A recent government decision that allows foreigners to invest in Sinai is moot without restoring stability in the strategic peninsula, writes Nesma Nowar The Egyptian government agreed last week to allow foreigners to invest in Sinai with a maximum stake of 45 per cent in any Sinai-based project. Meanwhile, Egyptian capital in any project should not be less than 55 per cent. Still, foreigners are not allowed to own land in Sinai, but they can run their ventures through concession contracts from the government. For security reasons, the Egyptian government has historically banned foreigners from investing and owning land in Sinai. Even land ownership for Egyptians has been firmly controlled. Egyptian investors with a non-Egyptian parent, for example, cannot own land but can obtain concession contracts in Sinai. Though last week's decision was welcomed by the business community as helping to spur investment in Sinai, the head of the North Sinai Chamber of Commerce, Abdallah Badawi, believes that the decision will not attract much investment. "The matter which should be discussed first is how we can regain security in Sinai," Badawi told Al-Ahram Weekly. "We cannot speak about investment before restoring security." Badawi added that the government decision should be accompanied by a bundle of incentives to boost investment. "The decision alone would not be able to attract any investments." Naguib Said, head of the exporters division at the North Sinai Chamber of Commerce, shares a similar view. He said that the decision to allow foreigners to invest in Sinai is a positive one. However, "it came too late." Said explained that the decision could have been applicable 20 years ago, when conditions in Sinai were relatively stable, but it would not do much in light of the current deteriorated security conditions in Sinai. "Local investors are afraid of investing in Sinai themselves," Said told the Weekly. "How can we expect foreign investors to come and invest?" he asked. Said explained that Sinai is not only a fertile land for tourism but also for a wide range of sectors, including mining, industry and agriculture. Badawi agrees with Said. He said that Sinai is in need of labour intensive investment, such as construction and agricultural projects. "The government should start investing in Sinai and thus attract private sector and foreigners to invest as well," Said said. He underlined the importance of introducing investment incentives, like tax exemptions and lower prices of electricity, natural gas and water granted to Sinai-based projects. The government's decision comes against the backdrop of the establishment of a new national authority for the development of Sinai -- a body with a budget of LE1 billion. Prime Minister Hisham Qandil stated last week that the new authority is set to endorse projects worth LE1.2 billion to be funded from the current 2012/13 budget, the Armed Forces and foreign parties. Qandil pointed out that the projects would include establishing fishing ports, roads, schools, factories and wells. Development in the Sinai Peninsula has consistently been hampered in recent years owing to its strategic location on the Egyptian-Israeli border. Sinai and its development came into the spotlight after the deadly attack that killed 16 Egyptian border guards on 5 August. Following the attack, the military launched Operation Eagle to clear Sinai of militant Islamist groups allegedly involved in the border attack.
