus vaccine? diseases, and the role of telemedicine and integrated care
Armanious: I think we will see a COVID-19 vaccine in 2021, not solutions will increase significantly. We also will need to
2020. It is still far off, so our focus needs to be on helping invest more in data analytics and artificial intelligence. Last
patients now. but not least, the pandemic taught us new ways of working
when it comes to agility, flexibility and the importance of
Saghbini: It s a bit early to tell. I think managing expectations is collaboration and partnerships.
really important because a vaccine typically takes 10 years to be
developed, proven effective and put in the market. I think if we Sweilam: To focus on telemedicine and prioritize innovative
manage to take less than two years, it would be outstanding. digital solutions to guarantee that patients will get the help
Sanofi has decided to start producing large volumes of vaccines they need even if they cannot physically be at a pharmacy,
before clinical trials conclude to secure a higher number of clinic or hospital. Digital is the future. As the pandemic has
doses. put a spotlight on the importance of healthcare funding
and investment and showcased the impact of health on the
What are some challenges for pharmaceutical economy, healthcare decision makers should approach
companies in the Egyptian market? healthcare budgeting and priorities in a new way. We need
Armanious: The pharmaceutical industry is affiliated with both to build stronger, resilient health systems that can better
the health and manufacturing sectors. To move forward with respond to health emergencies while continuing to provide
new projects and ideas requires approval from at least two min- essential health services to people living with NCDs and
istries. Starting a new manufacturing site requires investment other underlying conditions. n
16• Business Monthly - SEPTEMBER 2020Cover Story
Maintaining free trade with America has been an uphill struggle
since U.S. President Donald Trump took office in 2017 with the
declaration that his country must come first. Now, developed and
emerging nations are adopting similar national stances to ensure
a quick and sustainable recovery in a post-COVID-19 world. For
Egypt, that could be both an opportunity and a threat.
By Tamer Hafez
TRADING
GLOBALIZATIONfor
PROTECTIONISM
18• Business Monthly - SEPTEMBER 2020Cover Story
Business Monthly - SEPTEMBER 2020 • 19Cover Story
U
nprecedented intercon- might change in the years ahead. 1As it
nections due to the explo- destabilizes economies, intensifies
sion of media technologies geopolitical frictions and exposes the
in the 1960s led Canadian risks of current global manufacturing
philosopher Marshall McLuhan to coin and supply networks, the pandemic is
the term 1global village.2 In the 1990s, also likely to redraw the map of world
worldwide access to the internet added trade,2 wrote Ben Aylor, managing direc-
another layer of communication. tor and senior partner at Boston
Microsoft co-founder Bill Gates in Consulting Group BCG", in July.
2013 said: 1The internet is becoming
the town square for the global village
of tomorrow.2
Fend for thyself
The creation of the World Bank 1944",
As the world prepares for the third
IMF 1945", World Trade Organization
decade of the 21st century, that prover-
1995" and G20 1999", aimed to 1estab-
bial village is breaking up into hamlets
lish rules, norms and means of commu-
with each seeking to reduce imports
nicating and coordinating national poli-
from one or more trade partners to bal-
cy decisions, especially during times of
ance its trade deficit. Accelerating this
crisis, to help prevent calamity,2 wrote
trend is the COVID-19 outbreak, which
Chad Brown, a senior researcher at the
gave world leaders and citizens a glimpse
Centre for Economic Policy Research,
of a less connected world.
in a World Bank blog. Those bodies
However, untangling decades- worth
of business relations won-t be easy and preached trade without barriers. 1First,
requires more than just a strong political there-s no limit to prosperity. Second,
will as it will likely hurt economies and broadly shared prosperity benefits
job creation. 1Increasing tariffs is not everyone,2 said World Bank President
good for anyone,2 European Union David Malpass, as reported by Reuters.
Commissioner of Trade Phil Hogan told In the beginning, manufacturing hubs
Carnegie Endowment for International in the United States and Europe sold
Peace in July. 1It adds costs to business goods to the rest of the world. As they
and therefore consumers. Then there is got richer, they became high-consump-
the question of intermediate goods, tion markets. Meanwhile, emerging
which help create jobs in the country lower-income countries led by China
that imports them.2 offered cheaper labor and facilitations to
For emerging countries, international attract those businesses. The result was
trade is necessary for their economies to many emerging manufacturing nations
recover after the COVID-19 pandemic. became net exporters to developed
The U.N. Food and Agriculture countries, which in turn became net
Organization reports that Egypt importers. Some developed countries
imports 40 percent of its food, while fac- now want to lower their trade deficits by
tories import 70 percent of their needs making imports more expensive. latest development was the United
from intermediary goods, according to The United States started its trade States banning some Chinese lenders
Mahmoud Mohieldin, a former invest- war with China in 2018 by imposing cus- from dealing in dollars, as reported in
ment minister, at a press event in April. toms on a chunk of Chinese imports. It the July 19 issue of The Economist.
