Egypt im­ple­ments un­prece­dented re­forms, yet pol­icy in­sta­bil­ity, in­fla­tion, var­i­ous chal­lenges re­main: Coun­try Se­nior Part­ner at PwC Egypt

STRATE­GIC LO­CA­TION, DI­VER­SI­FIED ECON­OMY, MUL­TI­LAT­ERAL TRADE AGREE­MENTS PLACE COUN­TRY FAVOURABLY, SAYS EZZELDEEN

The Daily News Egypt - - Front Page - By Ahmed Fara­hat

Through­out the past three years, Egypt has been through tough but nec­es­sary eco­nomic re­forms un­der­taken by state au­thor­i­ties, and sup­ported by the IMF. Aim­ing to re­solve econ­omy’s struc­tural is­sues, curb the bud­get deficit, elim­i­nate cur­rency short­ages, all while achiev­ing sus­tain­able growth, the Egyp­tian gov­ern­ment has adopted a di­ver­si­fied set of eco­nomic mea­sures, in­clud­ing cur­rency flota­tion, sub­sidy cuts, im­pos­ing value-added tax (VAT), and in­tro­duc­ing so­cial pro­tec­tion pro­grammes.

Egypt’s un­prece­dented re­form mea­sures of macroe­co­nomic and busi­ness leg­is­la­tion are bear­ing pos­i­tively on the coun­try’s com­pet­i­tive­ness stand­ing for the first time in eight years, Maged Ezzeldeen Coun­try Se­nior Part­ner at Price­wa­ter­house­Coop­ers Egypt (PwC) told Daily News Egypt. He said that var­i­ous op­por­tu­ni­ties ex­ist in the en­ergy sec­tor rang­ing from ex­plo­ration and pro­cess­ing of crude oil, liq­ue­fy­ing gas, and ex­por­ta­tion of such prod­ucts.

Ezzeldeen elab­o­rated that the PwC sup­port in­vestors to place FDI by de­vel­op­ing their port­fo­lios through build­ing or buy­ing.The PwC is a net­work of firms with more than 236,000 peo­ple op­er­at­ing from 158 coun­tries glob­ally, mak­ing them the largest pro­fes­sional ser­vices provider in the world.

Daily News Egypt in­ter­viewed Ezzeldeen, the tran­script for which is be­low, lightly edited for clar­ity:

Which are the main chal­lenges Egypt faces to in­crease its com­pet­i­tive­ness in the re­gion?

Egypt’s un­prece­dented re­form mea­sures of macroe­co­nomic and busi­ness leg­is­la­tion are bear­ing pos­i­tively on the coun­try’s com­pet­i­tive­ness stand­ing for the first time in eight years. Egypt’s rank­ing on the global com­pet­i­tive­ness re­port wit­nessed a sig­nif­i­cant jump of 15 places in 2017. Un­der­pin­ning this was a re­mark­able im­prove­ment in the pub­lic in­sti­tu­tions and in­fra­struc­ture in­dices, sig­nalling the pay­off of sig­nif­i­cant pub­lic in­vest­ments in re­cent years. De­spite such im­prove­ment, Egypt still lags on other im­por­tant com­pet­i­tive­ness driv­ers. The most prob­lem­atic fac­tors for do­ing busi­ness in Egypt are pol­icy in­sta­bil­ity, in­fla­tion, cor­rup­tion, gov­ern­ment bu­reau­cracy, and the inadequately ed­u­cated work­force. In com­par­i­son to other coun­tries,Egypt ranked 134th out of 137 coun­tries in 2017 on the Labour Mar­ket Ef­fi­ciency In­dex, fol­lowed by macroe­co­nomic en­vi­ron­ment (132nd) and In­no­va­tion (109th).

