Ayman Aly Osman

To attract more foreign investments, Ayman Aly Osman, Head of the Economic and Commercial Office of Embassy of Egypt to China, made a presentation and explicitly introduced the overall economic situation, investment environment as well as governmental incentives on foreign investors in Egypt. Full text of the presentation follows:   

Since the early 1990's, the Government of Egypt launched a comprehensive economic reform and stabilization program aiming primarily at generating sufficient growth rates that are sustainable, alleviating and improving the standards of living, reducing unemployment and containing inflation rates down to safe levels.

Egypt is rapidly shifting towards a market based economy which necessitates that it also implements a consistent economic policy mix. This policy mix will require both the enabling environment to allow for achieving real economic growth, and rehabilitate the Egyptian macro and microeconomic institutions.

From another angle, what has been successfully achieved so far surpassed in many areas what was initially planned for in the reform program. Accordingly, the IMF has described the Egyptian reform program as "an achievement that has few parallels". As a result of this success story, Egypt is today geared to enter the new millennium with a robust economy, capable of its vigor and apt to apply its due role in world prosperity.

The Egyptian economy has already started reaping the benefits on its program, which is again reflected in its improved key economic indicators. It follows that the government is not only enhancing the private sector as a critical engine for economic growth and development, but it is aiming at strengthening the continued prudent management of the macro economy.

Therefore, the Egyptian Government will continue working on several fronts according to its priorities as follows:

1.       To generate greater investments, both domestic and foreign, through the creation of an investor friendly and enabling environment.

2.       To increase savings to support higher levels of investment. Therefore, the insurance sector, capital markets, and social security are being developed to improve the range, quality and efficiency of their services and products.

3.       Export promotion and improvements in the competitiveness, marketability, and quality of Egyptian products are the most important initiatives needed to see Egypt into the 21st Century with a strong, dynamic and diversified economy.

A number of export promotion initiatives are underway and should help Egypt attain its rightful position as a regional trading partner.

Egypt's key strategy is to move quickly to integrate its economy into the world's economic system by maintaining a balanced macroeconomic framework by the following:

1.   Integration into the world economy.

2.   A modern society; physical and social infrastructure.

3.   Growth, social and economic targets.

4.   Exports as the engine of growth.

5.   Global and competitive industrial strategy.

6.   Forging new trade arrangements.

7.   Gearing up for a knowledge-based economy.

Following the Egyptian economic restructuring program adopted by the government, several factors that dominated the industrial policy and the behavior of the industry over the last decades have changed completely. The main factors being:

1.     Going to the market forces economy and abandoning the central policy.

2.     Liberalization of trade which will minimize the protection that the local industry enjoyed so far and will make it subject to international competition.

3.     The elimination of the dual pricing system and uplifting of subsidies, also on energy and raw materials prices.

4.     Issuing the new public business sector law which liberates management and prepares the ground for privatization of public business sector companies.

5.     Opening up investments both national and foreign in all industrial sectors with very few exceptions namely military production and energy absorbing industries.

The diversification in Egyptian manufactured goods, the growing domestic market and the improvements in product competitiveness and quality, all attract a growing number of multi-nationals to base their operations in Egypt.

Currently, manufacturing output stands at 18.1 percent of total output, of which some 62 percent is contributed by the private sector. About 35 percent of the total private investments in Egypt are directed to the manufacturing sector, which is one of the most attractive sectors for enterprising in Egypt.

A vigorous privatization program is putting at the disposal of foreign and domestic private investors all public sector manufacturing enterprises. Before the end of the decade, virtually all manufacturing output in Egypt will be generated by the private sector.

Egyptian export growth rate is anticipated over the rest of the decade. The government has furnished a detailed export promotion program aiming at increasing commodity exports fivefold by the end of the decade. To this end, measures have been taken to further liberalize trade, remove tariff and non-tariff barriers, reduce operating costs, enhance transparency of trade regime, provide incentives and upgrade port services, customs procedures, quality control and product standards.

Most notable of reforms aiming at export promotion is the issue of delivering financial products to exporters, and the required institutional development. For this, the government supported by international expertise would identify export priority markets and products for the next decade. This would be followed by the examination of current export financial measures and institutions to be able to develop a program for future functions and regulations governing the institutions charged with providing export financial services.

The major Egyptian exports are agricultural products, food stuffs, yarn and textiles, chemicals, metals, engineering, mining, software products, pharmaceuticals, leather products, glass products and others.

