Egypt: EEDC Targets.. Results..Next Reform delivers ..Investment for - - PowerPoint PPT Presentation

Reform delivers… …..Investment for growth

Egypt: EEDC… Targets.. Results..Next

April 2015

Ministry of Investment

Egypt: Reforms …..on the top

• Political road map.. Close to end by parliament elections very soon..
• New Economic and Fiscal Reforms..remarkable achievements during

2014-2015.. Reform engine has been working to tackle down all economic constraints..

• Many legal reforms have been achieved…
• Launching Egypt’s train of the balanced economic development ..the

take off was in the EEDC held in Sharm El-Sheikh 13-15/3/2015..that aimed at:

• Telling the story of Egypt …after 2 revolutions..
• Addressing the Egyptian-tailored sustainable economic development plan. Where we are

going..

• Regulatory reforms.. Achieved and what still in the pipeline.
• Presenting investment projects in various sectors with a different approach.
• Restoring the confidence locally, regionally and Internationally.
• Putting Egypt on the world investment map again..

Egypt: briefs on ….Egypt’s economic plan targets..

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Fiscal consolidation plan* Economic Stimulus Economic recovery plan Develop a fiscal consolidation plan of $58 billion that addresses current funding gaps by 2018 Develop a growth stimulating investment plan that compensates for fiscal consolidation and addresses citizen pain points $29 Bn $29 Bn $60 Bn 73 initiatives Size of expenditure cuts

• USD 26 Bn in subsidy reforms
• USD3 Bn from wage freeze)
• USD50 Bn investment
• pportunities
• USD10 Bn infrastructure

projects to be launched in the next 4 years Size of revenue increasing measures

• USD 19 Bn VAT implementation
• USD 4 Bn Income & Wealth tax

reform

• USD 4 Bn mining law one off

asset sales

• USD 2 Bn others
• Regulatory, institutional and

infrastructure initiatives that enable sector development 1 2 + USD 17-20 Bn External Financial Support needed in 2015-2016 due to the gradual implementation of the plan

Egypt: ..fiscal consolidation.. economic stimulus.. Proposed plans in Jun 2014

Egypt: Signs of an upturn in economic indicators are more visible

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Source: Ministry of planning

GDP growth in H1-2015 estimated at 5.6 %

• Real GDP grew by 5.6% in 1H2014/15 with investment

being the main driver of such accelerated growth. The government’s fiscal stimulus whether through the central budget or through state authorities including the Suez Canal project and the expansion of the national road network supported the pick-up in investments.

GDP growth will target 6% in 2018/2019

Non-oil manufacturing is the biggest contributor to the rebound in growth

……Signs of an upturn in economic indicators are more visible

Newly established companies

• FDI inflows recorded USD2.7bn in the first half of FY14/15 up from USD2bn a year earlier. The net inflows

were driven by a net inflow for Greenfield investments by USD1.4bn and USD1.2bn inflows in the oil sector.

• Number of established companies reached 6,364 companies in 8M14/15 up from 5,331 a year earlier (19%+).
• Evident recovery in corporate activity as Loans saw an accelerated growth of 17%YoY in Jan-15, the highest in

4 years.

Source: GAFI & Central Bank of Egypt

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Loans growth Foreign Direct Investments

11.1 13.2 8.1 6.8 2.2 2.1 3.8 4.1 2.7 2 4 6 8 10 12 14 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 1H14/15 USD bn 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 YoY

200 400 600 800 1000 1200 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15

Companies

Egypt: overview of Egypt’s economy..(2011/2012 till 2018/2019)

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Source: Ministry of Finance projections

Egypt: Reform delivers

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Reform offers strong upside to the investment environment… As the political scene resets, Egypt commenced its reform program by tackling structural imbalances to restore macroeconomic stability and drive growth. The medium-term strategy focus on adopting pro-investment policies and implementing key legal, regulatory and institutional reforms to expand private sector investments. ..with a development strategy that places Egypt’s growth potential on a more sustainable grounds

The government’s key objective is to create a productive, efficient and ultimately more dynamic economy and to ensure that future growth is high, sustainable and inclusive. Hereby, priority is given to launching economically viable projects that are labour intensive to help alleviate unemployment.

Restored investors’ confidence, regional support and investment pledges should help achieve set targets

The Egypt Economic Development Conference marked a strong vote of confidence in the country’s economic policies with a unified message that highly emphasized the continued regional support and investors interest.

