Translation by Samar Samir, Nourhan Magdi, Hanan Fayed, and Sara Ghali
CAIRO: Egypt is actively courting new markets for foreign investment, said Investment Minister Ashraf Salman in an interview with Youm7.
A number of meetings have recently been held with 10 of Egypt’s new ambassadors abroad, to build connections and attract foreign investment, including with Egypt’s Ambassador to Azerbaijan Suzan Gamil, Ambassador to Turkey Wael al-Nagar, Ambassador to Brazil Alaa Roshdy, Ambassador to UAE Wael Gad, Ambassador to Australia Mohamed Khairat, Ambassador to Norway Mahy Abdel Latif, Extraordinary Ambassador to Kuwait Yasser Atef and Ambassador to Germany Badr Abdel Atty, he said.
The meetings stressed reform procedures taken by the Egyptian government in July 2014, including tax reforms, subsidiary system and reforms in the financial sector that had positive effects on economic indicators, including an increase in the growth rate by about 4.2 percent in the fiscal year 2014/15 compared to 2.2 percent in the previous fiscal year.
Direct foreign investments also witnessed a hike during the first nine months of the fiscal year 2014/15, totaling $5.7 billion; the employment rate declined from 13.6 to 12.6 percent during 2014/15 FY.
The meetings discussed available investment opportunities that would be promoted via the participation of the Arab and foreign investment, especially in high-priority sectors per the government’s economic and social program.
In addition, efforts being exerted by the government to resolve investment disputes in order to send a message to the world about how “eager” the government is to attract investments and counter the challenges facing investors, especially after the issuance of the investment law, which made decisions of the Dispute Settlement Committee obligatory.
Salman added that investment opportunities with Azerbaijan have been discussed regarding iron, oil, natural gas, real estates, petrochemicals, microfinance sectors, while the UAE were in the field of financial services and real estate projects and Brazil in petrochemicals, energy and others.
Moreover, it was agreed to hold meetings and conferences to introduce Egyptian investment opportunities, to promote Egyptian projects and to present the phases, steps and procedures taken by the Egyptian government to enhance the investment atmosphere and prepare a business environment.
The minister pointed to the coordination process with the ministry of foreign affairs regarding necessary preparations for investors and trade companies’ visits to the exchange delegations, to open trade horizons between Egypt and these countries.
He referred to the fact that the “special location” of Egypt and current reform efforts qualify Egypt to deepen its relations with all the countries, especially with the development of its infrastructure, including airports, seaports, road networks and power projects; besides the available potential in the Suez Canal axis development projects which offer “promising opportunities” for investment and trade.
Salman mentioned the importance of cooperation with the General Authority For Investment and Free Zones in providing detailed information about the plans and investment opportunities to the ambassadors and the economic consultants in embassies, to “activate cooperation and increase coordination in a way that serves Egypt’s developmental goals.”
He stressed the importance of coordinating results between the ministries of investment and foreign affairs, in matters related to the investment in Egypt and the best ways to promote it.
The improvement of economic indicators will be an “important sign” during the review of investment opportunities, he said, citing a growth rate of more than 4 percent compared to 2 percent in the preceding fiscal year under a global slowdown. He gave the credit to major national projects being executed by the Egyptian government, such as the New Suez Canal, the development of the Suez Canal Axis and a number of infrastructure projects necessary to launch other projects.
The overall investments in the 2015-2016 budget increased to 417 billion EGP, and the government will work on stimulating the private sector to increase its investments to 237 billion EGP. Meanwhile, government investments in the current fiscal year increased to 180 billion EGP, with the aim to expedite a breakthrough in infrastructure and public services and achieve a growth rate of no less than 5 percent in 2015-2016 in the framework of the state’s comprehensive development plan, he said.
Net foreign direct investments reached $5.7 billion in the first 9 months of the 2014/2015 fiscal year, which is a “large, clear increase compared to $4.1 billion in the preceding fiscal year,” according to Salman.
A total of 14,969 companies were established in the first half of 2015 with exported capitals of 25.4 billion EGP, expected to provide 127,000 job opportunities. In 2014, 9,236 Egyptian companies were established with an exported capital of 15 billion EGP, offering 80,000 direct jobs.
The minister added he would review steps taken to improve the investment environment in Egypt, such as Law No. 17, issued March 12, 2015, to amend regulations related to investments. In November 2014, a law was issued on micro-funding to help promote jobs and reduce poverty, as well as to support foreign direct investment in the energy field, which is prioritized by the government.
