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Country Commercial Guides FY 2000: Eritrea Report prepared by U.S. Embassy Asmara, released July 2000 Note*

CHAPTER V: LEADING SECTORS FOR US EXPORTS AND INVESTMENT

BEST PROSPECTS FOR NON-AGRICULTURAL GOODS AND SERVICES:

SECTOR RANK: 1 SECTOR NAME: CONSTRUCTION ITA INDUSTRY CODE: ACE CONSTRUCTION PROJECTS OFFER NEAR TERM INVESTMENT OPPORTUNITIES. SEVERAL FIRMS HAVE ALREADY OPENED OFFICES IN ASMARA TO TAKE ADVANTAGE OF THE INCREASING DEMAND FOR HOUSING, OFFICE SPACE, AND CIVIL ENGINEERING PROJECTS. ERITREA PROVIDES AMPLE SEMI-SKILLED LABOR (MASONS, CARPENTERS, SOME JOURNEYMAN ELECTRICIANS, PLUMBERS, AND SURVEYORS) AND BASIC BUILDING MATERIALS (SAND, GRAVEL, AND MARBLE). HOWEVER, THE SHORTAGE OF ARCHITECTS AND ENGINEERS OF ALL DISCIPLINES OFFERS A WIDE RANGE OF OPPORTUNITIES FOR EXPERIENCED ARCHITECTURAL AND CONSTRUCTION FIRMS; THE AMERICAN ENGINEERING FIRM NRCE OPENED A BRANCH OFFICE IN ASMARA IN 1993. CONSTRUCTION PROJECTS UNDERWAY OR UNDER ACTIVE CONSIDERATION INCLUDE EXTENSIVE REPAIRS TO THE COUNTRY'S ROADS, BRIDGES, AIRPORTS, AND RAILWAYS, REHABILITATION AND EXPANSION OF PORT FACILITIES, EXPANSION AND IMPROVEMENT OF WATER AND SEWAGE NETWORKS, AND CONSTRUCTION OF HOUSING UNITS, OFFICE BUILDINGS AND COMMERCIAL/INDUSTRIAL UNITS. ONE JOINT ERITREAN/AMERICAN COMPANY, ERITREAN BUILDING MATERIALS MANUFACTURING, HAS ESTABLISHED ITSELF IN THE CONSTRUCTION OF BUILDING MATERIALS. THE COMPANY IS ALREADY ENGAGED IN MULTIPLE CONSTRUCTION PROJECTS, MAINLY RESIDENTIAL AND INDUSTRIAL UNITS.

SECTOR RANK: 2 SECTOR NAME: ENERGY ITA INDUSTRY CODE: OGS/ELP IN 1995 A U.S. FIRM, ANADARKO OIL, CONCLUDED A DEAL FOR OFF-SHORE OIL AND NATURAL GAS EXPLORATION RIGHTS. THE COMPANY SIGNED A SECOND AGREEMENT IN SEPTEMBER 1997 EXPANDING ITS EXPLORATION AREA TO A TOTAL OF 9 MILLION ACRES. PRESENTLY, THERE IS ONE U.S. FIRM ESTABLISHED IN THE GASOLINE AND DIESEL RETAIL DISTRIBUTION MARKET, MOBIL OIL. THE GOVERNMENT IS INTERESTED IN EXPLORING THE DEVELOPMENT OF ALTERNATIVE ENERGY SOURCES, INCLUDING THERMAL, WIND, AND SOLAR THAT WOULD EXPLOIT ERITREA'S GEOGRAPHY AND TOPOGRAPHY. RECENT STUDIES CONDUCTED BY THE U.S. GEOLOGICAL SURVEY INDICATE THE POTENTIAL FOR DEVELOPING THERMAL ENERGY.

