The year 2007 witnessed many achievements in the investment domain on both local and world levels where net foreign direct investment increased during FY 2006/2007 to reach $ 11.1 billion. Flows of foreign direct investment became one of most important sources of increase in net international reserves in Egypt which increased with the Central Bank of Egypt (CBE) to reach $ 30.9 billion at the end of October 2007.

The newly established companies and expansions in companies already in operation attracted nearly 50% of net FDI flows during the last FY.

FY 2006/2007 witnessed the establishment of 5958 new companies with an issued capital of LE 36.8 billion while 1184 companies already in operation have undergone expansions with a total issued capital of LE 42.6 billion.

In 2007, Egypt joined the Organization of Economic Cooperation and Development (OECD)'s Investment Committee as the first Arab and African country in the committee.

The oil sector succeeded in luring foreign investments in the field of oil excavation and wells development amounting to nearly $ 3.3 billion, i.e. an increase of 21% as compared to FY 2005/2006.

Egypt now tops the World Bank's list of countries that have made the most progress in reforming their economies and facilitating the procedures required to do business. Egypt has improved in five of the 10 areas analyzed by the Doing Business team.

Egypt's impressive ranking as top reformer puts it ahead of countries such as Croatia, Saudi Arabia and China.

According to the World Bank, Egypt, the top reformer in the region and worldwide, greatly improved its position in the global rankings on the ease of Doing Business. Its reforms went deep. Egypt cut the minimum capital required to start a business, from EGP 50,000 to just EGP 1,000 and halved the time and cost of starting-up operations. In 2008, the minimum capital requirement to start a business was further reduced to EGP 200.

“Property registration fees were reduced from 3% of the property value much more reasonable fixed amount”, the report continued. The government also eased the bureaucracy that builders face in getting construction permits and launched new one-stop shops for traders at Egyptian ports, cutting the time to import by seven days and the time to export by five. A new private credit bureau was recently established that will soon be making it easier for borrowers to get credit.

The report is considered very significant in its implications regarding investment. Countries such as Egypt that are reforming pose an attractive proposition for investors who want to capitalize on untapped potential. The opportunities that are now available in Egypt are expected to attract similar levels of interest, relative to its size, as India or China, both countries that once ranked poorly and have since reformed.

One of the most dramatic reforms that Egypt has undertaken is the opening of several One-Stop Shops throughout the country. As a joint venture between the General Authority for Investments and Free Zones (GAFI) and the International Finance Corporation (IFC), these One-Stop Shops were created for the sole purpose of speeding up the process of and cutting down the costs when opening up a business. Instead of several months, it is now possible to obtain licenses in two days and new business registration fees have been cut by 40%.

Today these shops are in the cities of Cairo, Alexandria, Assuit and Ismailia.

Beyond making business easy, Egypt was applauded for its efforts to reform taxation. The tax system has been streamlined, with the corporate income tax rates cut from 32-40%to a uniform 20%; the approximately 3,000 different types of exemptions have been eliminated.

By cutting the red tape out of business, the government has created an environment that is friendly to the private sector and that's now attracting attention from some of the leading investment watchdogs worldwide.

An enabling investment climate is generally marked with several features that directly contribute to activating and boosting investment by promoting investors capability to clearly predict and realize the project expected profit. Salient and most essential of the characteristics are:

1- Democracy:

A democratic political or economic decision-making system would re-assure investors that no law or decision would be passed without the involvement by those affected through discussion and expression of viewpoints. This would ensure consistency with the majority's interests and makes investors well-prepared to totally abide by the provisions of a given law; thereby avoiding any attempt at evasion.

 

2- Clear and Predictable Policies:

Clear and predictable policies allow investors to accurately anticipate future circumstances. This can ensure that decisions made are sound and that results achieved are consistent with projections. This could also increase the demand for long-term investments and achieve stability in the business field.

  

3- Justice:

The guarantee of administering justice in society enshrines equal treatment of all involved in different fields. Funds invested in different activities will be treated equally regardless of its ownership and form of management. Private and public sectors and foreign and national investors are all equal before law. There is no discriminatory condition for acquiring raw material or intermediate production requirements. This would save investors seeking to maximize their profit, time and effort otherwise spent in selecting the most appropriate system or law.

 

4- Flexibility:

Flexibility saves time, effort and money spent in performing an activity or carrying out a procedure.   

 

5- Discipline:

Disciplined application of administrative procedures re-assures investors that they would be exposed to unpredictable impediments in the course of public or private behaviour as a result of negligence or willful act. So, investors will not waste their time and money trying to obtain a right secured by-law.

 

Second: Investment-Attracting Factors :

Egypt is so uniquely situated that it enhances trade links among Europe, the Middle East and Africa. It constitutes a land, air and space cross-over for the transit of goods, passengers and communications.

 

This location enhances opportunities of successful investment projects in Egypt with access to Arab, African, Asian and European Markets.

 

Since President Mubarak assumed office in 1981, Egypt has enjoyed democratic-based social and political stability. As social, economic and cultural prerequisites for such transition have been already fulfilled, wide strides towards democracy were possible.

 

In addition to internal stability, Egypt adopts a rational and meaningful foreign policy. Guided by President Mubarak's wise policy, Egypt maintains strong relations with all world countries. Manifestations of such policy include President Mubarak's commitment to just and durable peace, his initiative to free the Middle East from mass destruction weapons, his call for an international conference on combating terrorism and boosting solidarity among peoples and states to establish peace especially in countries of interest to Egypt.

 

Egyptian diplomatic efforts have been primarily employed to serve development objectives, to secure vital national interests, and to enhance Egypt's economic relations. It is Egypt's policy also to provide wider prospects for regional and international cooperation based on mutual interests. Hence arises Egypt's keenness to join the World Trade Organization and the COMESA, to conclude association agreements with the European Union and Mediterranean countries, to revive the Arab Common Market agreement, to establish the Arab Free-Trade Zone, and to activate the role of the G-15 developing countries and D-8 Islamic countries.