Economic reform programme was Al-Sisi’s bold decision to put Egypt back on global investment map: Abou El-Enein

Hussein Abd Rabo
17 Min Read

Businessman Mohammed Abou El-Enein knows the demands of European investors and the incentives to attract them to the local market, given his current stature and long experience as chairperson of the Egyptian-European Business Council, as well as the head of the Arab Investors Union. This vilifies his assertions that there is a great potential European demand for investments in Egypt, which proves the validity of economic measures taken by the state.

“The economic reform programme boosted confidence in the domestic economy and put Egypt back on the global investment map,” Abou El-Enein said. “We are already reaping the fruits of the reform: we received huge investment demands from local and foreign investors to implement projects in Egypt.”

In an interview with Al-Borsa, Abou El-Enein said that investors are keeping a close eye on the reforms in Egypt, expecting a great deal of European investments inflow to the local market in the near future.

He added that the meetings organised by the council with European investors showed the conviction of European companies that the efforts of President Abdel Fattah El-Sisi and the government put Egypt on track and restored confidence in the economy and in the investment climate.

He pointed out that the council had put forward ideas to European investors to promote joint investment and export, including the establishment of a comprehensive and deep free trade zone.

“We presented a package of available investment opportunities in the market to many European companies, and we stressed the importance of restoring European tourism to its previous levels, as well as requested to cooperate to address the campaign launched in Egypt in the wake of the 30 June Uprising to distort the facts,” he noted.

Abou El-Enein said that the council is in constant contact with investors to inform them of the reforms that are taking place and the new laws and investment opportunities available, aiming to create stable channels of communication between the business community and officials in Egypt and Europe.

He added that Europeans are the main investors in Egypt, acquiring 60% of all foreign direct investment (FDI) in the country, next to being the biggest trade partner to Egypt and the largest source of incoming tourism.

He said that Egypt and the European Union (EU) are linked by the unity of destiny and the common challenges that affect their collective security, such as terrorism and illegal immigration. Therefore, investing in Egypt enhances the security and stability of both sides.

He added that the council presents Egypt to investors in Europe as the largest market in the region for European companies and as the gateway to Africa and the Arab region.

He pointed out that the economic decisions taken by the government and the Central Bank of Egypt (CBE) in the past few months encourage investment substantially, and that the current period is witnessing a huge demand for investment in Egypt from local and foreign investors.

Abou El-Enein described the economic reform programme implemented by the government as bold and courageous decisions taken by El- Sisi, and said the plan was inevitable to correct the path of the economy and restore confidence in solving chronic problems and make Egypt more attractive to investors.

He stressed that the country is already reaping the fruits of the programme by restoring confidence in the economy, adding that there are many investment demands from local and foreign investors, in addition to the restoration of indirect foreign investment in the Egyptian Exchange (EGX) and government debt instruments.

“The foreign exchange reserves reached $36bn, which is similar to the level before 2011. We also have seen the abolition of restrictions on foreign exchange transfers abroad, the growth of non-oil exports, the decline in the balance of the trade deficit, and the gradual increase in FDI, especially in sectors such as oil and energy, and improved macroeconomic indicators,” he highlighted.

He said that the economic reform programme has a large tax that will be borne by the consumers, investors, producers, and the general budget of the state, especially since it raised the costs of investment and production, as well as the prices on the consumer.

Yet, he said that all these burdens are accepted by the public—being the path needed for the recovery of the economy.

“The Egyptian people have exemplified the awareness and confidence in their leadership and its decisions. We all have to work to reduce the duration of this transitional period and to address the negative effects. This is mainly related to reducing costs and encouraging investment to achieve the main objective of these reforms, which is realising the vision of Egypt 2030, surging growth rates, doubling the income of Egyptians, and improving the quality of lives in Egypt,” he said.

He added that improving the Egyptian economy to become one of the top 30 economies in the world requires improving the investment climate in general, including facilitating entry of capital and operation procedures at low cost, next to providing a safe exit for investments.

He pointed out that the priority now must be to complete the programme of improving the investment climate by issuing a stable package of legislation and clear, consistent and attractive policies that guarantee the ease and speed of dispute settlement and implementation of decisions. They should also ensure balanced work relations and advanced infrastructure, and complete the institutional reform which deals with investment in all governorates and regions, to eliminate bureaucracy and provide land at affordable prices. The legislation package will be complete through issuing the bankruptcy law, the unified corporate law, the labour law, and amending the social insurance and local administration laws.

He asserted that Al-Sisi is the main promoter of investment in Egypt. “He addresses problems radically and exerts efforts, with the Minister of Investment and International Cooperation, to solve problems,” he added.

Moreover, Abou El-Enein said that the economic reform programme has led to restoring confidence in the Egyptian economy, re-placing Egypt on the global investment map, and solving many of the major problems facing investment, especially the availability of foreign exchange, the possibility of repatriating profits, the stability of the exchange rate, and the abolition of the black market.

He added that the recent package of legislation issued by the government, particularly the new investment law and industrial licences, had made significant progress in improving the investment climate.

“For the first time in 15 years, Egypt established an economic zone of a second special nature after the Suez Canal: the Golden Triangle,” he noted, adding that Egypt has a strong investment portfolio in the agricultural and industrial sectors in the canal region, the golden triangle, and the New Administrative Capital, as well as 15 new cities.