SECTOR RANK: 3 SECTOR NAME: COMMERCIAL FISHING ITA INDUSTRY CODE: MFI/CFE ERITREA'S LONG COASTLINE OFFERS A POTENTIAL OPPORTUNITY FOR AN EXPANDING FISHERY INDUSTRY. FOR NOW, ARTISANAL FISHING PREDOMINATES, BUT THERE IS AN ESTIMATED 70,000-TON POTENTIAL SUSTAINABLE ANNUAL YIELD. AS THE INDUSTRY EXPANDS, OPPORTUNITIES WILL INCREASE FOR PROVISION OF BOATS AND MARITIME EQUIPMENT, AND MANAGEMENT AND INTERNATIONAL SALES EXPERTISE.

IN 1998 A JOINT VENTURE BY THE GSE AND ITALIAN AND DUTCH INVESTORS RESULTED IN THE ESTABLISHMENT OF A FISH PROCESSING PLANT IN MASSAWA AT A COST OF U.S. $1.2 MILLION. THE FROZEN FISH PROCESSING PLANT, ERI-FISH, PLC IS NOW EXPORTING 150 TONS OF FROZEN FISH EVERY MONTH TO MARKETS IN HOLLAND. THE MINISTRY IS ALSO CARRYING OUT A PILOT PROJECT TO DEVELOP SHRIMP FARMS IN MASSAWA. THE PROJECT IS CARRIED OUT IN CONJUNCTION WITH AN AMERICAN INVESTOR FROM ARIZONA.

IN JUNE 1999, THE GOVERNMENTS OF ERITREA AND EGYPT SIGNED A SIX-MONTH RENEWABLE AGREEMENT ALLOWING EGYPTIAN PRIVATE FISHING COMPANIES TO FISH IN ERITREAN TERRITORIAL WATERS. THIS AGREEMENT IS EXPECTED TO RESOLVE A LONG-STANDING PROBLEM OF ILLEGAL FISHING ACTIVITIES BY EGYPTIAN FISHERMEN IN ERITREAN TERRITORIAL WATERS.

DATA TABLE: COMMERCIAL FISHERIES

(MILLIONS OF U.S.$)

			1995	1996	1997	1998
TOTAL MARKET SIZE								
TOTAL LOCAL PROD	3.4	2.5	2.8	 NA
TOTAL EXPORTS  		3.0	2.0	2.2	 NA
TOTAL IMPORTS	0	  0	  0	  0
INVESTMENT		 12	1.5	  3	 NA

(THE ABOVE STATISTICS ARE UNOFFICIAL ESTIMATES.)

SECTOR RANK: 4 SECTOR NAME: MINING AND MINERAL RESOURCES ITA INDUSTRY CODE: MIN/OGS ERITREA HAS SUBSTANTIAL MINERAL RESOURCES THAT REMAIN LARGELY UNEXPLORED DUE TO THE WAR. THE JAPANESE MINED HIGH-GRADE COPPER ORES FOR A SHORT TIME IN THE 1970S. AT LEAST SOME ALLUVIAL GOLD DEPOSITS EXIST IN GASH-BARKA REGION, WHERE VILLAGERS COLLECT 24-CARAT NUGGETS DURING THE RAINY SEASON TO SELL TO JEWELERS IN ASMARA. ACCORDING TO FIGURES ISSUED BY THE MINES DEPARTMENT, GOLD COLLECTED THROUGH ARTISANAL MINING ACTIVITIES FROM 1996 TO MID-1998 AMOUNTED TO OVER 1300 KGS. IN 1998 ALONE 573.396 KILOGRAMS WERE COLLECTED BY ARTISANAL PRODUCERS. THE POTENTIAL FOR MINING IS GOOD, PARTICULARLY IN INDUSTRIAL MINERALS AND ORNAMENTAL MARBLE AND GRANITE. ERITREAN OFFICIALS ARE BULLISH ON MINING. TO PROMOTE INVESTMENT IN MINERAL EXPLORATION, ERITREA ANNOUNCED ITS MINING PROCLAMATION IN 1995. THE MINING PROCLAMATION CAN BE OBTAINED FROM THE U.S. EMBASSY OR ERITREAN EMBASSIES ABROAD.