The Egyptian Government is attracting – now – investment to export-oriented industries which have great potential for entrepreneurs include; Food processing and juices, leather, chemicals, glass, paper, vessel and ship building and maintenance, steel, cement, granite, electronics and electrical equipment, and other heavy industries.

What makes Egypt the Middle East's best investment choice?

Egypt is a land of business and investment opportunity for the following factor:

1. Egypt's unique strategic location at the crossroads of international trade routes with its modern ports, facilities along the Red Sea shores in the east and Mediterranean shores in the north.

2. The Suez Canal, which is considered the most vital link between East and West, enabling Egypt to be the gateway between three big continents of Asia, Africa and Europe.

3. National resources that play an important role in reducing costs of production make it easy for our products to compete in international markets.

4. The Free Zones in Egypt, which are highly equipped with storage facilities, make Egypt a convenient center for world trade.

5. Potential market of 91 million consumers should encourage international companies to have strong ties with Egypt.

6. Low cost labor and qualified to absorb and tackle modern technology.

Moreover at the time being, we have an infrastructure which is efficient enough to meet the requirements of doing business.

Over and above, in order to encourage investment in Egypt, the investment law No.8/1997 provides certain incentives for foreign investors who carry out commercial activities in Egypt in accordance with its provision. The investment law includes the following guarantees and incentives:

-        Tax holidays

-        Reduced custom duties

-        Guarantees against expropriation and sequestration

-        Guarantees regarding foreign exchange

-        Guarantees regarding reparation of capital and profits.

The private sector is playing different roles in the process of economic development and growth in Egypt.

The present relative share of both the private and public sectors in the economy highlight the current need for sweeping reforms of the public sector and the continued development of privatization strategy.

Over the past few years, the private sector has been steadily increasing its share and scope of economic activity in Egypt.

When we are speaking about Egypt, we should back to 7,000 years to emphasize the Egyptian tourism. While, it has a unique geographical location, a favorable climate, a rich history and a huge cultural heritage manifested in the Phraonic, Roman, Coptic and Islamic monuments.

Egypt has started introducing new sorts of tourism in addition to the traditional sorts.

The main kinds of tourism in Egypt are as follows:

-        Historical tourism

-        Religious tourism

-        Therapeutic tourism

-        Cultural tourism

-        Sports tourism

-        Safari tourism

-        Beach tourism

-        Conference and exhibition tourism

Egypt is traditionally one of China's most important trading partners in the African Continent and the Middle East region.

During 2011, bilateral trade volume between Egypt and China was totaled over $8.8 billion, and China enjoyed a trade surplus of almost $5.8 billion, while the Egyptian exports to China has reached to$ 1.5 billion.

Now, the major Egyptian Exports to China are diversified as follows;

-        Petroleum oils and petro-chemical products

-        Raw cotton

-        Cotton yarn

-        Metal products

-        Bovine skin leather

-        Marble

-        Ceramic articles

-        Carpets

-        Leather products

-        Plastic and rubber

 As I stated before, the Egyptian products are highly competitive in terms of price and quality. Hence, we are looking for more partners in China.

Many changes have been happened in both friendly countries. Egypt and China arouse optimism and opportunity in developing strong relations between two countries, and strong relations in non-political fields would contribute for establishing formal diplomatic relation between Egypt and China.

In order to explore and expand certain potential fields for the sake of future cooperation, the followings are suggested:

1.  To step up exchange of information and knowledge about experience in economic development issues.

2.  To encourage China's private overseas investment, flow into Egypt, which is the center of the Middle East and Africa, and near to Europe, with hope of joint ventures into third country.

3.  To maximize the available trade and investment facilities in both countries.

4.  To support the Economic policy of South-South cooperation and believe that the growth and economic development of developing nations are very important to stimulate a long-time recessed World Economy.

Economic and social impacts are likely to be substantial in the short term as production, trade, services and other elements of economic activity slip, and fiscal revenues, tourism and FDI receipts come under increasing pressure. Several among the non-oil group of economies - Morocco and Tunisia - rely on rain-fed agriculture, with wheat crops often exposed to adverse weather; these countries are now experiencing escalating import bills and pass-through to headline inflation. Consumers are further affected as inflation heats up; fiscal deficits will swell should governments choose to subsidize the spikes in staples prices.