| Speech By The Consul General of the Arab Republic of
Egypt Mr. Aly Galal Bassiouny
Before The Luncheon
Meeting on A Rising Economy With Promising Potential For Hong Kong Business And Investment |
European Union
We hope to sign in the very near future the
European partnership agreement, which would establish a free trade area between Egypt and
the European Union countries.
At present, Egypt has a preferential trade
agreement with the European Union, which was commenced in 1977.
USA
In 1999, Egypt and the USA signed the Trade
and Investment Framework Agreement (TIFA). This agreement is intended to be a stepping
stone to a free trade agreement between the two countries.
The Arab World
Egypt is part of the Arab Free Trade Area
Agreement that will be fully implemented in 2007. This agreement comprising of Egypt and
10 Arab States phases out existing tariffs over a period of 10 years commenced in January
1998.
At the bilateral
level - Egypt has been very active in promoting investment agreements. By
1997 it had reached bilateral investment treaties with 43 capital exporting countries. *1
At the
regional level - Egypt plays a leadership role. It is a party to 11
regional conventions related to investments and its protection and has concluded tax
agreements with 23 states regarding double taxation and tax evasion.
At the
multilateral level - Egypt is a signatory to various conventions
related to investment (e.g. on protection of industrial property, on the settlement of
disputes between states and nationals of the states... etc.)
Egypt's membership in the WTO since 1995
also provides investors with additional advantages related to international trade
transactions.
Ladies and Gentlemen,
The Egyptian
Market: Potential and Expectations
Egypt enjoys several competitive advantages, among which
are rich natural resources, a large economy and proximity to regional markets.
It has a population of nearly 66 million;
with large competitively priced labour forces, maritime and airfreights rates, electricity
cost and telephone tariffs. It also enjoys availability of land and of serviced land,
which is considered by international investors to be one of Egypt's advantages.
According to 1996-1998 index of Africa
competitiveness report, the Egyptian market ranks first in Africa when it comes to market
growth. Globally, its growth prospects are also ranked high (by the world competitiveness
report) just after China, Malaysia, Chile, Brazil and Portugal and ahead of all other
countries of the WANA region (West Asia North Africa Region). *2
FDI has flowed into Egypt at a steadily
increasing pace in the 1990s and the current level of inflow is getting more stable than
earlier. Egypt's rank is 18 among the largest developing countries recipient of FDI.
Annual flows were below USD200 million in
1990; they are now over USD2 billion: FDI increased from USD136 million to USD2.2 billion;
FDI% GDP rose from 0.28% to 3.9%; FDI% GDI rose from 0.96% to 19.5%.
Egypt attracts more FDI than any other
country in the Middle East and North Africa (MENA). Egypt and Nigeria together absorb over
50% of the total flows to Africa, and three quarters of the flows to the
oil-exporting economics of Africa.
The available data on the 1995 earnings of
affiliates of US companies show an average rate of return of 22% in Egypt, which is higher
than the average rate of return of affiliates located in other developing regions and
twice as such as the average income of affiliates located in Europe (10%). *3
Egypt currently boosts 26 out of the 100
worlds largest TNCs. *4
*1 One third of these
treaties are with OECD countries, 10 are with Arab countries, and the rest are with other
countries such as China.
*2 In a survey by
UNCTAD of business executives, foreign investors hold positive expectations of potential
market growth in Egypt. These expectations are due to the internal market as well as to
the wider regional market.
*3 This high profitability of
FDI in Egypt indicates that the domestic economy has the potential to absorb higher
amounts of FDI. (Now FDI amount to only 2% of GDP, and about 10% of gross domestic
investment)
The number and value of investment projects
by the General Authority for Investment and the Free Zones "GAFI" in 1989 and 1999, number of projects approved
increased from 591 in 1978 to 1,380 in 1988 to 6,618 in 1998 are more than double the
approvals of earlier years. Overall, the approval rate has increased from an average of 33
projects per year in the five-year (1970-1975), to 126 projects per year between
1990 and 1995.
*4 The top TNCs
in Egypt in electronics include GE, IBM, Philips, Siemens and Sony. In the automobile
industry: Toyota, Nissan, Fiat, Daimler Benz and BMW. In petroleum, the key players are
Amoco, Royal Dutch Shell, Mobil, Exxon, British petroleum and the ENI Group. In chemicals
and pharmaceuticals are Bayer, Glaxo, Hoechst, Novartis, Du Pont and Rhone Poulenc. In
food and beverage sector are Unilever and Nestle.
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