THERE ARE SEVERAL GEOLOGICAL FORMATIONS IN ERITREA THAT COULD POTENTIALLY YIELD EXCELLENT COMMERCIAL DEPOSITS OF MINERALS. THE CENTRAL AND NORTHERN HIGHLANDS CONSIST OF SOME OF THE OLDEST FORMATIONS IN AFRICA, ADJOINING AN EXTENSIVE RIFT SYSTEM LEADING NORTH-SOUTH DOWN THE MIDDLE OF ERITREA. THIS REGION OFFERS A POTENTIAL MINING REGION FOR PRECIOUS METALS AND MINERALS OF HIGH COMMERCIAL VALUE SUCH AS IRON, COPPER, GOLD, SILVER, CHROMIUM, ZINC, LEAD, COBALT AND NICKEL. A SECOND AREA OF GREAT POTENTIAL IS THE MUCH YOUNGER REGION OF VOLCANIC FORMATIONS ALONG THE RED SEA AND AFAR RIFTS; HERE THERE ARE INDICATIONS OF POSSIBLE DEPOSITS OF MAGNESIUM, BARITE, HIGH GRADE GRANITE, MICA, ASBESTOS, AND SULFUR. A THIRD POTENTIALLY RICH AREA IS THE REGION OF SEDIMENTARY FORMATIONS IN THE WESTERN AND EASTERN LOWLANDS; THIS AREA CONTAINS DEPOSITS OF LIMESTONE AND HIGH QUALITY GREEN MARBLE IN SIGNIFICANT QUANTITIES AS WELL AS SILICA SAND, POTASH, KAOLIN AND SLATE. THE ERITREAN GOVERNMENT IS CURRENTLY CONDUCTING A DETAILED GEOLOGICAL SURVEY FOR USE BY POTENTIAL INVESTORS IN THE MINING SECTOR. TWO ROUNDS OF LICENSING HAVE ALREADY TAKEN PLACE OVER THE LAST FOUR YEARS. ABOUT TEN MINING COMPANIES HAVE LICENSES TO PROSPECT THE RIFT AREA IN ERITREA, INCLUDING RIFT RESOURCES (CANADA), PHELPS-DODGE (U.S., COLORADO), AND ANGLO-AMERICAN (SOUTH AFRICA). INTERTEK TESTING SERVICES/BONDAR CLEGG OF CANADA IS RUNNING A FULL-SCALE ROCK-SAMPLING LABORATORY CAPABLE OF TESTING UP TO 20,000-30,000 SAMPLES. IT IS THE ONLY LABORATORY OF ITS KIND IN EAST AFRICA.

THERE ARE TWO MAJOR FACTORS THAT INHIBIT MINING INVESTMENTS IN ERITREA: STAGNATION OF GOLD PRICES AND LANDMINES. LACK OF CAPITAL TO FUND INVESTMENTS IN THE MINING SECTOR IS ALSO A MAJOR PROBLEM. A MINING EXPERT RECENTLY REPORTED THAT THE DOWNWARD PRESSURE ON THE PRICE OF GOLD TENDS TO LURE INVESTORS AWAY FROM SMALLER EXPLORATION COMPANIES, MAKING IT HARDER FOR SMALL FIRMS TO ATTRACT INVESTMENTS. SMALLER EXPLORATION COMPANIES LOOKING FOR FINANCING SEEK LINKS WITH LARGER CORPORATIONS OR MERGE WITH OTHER COMPANIES. THE MORE THAN HALF-MILLION LANDMINES STILL PRESENT IN THE RURAL AREAS IS A CONSTRAINT TO MINING DEVELOPMENT UNTIL MORE PROGRESS IS MADE IN THEIR REMOVAL.

