Egypt gears up to revive economy by wooing investors

As Egypt is struggling to rally support for its economic summit scheduled to be held in Sharm El-Sheikh in March, the country needs to conduct a number of reforms to improve its investment climate and attract foreign investors, said economic experts.

As the countdown is ticking for the awaited economic summit, Egyptian President Abdel-Fattah al-Sisi has been making restless foreign tours in Asia, Europe and the Gulf region to rally support for the event that will provide various foreign investment opportunities in the country.

"Sisi's tours aim to rally support for Egypt's upcoming economic summit in the first place, which is very important to recover the country's ailing economy after three years of political turmoil," economic analyst and former assistant to International Monetary Fund (IMF) executive director Fakhry al-Fiky told Xinhua, noting the summit will be attended by representatives of 120 countries and over 3,500 big companies.

Fiky sees Sisi's efforts as earnest, yet he stressed that these efforts need equal government endeavors and real reforms of outdated systems and regulations including those of the labor market, the product market, the wages, etc.

The expert illustrated that the products are monopolized by some big companies which is a blemish in the product market system, and that the pensioners are struggling because their allowances are based on basic salaries, which represent only about 25 percent of their total wages.

"Egypt needs a clear national and comprehensive economic program to be reviewed and certified by the IMF and the World Bank in order to mount its credibility and attract foreign investments, " Fiky told Xinhua, noting that Egypt is an early founding member of these world institutions and it has the right for their consultation.

In November 2014, Egypt held a tripartite summit in Cairo with Cyprus and Greece, and later in the same month Sisi paid visits to France, Italy and Vatican.

In late December 2014, the Egyptian president's visit to Beijing resulted in raising the level of Egypt's partnership with China to be "comprehensive." A month later, Sisi held talks with Japanese Prime Minister Shinzo Abe in Cairo that marked "a new start" of mutual cooperation.

Sisi has recently wrapped up a quick tour in the Gulf region including his top allies the United Arab Emirates and Saudi Arabia, and he is now in Switzerland attending the World Economic Forum in Davos.

The economist described Sisi's moves as "a fast pace," adding that Egypt is currently striving to attract foreign investments to start "a new beginning" for economic recovery.

According to Fiky, Egypt needs a gradual eight-year plan to deal with its financial problems that lead to budget deficit and leaking foreign currency reserves, to reform its administrative systems and provide equal opportunities for all sizes of enterprises and to redesign its social protection network to protect the poor against price hikes resulting from reform programs.

On Thursday, Sisi told the World Economic Forum in Davos that Egypt has "promising investment opportunities" referring to the expansion of the Suez Canal and the development of its surrounding region, which are expected to provide investments worth billions of dollars.

"The variety that distinguishes the Egyptian economy guarantees fruitful interaction with all investors on the levels of small, medium-sized and large enterprises alike and in different sectors including agriculture, industry and services," Sisi added.

Ehab al-Desouki, head of the Economy Department of Cairo-based Sadat Academy, echoed Fiky's view that Egypt needs to upgrade its economic regulations and tax structure in order to succeed in attracting foreign investors in March summit and beyond.

Egypt has recently initiated a "one-stop window" system at the Investment Authority to facilitate business establishment without investors having to visit several ministries for approvals and procedures.

Desouki said that Egypt needs to show more positive tangible progress in its economic regulations, saying that the one-stop window is a step forward.

"The one-stop window is good but I still wished that would have decreased the number of needed approvals as it remained the same but in one place," Desouki told Xinhua.

As for the currently-proposed "unified investment" draft law, Desouki argued that it is in favor of neither the country nor the prospect investors if it is approved in its current shape.

"It provides a 5-year tax exemption for new businesses, which does not benefit the country neither does it attract investors," Desouki told Xinhua, believing that such a tax pardon opens doors for corruption as some businesses run only for five years to use the exemption and then change their names into new ones.

Desouki added that tax exemption has been cancelled everywhere in the world and that a genuine tax system side by side with transparency and non-bureaucracy would attract more investors.

"Sisi's tours are very important to rally support for the economic summit, yet improving economic laws, regulations and procedures are more important to attract foreign investment," said Desouki. Enditem