business climate in egypt

7/29/2019 Business climate in Egypt

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Students: Popa OliviaIonescu AlexandruPaucean Ioan


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Topics of Presentation

Structure of Economy & Trade

Why & How in Egypt Challenges


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Egypts Economic Indicators 2009 Compared

to 2004

Domestic Economy June 2009 June 2004GDP (US$ bn) at market price 180 130Real GDP growth (%) 4.5 (7.2 in2008) 3.2GDP per capita (US$) 2,250 1,860Budget deficit (% of GDP) 14.8 6Inflation (%, Consumer price) 15 4

Population (in mln) 80 71

Unemployment (%) 12 17

Country Risk IndicatorsForeign reserves (US$ bn) 36 15Import cover (months) 10 12External debt (US$ bn) 31 29.1External debt (% of GDP) 17 23

External SectorExports (US$ bn) 24 8Imports (US$ bn) 46 15Trade balance (US$ bn) -22 -7

Sources: Central Bank of Egypt, World Bank and other International Reports


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Structure of the Economy 2009

- Sector Share of GDP -

Government Services

5%

Social Services6%

Agriculture

15%

Manufacturing &

Mining

18%Petroleum &

Products

8%

Electricity

2%

Construction

4%

Transportation &

Telecommunication

9%

Trade, Finance &

Insurance

22%

Tourism

9%

Real Estate

2%

Production Sector: 41%Services Sector : 59%

Source: Central Bank of Egypt


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Egypts GDP Growth Per Sector 2009

Communication,

0.6

Agriculture, 0.3

Oil & Gas, 0.4

Manufacturing,

0.8

Construction &

Building, 0.4

Wholesale &

Retail Trade, 0.5

Financial Services,

0.2

Transportation,

0.3

Suez Canal, 0.4Tourism, 0.6

Total GDP Growth: 4.5%


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Crude Oil

28%

Oil Products

11%

Raw Cotton2%

Raw

Materials

4%

Semi-

finished

Products

8%

Finished

Products

37%

Others

10%

Egypts Exports Structure 2009

High Value Added Exports: 56%Low Value Added Exports: 44%



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Egypts Exports by Region 2009

US

37%

Asia10%Middle

East

9%

Europe

42%

Others

2%


Europe & US: 79%


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Egypts Imports Structure 2009

Fuels, MineralsOil & Products,

7%

Raw Materials,

15%

Intermediate

Goods, 29%

Capital Goods,

25%

Durable

Consumer

Goods, 8%

Non-Durable

Consumer

Goods, 13%

Others, 3%

For Production Sector: 79%Consumer Products: 21%



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Egypts Imports by Region 2009

US

25%

Europe

46%

Asia

14%

Middle East6%

Russia

4%

Other5%


Europe & US: 71%


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UK / Egypt Trade (in Million)

Year UK Exports to Egypt Export to Total Trade Volume

Egypt UK

2008 909 617 1526

2009 945 656 1601

Change 4 % 6.5% 5 %

Ranked 4th. importer and 7th exporter among 20 MENA countries.

Ranked 2nd. largest exporter after Israel if oil excluded.

Source: DTI Analysis of HM Revenue & Customs data.


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Why Egypt?

Supportive reforming government since 2004

Access to a market of 74 million consumers

Modern infrastructure ( over $250bn. investment in 25 years)

Strong manufacturing base and fast-growing services sector

Stability in the foreign exchange and stock markets

Encouraging Tax policies - 20% Income & Corporate Tax, 10% Sales Tax

Availability of low cost semi-skilled, skilled and highly qualified labour

Access to three major regional free trade agreements: EU, COMESA and Greater Arab,

Turkey and shortly the U.S.

Free zones, Investment Zones, Special Economic Zones & Qualifying Industrial Zones (QIZ)


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Location Options For

InvestmentFree Zones

Investment Zones

Special Economic Zones

Qualifying Industrial Zones (QIZ)

Inland

Source: GAFI


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Free Zones

9 public free zones

Free customs duties

Tax free except for high energy consumption industries

Developed and managed by GOE


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Investment Zones Developed and managed by private enterprises

Bureaucracy-free environment through a one-stop-shop forincorporation, licensing, and support services.

Custom management through localized dry ports


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Special Economic Zones (SEZ)

North-West Suez Special Economic Zone

10% corporate tax on all activities

5% flat rate on personal income tax

Integrated custom and tax administration

Certificates of origin valid in all free trade agreement

countries Dispute settlement service

Source: GAFI


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Qualifying Industrial Zones (QIZ)

Egypt QIZ agreement with the United States

20 zones within Egypt are enjoying a duty free status withthe U.S.

Business should import at least 11.7% of components fromIsrael

Egypts textile exports to the US quadrupled in 4 years


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Infrastructure

Sector 2009Telecom

Telephone lines 16 millionInternet service providers Close to1200

Cellular phone users ( 3 operators) 55 million(68% of population)

Electricity

Installed power capacity (4.5 % Renewables) 22 GW

RoadsLengths of paved roads 107,000 Km

Railways

Lengths of lines 5,063 Km

AirwaysAirports 29Number of flights / year Close to 200.000

Air cargo capacity / year 400,000 tons

MaritimeSea ports 15 commercial/ 30

specializedTotal Capacity / year 76 million tons


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Utilities and Labour Costs

Egypt Ireland UK

Electricity (per

kilowatt hour)

0.044 0.093 0.054

Water (per cubicmeter)

0.209 0.996 1.23

Unleaded petrol/

liter

0.300

(subsidised)

1.72 1.76

Average hourlylabour cost inmanufacturing

1.089 15.93 19.37

Source: National Utility Services

(Figures in US$)


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Skilled Labour at Competitive Price

0

2

4

6

8

10

12

14

1618

20

Egypt Italy Germany France UK

1

14.38

17.69

13.55

19

Labour cost in Europe is almost 16 times higher

Source: IFC


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Tips -How in Egypt?

Choose your right Egyptian partner

Study the market and the market needs

Choose your right location

Arrange your finance

Study the laws and regulations (investment , tax, labour, trade...etc)

Use the available programmes in the regional and international tradeagreements

Stay in the market, and do not manage your business from afar

Choose your proper local staff

Build up your social life within the Egyptian friendly society


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Challenges

Bureaucracy & Over staffed Government

The Central vs Local Governments

The Legal System

The Education System

Information Supply

Access to Credit

Unemployment


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business climate in egypt

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