He pointed out that the economic reform programme had major effects on the cost of investment and production.

He called on the Minister of Investment and International Cooperation, Sahar Nasr, to prepare a comprehensive study on the cost of investment in Egypt compared to the competing countries and submit her recommendations to the Cabinet for discussion so that Egypt can gain a good competitive position in attracting investments.

Abou El-Enein explained that Egypt is in a global market where countries strongly wrestle to attract investment, and therefore, we must adopt bold and unconventional measures that can put the country on top of the investment-attractive list and prove it has the intention, the will, and the determination to attract investment.

“Investors look at the world and put their money on the stable countries that provide incentives, guarantees, and high profitability,” he added.

He suggested following a new method for promoting investment, namely offering 100 investment opportunities in all sectors and regions, including high-tech and renewable energy projects, basic industries, and pharmaceutical industries combined with a package of financial and non-financial non-traditional incentives and advantages for each opportunity. These opportunities, in his opinion, should also come with pre-obtained permits and licences so that investors can immediately begin operation and production. He described the plan as “a sale for opportunities”.

He added that the investors at this phase can be considered pioneers, which gives them advantages, as their success will bring in further investments in the sectors and the areas they work in.

He said that the reform of the investment system requires the good and honest implementation of the package of legislation issued in the past period, adding that the point is not the clear text or the good formulation, but rather understanding it correctly and implementing it correctly, along with the speed of procedures and respect for contracts and liabilities. “With good promotion for these laws and explaining their philosophy and importance, Egypt will become a better place,” he noted.

He pointed out that an investment map is needed based on specialisation, whether sectoral or geographical, and that these lands and investment opportunities should be free of problems and with prior licences to prompt investors to begin working and producing immediately.

Furthermore, Abou El-Enein said that attracting foreign investors and matching them to sectors and areas of priority to the state and encouraging them to re-invest their profits and increase their exports, requires the state to provide an attractive environment by providing a specialised economic zone in which feeding industries are complementary and services are available from schools, universities, specialised markets, accommodation, hotels, and banks.

He noted that such zones attracted brands to China, India, Malaysia, and Vietnam to produce at lower costs and export products to the rest of the world.

“It is this thought that will double FDI in Egypt to tens of billions, which will make Egypt part of the new fast-growing countries or what they call the new BRICS, such as Indonesia, Vietnam, and Turkey,” he noted.

He called for the need to set off the development potential in all provinces and to provide an industrial development centre in each of them, which should include the agriculture and commercial sectors. He noted that this will require the law to provide governors with the authority to compete in attracting investments, while at the same time put new criteria for performance appraisal based on the size of the investments that each governorate is successful in attracting.

He also stressed the importance of addressing the “shaky hands”. “All bodies should be as strong and responsible as Al-Sisi,” he explained.

He urged to solve all problems of local investors and implement the decision of the ministerial arbitration committees since the comfort and success of local investors will attract foreign investors.

He called for the provision of land to the industrial sector at competitive prices, addressing the multiple jurisdictions and authorities of the land, creating structured channels of dialogue between the government and investors, especially foreigners, and establishing an advisory board for foreign investment to be a continuous channel of dialogue between the government and investors to solve any problems and clarify the vision of the state.

He praised the new investment law and stressed it has been anticipated for years.

He added that the law has many unprecedented advantages in terms of procedures or incentives, but it will not solve all the problems alone and must be accompanied by a package of other legislations, as well as have a final solution to the arbitration problems.

He noted that investment promotion in Upper Egypt is not only dependent on tax incentives, but it is important to develop good infrastructure and link its provinces with the Red Sea.

He stressed the need to coordinate investment policies and procedures so that they all go in the same direction of encouraging investment, and that no action affecting investments should be taken without discussing it with the Ministry of Investment and International Cooperation.

He called for encouraging investment in services such as high quality education and health services, targeting countries such as Japan, Italy, China, Germany, and the United States (US) to encourage them to set up specialised industrial zones for their companies in the Suez Canal region – not only for production in the local market but for export to markets with which Egypt has trade agreements.

As for the flotation of the Egyptian poung, Abou El-Enein described the decision as inevitable, despite its contribution to raising the cost of importing production input. He explained that it had a positive impact on investment through providing US dollars and eliminating the informal market, as well as increasing foreign exchange reserves and facilitating the repatriation of revenues in hard cash, which brought back direct and indirect investments.

At the same time, he criticised the decision to hike interest rates, saying it harmed new investment and the expansion of existing enterprises. He hopes that the decision will be reversed soon so that these deflationary policies do not lead to further restricting demand and thus, reduce the ability to grow.

He asked banks to provide the largest part of their funds to encourage the private sector credit, not financing the budget deficit, and to set the goal of fiscal and monetary policies towards encouraging more work and investment.

He urged the importance of involving the armed forces in the Egyptian economy, saying that Al-Sisi made them the main contributors due to his keenness to develop the economy at the lowest possible cost and in the shortest time.

He noted that the armed forces do not compete with private investors on investment opportunities, and that their presence is necessary to help the government achieve development.

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