Defining public-private relationships

Ahmed Abdel-Hafez, Thursday 12 Jan 2023

Experts hope that Egypt’s new State Ownership Policy Document will improve the investment climate and expand the private sector’s share in the economy, reports Ahmed Abdel-Hafez

Defining public-private relationships

 

Aimed at regulating the relationship between the state and the private sector over the next 10 years, the new 32-page State Ownership Policy Document (SOPD) has finally been ratified, detailing the state’s plan for 62 sectors, whether by maintaining the same amount of investment, investing more, or exiting from some sectors altogether.

The third and final version of the SOPD, issued under the title of a “Framework Document”, was ratified by President Abdel-Fattah Al-Sisi this week. The first draft was issued in May 2022, while an amended version was produced during the National Dialogue sessions, in which about 1,000 experts participated.

Prime Minister Mustafa Madbouli said the final version was based on 85 per cent of the proposals and recommendations put forward at the National Dialogue. Former prime minister Ziad Bahaa-Eldin said the SOPD was part of the discussions conducted between the government, experts, and the private sector to help the government promote the state’s interests.

“Unlike what some people may think, the SOPD is not a privatisation programme. Instead, it is meant to establish a healthy relationship between the state and the private sector. It also has a high degree of credibility as it is based on a dialogue between stakeholders,” Bahaa-Eldin said.

He criticised demands that the state exit from all economic activities, saying that these were “not realistic” and adding that “no country in the world allows the state to withdraw completely from the economy.”

Although titled a “Framework Document”, the SOPD contains implementation clauses, such as the formation of a supreme committee to implement state policies on its assets. The committee will be affiliated to the cabinet and comprise representatives from various ministries, the Egyptian Competition Authority, and the Egyptian Sovereign Fund.

The committee will also comprise a technical secretariat formed at the cabinet’s Information and Decision Support Centre. This secretariat will be tasked with issuing a report within 60 days of the end of the fiscal year announcing the state’s exit plan from various sectors and companies, the activities and legal mechanisms upon which this exit will be completed, as well as the status of partnership contracts and where the proceeds of the state’s exit will be directed.

Khaled Ibrahim, chair of the Chamber of Information Technology and Communications, lauded the SOPD, saying it was a positive step on the part of the state to improve the investment climate.

He said that working on the 62 sectors set out in the SOPD in parallel would require the formation of a technical committee for each that would include representatives from the private and public sectors and various experts. He added that each sector has its own particular circumstances and it would be difficult for any single committee to be acquainted with the details of all sectors.

It would also be crucial for experts to take part in every committee to present their recommendations, thus helping to maximise the benefit for sectors from which the state plans to exit or partner with the private sector, Ibrahim said.

Abdallah Helmi, chair of the Chamber of Chemical Industries, said the SOPD was a move closer to achieving a stable environment for the private sector, whether during its work with the government, foreign partners, or on its own.

During the preparation of the first draft of the SOPD, the government had monitored the challenges facing the private sector, Helmi said, noting that the proposed supreme committee could take steps towards resolving these without going back to the private sector for further consultations.

Such challenges include facilitating the issuing of licences, digitising operations, and founding new companies using the same procedures that are used elsewhere in the region in order to increase competitiveness, he said.

Issuing the SOPD “is a positive step and is based on a real political will to encourage investment. However, we have to wait until it is implemented to evaluate the experience and then tell the government about points that need to be revised,” said Kamal Al-Dessouki, vice president of the Chamber of Construction and Building.

“I do not approve of the demand for the private sector to take part in the committees that will determine the future of government investments in each sector. It cannot be a part of the committees that will decide the projects that the government will offer to it,”Aal-Dessouki said.

“The SOPD does not need to be issued in the form of legislation. The government initiated the document, and this is proof of its commitment to improve the investment climate and expand the private sector’s share in the economy and in the industrial, commercial, and service sectors.”

Al-Dessouki approved the decision to have the technical secretariat issue its report 60 days after the end of the fiscal year. This reflected the mood of stability and transparency that the government has adopted with regard to the private sector while applying proper governance and parliamentary and democratic regulation, he concluded.

A version of this article appears in print in the 12 January, 2023 edition of Al-Ahram Weekly

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