Egypt

Investing

FDI in figures

Direct foreign investments have shown an unprecedented growth in Egypt since between 2003 and 2007 they have grown from 407 million USD to 11 billion USD. The sudden attractiveness of Egypt for foreign investors is explained by two factors. On the one hand, the economic reforms started by the government towards a greater liberalization has made it possible to re-establish an atmosphere of confidence in the business. On the other hand, Egypt has many advantages including a strategic location, low-cost qualified labor, unique touristic potential, and sizeable energy reserves. Investments mostly flow from United States and Europe as well as Gulf countries. They are mainly made in the tourism, construction, telecommunications, hydrocarbon and health sectors.

Foreign Direct Investment	2004	2005	2006
FDI of inward flow (millions USD)	2,157	5,376	10,043
FDI inward stock (millions USD)	n.c.	n.c.	38,925.0
Performance Index*, world ranking	102	68	33
Potential Index**, world ranking	79	81	n.c.
Number of Greenfield investments	34	45	57
FDI inwards (in % of GFCF)	15.0	29.9	50.2
FDI stock (in % of GDP)	n.c.	n.c.	36.4

Source: UNCTAD, World Investment Report

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk.

Why you should choose Egypt

Strong points: The country is in a geographically strategic location. Moreover, it offers cheap and relatively qualified labor. Its growing population constitutes quite a considerable market in the region. It has very good energy resources. In fact, the policies undertaken by the government towards a large scale liberalization and improved attractiveness for foreign investors are encouraging signs for foreign investment.
Weak points: In spite of privatizations, the inefficient and loss-making public sector remains ubiquitous in some sectors. In addition, the rapid population growth continues to curtail the improvement of the standard of living of Egyptians. In fact, the country registers a delay in its infrastructures that the current investments are not able to make up for.
Government measures to motivate or restrict FDI: Since September 2004, the General Authority for Investment and Free Zones (GAFI) has established an economic program to attract foreign investors, together with a reduction in customs duty by an average of 35% and a simplified pricing. If all the economic sectors are open to domestic and foreign investors, some are more particularly cited by the Law which expressly provides the possibility to execute projects in the form of BOT (Build, Operate, Transfer) in the sectors of agriculture, manufacturing industry, mines, tourism and hotel industry, air transport, off-shore shipping transport, goods transport services, petroleum exploration and exploitation, infrastructures more specifically for drinking water conveyance, highways, accommodation and used water recycling. Other sectors are added to this list depending on requirements (leasing, venture capital, creation of computer programs and software, etc.). Privatization programs are also open to foreign investors. Some sectors are considered strategic and hence subject to specific legislations: aerospatial, defence, newspaper publishing.

Administrative procedures relative to foreign investment

Freedom of establishment: In theory, it is guaranteed (except for setting up in Sinai or the military domain). In practice, foreign companies can face some discriminations compared to their competitors from the Egyptian public sector. Their main difficulty is to obtain local bank credit which is still highly state-controlled.
Acquisition of holdings: The acquisition of the majority interest in a domestic company is allowed in Egypt. In fact, holding more than 49% of the capital of a local bank is authorized since law 97/1996.
Obligation to declare: The General Authority for Investment and Free Zones (GAFI) in the country is useful to get information on the permissions necessary for setting up a company.
Competent organization for the declaration: GAFI
Requests for specific authorizations: The founders of joint stock and limited liability companies must furnish a bank certificate showing that 10% of the issued capital has been paid up.