Adopting pro-investment policies complements reform

Pro-investment policies are key to restore investors’ confidence where several measures were already taken to remove impediments to investments;

• Addressing current investor disputes marks an entry point for potential foreign inflow. 43% of investor’s disputes

were resolved under the mechanism of contract reconciliation and 60% of presented cases were solved under the dispute settlement committee.

• Settling dues with foreign oil and gas companies marks another priority to boost investors’ confidence – particularly

as the sector accounts for +60% of FDI inflows.

• Easing repatriation issues marks another boost; improved foreign currency inflows with a pick-up in FDIs and

continued Gulf support should ease capital controls.

• The Central Bank of Egypt swift move to a sustainable policy mix with a cut in policy rates accompanied by a

depreciation in the cut-off FX auction rate will help limit the currency overhang and revive lending activities. Such pro- investment stance will help setting the stage for a series of sovereign rating upgrades during 2015 which should bode well for equities.

Contracts reconciliation committee Ministerial dispute settlement committee

Source: Ministry of Investment Authority Number Governorates and affiliates 268 Ministry of Finance and affiliates 141 New Urban Communities Authority 79 Ministries 27 Tourism Development Authority 8 Others 6 Total Settlement 529

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9 1 4 3 1 2 3 23 3 3 3 1 10 5 10 15 20 25 Real-estate & const Tourism Agriculture Oil, Gas & Petrochemcials logistics Mining & Fert

• thers

Total Contracts No of disputes solved

As of March 2015

Creating a welcoming climate for investors

The government is determined to remove constraints and inappropriate legal provisions to create a healthier business climate. Thus, several amendments to a number of laws were recently passed, in addition to few that are expected to be released in the coming period.

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Investment Law

Status

Passed

Measures taken

▪ Create a one-stop-shop at GAFI that will reduce for investors the time needed

for issuing investment licenses, procuring land and obtaining utilities.

▪ Establish the National Center for Developing & Promoting Investments at GAFI

that will be in addition the sole liable for preparing an investment map for Egypt.

▪ Set a legal framework for dispute resolution as well as standard procedures for

solving investors’ disputes that may arise in the future.

▪ Emphasizing and adding some investor rights to the existing ones.

Passed Taxes Law

▪

Income Tax: Reduce the maximum for corporate income tax from 25% percent to 22.5%.

▪ Wealth Tax: Cancel the 5% tax imposed on individuals and corporations with

annual income above EGP 1,000,000. Passed Civil Service Law

▪

Guarantees citizens’ rights to civil jobs based on merit hence eliminating favoritism & discrimination.

▪

Address government bureaucracy and establish a strong governance system.

Creating a welcoming climate for investors cont..

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Measures taken Status

Mining Law Passed

▪ Implement a more effective tax & royalty structure that ensures a swift

allocation of mineral concessions to domestic & foreign firms. Third Party Contract Appeal

▪ Organize appeal procedures and prohibit any third party interference in

contracts between the state and the investor. (to protect the investor rights in their contracts with the government.) Passed Electricity Passed

▪ Restrict the state’s role in the electricity sector to regulation and supervision.

(more liberalization of the sector)

▪ Separate the production, transmission and distribution functions in order to

foster the private sector’s role and bring out greater competitiveness. Passed Competition Law

▪ Ensure competitive practices in markets by allowing the Competition Authority

to independently file lawsuits and settle cases against violators. Microfinance Law Passed

▪ Allow licensed entities to offer microfinance loans up to EGP 100,000 to

individuals or small companies

▪ Grant the Egyptian Financial Supervisory Authority (EFSA) the power to

supervise the microfinance entities to ensure their financial transparency . Passed

▪ Unveil "feed-in-tariff” and legal provision for the development of the country’s

wind and solar potential. (PPA, Sovereign guarantee, feed-in-tariff were introduced to facilitate more investments) Renewable Energy

Upcoming legislative reforms

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Status Measures Taken

Upcoming Value-Added Law

▪ Replace the general sales tax and create an incentive to join the formal

economy. Upcoming Bankruptcy Law

▪ Inform and empower bankruptcy judges in facilitating the bankruptcy

settlement. Upcoming Companies Law

▪ Ease procedures for holding shareholder and general assemblies and raising

capital.