One of the great­est chal­lenges Egypt faces is its rapid youth pop­u­la­tion growth, by 2023 the coun­try is ex­pected to have 3.5 mil­lion en­trants into the labour force which, if prop­erly sup­ported, could present a great op­por­tu­nity to build a strong pri­vate sec­tor that has been lag­ging over the past sev­eral decades com­pared to its peer MENA re­gion coun­tries. Sim­i­larly, Egypt at­tempts to fully ben­e­fit from its skilled work­force by tap­ping into start-ups and the tech­nol­ogy sec­tor, which has made other parts of MENA, such as Dubai, com­pet­i­tive.Also, the floata­tion of the Egyp­tian Pound,although a nec­es­sary step, led to a fur­ther loss in the econ­omy’s com­pet­i­tive­ness, mak­ing trade bal­ance is­sues more pro­nounced. An­other ma­jor chal­lenge is the struc­tural im­bal­ances in Egypt’s econ­omy which leads to weak pro­duc­tiv­ity and slow growth of in­dus­tries thereby de­creas­ing its com­pet­i­tive­ness. This is ex­em­pli­fied by the coun­try’s in­crease in pub­lic debt, both in­ter­nally and ex­ter­nally, which ac­counts for 106% of GDP. To com­bat such struc­tural im­bal­ances,it is nec­es­sary to put in place and im­ple­ment poli­cies that sup­port pro­duc­tiv­ity bases.

Cor­rup­tion and red tape have proven to be con­tin­u­ous chal­lenges in Egypt and have thus lim­ited its com­pet­i­tive­ness in the re­gion. How­ever,le­gal re­forms have taken place to cre­ate a busi­ness en­vi­ron­ment that is more con­ducive to trans­parency and to crack down cor­rup­tion.These ef­forts have been made through an­ti­cor­rup­tion cam­paigns which in­cen­tivise bu­reau­crats to make de­ci­sions and to elim­i­nate the fear of de­ci­sion mak­ing. Also, Egypt is a mem­ber of the Global Fo­rum on Trans­parency and Ex­change of In­for­ma­tion and must ad­here to cer­tain stan­dards by the third quar­ter (Q3) of 2019 which fur­ther re­flects the coun­try’s shift to be­come in­creas­ingly trans­par­ent. With re­gards to red tape, the gov­ern­ment is work­ing on es­tab­lish­ing a new era of tech­ni­cal and strate­gic bu­reau­cracy which is ex­pected to re­duce red tape.

An­other chal­lenge faced by Egypt is the re­gion’s no cor­po­rate tax en­vi­ron­ment mak­ing it dif­fi­cult for Egypt to be as com­pet­i­tive as its re­gional neigh­bours.

What are the main three com­pet­i­tive ad­van­tages when in­vest­ing in Egypt com­pared to the MENA re­gion?

One of the most im­por­tant com­pet­i­tive ad­van­tages is the coun­try’s strate­gic lo­ca­tion. Egypt is on the cross­roads be­tween the Mid­dle East and the Far East from one side and Europe and the East Coast of the Amer­i­cas on the other side. More im­por­tantly,the Suez Canal of­fers the short­est link be­tween East and West for in­ter­na­tional trade.An­other com­pet­i­tive ad­van­tage is the avail­abil­ity of hu­man re­sources on all em­ploy­ment lev­els, par­tic­u­larly its strong man­ual labour force mak­ing it in­de­pen­dent from mi­grant work­ers un­like, its neigh­bour­ing Gulf States.

Among other com­pet­i­tive ad­van­tages,Egypt has a di­ver­si­fied econ­omy com­pared to its en­ergy de­pen­dant neigh­bour­ing ren­tier states of the Gulf. More­over, Egypt’s pop­u­la­tion ac­counts for one-third of the Mid­dle East’s pop­u­la­tion com­pris­ing more than 100 mil­lion with a large, young, and grow­ing con­sumer mar­ket and a com­pet­i­tively priced labour force make it at­trac­tive to in­vestors.

