Transcript Open for business… and delivering

Egypt…
Open for Business
April 2008
Reasons to Invest in EGYPT…
Reforming
Economy
Large Pool
of Local Talent
Strong Macro
Fundamentals
A Regional
Hub
Diversified
Economy
Preferential Access to
Major Markets
Large Consumer
Market
Adequate
Infrastructure
Competitive
Cost of Production
Diversified Economy & Deep Local Market
 Real GDP growth rate in excess of 7% has increased Egyptians’ purchasing power and
solidified Egypt’s position as one of the most important consumer markets in the region
 As a heavy-weight economy in the region, Egypt has a large and diversified domestic
market spanning several sectors
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Services
Industry
Agriculture
Construction and real estate
Finance
Tourism
Communication & Info. Tech.
Logistics and infrastructure
GDP Sectoral Breakdown
Industry
32%
Agriculture
14%
Construction
7%
Comm & info.
Tech
2%
Tourism
3%
Finance
7%
Services
35%
Global Market Access
Preferential access and geographic proximity to global
markets
 Accessing more than 1.5 billion customers through
various multilateral and bilateral trade agreements…
 Direct connection through the Suez Canal between
the Indian Ocean to the Mediterranean Sea.
 EU through the EUTA
 US through QIZs
 Middle East through GAFTA
 Africa through COMESA
 EGYPT-TURKEY Agreement
 Egypt –Switzerland EFTA Countries Agreement
Local Talent
 Largest pool of competitive local talent
in the region…in excess of 22 million
 41% of population between 15 and 39
76 Million Consumers
Estimate of Population by Age Group
3%
18.1%
 Multilingual…strong English and
French language capabilities
37.5%
41%
 Sound educational systems…16
universities, local and international
Less than 14
Labor (Cost, Quality, Productivity, Availability
& Flexibility of Labor)
100 = Best
0 = Worst
Mckinsey & Co.
15 - 39
40 - 64
22 Million labor force
65 +
Developed Infrastructure
 Competitively priced and reliable
supplies of power, water, gas
Energy
(Cost, Quality, Access to
Electricity & Natural Gas)
 Excellent access through major
airports and port facilities
 Large investments in CIT networks
 Improved and expanding road
network
 Ongoing infrastructure investment
plans and commitments already in
place; expanded private sector
engagement in infrastructure
development
100 = Best
0 = Worst
Mckinsey & Co.
Business & Fiscal Reform….A Boost for Investment

Liberalized legal framework guaranteed by Investment Law… including; 100% foreign ownership of
companies…profit and dividend repatriation…dispute resolution and settlement mechanisms

Cost and time of business entry reduced…Incorporation time reduced from several months to 72
hours…min. capital required for LLC reduced to LE 200

Corporate One-Stop Shop introduced at multiple locations throughout the country

Tax Reform: Corporate tax rates cut from 42% to 20% …Personal tax rate cut from 32% to 20%...new
administration practices

Customs reform: weighted average tariff rate reduced from 14 to 6.9% …tariff bands streamlined and
reduced from 27 to 6…

Banking sector consolidation and further penetration of non-bank financial products: mortgage
finance, financial leasing, fixed income products, factoring, insurance

Strengthened Capital Market Authority…maturing stock exchange…introduction of small cap stock
exchange