One repercussion of trade wars is that escalated by adding nearly 300 compa- The Trump administration has also
businesses will likely have to alter their nies on the 1997 1Entity List2 with threatened retaliatory action against
overseas suppliers. That could either be which U.S. firms were prohibited from India, whose exports are exempt from
an opportunity or a risk for emerging doing business. The most notable are customs as per the U.S. Generalized
markets, including Egypt. Chinese telecommunication equipment System of Preferences framework, if it
To avoid entering a trade war, govern- companies Huawei and ZTE. The doesn-t import more American goods.
ments must carefully decide where to go Chinese responded by imposing custom Meanwhile, the EU will ban palm oil
next and anticipate how trade relations charges on American produce. The imports under its Renewable Energy
20• Business Monthly - SEPTEMBER 2020Cover Story
Directive II as of 2021, which will hurt Center Opinion section, Datu Yngson tries with carbon-pricing mechanisms
the world-s largest producer of the com- of the Caribbean ASEAN Council that the EU agrees are compatible with
modity, Indonesia. In June, the latter described those steps as 1thinly veiled its own may be exempt,2 Aylor wrote in a
filed a formal complaint to the WTO to protectionist measures.2 June blog. 1It would create serious near-
reverse the decision. The European Commission, mean- term challenges for companies with a
Another form of EU protectionism is while, is proposing a carbon tax on large greenhouse gas footprint.2
the 1farm-to-fork2 or 1farm-to-table2 imports as part of the European Green That is something for Egyptian deci-
movement, which came to the limelight Deal signed in December to cut pollu- sion-makers and businesses to consider
in 2015. It promotes the use of local pro- tion by 50 percent in a decade. 1The tax as the country ranked 53 on the list of
duce instead of imported commodities would reflect the amount of carbon emis- most polluted countries in the world by
by giving incentives to growers and con- sions attributed to goods imported into the end of 2019, according to World Air
sumers. In a June Op-Ed in the Policy the 27-nation region. Producers in coun- Quality Index project.
Business Monthly - SEPTEMBER 2020 • 21Cover Story
Meanwhile the EU is Egypt-s largest trad- money is part of a broader government
ing partner, accounting for 28.3 percent strategy to promote exports, as reported
of trade value, according to the Central by Akhbar Al Youm.
Bank of Egypt CBE". 1The requirement At the same time, the government
to measure, report and factor in the costs imposed anti-dumping duties on
of a product-s carbon footprint is already machine-made Turkish rugs and floor
in place in the EU,2 wrote Aylor. 1It could coverings starting July 1 until further
soon become a requisite for companies notice. They also apply to any carpets and
that export to Europe as well, contribut- textiles from other countries that pass
ing to the mounting global pressure to through Turkey, which has had a free
prepare strategies that reduce emissions.2 trade agreement with Egypt for 13 years.
China also is protecting its economic Egypt has imposed anti-dumping
prospects post-COVID-19 by develop- duties on Chinese blankets since
ing and catering to the domestic market November 2019. That protectionism
first, wrote Wang Xiangwei, former edi- may include other goods as China may
tor-in-chief of the South China Morning devalue its currency further. 1China will
Post, in a June blog on the newspaper-s certainly further depreciate its currency
portal. The aim is to reduce China-s to increase its competitiveness and offset
reliance on international trade to grow its the effects of higher tariffs,2 wrote
GDP. 1The inward shift does not neces- Mohamed Chemingui, a senior econo-
sarily mean China will retreat from global mist at the Egyptian Research Forum, in
supply chains or into isolation. Still, an April note. 1This additional competi-
China-s decisive turn to the domestic tiveness of Chinese exports will boost
market and industries will have far-reach- exports to the rest of the world in gener-
ing implications not only on the Chinese al, including Arab countries.2
economy but also on the world economy Lastly, the government extended
as a whole.2 blanket anti-dumping duties on iron
billets and finished steel rebars that
started last October.
