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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.
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