Dailynewsegypt

Author: Hussein Abd Rabo

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

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

    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.

  • Reform measures transform illusive system into a realistic one: Diab

    Reform measures transform illusive system into a realistic one: Diab

    Daily News Egypt interviewed the prominent Egyptian businessperson Salah Diab, chairperson of the Project and Investment Consulting Company (PICO).

    Diab reviewed the economic performance of Egypt during the last period, and the impact of economic measures on the Egyptian street, as well as his vision of political life in Egypt.

    How do you see the recent economic reform measures?

    The Egyptian economy’s recovery is on its way. The economic measures adopted by the government are like “surgery” which will develop the local economy from relying on illusive subsidies into a realistic economy.

    Egypt will achieve balance in prices, imports, and exports, but it needs some time to adjust the economic conditions.

    What are your expectations for the coming period?

    Egyptian exports will increase sharply after the Central Bank of Egypt’s (CBE) decision to float the local exchange. For example, PICO’s agricultural exports have increased significantly, as the exports of strawberry seeds increased threefold.

    Daily News Egypt interviewed the prominent Egyptian businessperson Salah Diab, chairperson of the Project and Investment Consulting Company (PICO).
    (Photo by Asmaa Gamal)

    What about the new investment law draft and its role in improving the investment atmosphere?

    The investment law alone cannot improve the investment atmosphere and attract investors. We need to reassure investors who want to know how Egypt will deal with them.

    The investors always want to achieve the highest return on investment. They prefer fixed taxes rather than tax exemption for a long period. For example, I suggest determining a fixed tax rate for 15 years, rather than the current eight-year exemption, so that the investor can calculate their profits over a long period.

    The investor also cares about the stability of the country they wish to invest in. They want to make sure that this country will not attack them, prevent them from travelling, or force them to reconcile based on the government’s conditions.

    The reconciliation measures in Egypt do not reassure neither local nor foreign investors.

    Do you think that the state of emergency will affect foreign direct investments?

    The three-month state of emergency imposed after recent terrorist attacks will not affect foreign direct investment flow. On the contrary, the state of emergency will achieve security in the country and reassure the safety of investments.

    We have experienced a 30-year state of emergency under former president Hosni Mubarak; however, we achieved a growth rate of 7%. Actually, this decision shows that the state is moving seriously towards securing the citizen, foreign investors, and vital installations.

    Do you think other businesspeople share the same view?

    Businesspeople should be reformers, not permanent critics. They should be capable of proposing alternatives and solutions.

    How do you see the state’s position of local businesspeople?

    The state arrested me for no reason, and that delivers a negative image to foreign and local investors.

    Have you considered moving your investments to outside Egypt?

    No, all my service, commercial, and investment activities will continue operating in the Egyptian market, even if the state increased the taxes to 80%.

    After the flotation of pound, some businesspeople cancelled their expansion plans due to the bad economic conditions.

    What about your investments and activities?

    I have a different investment vision than other businesspeople, as I always tend to expand my activities. We work effectively all the time, and everyone can see the expansions in La Poire and On the Run shops. Our expansion is not less than 20% in all activities annually.

    Would you expand in media production in the coming period?

    No, I just want to develop Al-Masry Al-Youm to keep up with modern journalism, and I have never thought of selling it, because I consider it as a reform project for the country, not a commercial activity. I never used Al-Masry Al-Youm to promote my commercial activities; on the contrary, I was affected negatively in the long run.

    Have you considered launching a political party?

    No, because the public action requires specific contributions and volunteer work without waiting for a return.

    I had refused to join the National Democratic Party (NDP), which could have allowed me to work with decision-makers. However, I joined the Wafd Party, which has a liberal ideology because I believe voluntary works should not be used for achieving personal interests. Businesspeople should not establish political parties, and we have many parties now but without influence.

    I have a different investment vision than other businesspeople, as I always tend to expand my activities. We work effectively all the time, and everyone can see the expansions in La Poire and On the Run shops: Salah Diab
    (Photo by Asmaa Gamal)

    Do you think there is a security crackdown on political parties in Egypt?

    I believe all the parties had to present clear and specific programmes to change the situation, rather than criticising the government to appear as an opposition party.

    I have never heard about any Egyptian political party to offer a plan, or an alternative solution, of increasing the average income of Egyptians over certain years.

    If there is any restriction to political parties, it will end when the regime has confidence in its agencies.

    How do you see the renewal of religious discourse?

    I reject the claims that Al-Azhar hampers the renewal of religious discourse. Salafist preachers, such as Al Heweny, who call for Muslims not to greet their Christian neighbours and congratulate them in their feasts, are the ones responsible for the crisis. The state is also responsible for the emergence of such figures about 15 years ago.

    So I am optimistic about the supreme council to combat terrorism and extremism, which was called for by President Abdel Fattah Al-Sisi recently. This council would limit those elements from spreading sedition in society.

    How do you see the performance of Egyptian parliament?

    I am not impressed by the performance of parliament.

    Do you agree on reconciliation with the Muslim Brotherhood?

    Why reconcile with them? They are like a separate country inside our own, and they have their own manifestos and violent militias.

    The Muslim Brotherhood does not have a religious vision that suits the future and technology and today’s requirements. They live in the past, and that is their favourite climate.

    Is there any truth about your acquisition of 70% of American agencies in Egypt?

    These are ignorant rumours. And if you can, name the agents I acquired. I do not own Ford, General Motors, Kentucky, and Hardee’s; I only compete with them.

    The truth is that I have three agencies, and only one of them is American. They all work in the field of construction and construction equipment.

    What do you think about the American Egyptian relations and the convergence between Al-Sisi and Trump?

