s.w.o.t analysis

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S.W.O.T analysis is about mapping strengths, weaknesess, opportunities, and threats then provide the right strategies to cover them.
In this article I want to show you how that analysis is used. The topic is about investment between Indonesia and Egypt. I also provide some data to describe how the condition of investment between that countries was. Lets see..

Investment between Indonesia and Egypt

           General Authority for Investment (GAFI) showed that in the term of investment, Indonesia dominated the scene by making high value investment in Egypt, such as the investment made by Indorama in textile sector with its investment mounted to USD 30.72 million in 2007, Kedaung Industrial Group which invested USD 100 million in 2008 with its glassware manufacturing industry under the title “Pyramid Gass” which is located in the industrial area of Borg e-Arab, Alexandria, and the investment in food product with the establishment of Indomie factory in Badr City in 2009.

Table 1. Value of Invesment RI-Egypt 2006-2010* (US $.000)

Investment/year          : 2006          2007         2008          2009         2010
Egypt for Indonesia    : 450            450           450            450           450
Indonesia for Egypt    : 103.310     140.030    240.030     270.030 270.030

*is processed by embassy of Indonesia to Cairo

              Total investment Egypt to Indonesia during 2006-2010 was only US $450.000. It was not as high as investment Indonesia to Egypt because only 3 company in Egypt which were developed in wholesale and travel agent. On the other hand companies from Indonesia had characteristics pervade labor.

SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

A. Strengths

1.   A huge number of inhabitant in Egypt which almost 78 million people is one of indicator that show how           potentially Egyptian domestic market. It is also guarantee about providing labors which relatively cheap and   competitive.

2. Egypt has good circumstance in social politic to support term of investment and Egyptian economic. In 2007, Egyptian economic growth was 7.1 % and 7.5 % in 2008. Egyptian government have been reformed economyc system that head for economic market and have been increased the openness of trading, taxtation, financing and banking. This reformation success increased Eyptian Foreign Direct Investment more than US$ 6.1 quintillion in 2006 and market capitalization registered companies in market stock until 80.3 % of GDP in the same years.

3. Egyptian Government also gave a large concern about providing  infrastructure properly, such as energy resources (electricity, gas, oil), transportation, information and technology.

4. Egypt could be the gate of countries in Middle East, Africa and another region because it involved many kind of bilateral and regional trade agreement such as Egypt-EU Partnership, COMESA(countries of East and South Africa), AGHADIR (countries of Arabian in Mediterania), Arab Common Market (GAFTA), FTA with Turkey, Qualifying Industrial Zone (QIZ) etc. Through investor of Indonesia in Egypt, Indonesia can use that Egyptian partnerships. For example by scheme of QIZ which possible to export to US without duty if the products (mainly textile and clothes) have component from Israel up to 10.5% and 35% value of that product must be produced in Egypt.

B. Weaknesses

            Term of administration in both countries are still complicated. Investor must wait and see before they decide to invest in Egypt or in Indonesia

C. Opportunities

1. In the field of telecommunication, Indonesia has big opportunity to develop nircable technology (GSM, 3G, VoIP, Wi-Fi, Wi-Max, or CDMA), especially since Egyptian Government has been opening kinds of new GSM 3G provider license. Demand is also increase not only for telecommunication services, but also supporting components such as HP keypad, fyber opticts etc.

2. In the field of oil and gas, there is opportunity for services and products of equiptment of oil and gas which they are predicted more than US$ 1.5 billion, while amount of operating foreign companies have been  increasing. During 2001-2007 more than 150 discovery of oil and gases in Egypt interested important companies to invest in there. Increasing of consumtion oil in domestic is also can be important investment opportunity. The other, oppurtinies appear in term of petrochemical, related with production of gas in Egypt which is increase and “ambition” Egyptian Government to export product of petrochemical and supplied to Egyptian domestic market.

3. In the field development of Technology and Information (IT) in Egypt which is growth increase in every year more than 10%, as one of agreement IT in WTO, Egypt has been erasing duty of IT products. Egypt also has project Smart Village that has been designed become Sillicon Valley Egypt which used by important companies like Microsoft and IBM. All of them give opportunities for market and production kind of IT products, both hardware and software, also e-business.