Egypt is the sig­na­tory to an ex­ten­sive num­ber of mul­ti­lat­eral trade agree­ments, such as GAAT, GATS, PAFTA and QIZ, in ad­di­tion to bi­lat­eral agree­ments with coun­tries in­clud­ing Tu­nisia, Mo­rocco, Libya, and Le­banon. These trade agree­ments present in­vestors with a myr­iad of op­por­tu­ni­ties that po­si­tion Egypt as a strate­gic trade hub.

Egypt’s pol­icy is po­si­tion­ing it as a global and re­gional ser­vices, pro­duc­tion, and re-ex­port hub; cre­at­ing jobs and eco­nomic growth by open­ing new mar­kets for Egyp­tian prod­ucts while si­mul­ta­ne­ously at­tract­ing FDI from cor­po­ra­tions look­ing to har­ness Egypt’s unique bas­ket of pref­er­en­tial trade agree­ments, highly com­pet­i­tive labour and util­ity costs,

EGYPT’S RANK­ING ON THE GLOBAL COM­PET­I­TIVE­NESS RE­PORT WIT­NESSED A SIG­NIF­I­CANT JUMP OF 15 PLACES IN 2017 THE MOST PROB­LEM­ATIC FAC­TORS FOR DO­ING BUSI­NESS IN EGYPT ARE POL­ICY IN­STA­BIL­ITY, IN­FLA­TION, COR­RUP­TION, GOV­ERN­MENT BU­REAU­CRACY, AND THE INADEQUATELY ED­U­CATED WORK­FORCE

tal­ented labour force, and prox­im­ity to key global mar­kets.To­gether, these ad­van­tages make Egypt an ideal hub from which to ex­port to Europe, the Arab world, the United States, and Africa.

Di­ver­sity is a key strength in the Egyp­tian econ­omy where growth is driven by many sec­tors, both con­ven­tional and un­con­ven­tional. This en­hances the econ­omy’s abil­ity to ab­sorb in­ter­nal as well as ex­ter­nal shocks. It also presents mul­ti­ple op­por­tu­ni­ties for in­vestors across many sec­tors com­pared to its en­ergy de­pen­dant neigh­bour­ing GCC coun­tries.

Egypt’s re­cent sig­nif­i­cant gas dis­cov­er­ies in the Zohr field in the Mediter­ranean Sea have fur­ther di­ver­si­fied its econ­omy in ad­di­tion to other dis­cov­er­ies un­der­way such as BP’s Atoll and East Nile Delta projects, as well as Nooros field. Egypt’s hot cli­mate cou­pled with high wind speeds makes it an ideal hub for re­new­able en­ergy sources. By 2022, Egypt aims to shift 20% of en­ergy sup­ply for elec­tric­ity gen­er­a­tion to re­new­able en­ergy with wind, hy­dropower, and so­lar pro­vid­ing 12%, 5.8%, and 2.2%, re­spec­tively. Geother­mal en­ergy is also play­ing a key role with the re­cent agree­ment be­tween the New and Re­new­able En­ergy Au­thor­ity (NREA) and Ganoub El Wadi Pe­tro­leum Com­pany (GANOPE) to utilise geother­mal en­ergy to gen­er­ate power.These re­cent de­vel­op­ments in Egypt’s en­ergy sec­tor are en­hanc­ing its po­si­tion as the po­ten­tial en­ergy hub, both re­gion­ally and glob­ally. In fact, FDI in Egypt’s pe­tro­leum sec­tor rep­re­sented 64.6% of to­tal FDIs dur­ing the first half (H1) of fis­cal year 2017/18. Could you please ex­plain to our read­ers, how can the new In­vest­ment Law and Com­pany Law im­prove the in­vest­ment cli­mate and of­fer se­cu­rity for in­ter­na­tional in­vestors?