Trading with Egypt On the flip side, Egyptian steel and alu-
So far, Egypt-s decline in exports has been minum exports may face hard times,
mainly due to declining demand during according to Walid Gamal Eldin, chair-
lockdowns across major markets, includ- man of the Export Council for Building
ing the EU and the United States. In Materials. The United States in March
February, exports were nearly $2.7 billion launched an investigation into steel
compared with about $1.5 billion in May. imports from Egypt and 17 other coun-
However, export orders in July increased. Meanwhile, the EU in June imposed
tries. The International Trade
Khaled Aboul Makarem, the head of anti-dumping fees on fiberglass fabrics
Administration ITA" noted Egypt-s prof-
Egypt-s Export Council for Chemicals, coming from the China-Egypt TEDA
it margin from U.S.-bound steel 31.5 per-
told Masrawy in August that as of mid- cent" was too high. 1Foreign companies Economic & Trade Cooperation Zone
July, export orders were as much as 60 that price their products in the U.S. mar- SETC-Zone". 1The governments of
percent of their pre-pandemic volume. ket below the cost of production or below Egypt and China have pooled their
The heads of the food and agriculture, prices in their home markets are subject resources to provide the companies
textile and garment, and furniture coun- to anti-dumping duties,2 noted the ITA. manufacturing in the SETC-Zone with
cils all report similar rebounds. 1Foreign companies that receive financial favorable conditions that confer bene-
To further support that recovery, the assistance from foreign governments that fits to them,2 the EU commission said
Minister of International Cooperation benefits the production of goods from in a statement reported by Belt & Road
Rania Al-Mashat agreed with the those companies and is limited to specific News, a Chinese news portal, in June.
European Bank for Reconstruction enterprises or industries or is contingent 1This pooling of resources via such
and Development in August on a $100 either upon export performance or upon close cooperation serves a common
million low-interest loan to 1facilitate the use of domestic goods over imported purpose and benefits a common benefi-
trade.2ِ According to Al-Mashat, the goods, are subject to countervailing duties.2 ciary Jushi Egypt and Hengshi Egypt".2
22• Business Monthly - SEPTEMBER 2020Cover Story
That decision comes despite Egypt become an industrial hub for America. move us away from the efficient out-
signing the EU-Egypt Association However, it would lose out if the U.S. come, even if it takes the guise of a free
Agreement, a free-trade deal, in 2004 starts a trade war with the EU, as both trade agreement and expands the volume
that guarantees customs-free access to are major trading partners with Egypt. of trade and investment.2
the European market. According to the CBE, the U.S. accounts This sensitivity toward customs-
The EU dumping case was unexpect- for 5.8 percent of Egypt-s trade. exempt imports increases if the export-
ed, but hardly shocking. 1Implications of ing government gives subsidies, export
a full-blown U.S.-China or U.S.-EU trade Long-term change incentives or other facilitations to reduce
war are not limited to the main parties The notion that free trade agreements production costs and ultimately prices,
involved,2 wrote Chemingui. 1They also make commerce easier may be coming to noted Rodrik.
affect other third-party countries an end. 1A trade agreement captured by Being the third party in a bilateral
through overlapping trade and financial an alternative set of special interests may trade war also could reduce funding
networks, thus disrupting global supply make things worse just as easily as it from developed nations to financial mar-
chains.2 makes them better,2 wrote Dani Rodrik, kets in emerging regions, such as Africa,
He explained that Egypt would benefit a Harvard University economist, in a noted Abdoulaye Diallo, Senegal-s
from the U.S.-China trade war, as it could 2018 paper. 1Such an agreement can finance minister, to Reuters in July.
Business Monthly - SEPTEMBER 2020 • 23Cover Story
Meanwhile, Ukraine-s, Peru-s and descent into anarchy, a new trade
Bahrain-s exports are hurting because of architecture is needed,2 said The
rising steel prices and declining fuel Economist in its July issue.
prices caused by commerce wars else- That structure must acknowledge
where. 1Trade tensions create uncertain- that China has the second-largest GDP
ty, and nobody is insulated from uncer- in the world, along with different politi-
tainty,2 Bahrain-s finance minister, cal, cultural, and governance norms com-
Sheikh Salman bin Khalifa, told Reuters. pared to the West.
