Area: 1.2 million km2

Land Boundaries: 2 ,665 kmCoastline: 2,450 km

Border CountriesLibya (1,115 km) to the west, Sudan (1,273 km) to the

south, Gaza Strip (11 km) and Israel (266 km) to the east.

Elevation ExtremesLowest point: Qattara Depression (-133 m)Highest point: Mount Catherine (2,629 m)

Geographic ImportanceEgypt's important role in geopolitics stems from its strategicposition: a transcontinental nation, it possesses a land bridge(the Isthmus of Suez) between Africa and Asia, which inturn is traversed by a navigable waterway (the Suez Canal)that connects the Mediterranean Sea with the Indian Oceanvia the Red Sea.

Natural ResourcesEgypt's most valuable mineral resource is oil. The countryalso has gold deposits iron ore, manganese, limestone, gypsum,talc, asbestos, lead, zinc, phosphates and uranium. Majornatural gas discoveries began with the start of the decade.

Judicial SystemThe legal code is derived largely from the Napoleonic Code.Egypt was among the first countries next to France to establisha judicial institution in 1875. The Egyptian Civil Code isthe prime source of civil law, first written in 1949.

Membership in Important InternationalOrganizationsAfDB, AFESD, AMF, EBRD, FAO, G-15, G-24, G-77,IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IDB, IFAD,IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM,IPU, ISO, ITU, LAS, MIGA, MINURSO, MONUC, NAM,OAPEC, OIC, OIF, ONUB, OSCE, PCA, UN, UNCTAD,UNESCO, UNHCR, UNIDO, UNITAR, UNMIL, UNMIS,UNOMIG, UNRWA, UNWTO, UPU, WCO, WFTU,WHO, WIPO, WMO, WTO.

Membership in Multilateral Trade AgreementsAGHADEER, COMESA, Euro-Med Partnership,GAFTA, QIZ.

Economic OverviewEgypt’s economy has been growing quickly after several yearsof stagnation thanks to the adoption of liberal economic policiesby the government, increased revenues from tourism, and abooming stock market. In its annual report, the IMF ratedEgypt as one of the top countries in the world in terms ofeconomic reform. Some of the recent economic reformsinclude a dramatic reduction of customs and tariffs, a unified tax law that slashed personal and corporate taxes in half from40% to 20% while increasing revenue by 100%, and numerousimprovements in the overall regulatory structure.

Highlights• Egypt’s main foreign exchange revenues come from

petroleum exports, tourism, Suez Canal traffic, and remittancesfrom Egyptians working abroad.

• Energy will continue to play an important role in Egypt'seconomy in coming years. Due to major recent discoveries,natural gas is likely to be the primary growth engine of Egypt'senergy sector for the foreseeable future. The country beganexports of liquefied natural gas (LNG) in January 2005.

• FDI into Egypt has increased considerably in the past fewyears due to the recent economic liberalization measurestaken, exceeding $6 billion in 2006.

• Egypt is slated to overcome South Africa as the highestearner of FDI on the African continent in 2007.

• Egypt has been receiving U.S. foreign aid (since 1979)an average of $2.2 billion per year and is the third-largestrecipient of such funds from the United States.

Time ZoneStandard (GMT+2),Daylight Saving (+1)

Internet TLD: .eg

Calling code: +20

Capital: Cairo

LanguagesArabic (Official), Englishand French widelyunderstood by educatedclasses.

Local CurrencyEgyptian pound (EGP)

IndependenceFebruary 28, 1922(from UK)

Republic declaredJune 18, 1953

PresidentMohamed Hosni Mubarak(Since October 14, 1981)

Prime MinisterDr. Ahmed Nazif(Since July 9, 2004)

ClimateHot, dry summers withmoderate winters.

TerrainVast desert plateauinterrupted by Nile valleyand delta.

