Public Policy on Modern Governance And Transparency To Improve Investment Environment In Egypt Presented By Eng. Ahmed El-Sayed GAFI ; Consultant & Head of promotion Affairs OECD Global Forum On International Investment 17-19 Nov. 003 1
Public Policy on Modern Governance & Transparency For Investment FDI Inflows (World / MENA Countries/Egypt) Egypt Overview ( Role of government in achieving transparency ) a) Demographic Data. b) Political & Economic Indicators. c) Trade & Markets. d) General Authority for Investment and Free Zones One stop Shop. Disputes Settlements. Laws Amendments. e) Development of promotion role to be proactive for Targeting quality FDI. Cooperation with International organizations (MIGA/FIAS/UNCTAD/ OECD).
World FDI Inflow 3
FDI Inflow In The World 00 1400 In Billion US $ 139 100 1079 41% 1000 84 1% 800 686 65 600 48 400 54 00 0 1991-1996 1997 1998 1999 000 001 Source : World Investment Report United Nation 003 00 4
FDI Inflow at MENA Countries In 00 5 7 41 37 56 36 48 18 57 700 681 81 1065 5 95 3000 500 000 1500 1000 500 0 Qatar Algeria Egypt Morocco Sudan Tunisia Bahrain Iran Jordan Kuwait Lebanon Palestinian Syrian Emirates In Million US $ 700 Petroleum 000 Source : World Investment Report United Nation 003
FDI Inflow at MENA Countries from 1991 to 00 3000 In Million US $ 500 000 1500 1000 500 0 1991-1996 1997 1998 1999 000 001 00-500 Algeria Egypt Libyan Morocco Sudan Tunisia Source : World Investment Report United Nation 003 6
1000 FDI Inflow at MENA Countries from 1991 to 00 In Million US $ 800 600 400 00 0 1991-1996 1997 1998 1999 000 001 00-00 Bahrain Iran Jordan Kuwait Lebanon Source : World Investment Report United Nation 003 7
FDI Inflow at MENA Countries from 1991 to 00 600 400 In Million US $ 00 0 1991-1996 1997 1998 1999 000 001 00-00 -400-600 -800-1000 Palestinian Qatar Syrian Emirates Yemen -100 Source : World Investment Report United Nation 003 8
Factors Affecting FDI Inflow Political & Economic Stability Market access. Cost of doing business. Utilities ( water, Electricity, Gas, Telecommunication,..). Other Resources. Availability of world class infrastructure. Availability of well trained, productive & low cost work force. Transparency. Availability of information. Sustainable investment laws. Investor awareness and participation in regulatory changes. Regular meeting between investors and policy markers. Investor facilitation startup from red tape to red carpet and reducing of administrative burdens. 9
Role Of Egyptian Government In Achieving Transparency 10
Geographical Location A unique strategic location at the crossroads between Africa, Europe &Asia. Total area is one Million km. Major transshipment destination: Suez Canal. Red Sea and Mediterranean ports. International airports. Availability of low cost utilities (water / electricity / gas) and raw material. 11
Demographic Data Population 71. millions. Population growth rate.1% ( 001/ 00). Sustainable growth rates, 3.% of GDP on average. Egypt s s inflation has consistently declined to reach.4 %. Total foreign debt is $ 8.7 billion. 1
Political & Economic Indicators Inflation Rate in Egypt (%) Real GDP Growth Rate % 10 9 9.4 1995-00 10 9 8 7 6 5 4 3 7.3 6. 3.8 3.8.8.4.4 % 8 7 6 5 4 3 1.9.5 3.9 4.7 4.9 5.3 5.7 6.3 3.6 3. 1 0 1995 1996 1997 1998 1999 000 001 00 1 0 1991/9 199/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 000/01 001/0 Source : Ministry of foreign Trade 13
Political & Economic Indicators Foreign Exchange System Since January 9,003 Egypt adopted a Free Float FX System. Rates are to be determined by banks (55 banks). Source : Central Bank Of Egypt 14
Private Sector Leadership for generating Growth (74%). Political & Economic Indicators Privatization 19 companies have been privatized out of (314) companies with total value of L.E 16.9 billion equivalent to (4.4 %) of GDP. 15
Political & Economic Indicators Privatization Proceeds (L.E. Millions) 1994- End June, 00 4,000 3,500 3396 3,000,500 791 361 785 476,000 1,500 115 116 1,000 500 0 664 9 1994/95 1995/96 1996/97 1997/98 1998/99 1999/01 000/01 001/0 00 16
Egypt s s Advantages versus other Economies in the Region The Outcome of the Competitive Benchmarking Indicates that Egypt Presents a number of Advantages Versus other Economies in the Region Egypt Turkey Israel Jordan Tunisia Saudi Local Market 3 3 1 1 3 Utility Prices 4 3 1 4 Raw Material Availability 4 4 1 1 4 4 Trade Openness 3 Government Role 3 3 3 3 3 3 Finance Labor 4 3 Competitive Edge 4 Highly Competitive 0 Limited Potential Source:The Global Competitiveness Report 000 17
The Egyptian Government s Economic Policies Are Well Perceived And Executed, As Evidenced By The Relatively Low Inflation Among Selected Economies Government Economic Policy Independence Rating Singapore Inflation Percentages Singapore Jordan Egypt Malaysia T hailan d Ita ly Greece Turkey India Philippine Indonesia Isra e l Russia 5.5 4.4 4.3 3.8 3.4 3.3 3. 3.1 3.1 3.7.7.1 0 1 3 4 5 6 Ita ly Egypt Jordan Greece M alaysia Isare l Thailand Philippines In d ia Indonesia Turkey Russia.1%.4% 4.4% 4.7% 5.3% 6.6% 8.1% 9.0% 14.0% 57.6% 84.6% 90.4% 0% 0% 40% 60% 80% 100% Average Score,From 0 to 6 Highest rank Source: The Global Competitiveness Report 18
Man Power A country of 71. million people Work force is 0 Million. Number of universities is 18. Ranking 17th worldwide in number of yearly graduates 70,000 high school graduates year 00. 48,451 colleague graduates year 001. 19
Skilled Manpower at Competitive Cost No. Of Times To Egypt 0 15 10 5 Labour Cost Comparison 17.69 14.38 1 13.55 Source: IFC (000) 0 Egypt Italy Germany France Skilled productive & low cost reliable workforce. Labor Cost in Europe is almost 15 times higher as compared to Egypt. Average labor cost in Egypt is US $ 65 15 / month. 0
Trade & Markets Trade Agreements Greater Arab Free Trade Area (GAFTA) Inhabitants 300 Million Common Market for Eastern and southern Africa (COMESA) Inhabitants 380 Million World Trade Organization (WTO) Egypt Europe Mediterranean Partnership Inhabitants 78 Million Other Agreements Local market 71. million consumer & Regional market 1.4 billion consumer. 1
General Authority for Investment and Free Zones (GAFI) Sole governmental agency responsible for investment affairs. Private sector oriented organization. Headed by board of directors formed by members from governmental agencies and private sector equally. Who we are? Reports directly to the Prime Minister.