SECTOR RANK: 5 SECTOR NAME: TOURISM ITA INDUSTRY CODE: HTL/TRA ERITREA'S LOCATION ON THE RED SEA COAST, COMBINED WITH ITS POLITICAL STABILITY AND A LOW CRIME RATE, PROVIDES THE SETTING FOR A POTENTIALLY LUCRATIVE TOURIST INDUSTRY. A TOURISM MASTER PLAN HAS BEEN PREPARED BY THE MINISTRY OF TOURISM. THE MASTER PLAN, WHICH WAS FUNDED BY THE UNDP, IS NOW UNDER PUBLICATION AND WILL BE ISSUED BEFORE END OF 1999. THE PLAN IDENTIFIES TOURISM SITES, ENCOURAGES INVESTMENT IN TOURISM, AND CALLS FOR THE PROTECTION AND CONTROL OF ENVIRONMENTAL POLLUTION CAUSED BY TOURISM. EFFORTS BY AN AMERICAN CONSORTIUM TO NEGOTIATE A DEAL FOR THE ESTABLISHMENT OF A MULTI-MILLION DOLLAR RECREATION FACILITY IN ONE OF ERITREA'S ISLANDS, ENDED IN FAILURE WHEN THE COMPANY CLOSED ITS OFFICES AND LEFT IN OCTOBER, 1997. THE MINISTRY OF TOURISM IS CURRENTLY PROCESSING SEVERAL OTHER PROPOSALS FOR INVESTMENT/CONSTRUCTION OF MODERN HOTELS IN ASMARA AND MASSAWA. AIR CONNECTIONS, PROXIMITY, AND NATURAL BEAUTY MAKE ERITREA ATTRACTIVE TO TOURISTS FROM EUROPE AND THE MIDDLE EAST. EARLY THIS YEAR, HOTEL INTERCONTINENTAL SIGNED AN AGREEMENT WITH THE GSE TO RUN THE FIRST WORLD CLASS HOTEL IN THE CAPITAL ASMARA. POTENTIAL INVESTORS WILL NEED TO PROVIDE MID-LEVEL MANAGEMENT, WHICH WOULD EVENTUALLY BE REPLACED BY ERITREAN TRAINEES. HOTEL MANAGEMENT FIRMS MAY BE INTERESTED IN TAKING OVER MANAGEMENT OF EXISTING HOTELS, WHICH THE GOVERNMENT IS ATTEMPTING TO PRIVATIZE. TOUR OPERATORS MAY ALSO WANT TO CONSIDER ADDING AN ERITREAN STOP TO THEIR ITINERARIES. WHILE HOTELS AND RESTAURANTS ARE NOT YET WORLD CLASS, TOURISTS MAY ENJOY ARCHEOLOGICAL SITES, MONASTERIES, DRAMATIC SCENERY, AND SNORKELING UNIMPEDED BY CRIME, HARASSMENT, OR CORRUPT OFFICIALS. THE BORDER WAR WITH ETHIOPIA HAS GREATLY DAMAGED THE TOURISM SECTOR. THE NUMBER OF VISITORS DECLINED BY OVER 60% IN 1998 RESULTING IN A SUBSTANTIAL LOSS OF FOREIGN CURRENCY EARNINGS. (SEE TABLE BELOW)

DATA TABLE: INFLOW OF NON-RESIDENTS AND INVESTMENT IN TOURISM

($U.S. IN MILLIONS)

			1995	1996	1997	1998
TOTAL MARKET SIZE		

TOTAL # OF VISITORS	0.692	0.889	.409	.187	

TOTAL # OF ERITREAN 
DIASPORA VISITORS	0.438	0.561	.293	.053

TOTAL # OF NON-ERITREAN
VISITORS		0.254	0.328	.116	.134

TOTAL INVESTMENT	25	25 	15.2	NA

(SOURCE: MINISTRY OF TOURISM.)

