Doing business in Egypt - assolombarda.it
Transcript of Doing business in Egypt - assolombarda.it
Economic Indicators 2009 2010 2011 2012
GDP (US$ bn)484.3 518.2 527.4 537.8
GDP growth(%) 4.7 5.1 1.2 1.9
Net FDI(US$ bn)8.1 6.8 2.5 1.1
Exports of goods (US$ bn) 24 25 27.9 28.3
Imports of goods (US$ bn) 45.4 51.5 57.4 58.7
Current Account (US$ bn) 3.1 -4.4 -6.5 -8.4
External Debt (US$ bn) 33 35.3 37.2 38
Exchange Rate (LE / $) 5.5 5.6 5.9 6.3
2,450 km Coastline
85 mn People
1 mn km2 Footprint
Economic Snapshot:
� Largest population in MENA;(85Million)
� Strong real GDP growth 5.1% (2010);
� Total FDI over the last five years US$ 45.3 bn .)
� Tax Rate ( corporate & personal): 20% .
� Partnership agreement with the EU, and FTA agreements with Arab countries, Comesa countries & Turkey , QIZ agreement with the USA .
� Labor Force:26 Million
� Industrial Zones:67.
� Major Commercial Ports:15.
� Road Network:91,173 Km
� Railway Network:6700 Km.
� Internet Users:25 Million..
Egypt: Country Profile
Source: AmCham, GAFI Information Center,
� Egypt’s competitive advantages
make a compelling case for
increasing FDI in Egypt.
Lucrative Returns Await FDI Inflow
Comparative Electricity Prices
Competitive Manufacturing
Costs
Access to Export
Markets
Large Domestic Market
Government policy
Strategic Location
Comparative Wages
Egypt India Tunisia Turkey
0.5
0.7
1.2
1.6Wages compared to Egypt in US$/ hr
Egypt Turkey India Tunisia
6
7
810Electricity prices compared to
Egypt (Cents KWatt/ hr)
Egypt: Competitiveness
Macro Overview | Longer-Term Outlook
Location
Solid Fundamentals
Demographics
Cost Edge
Economic Reform
Commitment to Economic Reform &Social equality
“New Egypt”
ClearGovernance
Reduced Corruption
InvestorConfidence
InvestmentGrowth
Improved Macro Fundamentals
&Growth Potential
Democracy
Why Invest in Egypt
• A sustained growth rate of 5% over the period between 2005
and 2010.
• Egypt has a diverse economy.
• A large population and hence a large consumer market
• Egypt has the largest labor pool in the region with a
competitive labor cost. (26.8 million).
• Time to establish a company: 72 hours
• Maintaining a flexible exchange rate set by free market forces,
while avoiding short term volatility.
Low Cost of Doing Business
Source: CBE, Ministry of Investment
• Competitive tax rates - corporate and personal
tax rates top out at only 25%
• Developed infrastructure with 15 commercial
ports in addition to 44 specialized ports to
serve importers and exporters, an expanding
airport network catering to both passengers
and cargo.
• An abundance of natural resources and
competitively priced water, power and gas.
Preferential Access to Key Global Markets
Source: CBE
The EU – Egypt Association Agreement grants Egypt preferential access to the EU market of 500 million
The EFTA-Egypt Free Trade agreements grants access to the markets of Iceland, Liechtenstein, Norway and Switzerland in industrial and agricultural products.
Free duty access to the US market of 300 million customers through the QIZ protocol.
The COMESA, a common market for Eastern and Southern Africa creates a free trade area among the 19 member states.
AGADIR Declaration creates grants Egypt a free trade zone between Egypt, Morocco, Jordan, and Tunisia in addition to a rules of origin advantage.
Egypt – Turkey free trade agreement
GAFTA: ratified by 22 Arab nations, involving the phasing out of customs and duties while eliminating non-tariff barriers
Special Economic ZonesInvestment ZonesInland InvestmentCategory
• 5% flat tax rate on personal income tax
• 10% tax on all activities within the zone
• 25% & 40.55% for oil and gas companies
• 10 years Exemption for Agriculture and animal production activities.
