Since the start of the recovery from the Covid-19 pandemic, Egypt has taken several decisions to re-drive economic growth. However, the global economy was eventually affected by the repercussions of the Russo-Ukrainian conflict, and these were reflected on the national economy.
In mid-May 2022, a press conference was held to announce the state’s plan to address the global economic crisis. In October, the Economic Conference was held with the aim of agreeing on the state economic roadmap and proposing clear policies and measures that contribute to increasing the competitiveness and flexibility of the Egyptian economy.
The National Dialogue sessions were launched last May to include various opinions and proposals from all segments of the Egyptian people with the aim of reaching outputs for the benefit of the Egyptian citizen, and to serve as a milestone towards building the New Republic.
In this context, the article at hand presents and analyzes the state’s policies to support and stimulate the Egyptian economy by improving the business environment, encouraging industry and developing the trade system.
Policies of Attracting and Stimulating Investments
State policies have been focused on investment. The first session of the Supreme Council for Investment in its new formation was held last May, adopting 22 decisions aimed at attracting investment and improving the business environment. These include facilitating the procedures for establishing companies, enhancing competitiveness, facilitating import and export facilities, in addition to reducing the financial burdens of companies, supporting startups and utilizing international expertise. A number of these decisions have already been implemented, including: the issuance of a decision to be circulated to all parties to set a specific time limit for all approvals of 10 working days and only for once upon establishment, and the extension of the Golden License which was also granted to two companies in late May, thus accounting the total number of companies that obtained the license to 15.
Furthermore, the Cabinet approved the amendment of Article (76) of the Executive Regulations of the Investment Law related to the establishment of special economic zone projects, as well as the proposal to amend Article (4) of the Executive Regulations of the Investment Law, allowing the new foreign investor to obtain temporary residency for a period of one year (non-tourism) renewable for a period of 6 months or one year during the period of establishing companies and economic entities, enabling investors to deal with banks, open a bank account and complete all procedures for establishing their enterprises.
Efforts to attract investment are meant to raise the share of the private sector participation in economic activity and build a strong and diversified production base, hence increase employment opportunities, raise production rates, provide export surplus, and increase foreign exchange flows. The measures to improve the business environment also aim to increase investments in a number of highly competitive sectors, most notably industry, energy, information technology and start-ups.
Supporting and Localizing the Industry
The state was keen to support and localize the local industry by expanding industries with high added value and high technological component, establishing several specialized industrial complexes that support sustainable development plans, and achieving the optimal use of available resources in order to increase the added value of the Egyptian industrial product. The initiative to support and localize the national industry was launched and the establishment of Ebdaa (Start) Company for Enterprise Development, the economic arm of the “Decent Life” initiative, with the aim to localize modern industry, reduce the import gap, and provide job opportunities. The initiative’s work is multifaceted, including the axis of supporting the industry by providing technical and financial support to non-compliant and financially-struggling factories and supporting them so that they can legalize their situation, as well as the axis of training, research and development to discuss the problems of struggling factories and find the most appropriate solutions via modern scientific practical methods and at the lowest cost, as well as the axis of macro projects, which is based on partnerships with major manufacturers, whether existing projects that want to develop their activities or new projects.
The state’s efforts to support industry are integrated with efforts to support the investment environment, as creating a business environment is a prerequisite for the development of various productive sectors. The state’s efforts to support the industry focus on several sectors, including: land reclamation and cultivation, transport and logistics, tourism and hotels, food industries, medical and pharmaceutical industries, textile industries, clean energy and green economy, metal industries, startups and entrepreneurship, and small, medium and micro enterprises.
Trade Enhancement Opportunities
The third axis in the trilogy of stimulating the Egyptian economy is developing the trade system, thus highlighting efforts to stimulate investments and support industry. In this context, the need for addressing the challenges pertaining to high cost of import and export should be highlighted, as well as the multiplicity of procedures related to the trade system, especially the procedures for importing components necessary for the production of export goods and related programs (the Drawback System and the Temporary Admission System), which affect the procedures for recovering financial dues to exporters after calculating imported components.
Moreover, it is necessary to address the overlap between the roles of the Ministry of Finance and the Ministry of Trade and Industry with regard to the role of the export support system, as well as the overlap between the Customs Authority, port authorities, and the inspection bodies amounting to 38. The development of work requires the digitization of the customs system to a greater degree in order to standardize the procedures followed on the same product, reduce the number of procedures, ease congestion, reduce the time required to complete the service and accelerate the document cycle, which is slower than the product cycle contrary to the norm.
The decisions of the Supreme Council for Investment included the approval of the amendment of Law No. 7 of 2017, where the amendment allowed non-Egyptian investors to be registered in the importers’ registry. This permission extends for a period of 10 years to facilitate the business environment and address the import difficulties of production supplies by facilitating the import process for the foreign importer. A number of incentives have also been adopted to support a number of sectors and projects related to the agricultural and industrial sector, energy and green hydrogen production, in addition to the housing sector, real estate developers and investment projects in new cities, as well as transportation with regard to export duties and customs.
There are several export reform proposals, including the need to facilitate and reduce the duration of export subsidy entitlements, and simplify and accelerate the procedures for Temporary Admission and Drawback systems. As for the most prominent proposals for import reform, these include the application of a unified risk system at the level of all regulatory authorities and in accordance with international best practices, the development of the Nafeza (one window) system to avoid technical problems, limit procedures to just platform and increase their efficiency, and increase transparency in estimating the total fees borne by the Egyptian importer, especially the manufacturer, during customs clearance procedures.
In conclusion, the key to reform is the development of production, operation and manufacturing processes, followed by developing the performance of the trade system, along with the importance of considering the private sector as a partner in the decision-making process and not only a recipient of decisions. In addition, it is important to develop a follow-up and evaluation plan according to a specific timeframe.