SECTOR RANK: 6 SECTOR NAME: HEAVY EQUIPMENT ITA INDUSTRY CODE: CON/AGM PROGRESS TOWARD REHABILITATING THE ROAD NETWORK TO DATE HAS BEEN BASED ON LABOR-INTENSIVE PROCESSES. THERE IS A SHORTAGE OF HEAVY CONSTRUCTION EQUIPMENT SUCH AS BULLDOZERS, BACKHOES, GRADERS, CRANES, AND CEMENT MIXERS, ALTHOUGH INVENTORIES ARE BUILDING. DEMAND FOR AGRICULTURAL EQUIPMENT IS RISING AS THE NUMBER OF MEDIUM TO LARGE AGRICULTURAL ENTERPRISES GROWS. AMERICAN EQUIPMENT IS HELD IN HIGH REGARD. AT PRESENT THERE ARE FOUR U.S. HEAVY EQUIPMENT COMPANIES DISTRIBUTING IN ERITREA. CATERPILLAR IS DISTRIBUTED BY ERITREA EQUIPMENT; J.I. CASE DISTRIBUTED BY GONAFER & SONS; AND JOHN DEER AND INGERSOLL-RAND ARE DISTRIBUTED BY NEW HORIZONS ENTERPRISES. IN THE INVESTMENT PROCLAMATION THE GOVERNMENT REDUCED IMPORT DUTIES ON HEAVY EQUIPMENT TO A NOMINAL 2%. NEW AND RE-CONDITIONED TRUCKS ARE IN DEMAND AS ERITREA NECESSARILY EXPANDS AND TURNS OVER ITS AGING PUBLIC AND PRIVATE VEHICLE STOCK. SUPPLIERS OF USED EQUIPMENT COULD HAVE A DUAL ADVANTAGE IN ERITREA'S MARKETPLACE. FIRST, OF COURSE, IS THE LOWER PRICE; SECOND IS THE ERITREAN TRADITION OF BEING ABLE TO KEEP ANYTHING RUNNING. DURING THEIR WAR FOR INDEPENDENCE THE ERITREANS HAD TO KEEP RUNNING ALL THE SOVIET STYLE VEHICLES WHICH THEY CAPTURED FROM THEIR ETHIOPIAN FOES. MANY VEHICLES IN ERITREA ARE OLD, LATE 1950'S CARS AND TRUCKS OF VARIOUS BRANDS (INCLUDING A 1954 MACK TRUCK) CONTINUE TO PLY THE ROADS OF ERITREA.

DATA TABLE: HEAVY MACHINERY & APPLIANCES (NON-ELECTRICAL) (MILLIONS OF U.S. $) 1995 1996 1997 1998 TOTAL MARKET SIZE TOTAL LOCAL PROD. TOTAL EXPORTS 2.8 3.8 1.5 .628 TOTAL IMPORTS 161.9 151.5 160.8 140.5 IMPORTS FROM U.S. NA 10.3 3.0 5.9 (THE ABOVE STATISTICS ARE UNOFFICIAL ESTIMATES.)

SECTOR RANK: 7 SECTOR NAME: LIGHT INDUSTRY ITA INDUSTRY CODE: TXM/FPP/GIE LIGHT INDUSTRY FLOURISHED DURING ITALIAN AND BRITISH RULE IN THE 1940-60 PERIOD, AND IS NOW MAKING A RECOVERY. ERITREA EXPORTS SHOES TO ITALY, WHILE THE MANUFACTURE OF SWEATERS AND LEATHER GOODS REPRESENTS A SIGNIFICANT SECTOR OF THE ECONOMY. APART FROM THREE MEDIUM-SIZE FACTORIES, THE SECTOR REMAINS A VIRTUAL COTTAGE INDUSTRY DIVIDED AMONG SMALL INDEPENDENT FIRMS. SKILLED LABOR IS AVAILABLE AND RAW MATERIALS SUCH AS COTTON, LEATHER, AND WOOL ARE PRODUCED LOCALLY. MODERN MACHINERY AND MANAGEMENT WITH THE SKILLS AND CONTACTS TO PENETRATE THE INTERNATIONAL EXPORT MARKET, HOWEVER, ARE LACKING. OPPORTUNITIES FOR U.S. FIRMS INCLUDE THE PROVISION OF MACHINERY, PRODUCT DESIGN AND QUALITY CONTROL EXPERTISE, AND IDENTIFICATION OF INTERNATIONAL CUSTOMERS FOR ERITREAN EXPORTS.