GAFI s Role Encompasses delegates from different governmental agencies dealing with investors. Comprises Following Divisions. A) The Advisory Unit One Stop Shop Focuses on investor facilitation, business support service. Respond to investor s inquiries. Optimize and streamline incorporation procedures. Investment Facilitation Services offered to investor before, during & after incorporation, such as : Providing needed data and information to investors. Providing Utilities & Land prices. Assist investors to select proper Locations for their projects. Supply investors with Investment opportunities. 3
GAFI s Role One Stop Shop B) The Current awareness unit: Receiving documents related to the legal incorporations of companies. Act on behalf of investors to obtain company license. Electronic registration of companies. Registration approvals & licensing of companies. Issue & Renew of Work Permits for foreigners. Airport entry permits for company representatives. 4
GAFI s Role One Stop Shop C) Disputes Settlements A permanent ministerial committee for investment affairs has been formed, presided by the deputy Prime Minister, competent ministries and GAFI Chairman, so as to solve investment disputes amicably outside court channels. A minor permanent committee is also formed with Ministry of finance to study and take action to solve Taxes & Custom problems ; ministerial committee will take the lead for unsolved cases. Out of (74) case discuss during (15 ministerial meetings), (17) have been solves and (14 ) decree became as general rule. 5
Amendments of Laws GAFI advice the government for investment regulatory changes in order to : Setting laws and decrees, so as to improve investment environment Outcome from investment disputes solved by Ministerial committee is used to amend laws. Discussions of regulatory changes with investors in done before issuance of laws New laws have been issued during 00-003 as follows :- Intellectual property law Mortgage Law Banking Law Labor law law Antimony laundry Law Export Development Law Special Economic zones 6
Amendments of Laws Other New Laws will be issued soon, which are Custom Law Tax Law Addition of New chapter in investment law to acquire GAFI s decisions the power of the law and to be final and binding for all governmental agencies 7
GAFI s role in proactive Investment Targeting Prioritizing potential sectors for development. Defining Egypt s sector competitive location Analyses potential markets, trade flow and FDI flow affecting such sectors. Performing assessment studies; SWOT analysis, Bench Marking, competitiveness for sectors and regions targeted for development, in order to issue vision strategies& policies 8
GAFI s role in proactive Investment Targeting Compile the output of such studies in a proactive promotion plan. Formation of Joints desk with foreign Embassies at Egypt to solve any problems facing foreign investors, As well as, coordinating for business affairs, Visits, Forums, according to agreed up annual plans 9
MIGA FIAS - UNCTAD - OECD Future Cooperation Program with Egypt 30
Cooperation with international organization MIGA, FIAS, UNCTAD & OECD Development and implementation : Investment Promotion Strategy promotional materials Information & CRM systems program Sector Targeting Program MIGA Program Market Intelligence Program National & International Public Relations and Communications Campaign 31
Cooperation with international organization MIGA, FIAS, UNCTAD & OECD International Country Branding Campaign Policy Advocacy Program MIGA Program Investor Facilitation & Servicing Program Investor Aftercare Program General Monitoring and Evaluation Program Human Resources and Staffing Program Monitoring and Project Supervision Program 3
FIAS Program Investment & Business environment improvement program Diagnostic review of the Direct Investment & Business Environment in Egypt Cooperation with international organization MIGA, FIAS, UNCTAD & OECD Administrative Barriers to Investment Assistance Program for the Implementation of the finding of the Administrative Barriers to Investment Competition Policy Environment for FDI Promoting the Development of Companies in selected sectors through FDI spillovers 33
Cooperation with international organization MIGA, FIAS, UNCTAD & OECD UNCTAD Review of the Investment Environment OECD Review of the Investment Environment Both studies were to be published internationally 34
General Authority For Investment and Free Zones 30, Sherief St. Down Town, Cairo Tel: 3938759 Fax :3933799 Email : gafiaa@maktoob.com Web Site : www.gafinet.org.org 35