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Egypt … Open for Business

Egypt … Open for Business. April 2008. Reasons to Invest in EGYPT…. Large Pool of Local Talent. Reforming Economy. Large Consumer Market. A Regional Hub. Adequate Infrastructure. Strong Macro Fundamentals. Preferential Access to Major Markets. Competitive

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Egypt … Open for Business

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  1. Egypt… Open for Business April 2008

  2. Reasons to Invest in EGYPT… Large Pool of Local Talent Reforming Economy Large Consumer Market A Regional Hub Adequate Infrastructure Strong Macro Fundamentals Preferential Access to Major Markets Competitive Cost of Production Diversified Economy

  3. 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 Services Industry Agriculture Construction and real estate Finance Tourism Communication & Info. Tech. Logistics and infrastructure Diversified Economy & Deep Local Market GDP Sectoral Breakdown

  4. 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

  5. Local Talent 76 Million Consumers • Largest pool of competitive local talent in the region…in excess of 22 million • 41% of population between 15 and 39 • Multilingual…strong English and French language capabilities • Sound educational systems…16 universities, local and international Estimate of Population by Age Group Labor (Cost, Quality, Productivity, Availability & Flexibility of Labor) 22 Million labor force 100 = Best 0 = Worst Mckinsey & Co.

  6. Developed Infrastructure • Competitively priced and reliable supplies of power, water, 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 Energy (Cost, Quality, Access to Electricity & Natural Gas) 100 = Best 0 = Worst Mckinsey & Co.

  7. 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

  8. 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% • 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 • The recent increase in FDI has been accompanied by a change in the sectoral distribution towards the non-oil sectors

  9. 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: economicreform.” Wall Street Journal Editorial, September 07

  10. Leaders in a Growing Market Improved investment environment attracted world multinationals…

  11. A Broadened Private Sector Contribution to Growth Public Asset Management / Privatization Private Public Partnership (PPP) Special Economic Zone Privately-developed Investment Zones Stronger Engagement of the Private Sector

  12. 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

  13. 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

  14. Toshki Investment Opportunities in Egypt

  15. 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 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 Egypt is providing the right environment for implementation Adoption and localisation of international successful PPP models (UK)‏ 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

  16. 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

  17. 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 …another PPP Modality

  18. …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

  19. …a Smart Location Port Said Alexandria Cairo • 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 Suez Governorate Site

  20. Thank you The General Authority for Investment www.investment.gov.eg

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