Small and medium-size Egyptian industry - both in need of investment (Photo: Reuters)
Egypt is streamlining rules to allow companies to secure licences more swiftly as part of steps to attract investors to revive the battered economy, a senior investment official said.
The head of the General Authority for Free Zones and Investment (GAFI), Osama Saleh, told Reuters his organisation was seeking to boost small- and medium-sized enterprises (SMEs), which economists say are vital to create new jobs.
Consultancy firm Geopolicity has said the Egyptian uprising that toppled President Hosni Mubarak in January had cost the economy US$9.97 billion up to September. Growth has stalled and foreign reserves have plunged $12 billion to around $24 billion.
"Everyone is waiting for the situation to stabilize and are requesting data and preparing themselves to start investments once the political situation calms down," Saleh said in an interview as part of the Reuters Middle East Investment Summit.
"The private sector is the partner of development in the upcoming period because the country's budget is being exhausted in a lot of operations and needs development operations carried on by the private sector," he added.
The government forecasts a budget deficit of 8.6 percent of gross domestic product in the year to June 2011. Economists say it could well be higher than that.
According to Saleh, foreign direct investment (FDI) dropped from $6.2bn in the 2009/2010 financial year ending in June to $2.1bn in 2010/2011, while the number of new firms registered between January and September this year fell by 15.8 per cent from the same period of last year -- to 4,562 from 5,418.
"We are reviewing some procedures to facilitate doing business and ease operations with the government sector," he said.
Saleh said new firms could now apply for a licence direct from GAFI, instead of seeking initial approval from the Industrial Development Authority, cutting out one bureaucratic hoop.
GAFI has also launched online business registration.
Another scheme involves a fund to support small- and medium-sized enterprises, which Saleh said would "boost the economy and lead to swift growth and development."
The government has said it expects growth of 3 to 3.5 per cent in the year ending June 2011, although economists predict less.
Saleh said he hoped upcoming elections would help reassure investors and boost confidence.
Many investors are wary of committing funds before Egypt's first free parliamentary election in decades. Voting starts on 28 November and lasts more than three months.
"What we hope is that stability would come after elections and there would be relative calm that may provide us with an outlook for the future and the economic orientation in general," Saleh said.
He said some firms were already investing, citing a European industrial firm that he said was building a factory and planned to make Egypt a regional hub.
An Asian electronics firm was building a factory after comparing Egypt with other sites in Latin America, Africa and Asia, Saleh said, without naming either firm.