▪ Facilitate company liquidation and setting 3 years as a cap for companies to be

liquidated instead of being open in the current version. Upcoming Customs Law

▪ Aims at clearing and simplifying customs to ensure timely release of goods from

the customs zone which will cut costs and time needed for the goods to enter the local market. Upcoming Commercial Register Law

▪ Modernizing the commercial register’s services to prevent any conflicts arising

from multiple registrations and to include all the updates pertaining to any one company in a single register.

EEDC reflected a strong vote of confidence

• The Egypt Economic Development Conference

mirrored a strong recognition for Egypt’s economic plan and a unified clear support message; especially with the IMF statement praising reforms undertaken so far.

• Key international companies, namely General

Electric and Siemens as well as BP, expressed their determination to expand in Egypt. Moreover, the conference witnessed the signature of a number of deals and MoUs both on the governmental and the private sector levels; with the announcement of Egypt’s new capital city standing out as one of the main highlights.

• Gulf financial support remained persistent with

USD12.5bn in pledges from KSA, UAE, Kuwait and

• Oman. (6 bn entered the CBE last week)
• Having the conference on annual basis, as

highlighted by the President, should improve transparency and speed-up the reform process.

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EEDC

Private sector investments Governmental MoUs Economic Development Strategy Legislative reforms Financial Support Packages

Egypt: strong potential overrules

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Location Solid Fundamentals Demographics Cost Edge Trade agreements Political Stability “New Egypt” Catalyst Clear Governance Reduced Corruption Commitment to Economic & legislative Reform Business Confidence Rising Investment

STRONG GROWTH POTENTIAL

Mega projects are the onset of the investment stimulus

• The government launched a number of

national mega projects that are labor intensive,

• ffering

various investment

• pportunities to the private sector
• A different style of screening priority sectors

is adopted where investment opportunities that tap into current market needs while providing adequate financial and socioeconomic returns are prioritized. This is highly reflected in the focus on power, energy and labor-intensive infrastructure projects.

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Mega projects

Suez Canal Area Development Project New Suez Canal (Parallel water way)

(to open on Aug 5th)

Upper Egypt Red Sea Development Airport City

presented in the conference

Northwest Coast Development Golden Triangle

The master planner was declared in March

A wide range of logistic, industrial, touristic, medical, infrastructure, mining and power investment

• pportunities

Its main features were presented in the conference

Investment projects signed.. exceeded USD150 bn

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Ministry Agreements MoUs Grants/loans

No Value No Value No Value Electricity 10 31.725 12 33.05

• Transport

4 1.665 1 0.49

• Petroleum

4 21 2 0.1

• Supply and Internal

Trade

• 4

6

• Housing and utilities
• 8

80.14

• Planning and Admin

Reform

• 3

0.506

• Tourism

1 To target 1 bn

• International

cooperation

• 17

8.498 Environment

• 1

n.a

• Investment
• 3

5.105

• Total

19 54.39 35 125.391 17 8.498

Bn… USD

Total by ministry

Value 64.775 2.155 21.1 6 80.14 0.506 (not counted) 8.498

• 5.105

188.297

Investment projects … prepared before z conference to promote

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Sector No of projects Agriculture 8 Housing & Utilities 14 Industry 2 ICT 6 Tourism 7 Petroleum and Mining 9 Transport and Logistics 7 Retail 2 Total 55

Published in a booklet distributed in the conference

• 29 Projects under the IBs
• 7 under private sector
• 7 under PPP
• 1 stands alone under

Ministry of Petroleum

• 11 as advanced ideas to

test the appetite of investors Note1:

3 of housing projects were signed in the conference Note2: 3 new projects were added after the conference to IBs Reached now 58

IBs term stands for Investment Banks

Investment projects … follow up is highly needed for all projects

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Projects Published in the booklet distributed in the conference

a steering committee was formed for follow up.. Regular reports being submitted

Signed projects in the conference

Egypt: what next

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Commitment to the Egyptian economic, social and political plan Maximise FDI attraction efforts To keep sustainable development Social Impact

STRONG GROWTH POTENTIAL

Other Reforms will continue Encouraging local investors (new and expansion investments)

Work and Work and Work…

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Egypt: signals from z famous newspapers, Al Ahram, Friday April 24th

HSBC, Adv Renault, Adv

We are very much optimistic.. That’s why we are here presenting, discussing, sharing views…etc

Awaiting you in Egypt!!

Thank you

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From EEDC….Egypt delivers