Investing in Egypt: Challenges and Opportunities

AmCham Conference in New York

A one-day conference on investing in Egypt was co-hosted with the Chamber by Goldman Sachs and the Bank of New York. Over 130 business leaders attended the conference, the widest and most targeted audience from the American financial community to hear Egypt's message. The conference covered a wide range of issues of importance to all potential investors, both financial and direct, in the Egyptian markets. It also served as a platform for Egypt to explain to the U.S. financial-services community the new developments in the Egyptian economy. Reaction to the conference was uniformly positive and it revealed that, while in 1995 the groups with whom AmCham Egypt met were interested in the market, in 1996 they were far more knowledgeable about developments and far more focused on the need to take advantage of the opportunities presented.

Past AmCham president M. Shafik Gabr gave details about the new possibility for these opportunities by outlining for the attendees the enormous positive changes that have taken place in the Egyptian economy over the past 23 years, such as the unifying of the exchange rate and making it convertible, deregulation of the financial sector, liberalization of the trade sector, the beginning of privatization, and the lowering of the inflation rate. He pointed out that AmCham's role in these changes has been significant since the mid-1980s, when it became a strong advocate for economic reform, deregulation, a single exchange rate and the removal of all types of "distortions." Gabr explained that, while Egypt is not an easy place to do business while it is in its present transitional phase and while the mind-set is still changing towards a market economy, nevertheless the opportunities are vast and an approximately 4-percent growth rate in 1994/95 was higher than forecast.

After elaborating on the pros and cons of doing business in Egypt and detailing the recent steps taken to remove obstacles to investment, Gabr affirmed that investing in Egypt makes sense because it is the largest Arab market, the Cairo stock exchange is the most important in the region in terms of listed companies, there are no restrictions on foreign investors who want to invest in Egypt, and there is an attractive tax regime - capital gains tax on securities is just 2 percent and there are tax holidays of up to 15 years. He concluded by stating that Egypt remains strong and has a major role to play in the economic remapping of the Middle East and Africa.

Dr. Nawal El Tatawi, minister of economy & international cooperation, also addressed the New York conference, speaking about Egypt's growth and development objectives, investments and their attendant preconditions, project opportunities, and the commitment of the new cabinet to doing what is necessary to bring Egypt to a position of economic strength.

Much has already been accomplished to make Egypt's environment more conducive to investment through removal of impediments and improvements in the physical and financial infrastructure. El Tatawi emphasized that this good work would continue. She cited several project opportunities available now for investment, such as a long list of companies destined to be privatized, opportunities in power production on a BOT basis, water and sewage projects, tourism and shopping malls. She also cited several actions taken by the new cabinet, such as reduction of tariffs on capital goods and the removal of the approvals required for investment under the foreign investment law.

In his speech to the New York conference, Minister of Finance Dr. Mohieddin El Ghareeb spoke about the present investment climate in Egypt. He stated that Egypt's new economic policies are geared towards full support of the private sector, full encouragement of foreign investment and exports. Skilled personnel at low costs, excellent relations between labor and management, tax-exempt free-zone areas, and equality under Egypt's investment law between Egyptian and foreign investors are the main reasons he cited for Egypt being more attractive than the other countries of the Middle East as an investment destination.

Top