    Relations must reflect the interest of the two countries. Trump will work to stand against terrorism, and I think he will be supporting Egypt in its war against terrorism.

    Do you think relations with America will be stronger compared to Obama’s era?

    Most definitely.

    How do you evaluate the performance of Sherif Ismail’s government?

    I think he is the best thing that happened to Egypt in a long time. His government includes good elements; however, future governments must be better prepared.

    What I mean is that the structure of the next government must be organised, including the number of ministerial portfolios and whether or not there will be a merging of ministries, in addition to the authority granted to ministers.

    Who is supposed to handle these issues?

    The presidency must assign some institution or a consulting firm. The cabinet could also have a working group to work on the upcoming government’s programmes.

    Do you really expect this to happen?

    If that did not happen, we will be surprised by the next government.

    In the most recent cabinet reshuffle, how do you explain the cases of ministerial portfolios being dropped?

    Ministers want reassurance, the same way investors do. How can we ask them to be reassured if they see the previous ministers in jail?

    Have you not donated to the Tahya Misr Fund because you object to its idea?

    Actually, I have given my donation directly to the president on portions, until I was able to pay it completely.

    How much was the donated amount?

    It is not right to disclose this information, and this applies for any kind of donations made by anyone to any charitable organisation.

    And if you ask me, Mohamed El Ashmawy, the head of the fund, is one of the most competent men.

    What about your relation with President Al-Sisi?

    I have a very good relationship with him; I hope he continues with success.

    Are you with the idea of a president having a party?

    No, legally he should not have a party. At the same time, we cannot be a state without parties.

    Do you think that the Egypt Support Coalition is the president’s party?

    I do not know, and I refuse this. I believe the coalition is one of the elements that have led to the return of the Socialist Union Party and the National Democratic Party. I refuse that a group calls itself “Egypt Support”, because would that mean that we call others “Egypt Demolition” parties? It is just not right.

    How do you assess the president’s performance over the upcoming period? Do you believe his popularity among Egyptians is diminishing after the recent economic reforms?

    Quite the opposite. What Al-Sisi did is a lot. The last attempts to reform the economy were taken in 1977; however, since then, the economy has been diminishing.

    How do you explain the state of anxiety and frustration Egyptians have as a result of these economic reforms?

    This is all new to them. People are repulsed by any changes, positive or negative. We tend to want familiar things to last. So, of course, we will need some time.

    Would you elect Al-Sisi for a new presidential term if he ran for presidency?

    Yes, I would, unless, you personally, are able to suggest someone better or is able to represent us better.

    Is the absence of an alternative or a competitor not a matter of concern?

    It is important that there be competition. In the case of the absence of a known competitor, we raise the question of “What is your programme? How will you implement it?” I believe that in the upcoming elections, the president will have a programme.

    Why have you elected the president even though he did not have a programme? 

    Because there was no alternative, and we were all panicking; however, during the upcoming elections, there must be a programme. Those who have the courage and confidence will compete against him. If I choose him, it will be for his programme, not for him as a person. This is a matter of competition of programmes against each other. Trump won against Clinton because he had a good programme.

    Are you concerned about the military’s control over the economic sector?

    No, I am not. The only case I would be concerned is if the army was given privileges. If it entered into civil activities, it must reveal its budget, profits, losses, tax, and customs. In the absence of these standards, I will definitely be concerned.

    The army’s involvement in the economy with the reluctance of some investors is necessary. I believe it will pay more attention to heavy military industries, on which civilians do not show much demand.

    How do you find the state’s strategy in the 1.5 million feddans project and its management of this specific file?

    I do not have an idea about this project, and I do not know if there really is groundwater and whether it would last for 80 years. I know that Egypt’s main issue is in the ways of irrigation.

    Irrigation ways in Egypt have been through flooding crops since the beginning of time, and this is a problem. Rationalised drip irrigation is much better.

    What do you think about the Toshka project and Al Waleed bin Talal selling it?

    The project is unfortunate, and I hope the situation improves.

    What is the truth about the existence of a group of businesspeople working against the president?

    This is not true. There will not be lobby groups unless there was an alternative to Al-Sisi. The only alternative is the brotherhood, so of course there is no lobby.

    Are you optimistic?

    Yes. Life is improving, and what is coming is better. We must, however, pay attention to education. It is the basis for any correct restructuring process.

  • Social protection programmes target poorest 10% of the population: Ghada Wali

    Social protection programmes target poorest 10% of the population: Ghada Wali

    The government has adopted a social protection network to mitigate the potential negative effects of applying the economic reforms agreed upon with the International Monetary Fund (IMF) to put the economy back on track.

    The fundamental ideas of ​​the government’s plans depend on expanding the cash support provided to specific categories, in parallel to reducing the other types of subsidies provided to the energy sectors that benefit all Egyptians without discrimination.

    The main criticism directed towards this plan is mainly regarding the insufficiency of the existing cash support programmes. The large gaps between the existing social security network programmes cause it to appear disorganised.

    Minister of Social Solidarity Ghada Wali said that the spending rates over the social protection programmes are growing immensely, and the government is working on making them more versatile through adding more monetary/cash support programmes.

    What is the size of social protection programmes in Egypt?

    The social protection budget for the current fiscal year (FY) 2016/2017 is estimated at EGP 12.5bn, which includes EGP 7bn for the social solidarity programme, and EGP 5.5bn for the dignity and solidarity programmes. EGP 4.1bn is directed from the state’s budget, and EGP 1.4bn is a loan from the World Bank, which will be repaid by the state. This reflects the government’s interest in protecting society.