The new In­vest­ment Law, passed in May 2017, of­fers for­eign in­vestors a plethora of fi­nan­cial, ad­min­is­tra­tive, and tax in­cen­tives in ad­di­tion to safe­guards to fa­cil­i­tate the in­vest­ment process and to pro­tect for­eign in­vestors.Some of these in­cen­tives in­clude ex­emp­tion from stamp tax, fees of no­tari­sa­tion, and reg­is­tra­tion of the Me­moranda of In­cor­po­ra­tion for five years from a com­pany’s reg­is­tra­tion day. In­vestors are also ex­empted from con­tract fees for com­pany reg­is­tra­tion and 2% on over­all cus­toms tax on the value of all im­ported ma­chin­ery, equip­ment, and de­vices re­quired to set up com­pa­nies. More­over, in or­der to fa­cil­i­tate and en­cour­age the de­vel­op­ment of var­i­ous in­dus­tries, for­eign in­vestors are able to im­port casts and moulds to man­u­fac­ture prod­ucts with no cus­toms du­ties that are to be re-ex­ported af­ter be­ing in­tro­duced and im­ple­mented. In ad­di­tion, in­vestors are given dis­counts on in­vest­ment projects made in Sec­tors A and B of 50% and 30%, re­spec­tively. Sec­tor A com­prises of un­der­de­vel­oped ar­eas with a high level of poverty and un­em­ploy­ment rate in ad­di­tion to zones, such as the Suez Canal Eco­nomic Zone and the Golden Tri­an­gle Eco­nomic Zones. Sec­tor B en­tails small and medium-sized en­ter­prises (SMEs), re­new­able en­ergy projects, tourism projects, and in­fras­truc­tural projects.The aim of these dis­counts is to en­cour­age de­vel­op­ment, re­duce in­come in­equal­ity, and cre­ate jobs.

Fur­ther­more, safe­guards put in place in­volve en­sur­ing sim­i­lar treat­ment of for­eign in­vestors equal to that of na­tional in­vestors and grant­ing them im­me­di­ate res­i­dency in Egypt through­out the du­ra­tion of their pro­ject. A par­tic­u­larly pro­gres­sive safe­guard is that in­vest­ment projects can not face na­tion­al­i­sa­tion,pro­vid­ing in­vestors com­fort to­wards the gov­ern­ment. For­eign in­vestors are also al­lowed to own an in­vest­ment pro­ject, profit and trans­fer re­lated prof­its with­out re­stric­tions.

Most im­por­tantly, the uni­fy­ing no­tion of the law is to cut bu­reau­cracy, pro­mote fair com­pe­ti­tion, com­bat an­titrust prac­tices, and en­sure trans­parency to ul­ti­mately make Egypt’s in­vest­ment cli­mate ap­peal­ing to for­eign in­vestors. It is ev­i­dent that Egypt is reap­ing the ben­e­fits of the new In­vest­ment Law through a promis­ing rise in for­eign di­rect in­vest­ment by 15% in April 2018. Which are the key sec­tors in which for­eign in­vestors can find un­par­al­leled op­por­tu­ni­ties in Egypt?

Egypt has many re­sources that have made it ap­peal­ing to for­eign in­vestors.Af­ter the dis­cov­ery of Egypt’s mas­sive Zohr nat­u­ral gas field, the coun­try has been placed on the in­ter­na­tional en­ergy map. The Zohr field is the first mega dis­cov­ery in the Mediter­ranean area with proven re­serves of 30tn cu­bic feet mak­ing it a real jewel to the Egyp­tian econ­omy and a very promis­ing step for en­ergy self-suf­fi­ciency and for fur­ther ex­plo­rations to the Egyp­tian ter­ri­to­rial wa­ters in the Mediter­ranean.Var­i­ous op­por­tu­ni­ties ex­ist in the en­ergy sec­tor start­ing from the ex­plo­ration and pro­cess­ing of crude oil, liq­ue­fy­ing gas, and ex­port of such prod­ucts. There are other var­i­ous dis­cov­er­ies

whether in gas or crude oil un­der­way such as BP’s Atoll and West Delta Nile projects, as well as Nooros field, which are en­hanc­ing Egypt’s po­si­tion as the po­ten­tial en­ergy hub of the re­gion and a key player on the world en­ergy scene.