• 25% & 40.55% for oil and gas companies
• 10 years Exemption for Agriculture and animal production activities.
Income Tax
None
• Custom procedures for production input will be administered in the zone
• Equipment customs are paid in 5-10 years installments
• 2-32% depending on the product
• Flat rate of 5% of the value of imported machinery and equipments
Import Duties
• No duties when exported out of Egypt
• No duties on domestic components when sold in Egypt
• 10% of value of non domestic components when sold in Egypt
• Sales taxes are paid in 5-10 years installments
• Exported good are tax exempted
• 5-25% of value of all sale transactions
Export Duties and Sales Tax
• 5% for all salary levels• 10-20% depending on salary
level• 10-20% depending on salary
levelPayroll Tax
•Depending on zone board’s decision
NoneNoneExport
Minimum
• Egyptian certificate of origin for SEZ based exporters
• Integrated custom and tax administration, licensing, and dispute settlement
• Companies established within the investment zones are to enjoy incentives given to both inland and upper Egypt investment regimes.
• Protection against expropriation and compulsory pricing
• Full right of profit and dividend repatriation
Other Incentives
Investment Policy Framework
• The process of registering foreign company subsidiaries to only three days of processing time.
• The time to open foreign representation offices; 3 days while simplifying administrative steps related to
establishing a business.
• Enhancing import and export flexibility through import and export certificates that are available for 3-5 year
periods.
• New facilities for investors include:
� Paying subscription fees to chamber of industry and the federation of Egyptian industries at the one
stop shop
� Increasing GAFI’s processing centers.
� Lifting the security approval requirement for media companies. As well as lifting licensing requirements
for print publications.
� An initiative to provide resources for a credit risk guarantee program to help develop SMEs and help
them gain access to bank financing.
Support and Incentives for Investments
• A stimulus package has been introduced by The Ministry of Industry to facilitate investments in the
industrial sector through:
• Reducing the value of Letters of Guarantee required to acquire land from industrial zones.
• Inspections by the Industrial Development Agency(IDA) are to be done upon request by the IDA
chairman.
• Enforcing the role of IDA representative offices in governorates to issue all required approvals, except
for land allocation.
• In case of fulfilling required terms of issuing an industrial registry, a permanent industrial license is
issued and renewed every 5 years.
• Investor Care Department: established within GAFI to support and guide investors to resolve any
conflicts they might face with the different governmental authorities.
• Disputes Settlement Center: established in 2009 for the reconciliation and disputes resolution
between business partners.
Support and Incentives for Investments
FDI in Egypt Today
• Pegas Nonwovens SA (PEGAS), a Czech maker of special textiles used in hygiene
products and health care
• GlaxoSmithKline plc announced that it will invest US$ 84.7 million in Egypt’s healthcare
sector over five years to expand its product portfolio
• Al-Futtaim Group will invest about US$ 300 million in 2012 to continue construction of
Cairo Festival City project.
• In April 2011, the Kuwait Investment Authority (KIA), set up a company worth $1 billion in
capital to invest in Egypt's stock market
• Electrolux, the Swedish appliance company, acquired a 52 percent stake in Egypt’s
Olympic Group at a cost of US$ 350 million.
• The Turkish company KCG announcement to raise its investments in Egypt by
establishing 3 new projects valued at USD400 million in the textiles, electricity generation,
and mining in Sinai.
• The Indonesian company “Multistrada” announced establishing a tire factory in
partnership with an Egyptian manufacturer, the project value is USD320 million.
FDI in Egypt Today
• In April, 2011, China Development Bank signed a memorandum of understanding
and cooperation with Commercial International Bank and Commercial
International Investment Company in Egypt to cooperate in infrastructure and
loans for SMEs.