    The dignity programme is specified for the elderly population, while the takaful (solidarity) programme is specified for women and their families that are suffering from extreme poverty or have unstable income. The family obtains financial aid through the programme, which includes EGP 60 for students in the primary level of education, EGP 80 for students in preparatory school, and EGP 100 for students in secondary school.

    The programme targets to provide financial aid to the poorest in the society—an estimated one and a half million poor families. A year after the programme’s launch the number of beneficiaries reached half of its target goal.

    Our ministry and the Ministry of Finance are examining potential alternatives that would increase the number of beneficiaries of the programme; however, we have not yet decided on a final model.

    What are the social protection mechanisms implemented by the government to reduce the effects of reform on the poor?

    The ministry is implementing several programmes that target reducing poverty in cooperation with other ministries through the solidarity, dignity, and nutritional/food support programmes. The ministry focuses on the poorest 10% of the population.

    We provide conditional and unconditional cash support/subsidies to the poor. The number of people who benefit from security pensions is roughly 1.7m families, receiving a total of EGP 609m.

    The scholarships provided by the ministry are estimated at EGP 220m annually.

    We also offer programmes for impoverished families that have suffered due to disasters, resulting in property loss, injury, death, and funeral expenses.

    The total number of beneficiary families for the first batch is an estimated 87,900 families, and the funds spent for these families has amounted to EGP 32m annually.

    The number of the beneficiaries of relief aid between July 2015 and June 2016 was roughly 15,700 families, with costs estimated at EGP 38.9m.

    Those labeled as in need in Sinai Peninsula obtained EGP 24.2m as exceptional aid, designated for those who have been affected by terrorism, particularly families in Rafah, Al-Arish, and Sheikh Zuweid.

    Does the ministry plan to launch new programmes in the coming period? Will there be any partnerships with the private sector?

    The ministry is currently studying possibilities for launching the Tamkin wa Tanmya (enabling development) programme, which aims to provide employment opportunities for the poor in various governorates. However, it will not be announced until the financing for the programme is decided upon.

    We are getting ready to launch another programme entitled Forsa (opportunity) in the coming days. The programme targets to prepare and qualify young people for the labour market, according to the qualifications needed for available employment opportunities.

    We recently established a social responsibility unit with the private sector, and cooperation is underway with a number of companies, including Nestlé, Majid Al Futtaim, and Americana. These partnerships were created in order to qualify and prepare young people according to the requirements of the labour market, as well as providing them with employment opportunities.

    What are the latest updates on the NGO draft law, and what are its main features?

    We finished the draft of the non-governmental organisation (NGO) law, and it is currently being discussed with 10 of the largest organisations before it will be submitted to the cabinet and forwarded to parliament for discussion and approval.

    Article 75 of the constitution states: “All citizens shall have the right to form non-governmental associations and foundations on a democratic basis, which shall acquire legal personality upon notification. Such associations and foundations shall have the right to practice their activities freely, and administrative agencies may not interfere in their affairs or dissolve them, or dissolve their boards of directors or boards of trustees save by a court judgment. The establishment or continuation of non-governmental associations and foundations, whose statutes or activities are secretive or conducted in secret or which are of military or quasi-military nature is prohibited as regulated by law.”

    The law obliges all associations and civil institutions to post their budgets, reports, and details of their projects on the central database of the Ministry of Social Solidarity every year, to ensure transparency and accountability.

    The modifications will include removing the negative sanctions that prevent freedom and replacing them with administrative penalties or administrative fines, depending on the type of violation.

    The law allows NGOs to branch outside of Egypt, after they receive approval from the Ministry of Social Solidarity’s coordination committee.

    The law fixes the problems of the entities that practise civil work, and are not subjected to laws that regulate their work and adjust their positions, urging them to modify their systems and adjust their positions according to the provisions of the law within a year from the law’s implementation.

    The law allows associations to mobilise financial resources with permission to collect donations and implement projects, then invest its excess revenues to achieve greater financial resources.

    The law supports the development of NGO projects in order to activate their role as effective tools in civil society.

    There will be new items that target to fix the foreign funding woes currently facing NGOs. A coordinating committee will be formed to be responsible for the activities of foreign institutions and the foreign finances provided to NGOs. The NGO will have the right to obtain foreign finances and register their project with the administration, which can approve or reject their request within 60 days.

    Financing will be approved as long as the coordinating committee does not reject it during the 60 days.
    How much is the insurance investments ratio in the EGX?

    The insurance investments ratio in the Egyptian Exchange (EGX) ranges between 1-2%. There was a study carried out that examined the possibility of increasing these figures; however, the discussions led to them not being increased, given the instability of the EGX.

    How much was the investment interest rate on social insurance and pensions during the last FY?

    The return on insurance and pensions investments during the last FY was roughly 7.3%.

    The size of the pension funds reached roughly EGP 665bn in June.

    EGP 315bn as a non-trading sukuk with an average return of 9%, EGP 55bn deposit of the National Investment Bank with a return of 9% annually, EGP 121bn direct investments in securities and financial companies with an annual return estimated at 13%, in addition to EGP 174bn debt of the general treasury represented in the Ministry of Finance.

    There are problems facing the insurance system, perhaps the most important one of which is the deficit caused by the current economic situation and its dues in the government and private sector. What is your comment on this?

    We are currently examining and preparing financial centres for social insurance funds with an international organisation, and the final report of the organisation confirms a significant deficit in social insurance funds. The reform process should be accelerated.

    According to Article 8 of Law 79 of 1975, the insurance funds are guaranteed by the state, and the law will be modified to meet constitutional requirements.

    What are the investment policies of the insurance sector?

    There is a new investment policy in the insurance sector that is based on three fundamental concepts, which are security, liquidity, and profitability. The ministry is studying similar experiences in the insurance investment fields that achieved success and are admitted internationally as the best administrative forms for insurance and pension investment.

