A business delegation consisting of representatives of more than 50 US companies visited Egypt this week to further strengthen economic relations between Egypt and the United States. The visit was hailed by many as “well-timed” as it comes at a time when Egypt is exerting efforts to ramp up investment and improve the business climate in a bid to attract much-needed foreign currency and boost the ailing economy. Khush Choksy, senior vice-president for Middle East Affairs at the US Chamber of Commerce, told Al-Ahram Weekly that the delegation was in Egypt to explore investment opportunities. “The companies are here because they have heard about the big projects such the Suez Canal project and they want to find out about other projects that the government is interested in doing that US companies can participate in,” Choksy said on the sidelines of a conference organised by the American Chamber of Commerce in Egypt. The business mission, visiting Egypt from 23 to 26 October, was organised by the American Chamber of Commerce in Egypt (AmCham Egypt) in conjunction with the United States Chamber of Commerce and the US-Egypt Business Council. “A stable and secure Egypt is essential for the future of the Middle East region,” said David Thorne, senior advisor to the US secretary of state, who was leading the delegation during the conference. This was why the US was backing Egypt's economic reform programme, including obtaining a $12 billion loan from the International Monetary Fund (IMF), he said. A senior US Treasury official said last week that the US viewed the IMF's proposed $12 billion loan to Egypt as “essential” and was working with other G7 countries to ensure that it was fully funded. Egypt needs to arrange up to $6 billion in bilateral gap financing before the IMF board can approve the programme and release an initial loan tranche of about $2.5 billion. Prime Minister Sherif Ismail said that about 60 per cent of the total had been secured. Thorne said the US appreciated the steps taken by President Abdel-Fattah Al-Sisi's administration to “put Egypt on the path of growth and prosperity”. He said the government had taken bold steps such as implementing the new value added tax (VAT) and slashing subsidies, which were essential for economic restructuring and the way to economic prosperity. He added that the implementation of these steps would be hard and that the US would offer support whenever it could. Craig Lebedev, CEO of the US Chamber of Commerce, reiterated this point, saying that the current Egyptian government, unlike its predecessors, had the wisdom and courage to carry out long-needed economic reforms. “President Al-Sisi knows that you can't have a strong country with a weak economy,” Lebedev said. Egypt's government embarked on a fiscal reform programme in 2014 to curb the budget deficit, estimated at 11.5 per cent of GDP in fiscal year 2015-2016, that includes phasing out energy subsidies and introducing new taxes. The government is also exerting efforts to get the economy out of its current bottleneck. “It is no secret that we are going through economic challenges. We are in a bottleneck, and I say a bottleneck because we will get out of it,” Tarek Kabil, minister of trade and industry, said during the AmCham Egypt conference. Kabil said that Egypt still had a lot to do to improve the climate for doing business in the country, but he said that the cabinet had approved major legislation that would make doing business easier. Kabil said that the cabinet had approved legislation that would bring down the time required to obtain a business license from 364 days to less than a month. On industrial land allocation, he said the government had delegated the Industrial Development Authority to be the single entity responsible so that investors only needed to go to one place. He said his ministry would launch an industry and trade strategy in the coming two weeks, saying that this would focus on technology, engineering, textiles and building materials. Small and medium enterprises (SMEs) are another focus. Kabil said that the government was trying to establish one organisation that would handle SMEs and act as a complete platform to help and support them. He said that the ministry would be working on boosting exports and reducing the trade balance deficit, saying that the government had reduced the latter by $7 billion in the past seven months. Africa will also be a focus of the strategy. Egypt exports $4 billion worth of goods and services to African countries, and it aims at doubling this in the next five years, making Egypt a manufacturing hub for Africa. It now has a direct shipping line to Kenya and is working on another one in East Africa, Kabil said. The government is also determined to encourage investment. “We have established the Supreme Investment Council, which means we are also focusing on investment,” said Dalia Khorshid, the minister of investment. In July, President Al-Sisi approved plans to establish a Supreme Investment Council that would work to improve the investment environment. Khorshid said the government knew the Egyptian market was a challenging one, and that it had identified the issues standing in the way of investment and was working on addressing them. She said the ministry had identified the fact that “60 per cent of the problems facing investors” pertained to land allocation, while 25 per cent were procedural and related to red tape. Khorshid said the ministry would issue a new investment law that would address these issues. She said the ministry had identified the guarantees and incentives that investors were looking for and included them in the law. The law also included needed protections for investors, she said. Khorshid said the ministry was working on the bankruptcy protection and liquidation law, which would improve doing business in Egypt. Choksy said that in order for Egypt to attract more investment, more consultation between the government and the private sector was needed. “When I say the private sector, I mean both international and Egyptian. This would be very helpful,” he told the Weekly. On the government's macroeconomic targets, Minister of Finance Amr Al-Garhi said the government was eyeing a five to six per cent growth rate, a six to seven per cent budget deficit, and an 80 per cent debt-to-GDP ratio. The proposed Eurobond offering will take place “hopefully in the second or third week of November,” Al-Garhi said, putting the value of this at $2-2.5 billion. He added that the ministry was starting an initial public offering (IPO) programme, as well as diversifying the government's sources of revenues. Al-Garhi said that Egypt's reform programme was necessary for Egypt, not for the IMF. He stressed the importance of redressing the current subsidies system, which he said had suffered historically from wrong policies. The ministry was working on a database that would make sure that subsidies went to those who needed them, he said. He talked about the ministry's plans to expand the tax base to make taxes contribute 16 to 17 per cent of GDP in the next five years, instead of the current 12.65 per cent. US direct investment inflows to Egypt reached $13 million between January and March 2016, and stood at $2.1 billion in 2015, according to figures from the American Chamber of Commerce. Egypt's top exports to the US during January to July 2016 were crude oil, cotton clothing and carpets, while top imports from the US in the same period included industrial machinery, vehicles, electric machinery, fuel and plastics. Egypt's generalised system of preferences (GSP) exports to the US represented 4.5 per cent of Egypt's total exports to the US during January to July 2016. The GSP programme offers duty-free access to the US market for a wide array of Egyptian producers.
