INVESTMENT OPPORTUNITIES IN EGYPT 2009

1. INVESTMENT OPPORTUNITIES IN EGYPT2009 Prepared By The British Egyptian Business Association (BEBA) November 2008 Prepared by Aziza Khalil, BEBA Economic Researcher

2. Background • High internal liquidity • Low indebtedness • Important recipient of FDI (direct and/or joint ventures): between $11 billion and $12 billion • Strong domestic market • Bilingual and young workforce: 32% of the total population is under the age of 14, while 63.5% of the population is between the ages of 15 to 64 • Political stability • Egyptian economy grew by 7.2% in FY 2007/08 • For the year-end FY2008-2009, growth expected to be around 6%, and for the FY 2009-2010, around 5%

3. Key reasons to invest in Egypt • Low-cost labour force: 20% of UK costs • Diversified sources of income: fees from the Suez Canal, tourism, private transfers, and remittances, gas and oil/hydrocarbon exports • Foreign-exchange reserves at a high level roughly at $33 billion • Strategic location: gateway to Africa and the Middle East • Access to one of the largest markets in the MENA region • Low-cost energy • Financial stability and strong banking sector

4. Key reasons to invest in Egypt (Cont’d) • Introduction of structural reforms to: • Streamline bureaucratic procedures • Tackle obstacles to higher growth • Promote the privatization programme • Improve the business climate • Introduce multiple investment incentives targeting the upgrading of the business environment and modernization of the economy • New natural gas reserves in the Mediterranean to develop the hydrocarbon sector

5. Sector Opportunities 1. New technologies 2. Infrastructure 3. Transport: • Mass public transport • Ports and airports 4. SMEs 5. Tourism 6. Consumer market: • Consumer goods • Retail 7. Commercial real estate development 8. Education and vocational training

6. New Technologies • Stimulation of new industries through technology and business parks.Smart Village Cairo is the first fully operational technology and business park: 12,000 professionals run the operations of more than 100 companies. By the end of 2014, this number is expected to reach 80,000. • Since 2006, innovative ventures under development: • Smart Village Cairo Financial District • Smart Village Damietta Business and Logistics Park

7. Infrastructure • ICT sector growing at 20% annually • Sector attracting $1 billion in FDI each year • Egypt sees the drivers for growth in the partnerships with leading national and international ICT players

8. Transport • Under the PPP framework, Egypt plans to build new cargo and railways • Highly developed road network: linked by highways to several neighboring countries • New infrastructure projects: • The Ahmed Helmy tunnel • El-Salam bridge (both connect the African and Asian sides of the Suez Canal.) • Further investment in the development in infrastructure

9. Transport (cont’d) • Cairo international airport’s third terminal building • Home to more than 14 commercial ports • Handling more than 97.5 million tons of cargo a year • First BOT (build-operate-transfer) and privately run international airport is now operational at MarsaAlam • Other BOT airports are in construction in RasSidr and Al-Alamein

10. SMEs • Egypt has adopted a plan that aims to develop the potential of about 4,000 small and medium-sized factories across the country. • Trade and Industry Ministry and Federation of Egyptian Industries are developing a blueprint that involves helping factories in various industrial sectors to improve performance, productivity and quality of product. • Blueprint will ensure the adoption of up-to-date production and management methods.

11. Tourism • Strong growth in the tourism sector: 25% increase in tourist arrivals due to special offerings and affordable prices • Increase in annual tourist arrival from 9.8 million in June 2007 to 12.3 million in June 2008 • Sector represents 11.3% of GDP • Employs 13% of the total workforce

12. Consumer market • Egypt has one of the most important and promising consumer markets in the region • Attracting large international companies such as Wal-Mart • Sector had a total of 40% growth rate over the past three years • Egyptian consumer market is the first in Africa and second in the Arab region

13. Commercial real estate development • Great potential for investment in the property market: stable investment with good growth rates. • Low property prices starting at around only £30,000 such as in: Hurghada, SahlHasheesh (Red Sea coast) • Less property taxes than in the UK • British residents avoid inheritance tax on any property in Egypt

14. Education and vocational training • World Economic Forum (WEF) Egyptian Education Initiative (EEI): PPP initiative between the Egyptian government and WEF’s ICT community to reform the education system: • 70% of the planned infrastructure achieved (connecting 2,000 schools to the internet, deliver 39,000 PCs to schools) • 65% of the training opportunities accomplished (train 64,000 teachers on ICT in education level) • The Technical and Vocational Education and Training UK (TVET) project aims to enhance competitiveness of Egyptian enterprises on both the domestic and international markets through improving quality of vocational training, as well as quality and structure of Egypt’s labour force.

15. USEFUL LINKS • Arab-British Chamber of Commerce: http://www.abcc.org.uk • Beltone Financial: http://www.beltonefinancial.com • British Egyptian Business Association: http://www.beba.org.eg • Egypt State Information Service: http://www.sis.gov.eg/En/Default.htm • General Authority for Investment and Free Zones: http://www.gafinet.org/index.htm • Ministry of Finance: http://www.mof.gov.eg/english • Ministry of Foreign Trade and Industry: http://www.investment.gov.eg/ • Ministry of Investment: http://www.investment.gov.eg/ • Technical and Vocational Educational Training UK: http://www.tvetuk.org • World Economic Forum: http://www.weforum.org • Zawya: http://www.zawya.com