    The importance of investment is maintaining the actual value of the excesses of social insurance and protecting them from the societal inflation—that are required for improving reserves and assets to cover the insurance commitments, to support the economy, and to achieve economic investment goals—which requires legislative modification in accordance with the constitution to establish an independent entity to manage and invest the excess social insurance money.

    What are the mechanisms that contribute to achieving large insurance investment returns?

    The best investments are the ones that achieve higher returns over long-term periods and they are represented in increasing the contribution rates of corporate and bank capital—which enjoys a strong financial position and high profitability—then purchasing these shares from the EGX.

    This also includes establishing companies in promising economic sectors, such as cement, fertilisers, petrochemicals, petroleum, and telecommunications and information technology.

    These sectors have great opportunities for growth in light of the increased size of demand on strategic commodities and the decline in supply through participating with banks and private sectors.

    We invest part of the insurance finances in the real estate sector, insert all the annual appropriations in the national administration for social insurance budget, and repay it monthly to cover the treasury commitments that are spent by the funds to avoid the accumulation of debt on the Ministry of Finance

    Is there an intention to increase the rate of return on the sukuk issued by the Ministry of Finance to the Social Insurance Fund?

    The ministry seeks to increase the rate of return on sukuk issued by the Ministry of Finance to the Social Insurance Fund to cope with interest prices on Egyptian bills and bonds issued by the Ministry of Finance. These sukuk will be consumed during a suitable period of time which allows them to be repaid annually with a specified ratio from the sukuk value.

    Some of the assets owned by the Ministry of Finance will be transferred to the Social Insurance Fund in the form of shares in the companies operating in important economic fields, such as petroleum, electricity, telecommunications, or real estate, or industrial investment lands, or agricultural reclamation projects.

    There were attempts to pass a new law for social insurance and pensions in Egypt. What are the latest updates on this?

    The Ministry of Finance prepared a new law and passed it in 2010. However, after the 25 January Revolution some segments of society, particularly those attached to syndicates and associations that represent pensioners, were against the law, so the state repealed it.

    We are preparing a new law to comply with the 2014 Constitution and with the international and regional conventions in the field of social protection.

    The new draft law targets legislative reform of social security systems and pensions, and aims to merge social security laws and current pensions in a unified legislation.

    The draft law seeks to remove the current problems resulting from the differences between the basic and variable salaries, unify the insurance subscription into one main salary, and implement a law to rectify the impact of inflation on the real value of wages and pensions. This requires linking wages to a suitable standard variable percentage that maintains the real value of pensions over time, as well as securing a living standard for pension beneficiaries through stipulating the increase of wages, while considering new methods to finance the desired increases.

    The law targets to put in place a minimum rate for pensions, calculating the pension according to the specified benefits, and linking the benefits with salaries. The state will remain the financial guarantor of the pensions system.

    Enhancing financial and monetary stability is vital to maintaining the real value of pension funds, as well as sustaining the regulatory and structural reforms related to capital markets to enhance growth opportunities and create a powerful insurance industry.

     

  • Al-Sisi would not run for presidency if he found his popularity had dwindled: Al-Sinawi

    Al-Sisi would not run for presidency if he found his popularity had dwindled: Al-Sinawi

    Journalist and political analyst, Abdullah Al-Sinawi, believes that Egypt is going through a difficult phase and going into a dark tunnel.

    Although some see that Al-Sinawi has close connections to the presidency, his writings on public affairs are sharp and scornful, criticising the state’s policies.

    He explains that as a free writer, it is one’s duty to speak frankly, just like all writers who are loyal to the country. Otherwise, they will be traitors of the responsibility of writing about the critical time that the state is going through.

    Speaking about current risks and how to get out of the dark tunnel, Al-Sinawi presented the following dialogue.

    Why are we so scared of the coming days?

    The general scene in Egypt is disturbing. We are facing a number of crises; some are existential and some prophecy dangers. There is a bottleneck in the political and the media sphere. There are economic and social crises. Difficult days are yet to come.

    The baby formula crisis was one of the first indicators, as well as the workers’ demonstrations and the return of bread queues. These indicators are introductions to social turbulence that we must face seriously. We must acknowledge that the current policy has failed and needs to be corrected.

    Which is more dangerous to the country from your point of view: the economic crisis or political suffocation?

    Although the general situation in Egypt is bad and although there is no political opposition that has clear programmes, perceptions, and cohesion, the economic crisis is more serious than political and social opposition.

    The danger here is that there is no political head and the state lacks the ability to establish political consensus. Therefore, everything is up to coincidence, random clashes, and the pressures of public anger.

    Where do you see the media in that?

    We are suffering from media suffocation or the lack of media as a whole, preventing it from playing a role and building an agenda. Priorities raised for public discussion are not determined by the media or the authority, but rather by the alternative media through social networks.

    There are issues that the TV and newspapers cannot deal with, but these issues arise on social networks, such as the army’s role in public life.

    But are there those who see the importance of the army’s role now?

    I understand and appreciate that the army intervened in some cases to face a difficult and intractable situation, but to interfere in every crisis leads to the erosion of trust and exposes it politically in front of an angry public opinion.

    The army will be held responsible for the failure of the administration to act and solve problems.

    What do you think of Egyptian political discourse?

    There is no Egyptian political discourse. There is a difference between political talks and political discourse, as political discourse is cohesive in its vocabulary and semantics.

    Political discourse also reflects the attitudes and social biases raised to public opinion to persuade, inspire, and invite public opinion to be patient to find the light at the end of the tunnel.

    Do you not see any ray of hope in the near future?

