OBG talks to Osama Saleh, Minister of Investment

 Osama Saleh, Minister of Investment

Interview: Osama Saleh

What examples do you have of improved investor confidence in 2012?

OSAMA SALEH: As a reflection of investor confidence in 2012 many new investments have been realised, along with some additional investor announcements. For example, in April 2012 Toyota Motor Corporation and Toyota Tsusho Corporation announced that Toyota Motor Engineering Egypt had launched the Fortuner SUV at a plant belonging to the Arab American Vehicle Company, an assembly subcontractor and one of the Arab Organisation for Industrialisation companies, with a total investment of $15m. In January of 2012 Schneider Electric announced plans to invest LE100m ($16.7m) into the Egyptian market. In February 2012 Tetra Pak Egypt signed a contract for the first automated factory in the Middle East for food packaging with Egypt’s Faragalla Group, worth LE300m ($50.2m). Al Masreen Iron Company and Danieli Italy signed a contract to establish a steel factory in Upper Egypt with investments totalling LE1.3bn ($217.6m). Lastly, phase II has commenced for the financing of an international-standard naphtha cracker and polyethylene complex representing one of several large petrochemicals projects in Egypt – a project valued at $3.7bn. Total investment in post-revolution Egypt until April 2012 reached $7.6bn.

On the macroeconomic level, the third quarter of financial year 2011/12 saw an increase in economic activity. GDP increased by 0.2% and 0.4% during quarters one and two, respectively, for an aggregate GDP growth of 1.8% during the first three quarters of the year and expected to reach 2% by the end of the year.

What impact did cutting some of the red tape surrounding investments have on foreign direct investment (FDI) levels in the country?

SALEH: The new measures include the easy establishment of industrial projects due to cancelling the previously required approval from the General Authority for Industrial Development. The General Authority for Investment (GAFI) will also be facilitating procedures for registering foreign company subsidiaries by reducing registration time to three days and simplifying procedures and documentation; under the new system, established as of March 2011, the registration of a foreign company’s representation office will take only three days compared to 40 days previously. The new exports and imports stimulus package allows for both import and export certificates to be valid for three to five years. GAFI is preparing new branches to provide services to investors in 10th Ramadan, Gamsah in Al Daqahliyah governorate, Al Minya and 6th October.

How successful have GAFI’s efforts been at easing the loan procedures required for small and medium-sized enterprises (SMEs)?

SALEH: The Bedaya Centre Investment Fund for SME Development was established with a target size of LE1bn ($167.4m) and a fixed term of 10 years. The objective is to provide the investment capital and know-how to promote SME growth. Funds will be operated by experienced local managers who will add value to firms in areas such as improving operating efficiency, strengthening financial controls, opening marketing channels, developing sound corporate governance, and facilitating domestic and international networking of SMEs. The funds will invest in SMEs established within the provisions of Egyptian laws and have an issued or net worth capital of between LE2m ($334,740) and LE50m ($8.4m). The relationship between funds and investees will be on a partnership basis and the exit scenarios will be mainly through Nilex.

What has GAFI done to resolve conflicts out of court between the private sector and government?

SALEH: Prior to the revolution, the Investor Care Department was established within GAFI to support and guide investors to resolve conflicts they might face with the different governmental authorities. In addition, the Disputes Settlement Centre was established in 2009 for helping resolve disputes between business partners.

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The Report: Egypt 2012

Economy chapter from The Report: Egypt 2012

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