Aylor suggested that ongoing trade To create more balanced trade rela-
wars could redraw the global trade map tions, the WTO requires meaningful
as soon as 2023. In terms of value, inter- reforms. 1The WTO is in crisis, even
national trade will not likely recover to though it is perhaps one of the best orga-
2019 levels before then. nizations in the multilateral space to
By that time, trade traffic could look help us with some of the trade difficul-
significantly different. BCG-s Trade ties we are seeing,2 said the EU Trade
Finance Model 2020 forecasts that two- Commission-s Hogan to Carnegie
way trade between China and the U.S. Endowment in July.
would be 15 percent $128 billion" less He noted the WTO-s regulations are
than in 2019. Meanwhile, commerce nearly two decades old and need a signif-
between the U.S. and EU 1will continue icant update to address the need to work
to grow, but at a sharply lower rate from toward the U.N.-s Sustainable
the $135 billion surge between 2015 and Development Goals, protect the climate
2019,2 wrote Aylor. and push for more institutional coopera-
He also forecasts Southeast Asia trade tion, among other issues.
will grow by $22 billion with the EU, $26 Major reforms might include unifying
billion with the United States and $41 e-commerce regulations as part of con-
billion with China by the end of 2023. ventional free trade deals. Another is
Still, that would be a slower pace than limiting state-sponsored facilitations,
during the preceding four years, noted subsidies, and incentives that promote
Aylor. trade. In Egypt, for example, there is the
revitalized Export Support Fund
The other factor shaping trade over
designed to reimburse some production
the next three years will be how individ-
costs of products sold abroad. If the
ual companies rebuild their supply
WTO institutes such changes, the orga-
chains to ensure continuity of opera-
nization could scrutinize Egypt-s fund if
tions in case of another pandemic or
a trade partner files a complaint citing
global crisis. 1The supply chain is chang-
unfair competition.
ing from labor arbitrage, which started
Reaching a consensus on a new global government pursues its interests. That
in the 1990s, to greater reliance on digi-
trade charter will prove difficult with 164 would only complicate existing prob-
tal platforms and knowledge workers,2
participating nations, noted Zoellick. lems. 1Disillusioned with the WTO,
said Bob Zoellick, a former World Bank
The other problem is how to ensure that the Trump administration-s negotiators
president to the Carnegie Endowment
state-owned corporations do not get unilaterally tried to wrestle China into
in July.
subsidies from the government to give liberalizing its economy and cutting
them an unfair advantage in internation- subsidies, using the threat of tariffs and
The WTO al markets. The third issue is the WTO-s embargoes,2 wrote The Economist in
Experts agree a significant factor con- special exemptions for emerging mar-
its July issue. 1That has been a fiasco.2
tributing to the increasing number of kets, which under the current system
trade wars is the WTO-s failure to allows countries to choose if they want
cope with recent developments in emerging market status, said Hogan. Economies at stake
commerce. 1If open societies in the However, without such reforms, In June, the WTO published a press
West and authoritarian China are to trade wars among large and small release stressing that while trade volume
keep their economic links and avoid a nations would likely intensify as each dropped 18.5 percent in the first quarter
24• Business Monthly - SEPTEMBER 2020Cover Story
of 2020, it was not the worst-case sce- rising but neither government took more difficult it could be for global
nario. �These declines are historically action or issued formal threats. economies because of their dependence
large, but could have been much worse,� The other fallout is that tourism on international trade to stimulate GDP.
the WTO said. That scenario would would likely decline for countries enter- �Unless trade wars end around the globe,
have seen a 32 percent decline by year�s ing a trade war. �Foreign arrivals ... have the world is headed for the biggest reces-
end, with the best-case forecast that plummeted since the trade wars started sion in living memory,� wrote Yngson of
trade would decline 13 percent. and are down 15.6 percent this summer
the Caribbean ASEAN Council in June.
Ongoing unilateral decisions of from the year before,� said A´sgeir
Hogan, of the EU Trade Commission,
nations waging trade wars have signifi- Jo´nsson, governor of Iceland�s central
cant side effects. �This feeds a spiraling bank in 2019. �We have become depen- noted in his Carnegie Endowment inter-
sense of lawlessness,� noted a July dent on tourism,� which has grown five- view that countries need to contain
report by Rhodium, a research firm. fold since the end of the 2008 global those trade wars quickly: �No doubt this
For example, direct investment by financial crisis. is a very opportune moment to talk
China in the EU dropped 69 percent The longer such wars go on and the about international trade and changing
since 2016, when trade tensions were deeper the trade divide becomes, the global dynamics.� n
Business Monthly - SEPTEMBER 2020 • 25Cover Story
NEW MODEL FOR
FREE TRADE?
The United States is pursuing a free trade agreement with Kenya that
it says will be a template for future negotiations in Africa.
By Tamer Hafez
26• Business Monthly - SEPTEMBER 2020Cover Story
A
s disputes intensify among countries with According to Caporal, Kenya also wants to retain the ben-
decades-old free trade agreements FTAs", the efits it gets from the African Growth and Opportunity Act
Trump administration announced in July it is in AGOA", which expires in 2025 and exempts African goods
talks with Kenya that could jeopardize the from customs. Since the act took effect in 2000, the United
African Continental Free Trade Agreement AfCFTA" and States has become Kenya-s top export market.