    The problem is that Egypt is entering a long, dark economic and social tunnel.

    I think that these are signs of danger and the risks exceed the regime, the current president, and even the safety of the community.

    Is the regime in danger?

    Despite talks about bringing down the state, the main issue is that the community’s cohesion is threatened.

    Do you think that ignoring political powers is a deliberate move?

    There is a state of disregard or contempt of the political opposition. Egypt has no real political parties with declared programmes and leaders capable of influence.

    Public and national interest requires strengthening these parties, not to weaken them. It also requires to call all parties to the scene and to be a part of the political partnership.

    But the regime sees that the security solutions are successful. What do you think about that?

    Security is not an alternative of policy; the outcomes would be disastrous, and those results have begun to clearly emerge as the regime’s popularity has fallen. The president always says that he has no political support and some people want to eliminate his popular support. Of course, there is no popular support without a political backer.

    We are talking about the one-man state?

    It reflects the idea of ​​the domination over state institutions or limiting the power to the president, as he is the only one who thinks, decides, and speaks. The one-man show would harm the president himself, because he will neither find a political backer nor popular support. When the president loses his patience with the media and different views, then the foreign channels affiliated with the Muslim Brotherhood will be the only effective media outlet, alongside social media. The era of the emergence of uncontrolled satellite channels does not suit the nationalisation of the media. Demolishing the political life, fighting political parties, and mistrusting political elites will increase the problems of the regime and will prevent the change.

    So are we awaiting new changes?

    The change is necessary in all times but the question is whether to bring about this change through normal channels or alternative methods. There is a possibility that the change will happen through irregular methods and this has happened more than once. However, it seems that no one learns from the lessons of the past.

    But don’t we have a large number of political parties and a parliament which gathers a lot of those parties?

    When the parliament was elected, many political parties joined the Egypt Support Coalition, Then, President Abdel Fattah Al-Sisi said that he had no political backer, as if he sentenced this coalition to death or complete failure.

    But this coalition controls the parliament and its decisions. What do you think about this?

    There is a difference between giving security or administrative instructions to vote in favour of a resolution or law, and the ability to raise controversy and agreement which can convince the public opinion. The parliament’s decision to ban the broadcast of its discussions and deliberations made it an Ali Baba cave.

    That way, you do not know what happens inside the parliament, which political forces dominate it, and who makes the final decision─the security or other parties? Who are the other parties and what are their visions and programmes?

    What is your opinion about Al-Sisi?

    The issue is not my about the president. The point is the president’s stance on the dangers facing Egypt.

    The duty of the journalist is to warn and alert as much as possible, in order to avoid dangerous pitfalls.

    The danger facing society is huge, and there is no rule to protect public consensus. The possibility for dialogue should be opened, especially since the community is under imminent threat that requires clear and transparent talking.

     

    The current situation in Egypt is neither correct nor sustainable, and Egypt cannot tolerate anarchy or a new failure. Our responsibility is warning, but the president is the one who will bear the responsibility before people and before history.

    He sat down with the senior intellectuals and writers, and he listened to them. There should be an associate team who reads what they say, and provides a vision to the president.

    According to what was just mentioned, where is the political kitchen of the presidency’s institution?

    I do not think there is a political kitchen in Egypt, and I wrote that two years ago:
    “The president is lonely, and unfortunately, he will bear the responsibility alone.”

    Perhaps the centres of power are hampering the attempts of reform?

    The president’s mistake is letting the security enter the public life. The security’s role is determined by laws and the Constitution, which they greatly influenced, and this lowered the president’s popularity. The president should initiate a national dialogue to listen, allow, and seek to make political ends meet. He needs a protective political network.

    How can he establish this network?

    Firstly, by releasing the unjustly imprisoned young people. The president has talked more than once about the need to release them, but those statements weren’t accompanied by positive movements on the ground. Releasing young people will lead to a reconciliation between these young people and the state.

    The National Council for Human Rights (NCHR) was promised to meet with the president, but the events of the Press Syndicate prevented that from happening. The meeting was scheduled to provide a list of 1,000 prisoner cases. I think that this meeting will probably bear positive results.

    Secondly, the state should free the media. The hands of the state have become too involved in the media, and talk show programmes turned to variety shows.

    Thirdly, managing the Nile water file needs a lot of honesty and strength. The president has pointed out the importance of expanding water stations in order to face any expected lack of water. However, honesty is necessary. Egypt is a pivotal country and should not be treated with disrespect.

    But all the dialogues and the state’s speech reveal that the crises you are talking about actually exist.

    The state’s speech is too confused─press wise and politics wise. The state is talking about carrying out procedures to reform the economy which is approaching bankruptcy. The state says that there is no alternative for the loan from the International Monetary Fund (IMF), but it is not a solution. This is merely a step to prevent a potential economic collapse. This, however, will result in social unrest that requires being addressed with economic experts and patriots from all economic fields inside and outside Egypt.

    When the president and the government ask people to sacrifice, they must show them the light at the end of the tunnel and acknowledge their responsibility for the policies they made. Priorities must also be determined, and the state of austerity must be imposed first on the government and the presidency, before it is applied to the people. More strict procedures must be imposed to face corruption, and regulatory agencies must work on uncovering corruption.

    In terms of distributing burdens, there must be justice. If you take a good look, you will find that it’s the poor who pay the price, while the rich do not pay. This is why I demand imposing a tax on wealth, as suggested by Samih Sawiris and Farid Khamis.

    There must be real achievements in order for citizens to feel a change.

    Where does the Egyptian elite stand on these thoughts?

    Some public figures thought of issuing a report on behalf of the intellectuals and sending it to the president. However, the idea never became a reality.

