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Top 10 Reasons to Invest in Egypt Today

Top 10 Reasons to Invest in Egypt Today
Region: Egypt
Created: Jan 11, 2010, modified: Jan 13, 2012, overall rating: 2.500

Egypt's Competitive Advantages

Top 10 Reasons to Invest in Egypt Today

AS THE TOP RECIPIENT of foreign direct investment (FDI) in Africa in 2006, Egypt is well positioned to con­tinue on its current growth path.

1
-Macroeconomic Stability and Robust Growth: Egypt's GDP grew 7.1% in 2006/07 and accelerated to 7.5% in the first half of 2007/08. That's not just better than the average for the Middle East and North Africa region; it's some two percentage points above the global average, too. Among the nation's fastest-grow­ing sectors are tourism, communications and information tech­nology, construction, manufacturing and transportation.

Egypt's unprecedented high rate of growth is supported by macroeconomic stability cushioned by a decline in the budget deficit to less than 7.5% of GDP in 2006/07 compared to 10.5% in 2002/03. The target: To cut the budget deficit in half by 2011 by continuing to cut one percentage point per year.

2-A Large. Trained, Competitively Priced Labor Force: Egypt has a sol­id reputation as a net regional exporter of labor services, but the country's competitive advantage in human resources is gradu­ally shifting towards becoming an adept provider of a skill-in­tensive workforce at home.

Many of the leading sectors of the Egyptian economy are skill-intensive service sectors, namely ICT, financial services and tourism. Wage levels in these sectors are well below those of neighboring countries — and in many cases cheaper than comparative countries around the world. A new national in­dustrial training program is turning out trained workers to fill some 500,000 new jobs in manufacturing.

3- Large Consumer Market: The sheer size of Egypt's population, as well as the doubling of per-capita income to EGP 10,055 in 2006/07 from EGP 5.548 in 2000/01 has transformed Egypt into a consumer market of significant importance as witnessed by the arrival of dozens of global consumer brands and the sharp expansion of retail sales in the past two years. The fact that 56.5% of the Egyptian population is between the age of 15 and 60 has also impacted investment trends.

4- Developed Infrastructure: Egypt boasts a broad, world-class in­frastructure base. Three independent mobile phone networks cover nearly 100% of the country's inhabited land. More than 8% of the world's total shipping transits the Suez Canal each year. Every home with a phone line has dial-up internet access for the price of a local call. Wireline broadband is readily avail­able in urban centers. The country's 14 ports serve the nation's exporters and importers alike, while an expanding and upgrad­ing airport network caters to both passenger and cargo traffic.

5- Competitive Tax Rates: Corporate and personal tax rates in Egypt are competitive, and the nation's newly overhauled tax code is easy to navigate. Corporate and personal taxes in Egypt both top out at 20%. the country has moved to random-sample auditing and the nation's largest corporate taxpayers are served by a special, highly trained unit at the Tax Authority.

6-  Preferential Access to Key Global Markets: The EU-Egypt Association Agreement established a bilateral trade agreement based on reciprocal liberalization for both industry and agriculture. Egyptian products from ready-made garments to furniture and food products now enjoy preferential access to European Union m arkets.

Meanwhile, the Qualifying Industrial Zones (QTZ) agreement with the United States gives manufacturers based in Egypt tar­iff- and quota-free access to the US market provided their prod­ucts contain a specified minimum of Israeli content.

Corporations exporting from Egypt also enjoy preferential access to the Arab world (through the Greater Arab Free-Trade Agreement) to Eastern and Southern Africa (COMESA) and to the Agadir nations. Egypt also has free-trade agreements with the European Free Trade Association (Switzerland, Norway, Liechtenstein and Iceland) and Turkey.

7- Proximity to Global Markets: The simple fact of the matter is that whether you're shipping perishable goods, commodities or manu­factured articles, key global markets in Europe, the Arab world, Africa and the Indian Subcontinent are all readily accessible from Egypt — something few competing markets can claim.

8- Diversified Economy: Egypt's economy is among the most di­verse in the Middle East and North Africa. Industry accounts for 32% of GDP, services account for 54%, while agriculture accounts for 14%. The manufacturing sector today is home to a rapidly growing number of companies in fields including chem­icals, food processing, spinning and weaving, ready-made gar­ments, construction materials and engineering.

9-Reformist Investment Climate: Egypt was the first Arab and first African country to sign the OECD Declaration on Internation­al Investment and Multinational Enterprises. Foreign direct in­vestment inflows increased twelve-fold between 2001 and 2006. Indeed. Egypt netted USS 10 billion between January and De­cember 2006, making it the number-one destination for FDI in Africa as it accounted for 30% of all foreign investment in Africa, according to UNCTAD. The UN agency also praised Egypt's improved investment climate. The World Bank's Do­ing Business 2008 report — which tracks the progress of 178 countries worldwide in terms of how easy it is to start, main­tain and exit a business — named Egypt as the "top reformer of the year.''

10- Political Stability and Personal Security: As war and instability continue to be unfortunate features of many countries in the re­gion. Egypt remains at peace. Political stability also guarantees businesses may be confident that the economic policies that at­tracted them to invest in the first place will not change over­night.

Meanwhile. Egypt's crime rate is low by the standards of al­most any nation, and Cairo is one of the safest large cities in the world, making it easy for multinational corporations to con­vince key staff members to accept long-term postings here.

Real GDP Growth (2003-2008)

Total Labor Force in Egypt and

Comparative Countries, 2005

Calculated averages

Source: International Monetary Fund (2007) World Economic Outlook Database

Source: World Bank (2007) World Development

Indicators and CAPMAS

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