4. Industry of package in Egypt which has been dominated by European import up to 90%, majority of them is used to package machine, also gives opportunity. Supported with export in Egypt which is always increase, demand both machines and material to package industry will be increase too, mainly for industrial food sector, medical products, textile, leather and chemical products.

5. Indonesian investor also can try opportunity in the field of otomotif, such as “changing” old and not properly vehicles in Egypt. The government in Egypt has been released a law to decrease the duty of otomotif spareparts and accessories up to 10%. The opportunity in this field are market of vehicles, spareparts, and treatment services. In fact some of car that are produced in Indonesia like Avanza and MPV has been developing in Egyptian market.

6. In the field of tourism also give another opportunities. Rate of tourism in Egypt that increased up to 10 million tourists in 2007, made demand of provide tools and hotel and restaurant services become higher enough. This is related with existence of incentive from the government which is support development kinds of resort in new regions such as North Coast, Sinai and near Red Sea.

7. In the field of supplying household products, Egyptian domestic market with stable enough in economic growth increased demand of market growth household product up to 4.2% each year. Later this condition has been appearing opportunity to reach market of special image household products like traditional women body treatment, household equipment with hue of etnic, since amount of reachman in Egypt has been increasing.

8. Opportunity for “sending skilled labour” to Egypt is also in openness.

D. Threats

1. Long distance between Indonesia and Egypt

2. A number of market in Egypt which are not recognized by investor from Indonesia yet.

3. Egypt has preference area where they will invest their capital

STRATEGY  

A. Strength-Opportunity

1. Increase skill of labour that are sended to Egypt, such add and improve organization that developed in distribution foreign labour, about their qualities.

2. Improve the infrastructures to support term of investment, such repair and improve road, railway, electricity, etc.

3. Indonesia may build some competitive and qualified telecomunication companies in Egypt

4. In the field of otomotif, Indonesia can invest more another their product of car to be sold in Egypt

5. In sector of tourism, Indonesia can developed investment   in field of hotel & restaurant, travel agent, etc.

B. Strength-Threats

1. Add and improve transportation facility to solve problem distance between Indonesia and Egypt. For example adding some ships, container etc.

2. Make joint study to discover investment agreement or economic partnership agreement. For example JSG in the field of economic and trade that have been made in 2007 between Indonesia and Egypt that it told about basic establishment, trading or investment barrier between both countries, scope of work JSG & so on.

C. Weaknesses-Opportunity

1. Manage and control situation of domestic social-politic  be more stable to support the term of investment.

2. Have met accompany economic agents then sharing information so can be used directly by investors.

D. Weaknesses-Threats

1. Government in both country make reformation in investment administration, such set a law (i.e Indonesia has roled UU No. 25 th 2007 about investment) to determine base rule of investment with gives same treatment both to domestic and foreign investor, gives guarantee about assurance in law, assurance in business and safety in business for investor, guarantee that government will not be nasinonalism, right to transfering and repatriation in foreign currency of capital and benefit, also apply problem solving through arbitration.

2. Increase GAFI’s otority in investment mainly controlling and facilitating, also gives help for investor how to invest their capital in Egypt. Conference with GAFI  discussed about some effort of Egypt to get their rate of investment rise. GAFI has major role in increasing of investment by doing research and market intelligence, promotion and facilitate, also investor services. Investor services has been done by build “one-stop shop” which makes easy in procedure administration, build 9 free zone with kind of facilitate such as free from  tag and export duty, and completing infrastructure to support the business.

note :
*nasionalism : process where government take offer the ownership of private or foreign companies. In this case, government has role as decision maker. Further, the employee will become a civilian employee.

*repatriation : like cash back, easy to say : sending back (in investment)

*foreign currency : valuta asing

*arbitration : a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable

*market intelligence : occasionally called business intelligence, is a branch of market research, involving collation and analysis of available and relevant information and data on specific markets. Market intelligence typically involves collation of data from various sources such as company accounts, official statistics, data from trade bodies, interviews with business contacts, and research on consumer attitudes. Whereas market research is often considered a consumer-orientated discipline, market intelligence tends to offer a broader view of markets including business and sector data - such as market-sizing, -segmentation, and -share data.