Interview: Yehia Zaki
Which policies can be adopted to encourage more private investment in special economic zones?
YEHIA ZAKI: Encouraging private investment in economic zones is about ensuring a competitive regulatory framework and efficient bureaucratic system, and combining these with the necessary infrastructure and supply chain links. Reducing or removing value-added tax for certain companies that export goods can attract manufacturing and create jobs. In the case of imported goods, applying customs tax to only foreign components will encourage local sourcing and boost competition. Autonomy for licensing and procedures can also be beneficial for attracting investors, particularly in markets where a challenging bureaucratic environment would be a hurdle for foreign businesses.
In addition to having the right regulatory environment with the proper financial incentives in place, physical infrastructure and geographical location are key factors. The aim of the Suez Canal Economic Zone is to leverage its six ports that lie on the Mediterranean Sea and the Red Sea to provide Egypt with a special economic zone located at the crossroads of Africa, the Middle East, Europe and the US, and through which approximately 8% of global trade passes.
How can Egypt better position itself in global manufacturing supply chains after Covid-19 passes?
ZAKI: Similar to the trajectory of other developed and developing economies, Covid-19 has reshaped the social and economic progress that Egypt was experiencing. The Egyptian government has been negotiating with international multilateral institutions, and recently secured an emergency loan from the IMF to shore up the economy. It has also been engaging with the private sector on employment, taxes and extending low-interest loans. Egypt is working on initiatives to attract investors through direct and/or indirect tax and non-tax incentives, and through enhancing the business environment in order to encourage companies to relocate their value chains and productions lines to the country. The government and the Suez Canal Economic Zone possess robust infrastructure – like tunnels and roads – to meet the needs of investors and ensure that land infrastructure is capable of handling the expected economic growth.
In what ways can public-private collaboration be enhanced to more effectively execute large-scale projects, such as the Suez Canal Economic Zone?
ZAKI: The implementation of both regulatory and fiscal investment incentives through public-private partnerships are essential to further encourage private entities and multinational organisations to participate in such projects. The private sector’s participation in government schemes plays a central role in the development of necessary infrastructure, which would support expanded industrial development. As such, the public and private sector in Egypt are working hand in hand on a number of initiatives that are anticipated to create economic clusters, creating opportunities within specific segments through offering attractive business plans in centralised locations.
To what extent is there more space for international participation in developing the Suez Canal Economic Zone, for example from China?
ZAKI: There continues to be interest from various classes of international investors willing to take part in the potential of an economic zone at a time when strengthening supply chains and boosting manufacturing efficiency is of increasing importance. Chinese developers and specialised companies have always been a part of the Suez Canal Economic Zone, but we are starting to witness increased interest from Chinese companies to expand or establish new business at the zone. It is hoped that the Suez Canal Economic Zone will attract a diverse range of global participants, including manufacturers and investors from around the world.
Read More from OBG