• In July, 2011, the Egyptian Hydrocarbon Company (EHC) was established with
paid-up capital of USD150 million; the first private sector industrial project to be
implemented in Egypt at international prices with no subsidies. Total investments
of the project are USD454 million.
• In June 2011, Cisco announced it will invest USD10 million. The venture capital
investment will be targeted at high-potential small businesses that provide
innovative products and services.
• The Turkish group “Limak” to carry out enhancement capacity project of Terminal
3 in Cairo International Airport with investments worth USD387 million.
• The Indian company Dhunseri petrochemicals Ltd. established a 160 million
dollars company in Sharkyia governorate in the field of plastic production
providing 500 job opportunities
• The Malaysian Islamic Finance company, AMANI , announced the establishment
of a USD 500M fund.
Bilateral Trade(Egypt-Italy)
Mutation2012
201120102009CategoryYear
+3%1358.51319902772.3Petroleum
Egyptian Exports
-22.5%937.212091000.3669.8Non
Petroleum
-9.2%2295.825281902.31442.1 Total
+10.3%2862.82589.82939.62603Egyptian Imports
+0.7%5122.75117.84841.64045.1Trade Volume
-94%-567-61.8-1037.3-1160.1Trade Balance
Source:ISTAT
Million Euro
Egyptian Exports (2010-2012)(Million Euro)
201220112010Sectors
1358.91319902Oil & Gas
220219.5169.8 Aluminum
119.6127.998.2Textiles &ready made garments
8411271.5Fertilizers
64.548.464.9Organic Chemicals
7986.579.6Agricultural Products
4561.239.5Food Industries
21.524.517.1Engineering Products
Source:ISTAT
Italian Exports (2010-2012)(Million Euro)
201220112010Sectors
857974.81208.7Machinery &Mechanical appliances
854400310.9Petroleum products
28.320.329.3Electrical appliances
88.474.159.6Plastic products
93.891.3125.8Organic Chemicals
5855.797.8Iron & steel
66.3142.3156.2Engines and Turbines
38.738.855.8Paints
Source:ISTAT
Italian Investment in Egypt
Italian investments in Egypt :� Total investments: 4 bn euro.
� Italian investing companies:809
Thirty six Italian companies invested in Egypt in 2011 after the revolution.
Main sectors:� Industrial (258 company)- Services (254 company)-
Tourism(169 company)-Construction (83)- Agriculture(25)-Financial (6).
Main investors:� ENI
� Intesa Sanpaolo
� Italcementi.
� Finmeccanica
� Italgen
� Mapei
� Cotonificio Albini
� Pirelli
� Domina
� Filmar
Recent Investors in 2011:
• Danielle
• Tecnimont
Priority Sectors and Clusters
The Industrial Sector
• The sector represents an important and advanced rank in the national economy
and is strongly interrelated with several production and service sectors along
with boosting foreign trade and improving the balance of payments.
• The sector amounts to 6.3% of growth rates from 2005 till 2010.
• Total investments are worth EGP 25.5 billion and EGP 8.8 billion were poured
into the industrial sector during FY 2009/10 and Q1 of FY 2010/11 respectively.
Source: GAFI
Priority Sectors and Clusters
• The Egyptian government aims to transform the
country’s infrastructure to a booming sector through
raising infrastructure spending.
• There are currently 4 utilities projects among 7 PPP
projects.
The Electricity Sector
• Total investments reached EGP 13.4 billion during FY
2009/10.
• The rate of growth of the electricity sector has reached
8% in Q1 of FY 2010/11, with a 6.9% increase in
consumption during the same period.
Egypt Infrastructure Industry
• Strengths:
• The government has ambitious plans to transform the country’s infrastructure,which include several mega-projects such as the US$9.5bn refinery andpetrochemical plant at Kafr-al-Shaikh, and US$8.7bn container terminal atEasternPort Said.
• Egypt has had one of the fastest-growing infrastructure sectors in the world,covering all segments including transport, tourism, commercial, industrial, etc.
