1. Presented by: Walid Gad Chairman of the Egyptian Hi Tech Association (EHITA)

2. EHITA An NGO representing 80 medium and large companies in the areas of IT H.T. our members are major companies in the S/W development, system integration, telecommunication and electronics area.

3. EHITA’s Mission To participate in setting the ICT strategy for Egypt.

4. Subject today is: The review of the IT services in Egypt and the possible effects of the liberalization of this sector and benefits to the IT sector if our request for liberating other markets were achieved.

5. IT Spending in Egypt

6. Relative weights of Computer Services Sub sectors

7. Share of Computer Services Users

8. Relative Importance of Factors Affecting Demand in Various Sectors (%) Factor Financial, Brokerage &Consulting Trading Other Services Industrial Quality/ Reputation 35254030 Price25352535 After Sales Service 25202520 Terms of Payment 1216810 Others3425 Total100

9. Foreign Companies in Egypt Always been in Egypt. Formal presence since the twenties before that cross border. Enjoys all the benefits of the Egyptian Companies. Only restriction is on owing land, importation and some limitation on employing foreigners. But this this not unique to the IT sector.

10. Foreign Companies in Egypt Have represented a major pull of the IT society in Egypt, by bringing in leading edge technologies, training and developing staff. Most of the large Egyptian Companies are managed by Egyptians that worked trained and developed in foreign companies. Associations allow foreign companies to join as much as they do for Egyptian Companies.

11. Percentage of Value of Services, 2002

12. Investment in Computer Services

13. The following summarizes the economic impact of computer services: DirectIndirectTotal Value added (Value Added Coefficient) 0.8 0.65 1.45 Employment (Number of employees) 1.0 6.00 7.00 Exports ($ million) 50 200 250

14. Strengths, Weaknesses, Opportunities, and Threats Analysis Strengths Lack of barriers to trade in IT Growing demand resulting from large-scale projects in the financial, telecommunications, energy, and manufacturing sectors as well as an increasing level of automation in the government. A young, educated labor force and a low cost of labor.

15. Strengths Egypt’s strategic location as the gateway to the Arab and African markets Time zone difference between Egypt and North America enable a second work shift for North American companies. A majority of computer services providers know both English and Arabic. Access to a high-speed communications network. Investment incentives and tax exemptions. ·

16. Weaknesses Lack of business development services in the computer services industry. Shortage of IT graduates with managerial and entrepreneurial skills who can fill the market needs. Focus by the private sector and public procurement sectors on price in general rather than quality of service. Lack of financial schemes to support start-up computer services companies (particularly for small and medium enterprises).

17. Weaknesses Lack of individual consumer base for computers and computer services. High price sensitivity for SMEs in computer services purchases. General bureaucracy and difficulties in licensing companies (for all types of businesses). Lack of targeted export promotion program.

18. Opportunities Development of a clear and flexible strategic vision for Egyptian computer services through a joint public– private sector endeavor that will be reviewed on an ongoing basis. Creation of the Pyramids Smart Village to centralize Egypt’s qualified labor and infrastructure to compete globally in the free market. Implementing training programs to increase the number of qualified computer services providers.

19. Opportunities The currency devaluation— a short term opportunity— could help companies promote exports while protecting providers of local services sector (if companies act immediately). Creation of a national legislative environment to encourage foreign direct investment in the sector. Attracting international producers interested in subcontracting programming of tailored applications.

20. Opportunities · Providing online content for the Middle East and North Africa. · Growing demand for application development, hardware and software installation, system/network implementation, and network integration from Egyptian companies needing to improve their operation systems. · Going beyond the Arab markets to build a strong presence in the European and American markets for more and faster transformation of technology.

21. Opportunities Establishing an export development organization responsible for promoting computer services exports and assisting developers and producers in marketing services globally. Making funds, aids, and financing facilities available to the local industry. Establishing R&D base depending on the academic and research institutions.

22. Threats Widening supply gap in well-trained human resources due to the ongoing brain drain. Fear of foreign competition leading to reactionary protectionism while the computer services sector (and all IT sectors) thrives on the global exchange of ideas.

23. The WTO GATS Negotiations Modes of supply Market Access National Treatment Cross border supply. Consumption abroad. Commercial presence Presence of national persons.

24. Recommendations Considering: The strengths and weaknesses of Egypt ’ s computer services market. (2) The critical role of free trade, including Egypt ’ s membership in the WTO Information Technology Agreement, in ensuring access to global technology resources in the development of a vibrant global IT industry.

25. Recommendations 3) The number of countries that have taken commitments and benefited (or not been harmed) by the commitments. (4) Egypt ’ s strong and vibrant IT computer services sector. It is recommended that Egypt undertake full and binding obligations to trade in computer services.