ICT role in trade facilitation

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ICT role in trade facilitation

• Egypt Case
• June 2007

2
Contents

• Introduction
• ICT regulatory environment
• ICT Facts Figures
• Trade Profile
• Government role in trade facilitation
• SMMEs utilization of ICT
• SMMEs utilization of ICT in business
• Weak utilization of e-trade

• Benefits of using e-commerce
• Difficulties of using e-commerce
• E-trade applications in Egypt
• Measuring the effect of internet use on Egyptian
  exports
  
• ICT role in trade facilitation - SWOT analysis
• Conclusions
• Recommendations

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Introduction

• Egyptian ICT sector is currently transforming its
  role to act as the cornerstone in the economic
  development process through modernizing different
  socioeconomic sectors.
• The utilization of ICT in facilitating trade and
  increasing exports is a priority policy for Egypt
  which looks forward to boost its exports as a
  means of increasing growth rates and welfare of
  the economy as a whole

4
ICT regulatory environment

• Egyptian ICT regulatory environment is business
  friendly as it ensures the competitiveness and
  freedom of the sector and its capacity to adapt
  to global challenges and attractive for
  investment opportunities.
• Telecommunications Law.
• WTO Basic Telecom Agreement.
• Intellectual Property Law.
• E-signature Law.
• Cyber crime law.

5
ICT Facts Figures

• Continuously growing sector with annual growth
  rate exceeding 25
  
• An increasing share in the GDP-more than 3
• A leading economic player with 16 of total
  investments in (2005/2006) 113 billion EGP)
  
• Annual revenues exceeding 3 billion US

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Trade Profile

• Volume of exports 18 billion US, mainly Oil and
  Oil products.
  
• Volume of imports 30 billion US, mainly
  equipment and capital goods.
  
• High trade deficit and need for promoting exports
  through non-traditional marketing tools.
  
• Major trade partners EU USA, need to expand
  geographic reach and diversify exports especially
  SMMEs exports.

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Government role in trade facilitation

• a) Customs Reforms
• Modernizing customs services and applying ICT
  applications for the interest of different
  stakeholders.
  
• Installing new system called the "Pre-Arrival
  Release" which meets the importers' needs and
  consequently leads to facilitate international
  trade movement.
• Developing "Account Management Service (AMS)
  for large importers who have no record of
  infractions and who are compliant with customs
  systems and procedures.

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Government role in trade facilitation

• b) Freedom of Transit
• The Customs Authority is planning in the near
  future to introduce an electronic system that
  removes paper handling to the extent possible,
  and provides interconnectivity between customs
  offices in order to facilitate the movement of
  goods in transit through Egyptian ports.

9
SMMEs utilization of ICT

• An analysis was conducted to highlight the SMMEs
  utilization of ICT in conducting business, to get
  a picture about the dependence on private
  companies in various economic sectors on ICT and
  the degree to which we can consider that there is
  a high level of ICT use to the extent that
  facilitates the operations of surveyed
  companies.
• The survey was conducted among 1821 companies
  selected across all Governorates which accounts
  for average capital from 20 k to 5 million LE.

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SMMEs utilization of ICT

• Companies surveyed were classified as follows
• Micro enterprise 0-9 employees
• Small enterprise 10-49 employees
• Medium enterprises 50-249 employees
• Large enterprises 250- -

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SMMEs utilization of ICT
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SMMEs utilization of ICT in business

• 96 of the companies reported having fixed
  telephones, while 33 of companies reported
  having mobiles
  
• 65 of companies reported having a fax at work

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SMMEs utilization of ICT in business

• 63 of companies reported having Computers,
• 100 of small and medium enterprises were having
  PCs,
  
• Only 40 of micro enterprises reported having a
  PC.
  
• uses of PCs were mainly for
• Typing documents 88
• Administrative development 52
• Surfing the internet 41
• Monitoring and following up activities 37
• Training 19

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SMMEs utilization of ICT in business

• 38 of the companies reported using the internet
  directly or indirectly

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Weak utilization of e-trade

• Around 10 of businesses in the survey involved
  in e-commerce 177 enterprises were receiving
  orders from foreign partners while 114
  enterprises were sending orders asking for
  imports.
• Volume of exports via the net is undefined

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Benefits of applying e-commerce
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Difficulties of applying e-commerce
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E-trade applications in Egypt

• There are currently numerous web sites that
  combines the concept of e-commerce where it acts
  as electronic catalogues which can be browsed by
  the customer and the product would be shipped to
  his place and payment take place on different
  bases of which most common is Cash on Delivery
  (COD).

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E-trade applications in Egypt

• Currently there is a problem in estimating the
  accurate volume of e-commerce in Egypt and some
  recent studies have only referred to B2C activity
  to be measured among the society and it was
  nearly 6 of internet users who actually make
  purchases on the internet.
• Recent estimates of exports volume through the
  internet for the year 2006 does not exceed 10
  25 million US according to the sources of the
  international trade point and the private sector
  companies.

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E-trade applications in Egypt

• Egyptian private sector has also a reasonable
  presence on international trade portals or global
  B2B portals mainly
  
• "Alibaba",
• "b2b trade-holding",
• "tbc world", "EC 21"
• and "tradexpro".

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E-trade applications in Egypt

• The average number of Egyptian websites on each
  portal was 1723 sites this was nearly 1.3 of
  total number of websites on business portals.
  
• As for the percent of the Egyptian websites in
  comparison to African websites it was nearly 35
  on "Alibaba" and around 20 of all African
  websites on "b2b trade-holding".