SECTOR RANK: 8 SECTOR NAME: CONSUMER GOODS ITA INDUSTRY CODE: FOD/GCG/HCG THE GROWTH OF A CONSUMER ORIENTED, ENGLISH SPEAKING MIDDLE CLASS WITH A PREDISPOSITION TO AMERICAN PRODUCTS, AND THE EXPANSION OF SMALL BUSINESSES NEEDING A VARIETY OF MODERN SERVICES AND PRODUCTS REPRESENT NEW AND EXPANDING MARKETS FOR CONSUMER PRODUCTS. SINCE INDEPENDENCE ABOUT 30 COMPUTER COMPANIES HAVE OPENED, INTRODUCING 400-500 COMPUTERS TO ASMARA ANNUALLY. DISTRIBUTORS OF IBM, COMPAQ AND HEWLETT-PACKARD ARE PROVIDING SALES, SERVICE, AND TRAINING. ELECTRONIC EQUIPMENT SUCH AS TELEVISIONS, VCRS, STEREOS, SATELLITE DISHES, AND CAMERAS ARE IN DEMAND DESPITE HIGH IMPORT DUTIES. PRESENTLY THERE ARE SEVERAL DISTRIBUTORS OF COPIER SALES SERVICE AND SUPPLIES, INCLUDING XEROX, CANNON AND OLIVETTI. THERE ARE A NUMBER OF OLDER PRINTING SHOPS, AND ONE MODERN PRINT SHOP OWNED BY THE PFDJ. THERE IS A LARGE DEMAND FOR MEDICAL SUPPLIES, EQUIPMENT, AND PHARMACEUTICALS. HEALTH CARE IS A PRIORITY WITH THE GOVERNMENT, AND IS THE PRIMARY TARGET SECTOR FOR USAID. THE US PEACE CORPS ( WHICH CEASED OPERATION IN JUNE 1998) MAY CONTINUE DEVELOPING A PRIMARY HEALTH CARE PROGRAM FOR ERITREA IN ADDITION TO ITS CUSTOMARY EDUCATION PROGRAM IF A PEACEFUL SETTLEMENT OF THE BORDER DISPUTE IS ACHIEVED. HOSPITALS AND CLINICS ARE BEING BUILT OR UPGRADED THROUGHOUT THE COUNTRY, AND FUNDING FOR EQUIPPING AND SUPPLYING THEM IS BECOMING MORE READILY AVAILABLE. SO FAR, EUROPEAN FIRMS HAVE LARGELY MET THIS DEMAND IN THE FORM OF FOREIGN ASSISTANCE AND DONATIONS. A U.S. FIRM HAS SUCCEEDED IN OBTAINING THE SUPPORT OF THE MINISTRY OF HEALTH TO EXPORT TO ERITREA NUTRITIONAL DRINKS, JUICES AND SYRUPS.