Introduction of comprehensive corporate governance principles, Anti-Trust and Consumer Protection
Laws
Strong Macro Fundamentals … Room for Growth
GDP
Growth
Rate
 Ensuring macroeconomic
stability as well as achieving and
sustaining average annual real
GDP growth that exceeds 7%
7.2
6.8
5.9
5.4
5.3
4.7
5.1
5.0
%
4.3
4.1
3.2
3.9
3.4
3.0
2.5
1.9
2006/07 Q3
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
1996/97
1995/96
1994/95
1993/94
1992/93
 The recent increase in FDI has
been accompanied by a change
in the sectoral distribution
towards the non-oil sectors
1991/92
 The average annual growth rate
of exports increased from less
than one% in 2001/02 to 33.4%
during the first 3Q in FY2006/07
International Recognition of Egypt
“Egypt has made impressive progress in reforming its investment policies in recent
years…” Egypt formally joins the Investment Committee of the Organization for
Economic Co-operation and Development (OECD) as a partner member and the first Arab
or African country.
OECD Investment Policy Review of Egypt 2007
“Egypt is the top reformer for 2006/07…Egypt’s reforms went deep.”
Doing Business 2007, World Bank, International Finance Corporation
“Egypt attracted an exceptional level of inflows [of FDI], amounting to 43% of the total
to the [North African] subregion…. Egyptian reforms could herald more foreign
investment.” UNCTAD World Investment Report, 2007, which ranked Egypt first in Africa
and second in the Middle East for attracting investment.
“Cairo deserves kudos for getting one thing right: economic reform.”
Wall Street Journal Editorial, September 07
Leaders in a Growing Market
Improved investment environment attracted world multinationals…
Stronger Engagement of the Private Sector
 Public Asset Management /
Privatization
 Private Public Partnership (PPP)
 Special Economic Zone
 Privately-developed Investment
Zones
Private Investment as % of Total Investment
70%
60%
50%
40%
30%
20%
10%
0%
61%
48%
48%
51%
47%
48%
47%
62%
66%
51%
19
98
/9
9
99
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20
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/0
1
20
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2
20
02
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3
20
03
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4
20
04
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5
20
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6
20
06
/0
7
20
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/0
8
(e
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A Broadened
Private Sector
Contribution to
Growth
Privatization… an Asset Management Approach
 The MOI has adopted an asset management approach to privatization
whereby all state-owned assets are treated as one pool that is managed to
maximize returns based on whether they are considered to be…
 Saleable Assets that are ready for immediate sale at maximum return under
current market conditions, or
 Assets to be restructured in order to make them ready for sale. The government,
in consultation with independent experts, is following strict policies for injecting
new capital in these assets based on thorough technical and financial feasibility
studies
 Various success stories of Bank privatization and consolidations
Investment Zones
Investment Zones regime…introduced in 2007 with the following
objectives…
 Promote economic clusters; industrial, services, tourism, agribusiness, etc.
 Private sector mandated for developing, promoting, managing these zones,
as well as economically benefiting from these zones
 Provide a Bureaucracy-free environment through a one-window for
incorporation, licensing, and support services in the zone
 Offer streamlined custom management through localized dry ports within
zone
Investment Zone Opportunities are offered throughout various regions within the
country are outlined in the Investment Opportunities Kit
Toshki
Investment
Opportunities in Egypt
Public Private Partnership (PPP)
PPPs are key to the Government’s
economic reform agenda and strategy
to increase private sector involvement
in public services through leveraging
private spending against public
spending
Egypt is providing the right environment
for implementation
– Provide a new source of investment
capital for required infrastructure
projects
– Reduce Government sovereign
borrowings and associated risks
– Drive the creation of local long term
funding market
– Utilize efficiencies of private sector in
running public services
– Expand economy and stimulate job
creation
Provision of Supportive Legislative
Environment
– New Legal Framework for PPP Projects
– (Draft under finalization for Submission
to Cabinet and Parliament)
– Standard PPP Contracts
– Standardization of procurement
documentation and procedures
– Creation of regulatory bodies for post
contract implementation
Adoption and localisation of international
successful PPP models (UK)
PPP Pipeline Projects
 Social Infrastructure
– Education Sector
– Health Sector
• Educational Medical
Facilities
• General Medical Facilities
 Utilities Sector
– Wastewater Treatment Plants
– Potable Water Treatment Plants
 Transportation Sector
Approx Value USD in Billion
6.12
5.00
1.12
0.32
0.80
2.80
2.20
0.60
7.00
15.92
…another PPP Modality
General Authority for Economic Zone-North West Gulf of Suez
 SEZone Site: 20.4 Km2 North West Gulf of Suez-Sokhna Industrial Zone
 Legal Framework: Special Economic Zone Regime Established by Law 83
of 2002
 Governance Model: SEZone Authority: Regulator / Main Development
Company: Development arm
 Development Approach: Attract private sector to lead on-site development
(zone and utilities), management, operation and promotion through
internationally recognized PPP arrangements (45 year use-of-right)
 Projected Industry Mix:
– Medium and light manufacturing
– Logistics and general services
…Value Proposition

Single regulator empowered by a robust legal
framework

Fiscal Incentives

Superior location (cross road to 10% of world trade)

Modern port facilities – Sokhna Port

Recently upgraded highway network

Access to workforce

Opportunities in infrastructure development
Law-enabled
Incentives
Flat 10% Corp. Tax
5% Personal Tax
Zero duties
Unlimited access
to local market
No duties on local
Content
…a Smart Location
Port Said
Alexandria
Cairo
Suez Governorate
Site
 Adjacent to the new Port at Sokhna
 Privately managed port
 Ideally located for added value logistics
 Direct access to Mediterranean & Indian
Ocean
 Export/import major international markets
 120 km south east of Cairo and 45 km south of
Suez City
 Approximate adjacent population: 20 Million
Thank you
The General Authority for Investment
www.investment.gov.eg