Population by Economic Activity (% of employed)

Agriculture, Hunting & FishingManufacturingDefense & General AdministrationWholesale & Retail TradeHealthBuilding & ConstructionCommunication, Transport & WarehousingBrokerage, Real Estate, Renting & Business ServicesEducationCommunity, Social & Personal Services, International& Regional Organizations & AuthoritiesRestaurants & HotelsElectricity, Gas & WaterMining & Quarrying

30.612.99.08.98.47.75.44.12.2

2.01.20.90.4

• Population (in bound)

• Population Density

• Number of Establishments

• Labor Force

• Birth Rate (2005)

72.579 million

72.1 person/km 

4.53 million

21.917 million

25.5/1,000 population

2006 Population Census

7.8

6.3

5.3

5

4.7

Top Five Governorates(by population in million)

• Cairo

• Giza

• Sharqiya

• Dakahliya

• Beheira

Age Groups

• Under 15

• 15-under 45

• 45-under 60

• 60 and over

23.1

35.0

10.0

4.5

32

48

14

6

million %

Egypt cut its average customs duties on 1,114 items with effect from February 6th, 2007. The reduction brings the weighted average of import tariffs to 6.9%, from 9% previously.

The cut means that 90% of imported goods, including many foodstuffs, raw materials,intermediate goods and some finished goods, such as refrigerators, heaters and televisions,

will face tariffs below 15%, and that some products, around 8.5% of the total,will be subject to no tariffs at all. One of the remaining exceptions are cars,

which will continue to face a 40% tariff to protect domestic vehiclemanufacturers; another will be apparel, which nonetheless have seen a

reduction from 40% to 30% in import tariffs.

Tourism receipts totaled $7.6 bn during 2006 reflectingb u o y a n t recovery of 11.7% compared to 2005 andarrivals reached 9.08 million.

Privatization Progress:

The government is continuing with its programof divestment of state-owned companies. In theperiod July-November 2006, proceeds from theprivatization of state-owned firms reachedE£27.5bn compared with the E£15.1bn generatedby the 60 privatizations in 2005/06. This leap waslargely thanks to two major deals: the sale of athird mobile-phone license and the privatizationof the smallest of the four large state-ownedbanks, Bank of Alexandria in October 2006.

Egypt Economic PerformanceReal GDP Growth reached 6.8% for 2005/06 compared to 5.8% in the previous year. Growth is anticipated to reach7% in 2006/07 with natural gas, construction, the Suez Canal, telecommunications, and Tourism as the prime drivingforces for robust growth during first half of 2006/07.

The overall Budget Deficit is reported at 7.9% of GDP for 2005/06 compared to 9.6% in the previous year.

Inflation rates have increased to 12.6% in February 2007 compared to 4% in February 2006. The average inflation ratesince the beginning of FY2006/07 is reported at almost 11%. This increase is driven principally by a surge in food (in lightof the outbreak of Avian flu) and transportation prices as well as recent increases in administered prices of several goods andservices such as telecommunications and fuel products.

Balance of Payments:

Indicators continued exhibiting outstandingperformance during the first half of 2006/07,realizing a surplus of 2.3% of GDP.

Commodity exports increased by24.4% to $10.7 billion, due to the surgein non-oil exports by 46%. Likewise, oilexports increase by 6.9% benefitingfrom high international oil prices andincreased natural gas exports.

Commodity imports alsoincreased by 18.2% to some $8.5

billion, reflecting buoyantdomestic demand.

Nominal GDP at Market Prices ($bn)Real GDP Growth (%)Real GDP Per Capita ($)Exports ($bn)Imports ($bn)Net Foreign Direct Investment ($ bn)Net Portfolio Investments ($bn)Net International Reserves ($bn)External debt as a % of GDPBudget Deficit (% of GDP)Period Average Inflation (%)

03/04784.1

1,03610.518.30.41

-0.2214.838.19.59.5

04/05934.5

1,32313.824.23.900.8319.331.19.6

11.7

05/06108. 4

6.81,52018.430.46.112.7622.927.67.94.2

06/07 H159.16.8

-10.717.37.250.0626.122.78.5

10.6

Key Economic Indicators

Sources: CBE, Ministry of Finance

Privatization Program Proceeds

Egypt-U.S. TradeThe United States has been Egypt’s leading foreign trade and investmentpartner since the time of Egypt’s Open Door Policy and the Camp DavidAccord in the late 1970s. Despite short-term fluctuations, bilateral relationshave been marked by an upward trend in trade and investment and supportivepartnerships and agreements.

