Interview: Ahmed Darwish
What opportunities will the Suez Canal Economic Zone (SCEZ) offer to investors? How can it maintain its competitiveness?
AHMED DARWISH: The business arena worldwide is experiencing a number of challenges due to the multifaceted nature of business today, and the global connections that play a fundamental role in shaping business operations and allocation. Yet every challenge we are presented with is another opportunity to attract investors by catering to their needs, through providing a competitive and dynamic environment that enables them to take advantage of economies of scale.
The SCEZ encompasses an area of 461 sq km, and has authority over six ports along the banks of the Suez Canal and Sinai, which provide a number of cross-sector opportunities for businesses and allow for vertical integration of their supply chains. Small and medium-sized enterprises will also play a significant role in the operation of economies of scale, given the policies in place that are designed to enhance exports and the integration of logistics operations across the zone, allowing for increased volume of traffic. The strategic aim is to transform this zone into an international business hub by capitalising on the port facilities that are already in place, while taking advantage of growing business opportunities in the industry.
Investors examine different factors in determining their business location. Among them is the ease of doing business, operation costs, ability to repatriate profits, cost of labour and the status of trade agreements, along with multiple other factors. These are the areas which require focus in order to effectively attract and maintain investment in the SCEZ.
What can be done to ensure that investment in the SCEZ benefits Egypt’s broader economy?
DARWISH: Sustainability is the key to any project, so it is our aim to create a successful business environment in the SCEZ, which is responsive to the needs of investors, and which can then serve as a new model for the rest of Egypt in terms of attracting investment and creating an advantageous business climate. The primary hindrance for investments is usually not contained in the legislation but in the implementation, where investors can be confronted with bottlenecks, red tape and bureaucratic inefficiencies. Because the SCEZ functions as an autonomous and unified regulator for the entire zone, none of these implementation challenges come into play, which is something that we aspire to expand to other areas in Egypt in the near future. The knock-on effects of SCEZ investment for the country’s manufacturers will be quite positive, and will provide ample room for local producers from mainland Egypt to export to the SCEZ and supply tenants with the local components. This will help reduce the cost and timescales of importing, while giving a boost to local industry. This also elevates the quality control standards for those local producers that will need to provide their products in adherence with the specifications of destination countries.
To what extent will the 22.5% corporate tax rate impact investment flows into the SCEZ?
DARWISH: Tax rates are one of the most significant factors that influence the business allocation process, yet continued interest from businesses to place their projects in the SCEZ has shown that this tax is not a deterrent. However, with our embedded strategy to cater to the economic prosperity of the zone at large, and as our development approach is to attract different scales of investors, we are currently examining this subject in order to take the appropriate actions if required. Because the board of the SCEZ is an autonomous regulatory entity, it has the authority to amend or adapt restrictions on foreign workers. Of course lower tax rates and tax holidays have the ability to benefit investors, but, these needs must be balanced within the overall macroeconomic parameters of the nation.
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