• 17:41
  • Friday ,24 October 2014
العربية

Egypt's govt has to deliver growth to survive-investment minister

By Aswat Masriya

Home News

00:10

Friday ,24 October 2014

Egypt's govt has to deliver growth to survive-investment minister

Egypt's government has to deliver economic growth to survive and can't let complex laws and bureaucracy discourage foreign investment, the country's investment minister said.

Egyptian President Abdel Fattah al-Sisi, whose two predecessors were toppled by protests in the past three years, has implemented some of the economic reforms that may boost investor confidence, slashing fuel subsidies and raising taxes.

But the big question is whether investors can expect real change when yet another man drawn from the military is steering a nation plagued for decades by red tape, corruption and other obstacles that keep foreign companies away.

Investment Minister Ashraf Salman said Egyptians will not allow the president or his ministers to maintain a system which has led to a soaring budget deficit, dwindling foreign reserves and general economic malaise.

"The big change that's coming this time is coming from Egyptians," Salman told the Reuters Middle East Investment Summit.

"They will not accept anymore somebody to be like Mubarak, to stay in power for 30 years. They will not accept anymore a minister like myself to stay on this seat for 20 years."

Economic mismanagement was one of the reasons hundreds of thousands of Egyptians staged mass protests in Tahrir Square in 2011 against autocrat Hosni Mubarak, leading to his ouster.

Critics say Mubarak's ministers tended to deliver sugar-coated news to Egyptians and foreign investors about the economy of the most populous Arab country.

Now Sisi, who served as chief of military intelligence under Mubarak, has set a new tone. His ministers say they are delivering a more realistic assessment of challenges and the painful reforms needed to tackle them.

Salman, for instance, says none of the major problems for foreign investors have been resolved but he stressed that streamlining the process is a priority.

The focus is a one-stop shop system that directs investors to Egypt's investment authority, saving them the hassle of dealing with multiple agencies with often conflicting agendas.

"You don't need to go to 12 government institutions and then you have a lot of contradictions between one institution and another and you spend quite a lot of time to establish your company and get it up and running," said Salman.

He said it currently takes foreign investors up to six months if they are lucky to secure the licenses and permissions needed to operate in Egypt, which is struggling to shake off a legacy of state intervention in the economy.

"We are trying now to minimize this time to be anywhere from two to three weeks in order to have a full company established, operating, up and running, ready for investment."

LIMITED PROGRESS

That ambitious target will have to confront a stifling bureaucracy and resistance among the roughly five million government employees.

"None of the big problems have been solved until now except for issues related to administrative procedures," said Salman.

Foreign investors have been hesitant to return to Egypt, fearful they will get entangled in costly lawsuits, one reason a new law blocking third-party challenges to deals between the government and companies is so important.

Salman said that even if that law was overturned his ministry would find a way to shield investors. He said the government was targeting about $10 billion of foreign direct investment in the fiscal year ending in June.

Egypt's government is banking on an economic summit scheduled for February in the Red Sea resort town of Sharm el-Sheikh to showcase what it says will be billions of dollars worth of prime investment opportunities.

Salman said investment banks, not the government, would handle the event and marketing of potential ventures.

Asked why the conference would be more successful than a similar one in 2012 that brought no tangible results, Salman said: "We're getting professionals to manage it."

Egypt's economy has been kept afloat for the past year by its Gulf Arab allies Saudi Arabia, the United Arab Emirates and Kuwait, who backed the army's ouster of elected Islamist President Mohamed Mursi in July 2013 and support Sisi as a bulwark against the spread of political Islam in the region.

These nations have cautioned that their aid would not be forever, and Egyptian officials say the focus will now be on Gulf investment. Salman said those countries would not receive preferential treatment in investment.

"We will not have any favourable relations with one nationality over another, or to one investor over another -- even the citizens of this country," he said. "We are trying to make this economy attractive and fair."

After Sisi removed Mursi and his Muslim Brotherhood from power following mass protests, security forces killed about 1,000 of the group's supporters at Cairo protest camps and arrested thousands of others.

The crackdown drew widespread condemnation from rights groups and generated accusations that the country had returned to the kind of army-backed dictatorship that makes some investors uncomfortable.

Asked how much further Egypt had to go to complete its democratic transition and improve human rights, Salman said parliamentary elections were the next step, adding the date was expected to be announced within a month.