The business of democracy

With parliament scheduled to begin its sessions next month, the economic agenda -- comprising laws related to the financial sector, the real estate market and labour -- is expected to predominate. Riding high on the list of priorities is the mortgage law, regarded by both the government and the business sector as crucial to jolting the real estate market out of its current lethargy by facilitating the extension of credit to people with average incomes. It is also hoped that the enactment of such a law would ease the economy out of an almost two-year-long liquidity shortage. Draft laws for the capital market and creation of free trade zones are also being formulated by the cabinet with the aim of encouraging investments.
Businessmen MPs interviewed by Al-Ahram Weekly agree on the importance of legislation addressing unemployment and regulating mortgages, the banking sector and its credit operations. Also key are the amendments proposed for the current unified companies law.
Abdallah Tayel, member for the National Democratic Party (NDP) who heads parliament's economic committee, a position he held in the last People's Assembly, accords particular importance to the capital market law and legislation related to the banking sector and its credit functions. Tayel emphasises the importance of addressing the exchange rate issue, saying that this is critical to enabling Egypt to realise the government's target growth rate of 6.5 per cent.
Another item on the agenda which Tayel will push for is "reducing unemployment by supporting small and medium-sized enterprises with funding and expertise." Tayel's concern for financial sector support of small and medium enterprises is shared by Mahmoud Abul-Kheir, another businessman MP and NDP member. "Currently, the Social Fund for Development (SFD) gives youths loans -- with a 10-year interest-free period -- to set up businesses. However, if these projects fail, for one reason or another, the state loses a great deal of money. Therefore, if young entrepreneurs are prepared to establish businesses, the banks should provide them with loans on favourable terms. Also, tax exemptions should be extended to small projects and enterprises," he said. Such a measure would facilitate the establishment of profitable businesses, reduce unemployment and increase the growth rate, Abul-Kheir suggested.
But despite the general consensus among business deputies about priorities for economic legislation, it remains to be seen whether all the aforementioned draft laws will be introduced in parliament. This question is raised by the pattern that occurred in the previous parliament whereby the government would announce its intention to introduce a given law, but subsequently backtrack, on the grounds that the law "needs further preparation and study." This happened with the mortgage law and modifications to the law governing owner-tenant relations. For this reason, President Hosni Mubarak this week publicly called for more thorough preparation of new laws.
In the current parliament, six key committees overseeing the economy are headed by high-profile businessmen -- double the number who headed the economic committees in the last parliament. Also contributing to talk of a strong business presence in this parliament is its inclusion of 30 major businessmen as MPs. Although the previous parliament had 37 business deputies, those taking seats this time around are qualitatively different. The majority of business MPs in the current parliament are chairmen of major companies and many are founding members or board members of chambers of commerce or business associations. This has led some people to wonder whether laws pertaining to the economy will have a smoother course through the legislature than they did in the last parliament.
However, in view of the lack of unity in the business community, which is reflected in the weakness of business associations and the absence of a common agenda, scepticism that the new parliament will overcome the problems which have stalled several laws is widespread.
"The business community might be expecting too much from businessmen who have become MPs," says the chairman of the Egyptian Garment Exporters' Association, Mohamed Qassem. "Effectiveness is not necessarily an outcome of a large presence in parliament," he said. Qassem also believes that laws consistent with the conditions implied by the transformation to a market economy would not be in line -- in many instances -- with the current constitution.
A prime example of this situation is the unified labour law which is still being "negotiated" among businesses, labour and the government. Such legislation faces the problematic issue of balancing between "social security" -- a priority under the constitution -- and allowing market forces to determine the labour market.
Other obstacles relate to more practical matters. Even if the long-awaited mortgage law is enacted, say observers, it will require support from specialised financial institutions and a strong insurance sector, both of which are currently lacking.
The enactment of anti-trust legislation has become a pressing demand within the business community and among legal experts and political parties. One area where the trend towards monopoly has many worried is the steel sector. "Anti-trust legislation is one of my concerns," said businessman Said El-Alfi, an MP for the NDP. "It is about time that measures were taken to put an end to monopoly, whether by a businessman or a company. The lack of competition will be detrimental to producer and consumer alike."
The government has also announced that it is giving high priority to the introduction of draft laws for intellectual property rights and the telecommunications sector -- both of which are specifically geared to attracting foreign investment.
Reported by Shaimaa Labib and Mona El-Fiqi
Businessmen heading parliamentary committees
Mohamed Abul-Enein -- Housing Committee
Ahmed Ezz -- Planning and Budget Committee
Abdallah Tayel -- Economic Committee
Hossam Awad -- Sports and Youth Committee
Abdel-Aziz Mustafa -- Labour Committee
Hossam Badrawi -- Education Committee
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