BEST PROSPECTS FOR AGRICULTURAL PRODUCTS:

AGRICULTURE: REVIVAL OF THE AGRICULTURAL SECTOR, SEVERELY DEPRESSED BY DECADES OF WAR AND DROUGHT, IS THE KEY TO ERITREA'S ECONOMIC RECOVERY PROGRAM. PUBLICATION OF A LAND TENURE LAW, REFORESTATION, AND CONSTRUCTION OF MICRO-DAMS ARE AMONG RECENT INITIATIVES DESIGNED TO REVIVE BOTH SUBSISTENCE AND COMMERCIAL AGRICULTURE. ACHIEVING FOOD SELF-SUFFICIENCY AND DEVELOPING EXPORT CROPS SUCH AS BEEF, CITRUS, AND COTTON PRODUCTS WILL REQUIRE NEW INVESTMENT IN IRRIGATION, AGRICULTURAL INPUTS, AND MECHANIZATION. AS PART OF ITS FOOD SELF-SUFFICIENCY POLICY, THE GSE INTRODUCED INTEGRATED FARMING SYSTEM IN 1998 BRINGING 40,000 HECTARES OF LAND UNDER CULTIVATION AND RELAYING HEAVILY ON MODERN AGRICULTURAL INPUTS AND MACHINERY. SUPPLY OF AGRICULTURAL MACHINERY AND INPUTS AND SERVICING THE SECTOR OFFERS AN OPPORTUNITY TO U.S. MANUFACTURES. (FOR FURTHER COMMENTS ON AGRICULTURAL EQUIPMENT, PLEASE SEE SECTION ON HEAVY EQUIPMENT ABOVE.)

SIGNIFICANT INVESTMENT OPPORTUNITIES:

THERE ARE A NUMBER OF SIGNIFICANT INVESTMENT OPPORTUNITIES IN ERITREA ASSOCIATED WITH THE PRIVATIZATION OF GOVERNMENT ASSETS, INCLUDING ERITREAN TELECOMMUNICATIONS SERVICES, ERITREA'S CEMENT FACTORY, MASSAWA SALT WORKS, AND THE DAHLAK SHOE FACTORY.

ERITREAN TELECOMMUNICATIONS SERVICES:

THE ERITREAN TELECOMMUNICATIONS SERVICES (ETS) IS ACTIVELY INVOLVED IN MULTIPLE PROJECTS TO UPGRADE ERITREA'S INADEQUATE BUT IMPROVING TELECOMMUNICATIONS INFRASTRUCTURE. IT IS WORKING TO UPGRADE BASIC TELEPHONE SERVICES, INCLUDING INTERNATIONAL DIRECT DIAL AND INCREASED CIRCUITRY, AND HAS PURCHASED SWITCHING EQUIPMENT AND SATELLITE UP-LINKS FROM BOTH AMERICAN AND EUROPEAN FIRMS. RECENTLY THE GSE ISSUED A TENDER INVITING INTERNET SERVICE PROVIDERS TO APPLY FOR LICENSES FOR THE PROVISION OF INTERNET SERVICES. A SIMILAR TENDER OFFER ON THE PROVISION OF MOBILE PHONE SERVICES WAS ISSUED IN JULY, 1999. ETS' JOINT VENTURE AGREEMENT WITH DAEWOO, SIGNED IN 1997, HAS NOT MATERIALIZED AS A RESULT OF THE FINANCIAL CRISIS THAT HIT THE KOREAN ECONOMY IN 1997-98. ETS IS ACTIVELY LOOKING FOR A STRATEGIC PARTNER.