• Opportunities:
• A growing number of visitors drawn to a relatively cheap country means there is thepotential to build more hotels and resort areas
• There is a strong demand for housing in Egypt; increasing population andurbanisation has resulted in the government undertaking major urban planningprogrammes
• Raw material costs are falling due to the global economic downturn
Egypt Petrochemicals Industry
• Strengths:
• Egypt’s abundant natural gas reserves provide a competitive advantage in terms of petrochemicals production
• Egypt is relatively low risk in commercial and political terms, and offers competitive labour costs and tax exemptions
• It has a well-established fertiliser sector
• It is well-placed to export to Europe
• The Ministry of Trade & Industry is working towards improving trade relations worldwide, protecting the rights of exporters and, above all, sustaining Egypt’s exports to foreign markets
• Opportunities:
• The government has launched a 20-year US$20bn petrochemicals development plan
• The sector is due to expand rapidly; petrochemicals output should grow substantiallyin the coming years if all the projects go ahead as planned
• There is the prospect of large-scale fertiliser and petrochemicals developments basedon the country’s gas reserves
• Early privatisation efforts, involving initial public off erings (IPOs) of successfulcompanies, have generated encouraging results and are likely to promote investment
Egypt Textile Industry
• INDUSTRY HIGHLIGHTS:
• The Textile industry contributes with one quarter of Egypt’ s non-oilexport proceeds.
• The public sector accounts for 90% of cotton spinning, 60% offabric production and 30% of apparel production in Egypt.
• The private sector apparel industry is one of the most dynamicmanufacturing processes in Egypt.
• Egyptian wage levels in the Textile industry are among the lowest inthe world, not exceeding one Dollar per hour.
• Cotton textiles comprise the bulk of Egypt’s TC export basket
• Egypt is the second largest MENA exporter of Textile products tothe US, with woven apparel as the largest category.
• MFN treatment grants Egypt the lowest entry rates as mandated byUS commitment to the WTO.
To achieve integrated development of East Port Said , open prospects for new development outside the Nile Valley and Delta, and contributes to the re-distribution of Egypt’s population during the next 30 years, creating more than half a million new jobs and resettlement of nearly 1.5 million people in Sinai and the implementation of the integrated development strategy of Sinai (touristism ,urban, service ,agricultural and industrial), many of the national projects need to be achieved, as follows:
Second: New urban city (millions) in Port SaidThe total area of about 13.6 thousand acres and is expected to accommodate about 1.5 million people.
First: East Port Said Port�One of the most important ports to the major hub in the Mediterranean region and expected to be the largest in years.�The current area of the port 17 thousand acres ,to include all maritime transport activities ; containers and general ,dry and liquid cargoes
Integrated development at suez canal project
Fourth: Other projects(Suez Canal tunnel, Port Said)(Electric train crossing the Suez Canal)(Urban aquaculture center)
Third: industrial Zone Eastern Port-Said Area•The largest industrial zone in Egypt with an area (10 thousand acres)Includes a full range of export industries heavy, medium and light (chemical industries, electronic, basic construction materials, glass, food, metal, textile, car, business district, ..)•The area includes research and studies center, logistic zone and an exhibition’s area.
Fifth: New Free Trade Zone on an area of 2300 acres.
Integrated development at Suez Canal Projects
Different Investment Opportunities In Arab Republic of Egypt
1. East Port Projects
Residential city (13.650 acres)
Sensitive area – future phase (15.000 acres)
Lands for existing society (1.100 acres)
Port and its extension (17.130 acres)
Industrial area and transit trade (10.000 acres)
Military Forces (3.06) Thousand Acres
Fishing farms and recreational / sport areas
(12.000 acres)
Free Zone (2300 acres)
3
6
7
8
1
International coastal road Arish
MEDITERRANEAN SEA
1
2
3
4
5
6
7
8
2
4
5
Different Investment Opportunities In Arab Republic of Egypt
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East Port Said Port:
• one of the most important ports to the major hub in the Mediterranean region is
expected to be largest during the years.