    What do you think about power centres and their role in hindering reform projects?

    Power centres arise in the joints of any authority whenever rules are absent from institutions. The regime has given a lot of power to the security forces after the 30 June uprising. The result was that power centres were established at the expense of political affairs, with alliances happening between some security officials with businessmen and media figures. The result was that many mistakes were made, and a lot of phone calls were broadcasted on TV, which was the power centre’s first sin. This has led to massive slander at many points, most prominently of the president. No one and no institution was safe from the violations.

    Moreover, freeing the hand of the security has led to slandering the 25 January Revolution, and therefore, picturing the 30 June uprising as a coup by another party, although those who participated on 30 June 2013 represent the blocks of the 25 January Revolution. Both revolutions were hijacked and 30 June has been used to slander 25 January. In spite of the fact that the president’s discourse about the 25 January Revolution is positive, it should have been accompanied with determining points of view, especially of the 30 June supporters.

    There is a slogan being promoted now, saying “with bold reform, we can shorten the way”. What is your take on that?

    Meaningless. What is the bold reform and what way do we want to shorten the way? Egypt is in need of serious talk because the present time is very dangerous. We need to talk about the core of problems, which, in return, will lead to national coherence.

    Social media is talking about the militarisation of state institutions. What do you think?

    This is very dangerous talk and those who say it should stop saying it. The army has a real popularity, but dealing with it as a political body and blaming it for the general failure is eroding its popularity, which is dangerous for Egypt.

    And what is the solution?

    The solution is for the army to return to its normal role as soon as possible, and for civil society to quickly fill the void it will leave. Moreover, the army should put a plan to withdraw from the scene. I remember that Al-Sisi said at the time of the Supreme Council of the Armed Forces that the return of the army to its normal missions will greatly increase its popularity.

    What about the calls on reconciliation with the Muslim Brotherhood?

    The reconciliation is an idea with bad reputation and almost impossible in the foreseeable future, given the blood shed by the two parties. People should admit that eradicating the Islamic current is an illusion that will not occur. The state has failed in that issue, as well as in the issue of terrorism. The issue needs to be handled under the slogan of ‘no eradication, and no reconciliation’.

    Will Al-Sisi run for a second term?

    The shape of Egypt in 2018 cannot be predicted. The state is suffering and prices are increasing, but Egypt’s situation by the end of the current presidential term cannot be predicted. If Al-Sisi manages to get everything under control, he will not face real competition in the elections, but if things are uncontrolled, the coming situation will not be foreseeable.

    Given the president’s personality, if he finds that his popularity had shrunken, he may decide to leave the scene or things may become uncontrollable.

  • Al-Sisi has not made serious mistakes, opposing his policies is a point of view: Makram Mohamed Ahmed

    Al-Sisi has not made serious mistakes, opposing his policies is a point of view: Makram Mohamed Ahmed

    The situation in Egypt is not so good. Danger bells are ringing at home and abroad, warning of the deteriorating situation in a country whose importance could have repercussions on both global and regional levels. Enemies do not want the state to fall, but they do not want it to rise either. The current situation in Egypt features an intense political scene amid various economic crises that have caused a wave of price hikes that have hit the already poorer classes hard, threatening unpredictable social and regional disturbances.

    All these issues compounded makes it hard to fully and accurately analyse the situation, instead limiting the debate to the fate of President Abdel Fattah Al-Sisi and whether or not he will run for office again. Moreover, further questions arise about the leader’s responsibility for the problems spanning his two-year rule and if he would alter his policies to lead the country out of the bottleneck.

    All these questions need expert answers. Columnist, veteran political writer, and former head of the Press Syndicate, Makram Mohamed Ahmed, was a witness to Egypt’s former presidents and close to former president Hosni Mubarak. Ahmed enjoys credibility among the Egyptian elite. Though he is nearing his 80th year, the renowned journalist still reports, conducts interviews, and attends seminars and conferences. He says he is a journalist who writes for himself and his readers, not for regimes. His life story positions him as popular source for those in pursuit of wisdom.

    What is your evaluation of the current scene in Egypt?

    The scene in Egypt is currently characterised by a chain of economic crises and price hikes that grind the people down while a government that is indecisive in some things and hesitant in others stays still.

    Still, the majority of Egyptians have confidence in President Al-Sisi. His popularity may have fallen by 19%, according to Baseera Centre for Public Opinion Research, yet most Egyptians are willing to give the president another chance—they are convinced that he could lead them out of the bottleneck.

    If we look closely, Al-Sisi did not commit any serious mistakes throughout his two years in office. Some people, of course, have a different perspective regarding certain decisions or projects, such as the Suez Canal Development Project or the New Administrative Capital. But any shortcomings are related to feasibility and timing—the Suez Canal, for instance, did not realise its set goal due to reasons related to global trade. Similarly, the New Administrative Capital is a vast and crucial project, but it will consume much-needed money.

    Furthermore, there are conflicting views over the sovereignty of the two Red Sea islands, Tiran and Sanafir, although geographical and historical facts prove the islands are Saudi. The latest Egyptian Geographical Society report confirmed this.

    Thus, disagreements over Al-Sisi’s policies are not huge and most Egyptians still have trust in him.

    At the international level, there were reservations from some countries about Egypt post-June 30th. For instance, the United States, with its pragmatist stance, has begun reconsidering its outlook on Egypt. It now understands that Egypt is an important part of the Arab world—resumption of military relations serves as a proof of this. There is a state of coexistence now following a period of suspending arms and ammunition delivery.

    In terms of relations with the European Union, we can say that it is good despite the Saudi-Egyptian dispute on Syria. Egypt stands with those who wish to unify Syria and are against its division. Arab aid to Egypt is not same as before, due to the economic problems facing the Gulf as a result of falling oil prices.