THE GOVERNMENT REORGANIZED THE ERITREAN COMMUNICATIONS DEPARTMENT INTO A REGULATORY BODY ALLOWING BOTH POSTAL AND TELECOMMUNICATIONS SERVICES TO OPERATE INDEPENDENTLY BESIDES OPENING THE TELECOMMUNICATIONS SECTOR TO BOTH DOMESTIC AND FOREIGN PRIVATE INVESTMENT, AS OUTLINED IN THE COMMUNICATIONS PROCLAMATION, A COPY OF WHICH CAN BE OBTAINED FROM THE U.S. EMBASSY OR ERITREAN EMBASSIES ABROAD. THE PROCLAMATION OFFERS A WIDE RANGE OF PRIVATE INVESTMENT OPPORTUNITIES SUCH AS THE PROVISION OF PUBLIC DATA TRANSMISSION SERVICES INCLUDING E-MAIL AND INTERNET, PROVISION OF PUBLIC CELLULAR RADIO AND MOBILE TELEPHONE SERVICES, PROVISION OF PAGING SERVICES, AND PROVISION OF GLOBAL MOBILE SATELLITE PERSONAL COMMUNICATIONS SERVICES. OTHER OPPORTUNITIES OFFERED BY THE PROCLAMATION ALSO INCLUDE IMPORTATION, MANUFACTURE, SALE, LEASE OR INSTALLATION OF TELECOMMUNICATIONS EQUIPMENT, AND PROVISION OF PUBLIC PAY PHONE AND TELECOMMUNICATIONS NETWORKS SERVICES. SUCCESSFULLY NEGOTIATING CONTRACTS DURING THE EARLY STAGES OF NETWORK EXPANSION WOULD POSITION A U.S. FIRM TO BID ON MAJOR SEGMENTS OF THE COMMUNICATIONS MARKET.

ETS SUPPORTS AT&T'S AFRICA ONE PROJECT THAT AIMS TO CONNECT AFRICA WITH THE REST OF THE WORLD THROUGH A FIBER-OPTIC CABLE. ALTHOUGH SOUTH AFRICA WITHDREW FROM THE PROJECT, AND MANY WEST AFRICAN COUNTRIES ARE NOT ENTHUSIASTIC ABOUT IT, COUNTRIES IN THE EASTERN PART OF THE CONTINENT, INCLUDING ERITREA, STILL SEE THE PROJECT AS VERY IMPORTANT IN PROMOTING AFRICA'S GLOBAL LINKAGE. ETA ESTIMATED ERITREA'S SHARE OF THE PROJECT TO BE AROUND U.S. $16 MILLION.

THE DAHLAK SHOE FACTORY

AN ITALIAN SHOE MANUFACTURER, FRATELLO BINI, BUILT THE DAHLAK SHOE FACTORY IN 1964. IT WAS ORIGINALLY CALLED THE BINI SHOE FACTORY AND WAS PART OF ANOTHER SHOE FACTORY IN ASMARA BY THAT NAME WHICH HAS RECENTLY BEEN PRIVATIZED. THE FACTORY IS LOCATED WITHIN CITY LIMITS. THE GROUNDS AND BUILDINGS ARE CLEAN AND VERY WELL MAINTAINED. THE DAHLAK SHOE FACTORY TAKES PRIDE IN BEING THE LARGEST SHOE FACTORY OF ITS KIND IN THE HORN OF AFRICA WITH A CAPACITY TO MANUFACTURE 5.5 MILLION SHOES PER YEAR. IT HAS THREE SEPARATE PRODUCTION LINES FOR THE MANUFACTURE OF LEATHER, PLASTIC AND CANVAS SHOES.

THE GOVERNMENT OF THE UNITED STATES ACKNOWLEDGES THE CONTRIBUTION THAT OUTWARD FOREIGN DIRECT INVESTMENT MAKES TO THE U.S. ECONOMY. U.S. FOREIGN DIRECT INVESTMENT IS INCREASINGLY VIEWED AS A COMPLEMENT OR EVEN A NECESSARY COMPONENT OF TRADE. FOR EXAMPLE, AMERICAN FIRMS THAT HAVE OPERATIONS ABROAD SELL ABOUT 60 PERCENT OF U.S. EXPORTS. RECOGNIZING THE BENEFITS THAT U.S. OUTWARD INVESTMENT BRINGS TO THE U.S. ECONOMY, THE GOVERNMENT OF THE UNITED STATES UNDERTAKES INITIATIVES, SUCH AS OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) PROGRAMS, BILATERAL INVESTMENT TREATY NEGOTIATIONS AND BUSINESS FACILITATION PROGRAMS THAT SUPPORT U.S. INVESTORS.