Real es­tate in Egypt, un­like the re­gion, has been con­tin­u­ously ex­pand­ing and we have been wit­ness­ing an un­par­al­leled real es­tate ap­pre­ci­a­tion in the last two decades. In 2017, the real es­tate sec­tor has con­trib­uted to 10% of GDP and 15% of to­tal in­vest­ments in the econ­omy, po­si­tion­ing Egypt as sec­ond in the re­gion with re­gards to real es­tate in­vest­ment re­turns. De­spite the de­creased pur­chas­ing power re­sult­ing from the de­val­u­a­tion of the Egyp­tian Pound, an in­flux of for­eign in­vest­ment in the sec­tor was ev­i­denced ex­em­pli­fied by an in­crease of 90% of Egyp­tians liv­ing in the GCC coun­tries af­ter floata­tion.Var­i­ous Arab in­vestors who are con­cerned about the un­sta­ble po­lit­i­cal cli­mate in their coun­tries, such as Libya, Ye­men, Iraq, and Syria are in­vest­ing.Also, the New Ad­min­is­tra­tive Cap­i­tal and Alamein City are vivid ex­am­ples of how a new city is com­ing to life with all its in­fras­truc­tural re­quire­ments.

Although still lower than pre2011 lev­els, Egypt’s tourism sec­tor is strongly re­bound­ing (37.7% real growth in FY 2017/18) and tourism re­ceipts post­ing 123.9% in­crease com­pared to the pre­vi­ous year.With con­tin­ued po­lit­i­cal sta­bil­ity, Egypt has the po­ten­tial to cap­ti­vate its fair share of tourism re­gion­ally as well as glob­ally.

More­over, Egypt has the largest ed­u­ca­tion sys­tem in the MENA re­gion at both the school and higher ed­u­ca­tion lev­els. Egypt has ob­served a sig­nif­i­cant in­crease of 32% in en­rol­ment rates over the last decade. For­eign in­vestors can ben­e­fit from the ed­u­ca­tion op­por­tu­ni­ties as de­mand ex­ceeds the cur­rent level of sup­ply in the coun­try’s ed­u­ca­tion sec­tor.

Also,the coun­try’s re­cently passed uni­ver­sal health­care cov­ers all cit­i­zens with world-class qual­ity ser­vice of­fer­ings. The bill aims to cut high med­i­cal costs of the pri­vate sec­tor and in­creases ef­fi­ciency. It will first be im­ple­mented in five gov­er­norates and then fur­ther spread across the coun­try in the com­ing years.

The in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy (ICT) in­dus­try has re­mained re­mark­ably re­silient post the 2011 rev­o­lu­tion, record­ing 10.4% an­nual real growth in FY 2017/18. Be­yond the ba­sics of na­tional in­ter­net in­fra­struc­ture, Egypt of­fers a num­ber of ben­e­fits for po­ten­tial ICT in­vestors, among which its prox­im­ity to the lu­cra­tive Euro­pean mar­kets.

In 2016, Egypt was short­listed for the Out­sourc­ing Des­ti­na­tion of the Year glob­ally by the Euro­pean Out­sourc­ing As­so­ci­a­tion (EOA).The rel­a­tively high com­pu­ta­tional ef­fi­ciency and mul­ti­lin­gual skills of Egyp­tians sheds light on the 50,000 em­ployed in off­shore BPO and the 40,000 in re­gional out­sourc­ing in 2015 alone in ad­di­tion to the ICT sec­tor con­tribut­ing to 4.1% of GDP.This has po­si­tioned Egypt strate­gi­cally to fur­ther at­tract BPO con­tracts mak­ing it a hub for out­sourc­ing ac­tiv­i­ties.