    Egypt’s relations with Israel are good. The Israelis have played it smart with Al-Sisi—they haven’t objected to his efforts in countering terrorism and have allowed the entry of weapons into Sinai.

    Hamas on the other hand, as part of Muslim Brotherhood, has antagonised Egypt, although Mubarak-era Egypt had dealt with them in Palestinian reconciliation talks and hosted them in Cairo. Hamas has made itself a defence mechanism for Qatar and Turkey—they did not play smart with Egypt. Hamas should have realised their size and stayed away from any dispute with Egypt.

    Ahmed enjoys credibility among the Egyptian elite. Though he is nearing his 80th year, the renowned journalist still reports, conducts interviews, and attends seminars and conferences (Photo by Nada Amr)
    Ahmed enjoys credibility among the Egyptian elite. Though he is nearing his 80th year, the renowned journalist still reports, conducts interviews, and attends seminars and conferences
    (Photo by Nada Amr)

    Certain professions have expressed concern about political freedom. What is your comment?

    Some journalists are anxious about freedom of the press. Al-Sisi’s comments on former president Gamal Abdel Nasser’s relationship with the press have been misunderstood. But no writers were banned and no papers were confiscated.

    There are opposing voices and political parties. Real opposition is necessary. The security’s caution towards political parties is exaggerated. Security protects the system. Therefore its standards and cautious are exaggerated.

    You called for a party that supports the president and another opposing him to be established. Can you explain this further?

    I spoke about the necessity of adjusting the political situation by establishing a healthy political landscape along the lines of western democracy with guarantees of power transfer and fair elections. I did not demand the establishment of a political party headed by Al-Sisi. The Constitution prohibits that. Al-Sisi can run for another presidential term. I do not believe he would pursue amendments to the constitution in order to extend his mandate.

    I think having Al-Sisi in office will be a good chance to rearrange the political landscape, but not by creating another National Democratic Party (NDP). The NDP and its leaders have vanished and will not return. Nor am I calling for another Sadat by forming political platforms. Anwar Sadat and Ibrahim Shokri made a misstep when they allowed the Brotherhood to enter the political landscape. I am calling for a genuine opening of political space. I do not object to establishing pro-regime parties, but there should be a credible opposition. We have parties that could do so.

    All these changes cannot happen suddenly or incidentally. We should prepare the political theatre for these relations between political forces, which is a kind of transfer of power and guarantee of integrity in the electoral process.

    What is your opinion of the upcoming presidential elections amid rumours that Al-Sisi has no competitor?

    Any presidential candidate wishing to compete against Al-Sisi in the coming elections will face a problem. I believe that former candidate Hamdeen Sabahi will play the same role. We need a bold step to break this impasse. I do not know how it could happen, but we must confess that this is a political defect.

    I believe that Al-Sisi wants to run in real elections, rather than just a referendum—which requires competitors.

    We hope to find competitors and a serious opposition—those who want to run should be bold and fearless of falsification campaigns.

    What is your opinion on calls for Al-Sisi not complete his term in office?

    I was surprised. Who is calling Al-Sisi to not complete his term? What is their political weight? It has never happened in the history of journalism that a newspaper demanded that Al-Sisi not complete his term. This is strange for these international newspapers.

    Apparently, there is pressure from some countries to force Al-Sisi to step down. Some in the US and the UK think that it would better for Egypt to be ruled by the Brotherhood. They see them as partners. Moreover, they believe that the rule of the Brotherhood will bring stability and that they are an effective economic power. That is what the west believes. However, Egyptians had a bitter experience with the Brotherhood upon which they overthrew their regime. How could anyone impose reconciliation with them on the Egyptian people?

    Has there been any reconciliation between the Brotherhood and the regime?

    No, the Brotherhood does not want reconciliation. They are now more inclined towards extremism. Many thought they were rethinking their stance from the 1990s, but that would be false. The majority of them would be deemed guilty if that happened, especially during their ruling, due to their lack of experience, stubbornness and disbelief in democracy.

    The Brotherhood did not realise that Egyptians changed after 25 January 2011. The people could not stand their strange thinking so they rebelled on 30 June.

    What do you think about the military’s control over economic activity in Egypt?

    I’m against it—not for fear of the military but because of the numerous challenges. It is better for the military to focus on its main mission of protecting the homeland. Official statistics show that its economic activity represents 20% of the total national economy. A large percentage of the state’s land is under military control.

    Are you satisfied with the mechanism of selecting ministries through regulatory agencies?

    These agencies make the worst choices. They lie directly to the people but get off scot-free. We have many conflicting agencies, with a conflict of specialties rather than institutions.

    What is your evaluation of the crisis in the relations between young people and the authorities in Egypt?

    It exists due to different ways of thinking and the absence of any political role for parties and other institutions that deal with the angry youth demographic. It is necessary to have resistance against regimes that are inclined to tyranny.

    What is Egypt’s regional role amid the political and military changes?

    Egypt is no longer a main player in the region due to the surrounding circumstances. This is an era in which Saudi Arabia has the say. I’m satisfied, however, with Egypt’s stance on the Syrian crisis and Egypt’s support towards Syria as a whole, not its divided factions.

    I believe there have been changes in the region. The Americans are withdrawing after petroleum ceased to be an incentive to stay in the region as well as the rise in the existence of alternatives. Obama’s policies have shown a clear failure in managing relations in the Middle East. This does not mean that America was not behind the 25 January revolution—as Hillary Clinton and Vladimir Putin have stated before.

