Egypt is counting on the bold economic measures of the past year to attract greater European investments. Sherine Nasr reports The first Egypt-EU Trade and Investment Conference held at the European parliament in Brussels last week was an opportunity to showcase the cabinet's successes during their first year in office. The mission which headed for Brussels was meant to impress their EU audience. The ultimate goal was to provide assurance that Egypt is a suitable place to invest. Sponsored by the Sokhna Port in Egypt, the event brought together senior Egyptian government officials along with senior members of the European parliament as well as industrial magnates operating successful multinational businesses in Egypt. As one of the biggest southern Mediterranean countries, Egypt's political, economic and social stability has been of utmost importance to its neighbours on the northern side of the Mediterranean. "The Middle East is the closest economic partner to the EU. Its prosperity and security largely depend on Egypt taking its place in the region," said Arlene McCarthy, member of the European Parliament during the conference. The year 2005 has been declared the "year of the Mediterranean" by the EU foreign ministers and it is due to conclude with the celebration of the 10th anniversary of the Barcelona Declaration. During the meetings, news of the reforms recently adopted by the Egyptian government was music to the ears of EU officials, one of whom noted, " a new Egypt is looking forward and with vision to its future as a leader of economic and political reform in the region." Determined to carry on with the painful task of reform, the number of measures taken to correct Egypt's economic vitality during the past 12 months have been exceptional. Since the current members of government came to office a year ago, drastic measures have been taken to encourage a greater flow of Foreign Direct Investment (FDI) as well as to reinforce the role of the private sector and carry out an open market policy. Reform actions included a drastic 50 per cent reduction on tax and tariff, reduction of trade barriers, the lifting of formal restrictions on FDI and noticeable simplification for business start-up procedures. Great focus has also been placed on job creation and improving people's income levels. In a nation where population increases by a million per annum, at least 600,000 new jobs need to be created every year. "Politicians do not create jobs. Businesses do," commented Rasheed Mohamed Rasheed, minister of foreign trade and industry who added that in order for Egypt to carry out these tasks successfully, "It chose to ensure stronger relations with the EU, Egypt's biggest trade partner." According to Mahmoud Mohieddin, minister of investment, reform measures have started to bear fruit. FDIs to Egypt, according to the minister, doubled in the past 12 months to record $2 billion compared to $408 million the year before. In the past few months, proceeds of privatisation have reached LE5.7 billion (almost $876 million), "more than all the proceeds put together since the privatisation programme began", stated the minister. The privatisation of a fertilisers and a tobacco company yielded half a billion dollars in only five days. In addition, 20 per cent of Telecom Egypt is to be privatised, along with a number of banks and an insurance company. In the meantime, newly established companies increased by 140 per cent compared to last year, and at least 40 per cent of these are industrialised companies. "We recorded a five per cent increase in real economic growth this year. These indicators show that we can grow by six per cent next year which is our target and we are achieving it smoothly," said Mohieddin who added that the private sector is leading economic reform and that Egypt is determined to enhance its integration with the international community as a means to anchor its reform measures. More impressive than the positive economic indicators are the success stories witnessed by many private sector companies as well as multinationals in Egypt. One project with phenomenal growth rates can be seen at the Sokhna Port just 40km outside Suez city. In 2000, the Sokhna Port Development Company (SPDC) was established with the aim of managing and operating a port to serve the Special Economic Zone south of the Suez Canal on the Red Sea. In less than five years, the site managed to attract a number of multinationals as partners and the company has grown into a huge conglomerate of maritime industry, logistics, international finance, renewable energy production and a number of other strategic industries. Among these are a 435 million euro project for the production of high quality magnesium alloys for export to Europe, a 395 million euro biodiesel project, a 344 million euro project for the production of liquid ammonia as well as a sugar refinery, a menthol plant and a grain silos project for the storage of grain for the Egyptian market. "The Sokhna Port has grown into one of Egypt's top FDI earners with some 1.8 billion euro of FDI committed up to 2007," said Osama El-Sherif, president and CEO of SPDC. Other success stories include the Mansour Group which, through cooperation with General Motors and Michelin, has grown into the largest conglomerate and export hub in the Middle East and Africa. "For the first time in 30 years, we made a 140 per cent increase in equity in the capital market over the past year," commented Mohamed Mansour, president of Mansour Group. Egypt has always embraced healthy ties with its European partners. Trade between the EU and Egypt has risen by a record 25 per cent reaching 11.5 billion euro last year. The EU is Egypt's biggest trading partner and currently accounts for 40 per cent of Egypt exports and 34 per cent of its imports. Egypt's main exports to the EU include oil, textiles and garments, agricultural products and chemicals while its major imports include power generating machinery, chemicals, transport equipment, food and agricultural products. In the arena of financial cooperation, Egypt received approximately 680 million euro in loans from the European Investment Bank (EIB), the primary EU financial institution. The sum is the largest claimed by any Mediterranean partner country over the past year. In 2003, the EIB opened its first office in the region in Cairo, an initiative which emphasises the unique EU relationship with Egypt. "Egypt is the biggest borrower of the EIB with some 1.7 billion euro in loans from 2001 to 2004," said Claudio Cortese, director of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the EIB's support facility for Mediterranean partner countries and the active forum for economic and financial dialogue between the two sides of the Mediterranean. Through FEMIP, funds are mainly allocated to support the private sector and SMEs in partner countries. Cooperation included a second loan to EgyptAir for the acquisition of seven new planes as part of an overall project to restructure the national carrier and contribute to the modernisation of its fleet. Other loans were directed to support the construction of two environmentally friendly power stations and to help enhance the availability of long-term funding to Egyptian banks and to finance private sector investment projects.
