At last week's Euromoney conference, Egypt presented its case as a safe and lucrative haven for investment even during a bizarre global crisis, Assem El-Kersh reports from London The upbeat introductory remarks by Richard Ensor, the managing director of the Euromoney Institutional Investor Plc, set the tone for the rest of the day. Opening "Egypt-The Investor Conference" in London last week, he said: "If it had to happen you could argue it could not have happened for Egypt at a better time. If Armageddon was to strike, now was the right time." It is no surprise that the global financial crisis was the buzz word throughout the event hosted by Euromoney, the influential international publishing and information group, as almost all speakers extensively discussed how Egypt is handling the impact of the crisis. Ensor listed Egypt's potentials in handling the situation, citing the International Monetary Fund's recent appraisal of the country's solid reforms only to be followed by the World Bank's move to name Egypt as the world's top reformer. He added that Egypt is but one of seven economies in the world that are most stable despite the crisis ramifications. Ahead of the conference, Euromoney's website published a positive assessment of the Egyptian performance saying that Egypt, in the face of regional and global economic storms, continues to chart a steady course. "We believe that the country's advantages are being recognized as never before. Prudent regulation of the financial sector combined with a young and growing population underpins a strong domestic economy. Combine this with a falling inflation rate, stable currency and geographical proximity to the markets of Europe, the Middle East and Africa and you can see why Egypt's future is bright. We've been bullish on Egypt for many years and the credit crunch and global recession have not changed our opinion one bit," it concluded. In a video interview beamed from Cairo, Mahmoud Mohieldin, the investment minister who could not attend in person, answered questions on how resilient Egypt's economy was. He assured his listeners that Egypt was able to withstand the world's financial turmoil mainly because of the financial sector's reform plan that aims at helping, recapitalising and consolidation of the banks. "So we did our homework well before the crisis. If we didn't do that we would have become in a very difficult condition." Now we can concentrate on the real side of the economy while continuing with the financial reform. Mohieldin foresees a balance of payments deficit this year of around 2.5 per cent -- three per cent of gross domestic product. He says that this is very much manageable due to what he calls decent capital inflows of $4 billion in the first half of 2009. The minister expressed his belief that the impact of the crisis will be short termed in the Arab Gulf countries whose investments constitute 40 per cent of the foreign direct investments (FDIs) coming to Egypt. "With the help of more than 25 per cent of the net surpluses accumulated in the Gulf states they will be able to weather the crisis and continue to invest." But, he says, instead of focussing on export- oriented manufacturing, FDIs are going to target infrastructure and projects that have balance between domestic demand in Egypt and the inertia of growth. Mohieldin also explained the reasons for the recent drive to create a unified central regulator to oversee the non-banking sector under a new law issued a few weeks ago. "The new scheme will be introduced by the beginning of the 2009 fiscal year in July. The aim is to improve co-ordination with the central bank and provide closer monitoring and more effective supervision of the financial sector," he said. For hours of presentations, discussions, speeches and questions and answers ,the gathering allowed Egypt's representatives an ample of time to put forward an optimistic account of the economic reform programme progress within the last four years and explain their view of why it is wise and safe to invest in the country. The message was drummed up repeatedly throughout the day. As Minister of Communications and Information Technology Tarek Kamel put it in an interview with Al-Ahram Weekly: "We are here to promote Egypt and brand its image as an attractive location for investment. We are specifically using the ICT sector as a viable sector for investment. This is a sector that is more and more playing a pivotal and growing role in the Egyptian economy as it grew in a very healthy manner within the last couple of years." Asked what edge Egypt has, Kamel readily answered: "We enjoy several preferential advantages; an excellent geographical location, political stability, coupled with the right work force and talent, a growing local market, a strong financial sector, and a banking system that was not negatively affected by the toxic acids of the crisis or exposed to them. The credit goes to the reform procedures implemented by the Central Bank of Egypt during the last four to five years. "What we are trying to do here is to send the message that Egypt is safe for investment and doing business. Our economy is not a unilateral one. It is based on industry and agriculture development as well as investment in the services and ICT sectors." Kamel is keen to show how the economy is diversified with a robust financial sector. "We are telling everyone here that we, as a government and a community, are taking a number of steps to accelerate economic growth and that despite the global turmoil we are still growing annually by four per cent while other parts of the world are witnessing negative growth and that we are committed to continue the reforms." Kamel is convinced that in every crisis and depression there are opportunities as well. Expressing the hope that the crisis will not last for long, Kamel said: "There will be winners and losers and we want to see Egypt more on the winning side in the post-crisis era. But we need to come up with innovative ideas for investment during tough times. We are making use of the fact that the Telecom sector is less affected by the crisis by seeking partnerships between Egyptian operators and the rest of the world because only by building synergies can the right base for growth be set. For our part of view in the ICT sector, we try to use it as one that disseminates hope and growth and attracts investments." For Assem Ragab, chairman of the General Authority for Investment and Free Zones (GAFI), the mission's aim and timing is of absolute importance. He told the Weekly that "Now with most of the essential European countries are making their [economic] decisions and oil countries reassessing their overall investment strategies, you can't afford to be out of their sight while they are contemplating whether to relocate or expand. And they too can't afford to stop doing business, be left out or lose their market share at the end of this downturn. At a time when they are becoming more and more selective you need to try and promote yourself as a destination of choice for them whether now or in the near future. In short, you have to show you are still on the map and a forum like this one creates a lot of visibility at a macro picture." "We," he explains, "have proven to be a cost efficient venue with a solid local market base and being a good hub for these countries to re- export has really been selling out with a number of British companies coming to us including Vodafone, British Gaz and many others." But why would an investor prefer doing business in Egypt and turn down calls from competitive locations like Turkey, Jordan or Israel? Ragab is not denying that some countries in the region, too, have their preferential advantages. Yet none could match the size and availability of the national and human resources that Egypt has along with the depth of its market and the proximity to the investors' target markets. "All in all, Egypt is offering a balanced and diversified portfolio," he pointed out. And that includes preferential trade agreements, improved accessibility, open quotas and zero or significantly cut-down customs in addition to incentives and subsidies for companies to work in Egypt. "We have been trying to lower the cost of investment, exporting and production and have just recently waived the cost for fixed assets and capital goods parallel to cutting down customs on more than 250 intermediary products needed by our local companies," he said. It is still too early, however, to tell whether the message of the day is reaching enough but Ziad Bahaa El Din, chairman of the board of trustees of (GAFI), believes the efforts is convincing as speakers agreed that the challenge is big but the prospects are quite significant and "after all investors would go where it fits them."