The food and bev­er­ages sec­tor has also ap­peared promis­ing through an in­crease in lo­cal restau­rant and café ser­vices. These in­clude chains, such as Mori Sushi, Nola’s Cup­cakes, and Bocca which have de­creased the need for fran­chises to set up in Egypt. How are you plan­ning to ben­e­fit from a cheaper Egyp­tian Pound as the main driver to at­tract for­eign pri­vate in­vest­ment?

De­spite the com­pet­i­tive­ness gains brought about by the cheaper cur­rency fol­low­ing the Cen­tral Bank of Egypt’s (CBE) de­ci­sion to shift to a man­aged-float ex­change rate regime and coun­try’s un­prece­dented macroe­co­nomic and leg­isla­tive re­form mea­sures im­ple­mented over the past two years, for­eign di­rect in­vest­ment in Egypt re­main lack­lus­tre, con­tract­ing by 2.7% on an­nual ba­sis in FY 2017/18. A ma­te­rial boost to the FDI is await­ing fur­ther con­sol­i­da­tion of the fis­cal ac­counts and deeper re­forms to the busi­ness en­vi­ron­ment.

Nev­er­the­less, a cheaper Egyp­tian Pound has made Egypt very com­pet­i­tive in sev­eral ar­eas. Many ef­forts are un­der­way to im­ple­ment im­port sub­sti­tu­tion by en­cour­ag­ing lo­cal man­u­fac­tur­ing and thus ex­port. Egypt has al­ready seen im­prove­ments in ex­port ac­tiv­i­ties demon­strated by an in­crease of 14% in H1 2018 which has made it more com­pet­i­tive.Also, a cheaper cur­rency gives for­eign in­vestors more eq­uity for the in­vest­ment com­pared to Egypt’s Gulf Mena-peers. Egypt, also plans to take ad­van­tage of the Egyp­tian pound by mar­ket­ing it­self as a cheap tourist des­ti­na­tion ex­em­pli­fied by low ticket and ho­tel rates for in­bound tourists al­low­ing them to gain more for their money. In ad­di­tion,a cheaper Egyp­tian Pound al­lows for­eign in­vestors to ben­e­fit from the coun­try’s low-cost hu­man re­sources on a broad spec­trum of em­ploy­ment giv­ing it a com­pet­i­tive qual­ity. What do you think are the main con­cerns of for­eign in­vestors to come and do busi­ness in Egypt (be­yond safety)?

We can proudly say that safety has been re­stored in Egypt ev­i­denced by the in­crease in the num­ber of tourists ar­rivals by 30% in Q1 2018 com­pared to that in 2017 and 730,000 tourists in Fe­bru­ary 2018 alone,mak­ing it no longer a main con­cern. A ma­jor con­cern to for­eign in­vestors could be the in­sta­bil­ity in Egypt’s poli­cies which are of­ten amended. This is ex­em­pli­fied through Egypt’s tax sys­tem which re­mains a source of dis­com­fort to in­vestors as nu­mer­ous changes have been made to its tax code as a re­sult of the coun­try’s past po­lit­i­cal in­sta­bil­ity. The tax code’s com­plex­ity and dif­fi­cul­ties with tax ad­min­is­tra­tion mean that com­pa­nies of­ten face uncer­tainty about how tax col­lec­tors will in­ter­pret the law. Many in­vestors are there­fore un­able to make long-term de­ci­sions as they can not plan ef­fec­tively for their tax treat­ment. How­ever, the in­creased level of sta­bil­ity in the Egyp­tian cabi­net and its lean­ing to­wards re­form, point to the pos­si­bil­ity that tax ad­min­is­tra­tion might be clar­i­fied. Sim­i­larly, the safe­guards put in place through the new In­vest­ment Law of­fer pro­tec­tion for for­eign in­vestors, for ex­am­ple,in­vest­ment projects can not be na­tion­alised by the gov­ern­ment. More­over, as part of eco­nomic re­form, Egypt passed its first Bank­ruptcy Law in Jan­uary 2018, which fur­ther pro­tects for­eign in­vestors in the event of bank­ruptcy by erad­i­cat­ing im­pris­on­ment and sim­pli­fy­ing post-bank­ruptcy pro­ce­dures.