Partnerships and Agreements with the U.S.

• Textile and Apparel Agreement (1973)

• United States Agency for International Development (1975)

• Double Taxation Treaty (1981)

• Bilateral Investment Treaty (1982)

• Memorandum of Understanding with the US Department ofDefense (1988)

• The U.S.-Egypt Partnership for Economic Growth andDevelopment (1994)

• Science and Technology Agreement (1995)

• Trade Related Investment Framework Agreement (1999)

• Investment Incentives Agreement (1999)

• Cooperation in Energy Technology Agreement (1999)

• Egypt-U.S. Electronic Commerce Joint Statement (1999)

• Qualified Industrial Zones Agreement between Egypt, Israeland the U.S. (2004)

The United States is Egypt’s largest single trade partner and secondlargest trading bloc after the EU.

U.S. exports to Egypt are the fifth largest in the MENA regionrepresenting 8% of the total region. U.S. imports from Egypt are 2.4%of the region’s total.

Investment in Egypt

Law 8 of 1997 is the principal law that regulates investment in

Egypt. The law established a network of Free Zones that allow for

exemptions from taxation, customs, and duties. In addition, some of

the benefits from free zones can be extended to companies in certain

sectors outside of free zones. These industries include Information

Technology, land reclamation, manufacturing, mining, transport,

medical services, certain financial services, agriculture and tourism.

Tax Law 91 of 2005 slashed corporate and personal taxes in half

from 40% to 20% and restructured income tax brackets. Revenues from

agriculture, the stock exchange, and bonds are exempt from taxation.

A Large Taxpayer’s Center (LTC) was set up in 2005 to

streamline the process for high-paying individuals and corporations.

Despite the rollback of the corporate tax benefits outside of free zones,

businesses within free zones are still exempted from corporate tax.

CASE-30 index reported an annual increase of 648 points for the year

ending December 2006. Market capitalization also increased over the

previous year by 17.1% (80.3% of GDP).

The S&P/IFCG index for emerging markets for Egypt

increased during February 2007 by 8.7%.

Egypt attracted approximately $7 billion in Foreign DirectInvestment (FDI) during 2006, an increase of 86% over the

previous year. FDI increase in FY 2005/06 is attributed mainly to the

increased FDI in non-petroleum sectors of $4.3 billion compared to

$1.4 billion in 2004/05.

Banking has been transformed over the past three years, with new laws,

state withdrawal from the sector, and restructuring under the Financial

Sector Reform Program (FSRP), due to end in 2008.  Under FSRP,

privatization of the state-owned Bank of Alexandria has been awarded to

the Italian bank Sanpaolo, now the country's biggest privately-owned

bank.  In 2006, the government sold the shares it held in 13 commercial

banks, and several Egyptian banks came under foreign control.  In addition,

several M&As led to a reduction in the number of banks from 57 to 39,

aiming  to reach 22 banks by 2007.

Major Foreign Banks by AssetsHSBCBarclays Bank EgyptBNP Paribas Le CairePiraeus BankBlom Bank Egypt

15.57.85.14.54.4

Top Banks by AssetsNational Bank of Egypt (NBE)Banque MisrBanque du CaireBank of AlexandriaCommercial International Bank (CIB)

185.3106.945.733.232.6

End of June 2006 (LE bn)

Trade Values (Egypt/U.S.)

FDI Composition

Source: Ministry of Investment

Real Esta

te

Sale of C

ompanies

New Establishments& Capital Increase

Petroleum

Egyptian Petroleum exports in 2005 and 2006 were around one billiondollars, more than triple their 2004 value, due to the surge in gas exports.The most important non-petroleum exports to the United States are textiles,ready-made garments, and iron and steel.

Qualifying Industrial ZonesThe Qualifying Industrial Zones (QIZ) protocol between Egypt, Israeland the U.S. was signed on December 14, 2004, providing quota and duty-free access to U.S. markets for products manufactured in specific industrialzones, provided 35% of the commodity’s value is manufactured in anEgyptian QIZ, of which one third, or 11.7% consists of Israeli inputs.

