Egypt's Prime Minister, Dr. Ahmed Nazif, and the Ministers of Investment, Trade and Industry, Tourism, CIT, and Transport, discuss Egypt's commitment to reform during private reception and dinner on the eve of the Forum's opening
Sharm El Sheikh, Egypt - The World Economic Forum's annual meeting on the Middle East began its opening session this morning at this beach resort in Egypt's southern Sinai. The Forum was unofficially kicked off last night at a private dinner organized by Egypt's investment promotion agency, GAFI, under the auspices of the Prime Minister.
Following his opening remarks, Nazif and a group of five key Ministers behind Egypt's aggressive program of economic liberalization invited a handful of guests from the Forum's 1,200 delegates to a cocktail reception and dinner.
The invited delegates were chosen to discuss emerging business and investment opportunities in the Egyptian market as the government of Egypt continues an aggressive program of economic liberalization, and privatization designed to open the market to foreign investors.
The WEF's decision to hold the in Egypt instead of Jordan was seen as a major victory on the part of Egypt's progressive, business-minded cabinet who successfully managed to bring the Forum back to Egypt, where it was last held in 1996.
The WEF, and this reception and dinner, is seen as the latest in a series of events at which Egypt's investment "dream team" -a handful of reformist Ministers-- has been seen aggressively courting foreign investors as part of an international campaign to promote the country's economic reforms.
Since the campaign launched at a Euromoney conference in September 2005, GAFI has laid the foundation of what is estimated will be a multiyear campaign to increase foreign direct investment into the country. In the last nine months Egypt's investment evangelists have toured Europe, Asia, and the United States, promoting Egypt's value proposition and positioning Egypt as the next big thing.
In some ways the WEF meeting in Sharm El Sheikh is the culmination of 18 months of hard work since the new cabinet was sworn in. Others see it as just the beginning.
Egypt's economic reform program has been underway for 20 months and has included dramatic reductions in business and personal taxes, tariffs and non-tariff barriers to trade, broad financial service sector reforms, and the eventual privatization of some 200 government-owned businesses, and 400 public-private joint ventures. These economic reforms are designed to enable international and Egyptian investors to tap the comparative advantages the country offers, including:
- Preferential access to U.S., European, Middle Eastern and African markets under the terms of free trade agreements negotiated in recent years
- Close proximity to European, east coast U.S., Middle Eastern and African markets
- Low-cost and reliable energy, water and labor supplies and abundant, accessible raw materials
- A developed transportation, energy, water, telecom and business service infrastructure
- A large educated and technically-trained workforce with proficiency in English, French and Italian
- A young, rapidly growing domestic market
After less than two years, the reforms are already having positive effects:
- GDP growth rose to 5% last year and is on track to reach 6% this year.
- Inflation, which spiked at 12% in 2004, receded to 3.1% by late 2005.
- Egypt's current accounts posted a surplus of 3.3% of GDP last year, climbing from a 1.2% deficit five years earlier.
- Market capitalization doubled in 2005, and the total value of stocks traded on the Cairo Alexandria Stock Exchange increased four-fold last year.
- After four years of stagnant growth, FDI tripled last year and is poised for another dramatic increase in 2006.
Independent credit and investment climate analysts are now recognizing this progress. For example, Moody's Investor's Service Egypt Credit Opinion (August 2005) notes that "The government of Ahmed Nazif since July 2004 has clearly played a role in the revitalization of the economy. Some important reforms such as reduction of customs tariffs and taxes have been set in train. Even the privatization programme which had stalled a few years ago, has been revived."
The Institute of International Finance (Summary Appraisal: Egypt, October 2005) states "[Egypt's] economic prospects appear more favorable now than for a decade or more. Tax reform, trade and exchange rate liberalization, a revival of privatization and ongoing restructuring of the banking system have raised confidence, as reflected in a surge in FDI and a booming stock market."
The World Bank (Doing Business 2006 - Creating Jobs, September 2005) ranks Egypt 6th among 150 nations for its economic reforms, stating that "Some of the boldest reforms, driving the biggest improvements in the Doing Business indicators were... Egypt's streamlining of customs procedures and trade documents."
Finally, A.T. Kearney's Global Services Location Index (2005) ranks Egypt among the 12 most attractive locations worldwide for IT, call center, and business process services, just behind the United States and ahead of all Middle Eastern, North African, and all European locations, with the exception of the Czech Republic. For cost-sensitive companies, Egypt jumps from 12th place to 5th, trailing only locations in the Far East including India and China.
-Ends-
About GAFI
GAFI, The General Authority for Investment and Free Zones, supports the expansion of economic opportunity in Egypt through promotional programs, customer services and the advocacy of investor-friendly government policies to enable more responsive customer service. For the past 15 months, GAFI, has operated the "One Stop Shop", which brings together 32 governmental bodies to simplify and expedite investor services. The"One Stop Shop" has been expanded to Alexandria, Ismailia, and Assiut.
For more information please contact:
Lamia Mokhtar
Tel: +2 012 219 6042
Andrew Rothgaber
Tel: +2 012 103 8785
© Press Release 2006