Fur­ther­more, the coun­try’s un­der­ground econ­omy, which ac­counts for 40% of the Egyp­tian econ­omy, cre­ates an un­lev­elled play­ing field and de­creases the com­pet­i­tive­ness of in­vestors that ad­here to the law.This rep­re­sents a ma­jor is­sue for for­eign in­vestors as they do not par­tic­i­pate in tax eva­sion and have dif­fer­ent mar­gins to those in the in­for­mal sec­tor. The crowd­ing out of Egypt’s pri­vate sec­tor, par­tic­u­larly in the con­struc­tion in­dus­try, also lim­its for­eign in­vestor’s chances to com­pete in the sec­tor.

The lack of a solid le­gal and reg­u­la­tory frame­work in Egypt makes for­eign in­vestors ap­pre­hen­sive as they would en­counter dif­fi­cul­ties to gain jus­tice and would need to re­sort to the costly so­lu­tion of ar­bi­tra­tion to set­tle le­gal dis­putes. Sim­i­larly, while the le­gal sys­tem sup­ports for­eign in­vestors to en­ter Egypt, it presents dif­fi­cul­ties in the event of ex­it­ing the coun­try re­flect­ing a Ho­tel Cal­i­for­nia model.There­fore, it is im­per­a­tive to im­prove and ac­cel­er­ate the set­tle­ment of dis­putes which is an is­sue that the new In­vest­ment Law tack­les. Mea­sures to achieve these goals would have a sig­nif­i­cant ef­fect on in­vestor con­fi­dence. The first step to­wards this goal would be to call on ad­di­tional ex­pert wit­nesses who are well versed in as­pects of fi­nan­cial ser­vices.This would re­quire judges to be­come spe­cialised in the fi­nan­cial sec­tor and might even re­quire the for­ma­tion of a sep­a­rate court un­der the aus­pices of the Egyp­tian Fi­nan­cial Reg­u­la­tory Au­thor­ity (FRA).This would greatly ac­cel­er­ate the judicial process, re­duc­ing costs for all par­ties in­volved.This would al­low for­eign in­vestors to en­force their rights in a timely man­ner and en­hance their con­fi­dence in the coun­try’s busi­ness en­vi­ron­ment.

Fur­ther­more, the de­val­u­a­tion of the Egyp­tian pound has not only posed an is­sue to for­eign in­vestors with re­gards to the value of their in­vest­ments de­creas­ing by more than half,but also presents an is­sue re­gard­ing high bor­row­ing costs on loans.

More­over, the World Bank and IMF’s in­ter­ven­tion in the eco­nomic de­ci­sions in Egypt could be a ma­jor con­cern to for­eign in­vestors, ex­em­pli­fied by the de­crease in sub­si­dies for en­ergy. How­ever, the elim­i­na­tion of en­ergy sub­si­dies may al­low for im­proved re­source al­lo­ca­tion. What are your main con­cerns in re­gard to re­duc­ing the red tape?

It is the gov­ern­ment’s role to en­sure in­vestors that the new In­vest­ment Law will be en­forced and red tape will be fought in an ef­fec­tive way. With the cur­rent gov­ern­ment sup­port to in­vestors and de­ter­mi­na­tion to suc­ceed, we be­lieve the red tape will be re­duced sig­nif­i­cantly.

