HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements…Egypt

# 					2018 Investment Climate Statements: Egypt			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Progress on Egypt’s reforms over the past 18 months has been remarkable. Though many challenges remain, Egypt’s investment climate improved markedly in 2017, prompting an increase in foreign direct investment (FDI) of 13 percent year over year according to the Central Bank of Egypt. The country has witnessed significant structural reform since the flotation of the Egyptian Pound (EGP) and the start of a three-year, USD 12 billion International Monetary Fund (IMF)-backed economic program in November 2016. Increased investor confidence and the reactivation of Egypt’s interbank foreign exchange (FX) market have resulted in increased foreign portfolio investment and foreign reserves. As yields on government debt continue to fall, investors may shift towards direct investments, which would be a positive market signal that Egypt is beginning to turn the corner towards higher growth. The Egyptian government (GoE) understands that attracting FDI is key to addressing many of the economic challenges it faces, including low economic growth, high unemployment, current account imbalances, and hard currency shortages.

Egypt implemented a number of regulatory reforms in 2017 and others are scheduled for 2018. Key among these are the new Investment Law, the Companies Law, and the “New Amendments” – which aim to improve Egypt’s ranking in international reports of doing business and to help bring the economy to its full potential. These reforms have led to noticeable improvements in investors’ confidence and are seen as setting Egypt on the right path to stability and development.

The Investment Law (Law 72 of 2017) provides a new framework for the government to offer investors more investment-related incentives and guarantees. Above all, the new law aims to attract new investments, consolidate many investment-related rules, and streamlines procedures. The government has plans in 2018 to focus especially on improving customs clearance, public procurement and land distribution practices.

The government is also working to attract significant international investment in several “mega projects,” including a large-scale industrial and logistics zone around the Suez Canal, a new national administrative capital, a 1.5 million feddans (in which one feddan is equal to one hectare) agricultural land reclamation and development project, and the development of mineral extraction opportunities in a special 10,000 square kilometer zone.

Egypt is party to more than 100 bilateral investment treaties, including with the United States, and is a member of the World Trade Organization (WTO), the Common Market for Eastern and Southern Africa (COMESA), and the Greater Arab Free Trade Area (GAFTA). In many sectors, there is no legal difference between foreign and domestic investors. Special requirements do exist for foreign investment in certain sectors, such as upstream oil and gas as well as real estate, where joint ventures are required.

Several challenges persist for investors. Dispute resolution is slow, with the time to adjudicate a case to completion averaging three to five years. Other obstacles to investment include excessive bureaucracy, regulatory complexity, a mismatch between job skills and labor market demand, slow and cumbersome customs procedures, and various non-tariff trade barriers. Inadequate protection of intellectual property rights (IPR) is a significant hurdle in certain sectors and Egypt remains on the U.S. Trade Representative’s Special 301 Watch List. Nevertheless, Egypt’s reform story is noteworthy and if the steady pace of implementation for structural reforms continues, and excessive bureaucracy reduces over time, then the investment climate should continue to look more favorable to U.S. investors.

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