Implementation of the QIZ protocol began upon ratification by theEgyptian and Israeli sides on February 16, 2005. Since its ratification,the QIZ agreement helped increase Egypt’s exports to the U.S. to $2.4billion in 2006 from $1.3 billion in 2004.

Designated QIZs in Egypt are located in four geographical regionsnamely, greater Cairo, Alexandria, the central Delta and the Suez Canal.The QIZs encompass Egypt’s largest industrial centers, including eightpublic free zones. Greater Cairo and the Suez Canal region includeEgypt’s most important textile and clothing manufacturers.

The QIZ protocol has encouraged Egyptian companies without anyprevious export experience to enter the U.S. market.

Since its implementation in February 2005, QIZ exports have shown anupward trend with a remarkable increase in the level of investments. Theprotocol, which started with a total of 397 companies, currently includes655 companies compared to 548 companies in February 2006.

The current number of exporting QIZ companies nearly tripledfrom 54 in the second quarter of 2005 to138 companiesduring the third quarter of 2006.

Currently there are 263 registeredexporting companies(Q4 2006).

Investment in the QIZ is particularly attractive to industries subject to hightariffs in the U.S. market, particularly textiles and clothing TC. Consequently,around 80% of QIZ companies produce textiles and clothing articles whilethose producing prepared foodstuff are only 4%.

QIZ Companies by Location (14/2/2007)

U.S. Exports to the MENA Region (2006)

Others

IraqKuwaitEgyptTurkeySaudi ArabiaIsraelUnited Arab Emirates

OmanMoroccoLebanonAlgeriaQatar

23%

21%

Others (4%)2%2%

2%2%

3%3%

4%

11%

15%

Egypt (8%)

Top U.S. buyers from QIZ exporters include The Gab Inc,. Wal-mart Fashions, Kmart Corporation,V.F Jeanswear, Levis, May Department Stores and Target.

Egypt QIZ Exports to the United States

Q2 2005Q3 2005Q4 2005Q1 2006Q2 2006Q3 2006Q4 2006

Textiles &Clothing ($ Mn)

61.6116.2110.5117.5164.3177.4176.7

Food Products Exporters(No. of companies)

0.00.00.20.50.40.10.2

54708596

137138146

Port Said

Giza4%

Gharbeya4%

8%

Alexandria24%

10th ofRamadan

20%Shoubra

El Kheima14%

OtherCairo Area

15%

Others11%

U.S. Imports from the MENA Region (2006)

United Arab Emirates

Jordan

Egypt

Kuwait

Turkey

Iraq

Algeria

Israel

Saudi Arabia

Libya

Others

32%

19%

12%

16%

5%

4%

Egypt2%3%

1%

1%

Others3.8%

Egypt TC Exports under the QIZ

BUSINESS STUDIES & ANALYSIS CENTER (BSAC)

U.S. Investments in EgyptThe stock of U.S. FDI as of the end of 2006 stood at $5.5 billion, representing

10% of U.S. foreign direct investment in the Middle East and Africa.

The U.S. is Egypt’s largest foreign direct investor, with investment concentrated

in the oil & gas sector. It is the second largest non-oil foreign direct investor

after the UK.

Houston-based Apache Oil Company is now the largest American investor

in Egypt, with total investments of over $3.2 billion (as of December 2005).

This includes Apache’s concessions in Egypt’s Western Desert as well as

offshore concessions in the Nile Delta.

On January 6, 2006 Apache announced the sale of its offshore Mediterranean

interests to Amerada Hess for $413 million. All Apache operations are now

concentrated in the Western Desert.

While the Ministry of Petroleum keeps track of investment in the oil & gas

sector, the General Authority for Investment and Free Zones (GAFI) keeps

statistics on all other investments. According to GAFI statistics, inland U.S.

direct investment (FDI) outside the oil & gas sector totaled $1.46 billion as

of December 2006, divided among some 494 companies.