The con­cept of a one-stop shop for es­tab­lish­ing a com­pany, although has helped to ex­pe­dite the process of start­ing a firm, has not solved the un­der­ly­ing is­sue, as firms still need to ob­tain a ma­jor­ity of the per­mits, li­censes, and ap­provals from mul­ti­ple au­thor­i­ties and min­istries in or­der to be­gin op­er­a­tions.The time spent in ob­tain­ing those can of­ten de­lay projects for months, even if only one or two li­censes re­main out­stand­ing. In or­der to re­duce the red tape on the firm es­tab­lish­ment to have all in­ter­ac­tions with busi­nesses take place through this sin­gle au­thor­ity, rather than sim­ply plac­ing mul­ti­ple au­thor­i­ties in a sin­gle lo­ca­tion, which is the ap­proach that the ‘one-stop shop’ uses.

Fur­ther­more, re­dun­dancy in the deeply en­trenched lay­ers of bu­reau­cracy is a ma­jor source of red tape, how­ever, the con­cept of a one-stop shop aims to elim­i­nate such in­ef­fi­ciency. Could you share with us the story of PWC in Egypt and your main strat­egy in the coun­try?

PwC was formed in 1998 by the merger of two legacy firms, Price Water­house and Coop­ers and Ly­brand. The PwC later ac­quired Booz and Com­pany in 2014 to make it part of its net­work.The PwC of­fice in Egypt was es­tab­lished in 1974. Our of­fice in Egypt in­cludes 13 part­ners and 395 pro­fes­sional staff work­ing in Cairo and Alexan­dria.

Our am­bi­tion is to be the largest and most pro­fes­sional ser­vices firm in Egypt that de­liv­ers a dis­tinc­tive ex­pe­ri­ence to our clients and stake­hold­ers.We aim to be the firm of choice for our clients, to of­fer a nur­tur­ing yet chal­leng­ing en­vi­ron­ment for our em­ploy­ees and lastly to be an ac­tive sup­porter of our com­mu­nity. More­over, we sup­port the gov­ern­ment with trans­for­ma­tional projects and sup­port SMEs ini­tia­tives through our strong lead­er­ship qual­i­ties.

Our strat­egy is em­bod­ied in three core ob­jec­tives that guide our be­hav­iour and de­ci­sion mak­ing, firstly to en­hance the en­gage­ment in­ter­nally amongst our teams, se­condly to in­vest smarter in our clients, tal­ent and in­fra­struc­ture to en­sure sus­tained lead­er­ship in our mar­ket, and lastly to ex­cel in our mar­ket in or­der to achieve con­tin­u­ous growth, prof­itabil­ity and qual­ity. Our peo­ple have a de­tailed un­der­stand­ing of the lo­cal mar­ket, busi­ness stan­dards, and cul­ture, and are pas­sion­ate about work­ing in one of the most ex­cit­ing and dy­namic places in the Mid­dle East. How can PWC en­cour­age in­ter­na­tional in­vestors to in­ject FDI in Egypt?

PwC is proudly a net­work of firms with more than 236,000 peo­ple op­er­at­ing from 158 coun­tries glob­ally, mak­ing us the largest pro­fes­sional ser­vices provider in the world.We sup­port in­vestors to in­ject FDI by de­vel­op­ing their port­fo­lios through build­ing or buy­ing. Build­ing en­tails pro­vid­ing clients with mar­ket as­sess­ment and fi­nan­cial fea­si­bil­ity study. Buy­ing in­volves of­fer­ing clients fi­nan­cial tax due dili­gence of a tar­get firm, val­u­a­tion of busi­ness, in­ter­nal setup of poli­cies and pro­ce­dures, au­dit tax com­pli­ance, post-pur­chase sup­port with a 100day plan, and exit strate­gies along with other ser­vices.

Maged Ezzeldeen Coun­try Se­nior Part­ner at Price­wa­ter­house­Coop­ers Egypt

One of the most im­por­tant com­pet­i­tive ad­van­tages is the coun­try’s strate­gic lo­ca­tion

Real es­tate in Egypt, un­like the re­gion, has been con­tin­u­ously ex­pand­ing and we have been wit­ness­ing an un­par­al­leled real es­tate ap­pre­ci­a­tion in the last two decades

Newspapers in English

Newspapers from Egypt

© PressReader. All rights reserved.