CAIRO Egypt plans to build hi-tech "villages" to try to become a regional technology hub and extend its long-standing preeminence in the Arabic media to the Internet.
"Egypt is traditionally the intellectual capital of the Middle East and Arab-speaking countries and is where a lot of the content in media is produced," Communications Minister Ahmed Nazif told Reuters.
"This is the future.
Pumping content onto the World Wide Web. Egypt is a leader in media, television, cinema and the Internet, as well as a gateway to Africa," he added.
Nazif has announced that the first purpose-built information technology (IT) business park, or "smart village", would be built in Giza, in the outskirts of the capital Cairo.
A second is planned in Mansoura, 125km (78 miles) north of Cairo, and a third in the Mediterranean port of Alexandria.
A "smart village" in the southern city of Assiut has been mooted and Nazif hopes to repeat the model across the country.
President Hosni Mubarak has allocated government land for the Giza project and given smart villages a 10-year tax break.
Facilities will include business-oriented hotels, a convention center, restaurants and financial services.
The private sector has pledged 100 million pounds ($26 million) for the Giza development, which it will run.
A visit by Mubarak to the United States this year helped seal alliances with it firms such as Microsoft, IBM and Cisco in upgrading Egypt's it education.
The agreements aim to train 5,000 professionals a year to develop it in Egypt and compete in international markets. "The value added by each professional is about $100,000, which means half a billion dollars added to GDP every year," Nazif estimated.
He said Egypt had seen heavy investments in it the past 12 months, attracted partly by a big local market in a population of 65 million. The U.S. electronic chip-making giant Intel Corp. won government approval last month for a $500 million project to build a microchip plant that would create 3,000 jobs.
Fast Growth From Thin Base Egypt's IT industry is relatively small but growing fast, like that of other Arab countries.
The London-based Asharq al-Awsat newspaper has estimated the number of Internet subscribers in the Arab world at 500,000 and users at two million, including 400,000 in Egypt.
Khaldoon Tabaza, cofounder of Arabia On-line, the Arab world's first portal, reckoned the region already has three million Internet users and up to six million personal computers.
It would have at least 13 million Internet users by 2004.
Yet the Middle East is still lagging far behind Europe.
World Bank figures show that Poland alone has as many Internet hosts as the Middle East and North Africa combined.
The United Arab Emirates is the regional leader, followed by Lebanon and Kuwait. Egypt, the most populous Arab nation, has only six percent of the region's Internet hosts, the bank said.
A report by the Economist Intelligence Unit in September said there are only one million computers in Egypt, 62 Internet service providers and 400,000 Internet users, representing 0.6 percent of the population, compared to two percent in Turkey.
Hassan el-Moussallamy, marketing manager of Microsoft Egypt, told Reuters about 130,000 PCs were sold in Egypt in 1999. An estimate of 20 to 25 percent sales growth in 2000 has been cut to 16 percent amid an economic slowdown.
Year-on-year growth in Egypt's it market as a whole, including services such as consultancy, maintenance, application development and customization, is about 40 percent, he said.
Egypt imports roughly as many personal computers as Saudi Arabia or the United Arab Emirates, but not nearly as many as Turkey, Moussallamy said. Mostly cheap, non-branded and locally assembled PCs are sold in Egypt, where incomes are low.
The Middle East and North Africa has less than one percent of global Internet users, while the United States alone accounts for more than 50 percent.
Cutting Local Costs Egypt slashed the cost of local leased lines for Internet service providers by up to 60 percent on October 1.
Taher Gargour, equity analyst at HSBC, said Egypt offered a positive investment climate, cheap labor and tax incentives.
"But what Egypt critically needs, which is true for technology and any skilled labor, is a real improvement in the education system," he said. "At the moment, Egypt has potential. You do not have to be India -- only 10 percent of India would have a profound impact on Egypt's economy." India is proving to be software development leader, with software exports running at $4 billion a year and growing fast. So far only a handful of Egyptian firms are exporting software.
Ali Faramawy, general manager of Microsoft Egypt, said Egypt should not just mimic India's approach.
"We need to showcase some really innovative it solutions internally in Egypt and become renowned for this," he said.
Egypt should move into "E-government and Web-enabled government services" faster than India had, he said.
That would not only help cut red tape, but turn the it experts involved in creating the systems into "hot property".
It could vastly improve the efficiency of services and organizations in Egypt and speed the transition from a public sector-led economy to more open and competitive one, he argued.
Faramawy said Egypt's main strengths would be Arabic content, software development and it services such as training, infrastructure development and customization.
Egypt faces competition in the Middle East, especially from the United Arab Emirates, with its Dubai Internet City, Jordan and Israel in the race to get ahead in the "new economy".
"There is a lot of regional competition, but Egypt just needs to take a piece of the pie," Gargour said.
(Reuter)