FTAs with non-African nations. Additionally, Kenya doesn-t qualify for the U.S.
1We look forward to negotiating and concluding a com- Generalized System of Preferences because it isn-t on the
prehensive, high-standard agreement with Kenya that can organization-s list of least developed countries. 1As a result,
serve as a model for additional agreements across Africa,2 Kenya faces a greater risk than neighboring ... countries
said U.S. Trade Representative Robert Lighthizer, as report- should AGOA expire without a replacement,2 wrote
ed by his agency in August. Caporal.
Limited presence Risks ahead
Of the 20 FTAs, the United States has, only one is with an A U.S.-Kenya FTA could cause friction in the East African
African nation Morocco. It took effect in January 2006 Community EAC", a six-nation regional intergovernmental
as a 1comprehensive agreement that supports ... economic organization. 1Kenya is bound by the group-s common
and political reforms that are underway in Morocco,2 external tariff. It-s unclear how bilateral talks in this area
according to the U.S. Trade Representative website. The will unfold,2 wrote Caporal. That alignment will eventually
U.S. Census Bureau said that in the first half of 2020, trade include all African nations with the full implementation of
with Morocco reached nearly $1.9 billion. AfCFTA expected this year.
In Egypt, the United States has the Qualifing Industrial Another difficulty facing an FTA with the United States
Zones QIZ" agreement, signed in December 2004. It is is that China already has FTAs with 40 African countries. It
limited to products that meet specific standards, such as also 1brokered2 the AfCFTA agreement, said Chris
imports with at least 10.5 percent of raw materials and semi- Devonshire-Ellis, founder of Dezan Shira & Associates, a
finished components from Israel. legal firm, to CNBC in July 2019.
According to the Ministry of Trade and Industry, more Caporal believes splitting the continent between free
than 1,000 companies have QIZ certification, with 204 of trade agreements with China and the United States could
them exporting to the United States in the past five years. 1discourage intra-regional trade in Africa and lead to a grad-
According to U.S. International Trade Commission, QIZ ual disintegration of these multilateral bodies. Today,
exports topped $1 billion, 97 percent of which were textiles African Union AU countries are increasingly concerned
and clothing. That is nearly 28 percent of Egypt-s total trade that the U.S. attempt to use Kenya as a model- will not
with the U.S. in 2019. reflect the needs of other AU members and could upset
regional integration.2
Why Kenya? That potential conflict prompted Erastus Mwencha, a
Jack Caporal, an associate fellow at the Center for Strategic former deputy chairman of the African Union Commission,
and International Studies, a U.S. think tank, in his March to tell Bilateral.org: 1Under the AU, the African heads of
blog, said Kenya-s 1geostrategic significance2 was the prima- state have discouraged member states from entering into
ry motivation for pursuing an FTA. Kenya is one of the few bilateral free trade negotiations with third parties because
African countries that has no deal with China. they jeopardize the AfCFTA.2 n
Business Monthly - SEPTEMBER 2020 • 27The Changing World
The evolution of cities
F
or anyone living in Cairo, mov- well as tourism-focused metropolises cities so they work for all the people
ing from one neighborhood to such as Hurghada, Aswan and Luxor who live in and around them,2 said
another requires choosing the during their high season. Marcia Young, the host of CNBC s
right time, the right route and some However, the advent of the COVID- World Report, during a June event host-
luck. 19 pandemic has shown that vibrant ed by Munk School of Global Affairs
On the flip side, a walk through the cities are vulnerable. 3Making cities suc- and Public Policy at the University of
capital s older sections is a treat to cessful as cultural and financial centers Toronto.
the senses with their cramped street also makes them a hotbed for spreading Successful redesign of cities in a post-
vendors and food carts, crowded nar- disease,2 noted a story in The Wall COVID-19 world will have significant
row footpaths, 100-year-old estab- Street Journal WSJ in August. economic benefits. 3Otherwise, coun-
lishments lining the street and local As countries lift lockdowns but retain tries would not be in good shape,2
music booming through megaphones. social distancing, many see this as an warned Nathalie Des Rosiers, a law pro-
Alexandria, Damietta and Assiut and opportune moment. 3COVID-19 is giv- fessor at Massey College, during the
other cities are similarly vibrant, as ing us an opportunity to remake our Munk School event.
28• Business Monthly - SEPTEMBER 2020You can also read