Leading Sectors for U.S. Exports and Investment

1. Telecommunications Equipment and Services2. Petrochemical Industry3. Environmental Equipment and Services4. Oil and Gas Field Machinery Services5. Automotive Parts and Service Equipment6. Electricity and Power Generation7. Packaging Equipment8. Railroad Equipment9. Port Development Services10. Food Processing and Packaging Equipment11. Hotel and Restaurant Equipment12. Medical Equipment13. Educational Training & Equipment

USAID Programs in Egypt: Social & Economic BenefitsUSAID-Egypt’s strategic goal is the development of a globally competitiveeconomy benefiting Egyptians equitably. For nearly three decades, theUnited States and Egypt have collaborated closely as partners in economicdevelopment and regional stability. Coordination on the Middle East peaceprocess, interest in a strong and open Egyptian economy and cooperationin countering terrorism are pillars of the nations’ relationship.

U.S. economic assistance has directly raised the quality of life for millionsof Egyptian citizens. Many of the improvements are apparent, such as addedclassrooms, renovated hospitals, a massive expansion of infrastructure andutility services, and loans to small and medium-sized enterprises. Some areless visible, such as dramatically lowered maternal and child mortality rates,reduced air pollution and increased access to education for girls.

Other improvements are observed on a society-wide level, such as USAID’slong-term championing of the private sector, business associations andnon-governmental organizations, and its encouragement of policy reform.USAID is supporting financial privatization and technical strengtheningin areas including commercial banking, real estate finance and insurance.

The most important Egyptian imports from the U.S. are cereals,transportation equipment, and machinery.

U.S. firms are active in the banking sector and in a wide range of

manufacturing industries, producing goods both for the local market and

for export. Among the most prominent U.S. investors are American

Express; AIG, American Standard, Bristol-Myers Squibb; Citibank; CIB;

Coca Cola; Exxon Mobil, Eveready, General Motors, Guardian Industries,

Gillette; GlaxoSmithkline; H.J. Heinz; Johnson & Johnson; Kraft,

Microsoft; PepsiCo; Pfizer; Procter & Gamble; and Xerox.

Others

Food And Kindred Products

Fabricated Metal Products,Nesoi

Chemicals

Special ClassificationProvisions, Nesoi

Computer and ElectronicProducts

Machinery, Except Electrical

Agricultural Products

Transportation Equipment

15%

5%21%

19%

5%

6%

10%

7%

12%

Egypt Imports from the U.S. (2006)

Egypt Exports to the U.S. (2006)

42%

15%

11%

12%2%

4%

14%

Others

Textile Articles

Carpets and other TextileFloor Coverings

Knit Apparel Articlesand Accessories

Iron and Steel

Not Knit Apparel Articlesand Accessories

Mineral Fuel, Oil etc

US Contribution in Companies’ Capital(Stock end of 2006)

TextilesEngineeringChemicalsFood & BeveragesPharmaceuticalsMetallurigalBuilding MaterialsMiningWood ProductionTotal IndustryTotal AgricultureBanksInvestment FundsTotal FinanceFinancial ServicesPetroleum servicesHospitalsTransportationConsultanciesOther servicesFree Zone Warehousing & StorageTotal ServicesInfrastructureHousingContractingTotal ConstructionTotal TourismGrand Total

NUMBER OFU.S. COMPANIES

4275462712151133

234254

13171310131033722

151161

143136

496

U.S. CAPITAL($ MILLION)

140.73187.61256.3362.09

148.99119.5349.92-3.020.47

962.6516.17

131.5632.6

164.1626.36174.26.22

10.755.27

37.330.15

260.1328.07

14.6

33.6726.96

1463.89

SECTOR

BUSINESS STUDIES & ANALYSIS CENTER (BSAC)

Increased openness to international trade is supported through assistancefor improved procedures at ports, customs reforms, participation in trade-opening initiatives with the WTO and continued promotion of U.S.-Egypttrade through the Private Sector Commodity Import Program (CIP) forindustrial inputs.