• The area of the port is 17 thousand acres, in order to include all maritime
transport activities of container and general cargo, dry and liquid.
• The Cabinet approved in its meeting No. (20) dated 06/06/2012 to Establish and
Operate and re-delivery of the second container terminal (CT2) in Port Said East
Port with BOT system provided in one condition the foreign investor's share
dosnt exceed 25%.
• The proposed site for a container terminal (CT2) is within the first phase of the
port development plan and is located south of the container terminal (SCCT1)
on an area of 540 thousand square meters and quay length of 1,200 m.
• In the process of making the pre feasibility study to review the planned
distribution of land uses in the port
Different Investment Opportunities In Arab Republic of Egypt
New terminal cargo in East port
City for International transit trade and industry c enter and maintenance of ships and containers
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MEGA Projects unit- GAFI
Different Investment Opportunities In Arab Republic of Egypt
Center for industry and maintenance of ships and containers
Transit city
The main features of the scheme for the East Port Said.
N
Example: projects available to developers for logistics areas and free zone).
• Each administration free zone system • Each area about 10-15 km 2• Each project is thrown as an independent investment
Port utilities
Stage 2Stage 1 Stage 3
General Cargo Terminal
Liquid cargo Terminal
Multi Purpose Terminal
Dry Bulk Terminal
Agri-Shipments Terminal
Roll-On Ships Terminal
Bunker Terminal
Ships Yard
2010-2012 2012/2015
2400 m(1) 3600 m(2)
4
1500 m(1)
450 m(1)
500 m(1)
450 m(1)
500m(1)
2020
7200 m(4)
7
2700 m(3)
600 m(1)
900 m(1)
1100m(2)
500m(1)
1000m(1)
2030
12000 m(7)
10
5600m(4)
1000(2)
900m(1)
1500m(2)
500m(1)
1000m(1)
Stages of Development
Different Investment Opportunities In Arab Republic of Egypt
N
1-Business Area2-Univercities Area3-Housing4-Tourism
4
1
2
33
3
33
3
3
Port Said new urban residential city (millions)in a total area of about 13.6 thousand acres and is expected to
accommodate about 1.5 million people
Different Investment Opportunities In Arab Republic of Egypt
Residential city East Port Said
East Port Said Industrial Area
Industrial area east of Port Said targeted investments of more than 120 billion pounds over 20 years and have charts and detailed studies.
� The largest industrial zone in Egypt on an area of (10 thousand acres)
� Includes a full range of export industries; heavy, medium and light (chemical industries, electronic, basic construction materials, glass, food, metal, textile, car, business district, ..)
� The area includes a center for research and studies ,logistic zone and an exhibition's area.
Different Investment Opportunities In Arab Republic of Egypt
Project Description:
Development and Upgrading of Safaga mining port.
Authority Responsible of the Project: Ministry of Finance.
Project Objective: The Project include exporting for exporting crud phosphate to
be an industrial port with 8 platforms to receive bigger vessel and adding 3 more
industries (Exporting phosphoric Acid – Importing & exporting Grain – importing
live stock – maintenance dock Shipyard).
Location: Safaga Port.
Government: Red Sea Governorate.
Notes:
• Expected Time to finalize pre-feasibility studies in February 2012.
• Expected Time for tendering is July 2013.
• Expected time for Contract signature is Q4 2014.
Investment Opportunities In Arab Republic of Egypt
Safaga Industrial Port
Project Description:
Construction (Design, Develop, Duplicate, Finance, Operate and maintain) of
Passenger and freight link from Ain Shams (Cairo Suburb) to 10th of Ramadan
(Inudstrial City), Passing by Belbes City. Total length 72 Km, with 17 Stations.
Authority Responsible of the Project: Ministry of Finance.
Project Objective: Construction of Passenger and freight link from Ain Shams
(Cairo Suburb) to 10th of Ramadan (Industrial City), Passing by Belbes City.
