Egypt business digest Nov. 2: Egyptian council approves raft of measures to boost investment
President Abdel Fatah al-Sisi chairs the Supreme Investment Council on Tuesday, Nov. 1, 2016- photo from Egyptian Presidency Office
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Egyptian council approves raft of measures to boost investment

Egypt’s Supreme Investment Council on Tuesday approved a host of measures to boost investment that included an extended suspension of capital gains tax on shares and tax exemptions for producers in strategic sectors.

Egypt has been trying to attract investment to restore growth since an uprising in 2011, which ushered in protracted political turmoil and scared away tourists and foreign investment – its main sources of hard currency.

The council, set up by President Abdel Fatah al-Sisi last month and chaired by him, approved a total of 17 measures, Sisi’s office said in a statement.

The government had imposed a 10 percent tax on capital gains from shares in July 2014 as part of efforts to boost a severely strained budget, but froze it for two years in August 2015. Tuesday’s statement said the freeze would be extended for three years, though it was not clear if this was from now or from the intended end in 2017. Government officials could not be reached for comment.

The measures also included wide-ranging tax exemptions for farmers and manufacturers who produce strategic crops or goods that Egypt imports or exports.

There were also new ways to settle tax disputes and to reduce bureaucratic barriers to investment, notably by introducing temporary manufacturing licenses while factories complete paperwork, and forcing government agencies to grant licenses or settle disputes faster.

“The Supreme Investment Council aims to review the state’s investment policies, … remove all obstacles facing investors, and … improve the investment climate,” the statement said.

The prime minister, the central bank governor and the finance, defense, interior, investment, trade and justice ministers all sit on the council, along with the chief of the General Intelligence Service.

 

Egypt targets saving 40 bln EGP from state’s budget of 20

The Egyptian government targets to save 40 billion EGP from the state’s general budget of Fiscal Year 2016/2017 via applying the government austerity plan, Youm7 reported an official in the central bank of Egypt (CBE) on Wednesday.

However, certain sectors such as the public servants’ wages and the investment budget will not be subjected to such action, he added.

Few days ago, the cabinet has approved a plan to rationalize state’s expenditure and sent a notifications to the state-owned bodies to apply the plan.

 

Suez Canal Authority expects response to pre-paid fees plan next week

(Reuters) – The Suez Canal Authority expects to hear back from three major shipping firms shortly about its proposal to give discounts on fees for using the waterway if they are paid in advance, its chairman said on Wednesday.

“I will hear next week,” Mohab Mameesh told reporters on the sidelines of a maritime conference in Dubai when asked about the plan, confirming he was awaiting responses from Maersk, MSC and CMA

“Every company has to make a meeting for the board and to discuss with the lawyers and the finance team before it passes.”

Mameesh said earlier this week it had proposed offering ships using the canal a discount of between 3 and 5 percent on fees if they paid three and five years in advance, respectively, with the aim of introducing the system early next year.

The authority has been considering pre-paid systems for fees that would attract large sums of cash as a way to further draw in foreign currency to ease a shortage.

The canal is one of the main sources of income for Egypt, which is facing increasing speculation about whether it will need to devalue its currency, having already weakened it by almost 14 percent in March.

“We need the hard currency in advance and I think many navigation lines are thinking about it,” Mameesh said.

 

USD exchange rate ‘stable,’ reaches 8.78 EGP

The USD exchange rate has been stable against the Egyptian Pound, where it reached Wednesday 8.58 EGP for sale and 8.88 for purchase. Euro exchange rate reached 9.76 EGP for purchase and 9.78 EGP for sale.

 

Australian trade in Egypt declines due to economic, currency crises

Australian trade in Egypt has been declined to $500 million from $750 million due to the economic and currency crisis Egypt faces, said the Egyptian-Australian business council on Wednesday.

The council tried to enhance the Australian investments in Egypt in the past period, but the economic situation caused failure of its attempts.

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