Breakfasts with Cinco Días  

Irene López

Oct. 6, 2014 7:41 a.m.

Traditionally associated with energy resources such as natural gas, Algeria now wants to look beyond just exporting such raw materials and is seeking to become a destination for foreign investments. Its proximity to Spain makes our country one of the places with which the Algerian government would like to promote trade relations. This is what was explained by the country’s ambassador to Spain, Mohammed Haneche, during a meeting of experts organized by CincoDías, with a breakfast sponsored by the logistics company DHL Express. Along with Haneche, representatives from the business world and institutions such as Casa Árabe had the opportunity to debate over the possibilities and challanges which Spanish organizations encounter, especially small and medium-sized companies, when they disembark to do business in this Arab country.

“For Algeria, the central focus through which we should establish cooperation with other countries is the European Union,” the ambassador assured. And, as he explained, Spain may play a notable role in these relations, which the government hopes to intensify with its neighbors.

At present, there are approximately 300 companies from our country working in Algeria, with an important presence in the construction industry. The Spanish exports which reach the country are of great importance, above all industrial products. However, the challenge for the country lies in attracting small companies, which often tend to run up against more barriers than large companies do. “The truth is that Spanish companies prefer to work in their domestic market or European markets, but I believe that their fears about coming to Algeria are overly emphasized,” Haneche pointed out.

“When small and medium-sized companies decide to go international in countries which, though located nearby, are more complex, preparation is basic,” Nicolás Mouze points out. He is DHL’s Marketing and Sales Director and says it is key for companies to overcome their fear of working in markets with cultures that are different from their own.

With proper preparation and the help of a partner who knew how businesses work in Algeria, the food company Dulcesol began to market its products in that country in 2011. “Today, Algeria has become our second largest international market in importance, and next month we expect to be opening our first industrial plant there,” the company’s International Director, José Vicente Castell, explained, describing the business venture as very positive.

However, in his experience, Castell also pointed out some of the problems that Dulcesol and other small and medium-sized companies have come across in entering this country in North Africa.

One of those most often repeated throughout the conversation was the so-called “49-51 Law” that keeps foreign businesspeople from possessing majority shareholdings in joint companies, in those sectors considered to be strategic. To Mohammed Haneche, this rule makes clear the intention to promote domestic capabilities, while at the same time attracting investment from abroad.

The complicated bureaucracy which is required to complete all of the administrative procedures is another of the great barriers that experts have identified for Spanish businesses. “Computerization will help us in this sense,” the ambassador claimed, attempting to make it clear that the government is trying to make it easier to surmount such barriers.

Juan Lazcano, Vice-President of the CEOE, also mentioned other difficulties, such as those encountered by companies, above all those which are medium-sized and large, when bidding in public tenders. “There is interest amongst companies, but there are still topics to be resolved, such as a certain positive nationalism that one comes across in some tender processes,” Lazcano mentioned.

As for Haneche, he wished to place an emphasis on the great ability of Spanish companies to carry out the projects which they are promoting in Algeria and the comparative advantages they enjoy compared with other international companies. “I believe that both of our countries must make efforts to reach agreements,” the ambassador said.

Despite the difficulties that companies may find along the way, this Arab country also provides many appealing advantages, including its strong financial position. “In its plan to reduce foreign debt, Algeria has taken out no loans from the African Development Bank since 2006,” said Esther González Sanz, representative of the Sub-directorate General of Multilateral Financial Institutions. This Arab state has chosen to use its own funds to make investments, including the two five-year plans valued at 263 billion euros, which it will be implementing from now until 2019.

This country’s trade relations with others have also become more intense in recent years, as explained by the General Director of Casa Árabe in Madrid, Eduardo López Busquets. “Its growth has modified the country’s economic structure, and that will make the proximity with companies from other parts of the world much more intense,” he remarked.

López Busquets also mentioned other problems that companies tend to deal with, such as the tax system (due to double taxation agreements) and difficulties in repatriating dividends (due to the fact that the dinar is not convertible). “They are openly known and arise quite frequently, but this does not mean that a solution is not appearing on the horizon,” the General Director of Casa Árabe argued, alluding to the ongoing dialogue taking place between Algeria and Spain regarding these aspects.

The desire to reach an agreement is a point in Algeria’s favor, in the opinion of DHL’s Marketing Director. “There are many pitfalls, but in the end the message is positive,” says Nicolás Mouze resoundingly. He also called for companies to appreciate factors such as the stability that exists in this Arab country in many senses.

According to Dulcesol’s International Director, José Vicente Castell, the key allowing this company to become established there was the great potential its managers detected after paying several on-site visits to the largest cities, including Algiers and Oran. As Castell explained, they were able to witness the political and social stability there first-hand, as well as the currently dynamic economy, and how there are consumer habits similar to those in our country, despite the cultural differences.

“We left Algeria with a long-term vision,” the pastry company’s director pointed out. According to the experts who met during the debate, this will turn into one of the keys for investments in other countries to prosper, especially in those with certain special features like Algeria. “Opening an affiliate in another country means creating a stable relationship,” pointed out Nicolás Mouze in his conclusion. “You have to take that first step in order to continue building on it,” DHL’s representative assured.

Easier visa processing for managers

The presence of a company’s own personnel on-site is essential in any internationalization process, as well as transferring some local staff members to the company’s headquarters so that they can receive training. However, travel by these professionals from one country to the other is not always as simple as corporations would like.

“We have encountered difficulties involving travel by people in both directions,” explained José Vicente Castell, Dulcesol’s International Business Director, during the debate on investments in Algeria organized by CincoDías and sponsored by DHL Express.

As for the Algerian ambassador in Spain, Mohammed Hanneche, he explained that the country is promoting improvements in this direction. “We’re working on it. We already have an agreement to facilitate visas,” Haneche mentioned, adding that it is already possible to process visas in just one day through the institution which he presides over in order to travel to this African country. 

The Algerian diplomat also assured that Spanish businesspeople and managers can already gain access to permits which last for one year to enter and exit his country. By allowing this, the Embassy hopes to make business between companies and organizations in the two countries smoother. 

As for the local staff in Algeria, José Vicente Castell pointed out that Dulcesol has found that there is an “excellent technical and professional level” in the country. The food company’s International Business Director explained that this has made it possible to hire employees of Algerian origin to become the mid-level managers of its business located in that country. 

Spain and Algeria’s willingness to reach understandings is, in the judgment of this group of experts, one of the positive factors which invite them to believe that there is still a huge amount of potential for commercial agreements between the companies in both regions.

*Photo caption: From left to right: José Vicente Castell, International Director of Dulcesol; Esther González Sanz, of the Sub-directorate General of Multilateral Financial Institutions; Juan Lazcano, Vice-President of the CEOE; Nicolás Mouze, DHL Marketing and Sales Director; Mohammed Haneche, Ambassador of Algeria in Spain, and Eduardo López Busquets, of Casa Árabe, at the Cinco Días newsroom. Photo: Pablo Monge

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