Location: Ain Shams / 10th of Ramadan.
Area: 72 Km.
Government: Cairo / Sharqeia Governorates.
Notes:
• Expected Time to finalize pre-feasibility studies in February 2013.
• Expected Time for tendering is June 2013.
• Expected time for Contract signature is Q1 2015.
Investment Opportunities In Arab Republic of Egypt
Ain Shams-10th of Ramdan Railway
Area: 60 acres next to the land of golf was allocated from the Governorate of the Egyptian General Authority for Exhibitions and Conferences.Investment Cost of the Project: USD 2 Billion for City exhibitions, conferences and monorail project.Government : South Sinai Governorate.Notes: • The profitability study has been prepared architectural and structural designs and drawings by the International Advisory Zaha Hadid has won the project designs several international awards.• Cooperation protocol was signed between the Egyptian General Authority for Exhibitions and Conferences and the General Authority for industrial and mining projects as a consultant for the project.• Project land has been allocated from the Government and the Egyptian General Authority for exhibitions, conferences and Gary dependence of the Council of Ministers.• Immediately after the adoption of the Higher Committee for participation between the state and the private sector will take executive action to put locally and internationally between specialized companies.
City exhibition and conferences in Sharm El Sheikh
Investment Cost of the Project: USD 200 Million.
Government : South Sinai Governorate.
Notes:
• The distance between the port of Sharm el-Sheikh and developed port 100 km
and so when developing the port will be developed to reduce the burden on
the port of Sharm el-Sheikh.
• Port has scaffold consists of a length of 200 meters and a depth of 8 meters,
and pavement of iron curtains length of 75 meters and a depth of 8 meters.
• There is also a port hinterland length of 150 meters and width of 75 meters,
where the port to receive vessels operating in the field of petroleum services,
and bunkering mineral water, and replace rigs for maintenance for commercial
ships and tourist no more than Rasfha 5 meters, as the Annual Return for Port
EGP 1.4 million other than maintenance and development work.
Investment Opportunities In Arab Republic of Egypt
Developing tour sinai Port
Project Description: 55,000 m3 of water / day. Type of treatment: Active sludge.
Authority Responsible of the Project: Holding Company for Water and Waste
Water – Qena Governorate.
Project Objective: Using treated wastewater in agriculture, according to the
Egyptian code.
Investment Cost of the Project: EGP 100 Million.
Location: Qena Expansion Forest.
Area: 4000 Acres.
Governorate: Qena Governorate.
Notes:
• After triple treatment, its possible to use traditional agriculture according to the
Code.
• The Project is tendering by Usufruct system.
Re-use Of Treated Wastewater In Agriculture – Qena Expansion Forest
� Project Description:Area of 16.4 Km2 North East Suez Canal – Special Economic Zone (Sokhna). Attract the private sector to develop the first phase of the project with an area of 6.8 Km2 to manage, operate and maintain the infrastructure and utilities, and promote the Zone
� Sponsor:The General Authority for Investment
� Investment Cost:800 Million pounds
� Status:The Chinese Company “TIDA” has been contracted for developing phase one of the project
Special Economic Zones North West Suez Canal
Mega Projects
Alexandria Medical City
Mega Projects
• GAFI is adopting a project to establish a Medical City in Alexandria
through the Mega Projects Unit in order to achieve the vision to support
investment projects in the medical field by coordinating efforts between
them and the Alexandria Governorate and the Ministry of Health.
• The project is located on a 500 acre lot, at a prime location, at the
entrance of Alexandria on Cairo-Alex desert road.
• Alexandria governorate will avail the land under a usufruct arrangement.
• The project will include specialized hospitals, emergency centers,
wellness facilities, administrative areas, and clinics. In addition to
commercial and hospitality developments.
• Anticipated investments of the project are around 8 Billion LE.
• Project Sponsor : General Authority for Investment / Alexandria
governorate.
• Proposed Investment Mechanism: Investment Zone.