A total of 6 billion EGP of the 2015-2016 budget was allocated to the energy sector; new legislation was issued on energy investment, such as the law of pricing and tariffs, the law of power purchase, in addition to government protection enjoyed by energy investors. The government also plans to produce 30,000 megawatts over the next 10 years in a mixture of traditional and renewable energy, Salman said.
Furthermore, procedures of registering companies at the Investment Authority have been facilitated; a package of institutional reforms were adopted, such as reducing start-ups fees, reducing the time required to establish companies to 72 hours.
Salman noted that many branches of the Investment Authority have been opened in several governorates. Meanwhile, the authority is about to launch an online corporate establishment system, and start one-stop offices, now that the new investment law has been issued, especially with regard to facilitating procedures of land allocation, license issuance, and approvals of new investment projects.
The minister stated that the Euromoney Egypt Conference, which is scheduled to take place on Sept. 7-8 in Cairo is a “big opportunity to present the economic developments in the country.”
Salman added that “the government is keen on presenting what has been accomplished in the economic reform through amendments issued to investment laws, taxes, project funding, stock market, land allocations and the one-stop shop policy, in order to maintain an investment-attractive climate.”
The 20th round of the conference will include a review of Egypt’s main future projects; most importantly the Suez Canal Axis projects, which will cost between 120-150 billion dollars, for the development of the ports and infrastructure works, Salman added.
He continued, “This means that the projects will be very important to global companies for partnership in implementing, funding and working in the Suez Canal Axis, which is expected to be one of the main economic spots in the world within the coming years.”
The Euromoney Egypt Conference ia “a starting point from which the future of Egypt’s economic and investment future in all sectors is discussed,” said Salm an, adding that all recommendations and insights that will be proposed during the conference will be submitted to the government for consideration.
Between 800 to 1,000 international businessmen, heads of companies and experts are expected to participate in the conference, said Salman, adding “this contributes to achieving our plan to attract between $8 billion – 10 billion in new foreign investments.
During the conference, the government plans to present investment opportunities in different sectors including: energy, power, real estate development, construction, housing, credit markets, private and public investments, medium and small enterprises and agricultural investment.
Some 280 other projects tackling development in Upper Egypt area will also be discussed during the conference, aiming to invest 847 billion dollars, he added.
In order to show investors “readiness,” as Salman described, the government will issue initial approvals, licenses and preliminary studies for the to-be-proposed projects.
The minister highlighted significant cooperation between Egypt and the commercial chambers and business councils of those countries in fields of tourism, investment, trade, and training.
Egypt has discussed investing opportunities with Australia in the field of livestock; with Norway in fields of fishery, petroleum, natural gas, and vessel industry; with Kuwait in fields of mortgage and financial services; and with Germany in fields in energy, chemicals, and the industry of vehicle spare parts, Salman continued.
Regarding the recently applied “settlement policy” between the state and the investors, the Minister said the Dispute Settlement Committee (DSC), has discussed 18 investment problems in Ministries of Tourism, Finance, Housing and Urban Utilities, and Trade, Industry and Medium and Small Enterprises.
The DSC has solved 15 out of 18 problems and referred the rest to a technical committee for further study, Salman continued.
The DSC has tackled a group of problems in various governorates including Cairo, Giza, Ismailia, and Marsa Matrouh, Salman added.
It is scheduled that the committee will meet with the Cabinet in coming few days to update its ministers on the DSC decisions that have been taken regarding the fifteen problems, the minister said, saying “the Cabinet will issue its decision on the committee’s decisions per the newly passed investment law that made the committee’s decision obligatory.”
“The committee will urgently consider the investors’ requests and problems with the various entities of the state in a just way,” Salman continued, “and to take quick decisions resolve all disputes.”
In order to encourage investments, Salman said the government hasrefused to list some public sector companies in the stock exchange pending the development of the bourse.
“Egypt’s training programs need big changes and international experience, so there will be coordination with scientific universities and centers to provide the best training programs,” he clarified.
“The improvement of public sector performance will increase investments,” Salman said, noting that performance indicators of the public sector recorded more than EGP 2 billion profits ($255.4 million) in the 2014-2015 Fiscal Year, compared with EGP 192 million ($24.5 million) in 2013-2014 FY.