In the realm of the continous reform of the Egyptian economy, Egypt is making wide strides to be able to catch up with a world where rapid political, economic, and social changes are being witnessed, along with globalization, technology development, and flow of investments.
The Egyptian government has recently taken several important steps to liberalize the economy and integrate with the global market, through rapid and full implementation of WTO rules and regulations, and the pursuit of multilateral regional and bilateral trade agreements. These agreements will allow Egypt to gain access to the world's markets, giving investors in Egypt a manufacturing base for exports. Egypt also accelerated the improvement of trade and investment procedures in line with best international practices.
Egypt Value Proposition
For millennial Egypt has occupied one of the world's strategic crossroads. Today Egypt is again emerging as a key nexus in the global economy, providing preferential access to the largest markets in the world. Egypt is renowned for its cultural depth and tolerance, its intellectual capital and its stable economic and political institutions, ensuring an environment that is conductive to long term business investment.
Investment in Cultivation of Siwa Oasis
The International Company for Land Reclamation and Cultivation has initiated a cultivation project in the Siwa oasis. The Company was established for the purpose of reclamation, preparation, and cultivation of barren and desert lands. The company headquarters is located in Alexandria and acquired a land of 11,500 feddan (12,000 Acers) in Siwa to be reclaimed and cultivated utilizing organic agriculture and modern agro-processing techniques.
The International Company for Land Reclamation and Cultivation is now looking for investors from abroad.
Egypt Committed to Reform
- Lowered highest personal tax rate from 32%-20%
- Cut corporate tax rate in half from 42%-20%
- Adopted streamlined, automated tax collection procedures
- Reduced tariffs from an average of 14.6% to 9%
- Simplified and reduced tariff bands from 29 to 6
- Adopted streamlined, automated customs procedures
Financial Sector Reform:
- Consolidated and restructured the banking sector
- Privatization underway
- Private Sector Management for public sector banks
- Enhanced supervisory role of newly autonomous Central Bank of Egypt
- Enhanced anti-money laundering regulations in line with international standards
- New Mortgage and Bond Market systems in place
- New financial instruments introduced such as: Securitization. Short selling, Margin lending, Share option schemes, primary dealers
Preferential access to Europe, the USA, the Middle East and Africa.
Key trade agreements provide investors with unparalleled market access:
- To the EU via the European Mediterranean Partnership Agreement
- To the USA via the Qualified Industrial Zones (QIZs)
- To the Arab countries via the Pan Arab Free Trade Area (PAFTA)
- To African countries via the Common Market for Eastern and Southern Africa (COMESA)
Signs of Progress
Foreign Direct Investment (FDI):
- After four years of stagnant growth, Egypt posted a strong increase (146%) in FDI during the fiscal year ending July 30,2005. In comparison with the investment Egypt requires to achieve its economic goals, this is a modest achievement, but it is a start. The government forecasts that FDI in the current fiscal year will grow by 40% reaching $1.4 Billion.
- Issued capital from Egyptian sources dominated capital from foreign sources by more than 4 to 1.
Real GDP, Current Account Surplus and Inflation:
- GDP climbed to 4.9% in 2004/2005 and is forecast to reach 6% in 2005/2006. GDP growth is expected to accelerate as economic reforms take root.
- The Consumer Price Index (CPI) spiked to 12% in 2004 following devaluation of the Egyptian pound, but by the fourth quarter of 2004/2005 the CPI had fallen back to 4.8%.
- Since 2000, Egypt's current account surplus has grown dramatically from a deficit of 1.2% of GDP to an estimated surplus of 4.2% in 2005. On August 25, 2005 a credit opinion issued by Moody's Investors Service cited "external indicators such as the current account surplus" as illustrating the strength of Egypt's recovery and the role played by the government's reform policies "in the revitalization of the economy" and "a surge in the stock market".
- The Capital Market Index posted a modest gain of 190 points in 2003/2004 before accelerating in July to 2004 to clib 860 points over the next twelve months. According to the CBE, total market capitalization stood at EGP 172.9 billion in June 2004. A year later, market capitalization had doubled to EGP 337.1 billion. Egypt is strategically located economically and geographically, offering investors proximity and ready access to the European, Arab and African markets. Moreover, Egypt's population of 72 million, growing at a rate of 2% per year, represents an attractive market for many investors.