Infrastructure Projects: USAID has invested almost $6 billion inphysical infrastructure programs since the beginning of U.S. assistanceto Egypt, including electric power, water, wastewater and sanitation,telecommunications and transportation. The results have been impressiveto say the least: 99 percent of all Egyptians now have access to electricity;improved water/wastewater services have been provided to 22 millioncitizens; and the number of telephones has increased by a factor of morethan 12.

Agriculture: Approximately 30 percent of the Egyptian labor forceis involved in the agricultural sector. During the last 25 years, USAIDhas provided about $1.3 billion to boost crop production, raise theincomes of farmers and develop the overall sector. As a result, Egyptianfarmers have seen a significant increase in crop production, progress inwater irrigation systems and greater access to credit for 2.3 million smallfarmers. Activities have focused on policy reform, research, financialservices, farm management techniques, expanded access to improvedinputs and new technologies, and the formation of water-user associationsfor local irrigation systems.

Education: USAID activities in education have focused on developingand implementing effective models of formal and non-formal educationdelivery in poor communities in both urban and rural settings, with specialemphasis on girls’ education. Additionally, USAID assistance has beena major provider to Egypt’s workforce development, providing trainingfor both university graduates and executives in various fields.

Health and Nutrition: During the late 1970s and early 1980s, U.S.assistance was aimed at expanding access to general health services forthe rural and urban poor. USAID assistance has supported family planning,reproductive health and maternal/child health as it systematically transferredfunding and management responsibilities for these activities to Egyptianorganizations (public and private).

All Egyptian governorates are now being served by an infectiousdisease surveillance system financed by USAID.

Among many concrete accomplishments,USAID/Egypt has:

• Built more than 2,000 schools and 4,000 classrooms;

• Established 100 health and family planning facilities andrenovated 470 others.

• Installed 700 mooring buoys to protect Red Sea coral.

• Replaced 19,250 irrigation structures and improved 900irrigation channels benefiting 1.4 million farmers.

• Generated over $1 billion in local currency loans to over250,000 micro entrepreneurs at under $350 each.

• Funded $300 million for Egyptian government loans to 2.3million small farmers.

• Financed $3.9 billion in equipment and commodity importsfor public bodies and $3.1 billion in commodity imports for1,700 private sector importers.

• Fueled the compressed natural gas industry by providing 50city buses and maintenance equipment and financing 61 CNGstations and firms that converted 40,000 vehicles.

• Expanded utility services throughout Egypt with $3 billionfor water and wastewater systems reaching 22 million users; $1.8billion for electricity benefiting 40 million users; and $605 millionfor telecommunications adding 860,000 lines for 5 million users.

• Held classes for 43,000 young females in “New Horizons”life skills such as health, rights and self-esteem; provided 25,000scholarships to girls in rural areas l; and funded 170 episodes ofthe educational television program Alam Simsim (Egyptian“Sesame Street”) viewed regularly by 7 million children.

• Trained 50 Red Sea rangers; thousands of doctors to improvemother and infant health; 7,940 tourism workers and supervisors;570,000 people in agriculture and irrigation sciences; more than100,000 people in subjects including the environment, economicdevelopment including advanced academic degrees in businessadministration, information technology and public health.

• Provided grants, training or technical assistance to more than6,000 non-governmental organizations throughout Egypt.

• Contributed to reducing Polio cases from 626 in 1991, toonly one in 2003, and in January of 2006, the World HealthOrganization pronounced Egypt free from polio.

From 1975 through 2006, U.S. economicassistance to Egypt through USAID totaled$28.06 billion, with another $455 millionbudgeted for 2007.

USAID Program/ProjectStrengthen the Environmentfor Trade and InvestmentInfrastructure ProjectsDemocracy and GovernanceEducation and TrainingHealth and Population

Amount Obligated ($bn)

14.835.681.030.990.90

Sponsered by AmCham Corporate Partners

BUSINESS STUDIES & ANALYSIS CENTER

© 2007 The American Chamber of Commerce in Egypt, BSAC

American Chamber

of Commerce in Egypt

33 Soliman Abaza Street, Dokki 12311 – Cairo, Egypt

Tel: (+20-2) 338-1050 • Fax: (+20-2) 338-9895

Website: www.amcham-egypt.org • E-mail: studies@amcham.org.eg