    Regarding Russia’s role in the region, Russians have previous experience and are being careful. They adopt the pragmatic of thinking about “how it will benefit us first”.

    Iran is a dangerous player in the region because of its influence in Lebanon, Syria, Yemen, and Iraq. There is a contradiction between Iran’s interests and Arabs’ interests. A dialogue is necessary to find common benefits.

    Are you concerned about Egypt?

    Egypt can help itself on its own, as its history shows. It does not tolerate racial conflicts or civil wars, however, the political scene is heated and there are many economic crises accompanied by high prices and the poor are bearing the burden.

  • Legislative reform necessary to improve business environment: former EGX head

    Legislative reform necessary to improve business environment: former EGX head

    Former head of the Egyptian Exchange (EGX) and chairperson of Atef El-Sherif Law Firm and Consultants, Atef El-Sherif, stressed the importance of starting a legislative reform process that aims to improve the business environment.

    El-Sherif said that the state is diligently seeking to attract foreign direct investment with the aim of increasing growth rates and creating jobs, which requires real reform in all the economic sectors. He noted that many laws and legislations associated with investment are in need of amendments, including facilitations and incentives, besides clear rules for the process of allocating lands to investors.

    El-Sherif mentioned a number of laws that need to be amended, such as the Investment Law, the laws regulating land allocation, the bankruptcy law, the rules of exiting the market, the capital market law, and the mechanisms of settling disputes between the state and investors.

    He hopes that reform extends to the state’s administrative body in order to reduce bureaucracy and to fight against corruption through working on the publication and localisation of e-government, applying decentralisation systems in the local administration and giving power to governors to make decisions on the establishment of projects and the allocation of land.

    He explained the importance of having a clear investment strategy that determines available investment opportunities, areas with facilities and land allocation mechanisms. This strategy should include fairness in distributing investments among all governorates, particularly in the regions that face an increase in poverty and unemployment.

    He said that foreign investors are looking for a good and clear investment climate characterised by stability and transparency in dealing, tax policies, and economic stability.

    He called on the government to study the experiences of neighbouring countries for how to attract foreign investment, such as Jordan, the United Arab Emirates (UAE) and Morocco.

    El-Sherif pointed out the importance of accelerating reforms in order to cope with the economic crisis the country is going through which requires urgent solutions, most importantly rationalising government spending.

    It is necessary to coordinate between ministries to speed up achievements, in addition to offering real incentives and facilitations to support the sectors of agriculture and industry in order to increase exports and limit importing, leading to an increase in the country’s foreign exchange income, according to El-Sherif.

    El-Sherif demanded coordination between the Ministry of Finance and the Central Bank of Egypt (CBE) in applying monetary and financial policies in a way that suits the economic changes the country witnesses. This includes the deformities of the exchange price, limiting borrowing, and reducing the budget deficit.

    El-Sherif warned against the slowdown of applying these reforms, noting that the country does not have time anymore because of the worsening economic crisis and its clear impact on all segments of society.

    The impacts of the crisis include the high prices, the low production levels, and the lack of available foreign exchange. They are all issues that reveal the social unrest that could aggravate if no fast solutions were reached.

  • The QIZ: A Faustian Deal

    The QIZ: A Faustian Deal

    Egypt and Israel signed the Qualifying Industrial Zone (QIZ) 11 years ago, which promotes and facilitates the entry of garment exports to the US market and in exchange, Egyptian factories import raw materials from Israel. At the time, my colleagues and I called this agreement a deal with the devil. When we sign agreements with Israel or the US, we do not receive the advantages we seek. Would you be able to live with a fox or a wolf, even if you feed them?

    Eleven years ago, a number of industry leaders and government officials promoted the importance of QIZ and said it is the only thing that can save the Egyptian textile industry. They said the US will open its market for our garment exports.

    The agreement was signed and top producers cheered but it was only Israel that won by way of political and economic normalisation with Egypt. About 400 Egyptian companies and factories adhered to an agreement that stipulated export to the US market and the import ofraw materials from Israel. This made Israel the primary beneficiary of this agreement as it could impose its products and prices on Egyptian manufacturers.

    Even worse, Israel obtained the right to write off Egyptian companies enlisted in the agreement. Right now, Israel is threatening eight companies with that if they do not buy its raw materials. The threat was made when the Egyptian companies committed a number of violations by faking bills of purchase from an Israeli-Egyptian company chaired by a senior promoter of this agreement. One of this official’s employees went on to establish a company for importing Israeli raw materials to Egyptian companies.

    This agreement has brought so little to the Egyptian economy. Our revenue of exports to the US market is still below $900m while Bangladesh and Vietnam exports account for a revenue of $10bn in textile exports to the US. Even Jordan, another member of the QIZ, exports twice as much to the US market.

    Moreover, 20 exporters from 400 Egyptian companies in the agreement account for about 80% of Egyptian exports to the US market. All those exporters were promoting the agreement, namely Galal El-Zorba, Mohamed Kassim, Magdy Tolba, Hamada Kalyouby, and Alaa Arafa.

    The rest of the 400 companies make almost nothing out of this agreement. Furthermore, some of those industrial giants trade Israeli ingredients and manipulate Egyptian companies that are now threatened by an Israeli warning.

    Where is our Egyptian negotiator? Where is the QIZ unit from the Ministry of Trade? Why is it standing still while companies face threats like this, though knowing well who forged those bills? Why is Israel not held accountable when it is the provider of these materials? Where does the unit stand with reducing Israeli materials to 8.5%?

    Does this unit negotiate or does it receive orders and conditions from Israel? Do we still need this agreement? Do we have to accept it as it is or amend its terms? Will QIZ become a new space of negotiations that forecloses upon negotiations before they begin?