Egypt Opts for Sticky Investment

"Egyptians are into chewing. They do chew and they have been doing it since time immemorial," says Warner-Lambert's manager of international communications Aracelia Garcia in explaining the firm's decision to expand into the Egyptian chewing gum market.

By producing gum that will equal imported varieties in quality but will sell for less, Warner-Lambert hopes to wean a steadily-growing number of Egyptians away from lower-quality domestically-produced chewing gum and from "mistika" - grains of sap from a medicinal desert shrub which are chewed in rural areas to ward off hunger and fatigue. '

Warner-Lambert owns 57 percent of a new company, Incogum, which is scheduled to begin producing chewing gum late this year at a plant now under construction in Alexandria. The minority share in the joint venture is held by Egypt's stateowned confectionery company, Bisco-Misr, which is presently the nation's leading chewing gum producer. Egyptian officials state that a prime goal of the joint venture, from their standpoint, is to modernize the nation's industry by adopting foreign technology.

But use of this new technology will be restricted to Incogum operations; Bisco Misr's existing plants will not benefit from it.

Sugar, glucose, wrapping paper, and other ingredients will be bought locally-but only insofar as these Egyptian products meet quality standards set forth by Warner-Lambert. No import restrictions have been set for Incogum, and the new plant's location near Alexandria's industrial free zone makes importing ingredients very easy.

The more ingredients are imported, the less the plant will stimulate Egypt's economy.

The Egyptian government has pursued an "open door" economic policy for the past six years, but it does not always funnel foreign investment into the most appropriate areas.

"Much foreign investment is going into consumer goods sectors which are of dubious value to the overall national economy," says Fouad Ajami, Director of, the Middle East program at Johns Hopkins University School of Advanced International Studies. "Some of the projects don't seem to be very serious."