Foreign Businesses Close While Egypt Is In Turmoil

With Egypt in chaos, large parts of the Arab nation's economy have ground to a halt. A lot of people are unable to get to work, and the distribution systems for food and other products have shut down. A lot of foreign companies that make and sell goods in Egypt have decided to close for a while.

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Egyptian protestors hope their demonstrations will bring a better future, but in the short term the protests mean lost business. Much of Egypt's economy has stopped. When authorities shut down the train system people can't get to work. Distribution systems for food have shut down. And foreign companies are suspending operations. NPR's Jim Zarroli reports.

JIM ZARROLI: With its worldwide reputation for corruption and inefficiency, Egypt has often had trouble luring overseas investors. But Ragui Assaad´┐Żof the Humphrey School of Public Affairs at the University of Minnesota says over the past few years Egypt has been trying with modest success to change its image.

Professor RAGUI ASSAAD´┐Ż(Planning and Public Affairs, University of Minnesota): Foreign investment has been growing, partly because they feel that Egypt has created a business-friendly environment.

ZARROLI: Assaad says the Mubarak government has set up one-stop shops where foreign investors can get their bureaucratic problems resolved. It established industrial zones to encourage manufacturing. Assaad says these efforts have done little to ease the dramatic income inequality in Egypt, but they have attracted some blue chip companies, like Microsoft, Siemens and BMW.

Now many of these companies have shut down operations temporarily. Laurie MacDonald is a spokesman for Nestle, which operates three factories employing 3,000 people in Egypt. She says safety is a huge concern for the company.

Ms. LAURIE MACDONALD (Vice President of Corporate Communications, Nestle): So we're currently evacuating the families of approximately 20 expatriates. And in addition to that, we have temporarily interrupted our operations in Egypt. Again, it's in light of the political unrest.

ZARROLI: Other companies like Coca-Cola, Daimler and Nissan have shuttered factories and closed down their offices. Some have cited security fears. But there are numerous other impediments to doing business. Houda Youssef is an economist at the Arab Forum for Alternatives, a Cairo think tank. She says the government has made it difficult for people to work normal hours.

Ms. HOUDA YOUSSEF (Economist, Arab Forum for Alternatives): First of all you have this curfew, which decreases the number of hours during which business can function.

ZARROLI: Gasoline costs have risen. At the same time, she says, distribution networks have been crippled. Rail and port systems are shut down or operating at half strength.

Ms. YOUSSEF: It's getting harder to find a way to distribute goods and especially you can see it in the food market.

ZARROLI: The shelves in many supermarkets have been swept clean by hoarding. And stores have had trouble restocking their shelves, though many smaller food markets continue to operate.

A big problem for many businesses has been the government's shut down of Internet services, says Ragui Assaad.

Prof. ASSAAD: A lot of external commerce in Egypt, as well as internal commerce, but in particular people who import and export stuff rely completely on the Internet for their transactions.

ZARROLI: Meanwhile, tourism, a vital industry in Egypt, has shut down. Tour group operators and cruise ships have canceled trips to the country. Assaad says tourism has suffered shocks to its system in the past and has managed to recover. And he says the economy as a whole can rebound.

Prof. ASSAAD: Clearly business is disrupted and people are not getting to work, etcetera. But, you know, this is only days into this.

ZARROLI: But each day that the unrest continues Egypt's economy will grow a little bit weaker and the poverty and inequality that have helped provoke the current crisis will be a little harder to eradicate.

Jim Zarroli, NPR News.

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