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E-trade applications in Egypt

• The study had identified an attempts to construct
  a competitive global Egyptian B2B portal to
  be"Trade-egypt.com" which is an example of the
  private sector initiatives to promote Egyptian
  exports internationally
• This portal acts as a one stop shop for all the
  needs of the business community (building
  websites, information brokerage, e-marketing
  campaigns,...etc.) assisting them to
  successfully exist within the global marketplace.

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E-trade applications in Egypt

• Another e-trade website is SPEEDSEND which acts
  as a B2B e-procurement solution for enterprises
  helping them saving time and financial resources.
  
• Currently SPEEDSEND has managed to achieve
  phenomenal growth in revenues thus being able to
  attract foreign partners to be equity holders for
  15 of the business.

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E-trade applications in Egypt

• As an example of specialized trading website
  EgyBiz.com is the online marketplace
  specialized in trading Egyptian granite and
  marble by utilizing the highest technology in the
  field of web to finalize the trades and showcases
  of products through out the world.
•  EgyBiz.com provides the Egyptian stone traders
  several services especially in the marketing
  field, to capture international leads that are
  concerned about Egyptian stones.

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Measuring the Effect ofInternet use on Egyptian
Exports

• Recent literature has proved that the internet is
  positively correlated with exports from
  developing countries to developed countries.
  
• An econometric model was applied to assesses the
  extent to which internet use affect Egyptian
  exports taking into account the endogenous
  variable of internet use.
• The results was that there is no correlation
  between the internet users as share of population
  and the exports of Egypt.

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SWOT analysis
ICT role in trade facilitation
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SWOT analysis
ICT role in trade facilitation
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Conclusions

• Egypt has proven to take serious steps towards
  building a modern and sophisticated ICT sector
  through the sound mix of regulatory and
  technological components, Egypt is doing very
  well as for creating a conducive climate for ICT
  companies.
• Egypt has also succeeded in adopting advanced ICT
  technologies and applications and providing the
  services of ICT to a broad range of people and
  other socioeconomic sectors, meanwhile it is
  obvious that the external trade sector is still
  far behind what had been achieved in the ICT
  front,

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Conclusions

• The above opportunity can also be further
  developed by exploiting the current framework for
  electronic commerce developed by MCIT and which
  is considered to be aligned to national
  political, social and legislative environment and
  compatible with the competitive global arena,
  also it should get the benefit of the keen
  efforts that are conducted currently to provide
  relevant up-to-date technology required for doing
  e-commerce transactions

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Recommendations

• Providing technical and financial support for
  Egyptian business portals (B2B,B2C) necessary for
  increasing the effectiveness of the private
  sector companies working in this field through
  appropriate technical consulting and training in
  order to increase its customer base
  internationally and thus increasing exports and
  economic growth.

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Recommendations

• Reassessing the role and structure of
  international trade point and transferring its
  promotional role to a supportive role that
  provides a relevant mix of services upon the
  request of exporters through a national
  orientation towards using internet in trade,
  especially that the private sector is playing an
  active role currently in building websites and
  utilizing ICT in trade without the need for
  traditional service of ITP.

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Recommendations

• Building capacity within Commercial
  Representation Offices in main partner countries
  to promote ICT sector and be aware of the
  importance of ICT sector and its impact on other
  sectors and mainly foreign trade increasing hard
  currency receipts and helping improve Balance of
  Payments.

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Recommendations

• Increasing awareness among exporters about the
  role of ICT in facilitating their business
  through cooperation between MCIT (through its
  specialized programs i.e ITAC program) and
  MFTI (through the IMC), this will make use of IT
  solutions or products to increase productivity
  and enhancing performance of the whole
  international trade sector.

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Recommendations

• Implementing capacity building programs on ICT
  applications in trade supported by MCIT,
  including (website development, web marketing
  techniques, in addition to a scheme for upgrading
  technical capacities of exporters to use ICT and
  helping exporting companies to acquire advanced
  technologies (software/hardware).

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Recommendations

• Establishing a tracking system for payments for
  exports that take place over the internet through
  cooperation between Central Bank of Egypt,
  Ministry of ICT and Ministry of Foreign Trade
  Industry, this will include only transactions
  that entail transfer of money through corporate
  and purchasing cards.

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Recommendations

• Establishing an "Electronic Exporters
  Association" for companies that export using the
  internet in order to create a positive culture
  about electronic trading and facilitate the
  process of collecting information about this
  activity and solving problems that might be
  facing companies conducting e-trade.

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Recommendations

• Launching a national prizes and awards scheme for
  top exporters using the internet, and top ICT
  products exporters through a PPP model including
  MCIT, MFTI, exporters' associations, business men
  associations, in order to encourage members to
  use internet and other ICT applications in trade

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Recommendations

• Maintaining current quality and cost effective
  ICT infrastructure and working with international
  partners to continuously develop infrastructure
  and realize enhanced and low cost services.

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Recommendations

• Designing a national marketing strategy for
  Egyptian exports that emphasizes the use of
  internet as a tool for marketing, this might
  include as well designing a unified message to be
  published on all Egyptian websites as a brand for
  Egypt.

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Recommendations

• Launching Online Disputes Settlement Mechanism to
  encourage the Egyptian companies to do electronic
  business inside and outside the country. The
  importance of such project, not only reducing
  time and costs incurred but also it provides
  companies with prevention rules and trust mark to
  decrease their exposure to disputes and prevent
  their businesses from any kind of hacking.

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• Thank you