Dr. Bahaa Helmy Writes: Foreign Investment in Egypt: Problems and Solutions

Conferences and seminars calling for attracting investment have multiplied since the June 2013 Revolution, without our seeing tangible results on the ground. We believe that the problems hindering the success of investment in Egypt are the very same problems that limit production capacity and competitiveness.

It has therefore become necessary and urgent to re-examine and identify the problems and obstacles to investment more deeply, in order to devise appropriate solutions that create an environment and climate attractive to investment. Some businessmen have complained of bureaucracy, high energy costs and the lack of a clear vision regarding the government's economic plans, according to the British Financial Times, and some attribute this to many obstacles to investment that spoil business in Egypt, most notably «unsuitable investment laws / infrastructure and the cost of connecting utilities / energy / bureaucracy / problems obtaining land and its high cost / the effect of the security situation and the regional situation».

Despite the election of Parliament, political stability and the announcement of some labor-intensive projects, there are many problems in addition to the above, such as the problems of industrial cities, failure to resolve disputes with investors, failure to address the problem of stalled projects, problems with repatriating profits, low productivity, difficulty obtaining licenses, the faltering of many companies, and contradictions between some of the laws governing trade.

Add to this the conflicts between State agencies over establishing new projects from a customs or tax standpoint, the poor performance of government employees, and the State's administrative apparatus's need for reform and for combating corruption and bribery. We therefore see the solutions in the following areas:

First area: settling investors' problems, with the State committing to legislative stability, and working to issue legislation regulating mediation for the settlement of disputes.

Second area: legislative reform of the laws governing investment and trade and linking them with the State's economic strategy.

Third area: reviewing the laws governing the State's administrative apparatus and issuing a freedom of information law.

Fourth area: designating a body to allocate land for industrial projects free of charge or for a nominal fee, using information technology to submit company incorporation applications.

Fifth area: solving the licensing problem by establishing specialized companies and technical offices, without dealing with any government body.

Sixth area: adopting new incentives for information technology industries, and encouraging industries related to public services, supply and transport, shipping and transport, crystal glass and marble, while evaluating these incentives periodically.

Seventh area: reconsidering tax policies, with exemptions for small and medium enterprises / exports, in proportion to export rates / investments in infrastructure and energy / high-technology projects / joint investment.

Eighth area: granting incentives to unregistered small businesses to encourage them to join the formal industrial and commercial sectors.

Ninth area: administrative decentralization and opening branch offices of the Investment Authority and of official agencies and departments in the governorates.

We also see the need to set basic principles for benefiting from investments, such as importing technologies applicable in Egypt, obtaining the greatest gains from investments, expanding exports and establishing free zones with special advantages, together with continuous evaluation of the structures and nature of incentives and of the level of government performance, and the adoption of a media and educational vision to instill conviction in the importance of work and production and of commitment to the rule of law.