How does the US business community see 30 June 2013? What will attract US businesses to Egypt? We asked these questions and more of Khush Choksy and Greg Lebedev, both of whom are in Cairo with one of the largest US business delegations to visit the country post-revolution. Choksy is the US Chamber of Commerce’s Senior Vice President for Middle East and Turkey Affairs, while Lebedev is chairman of the Center for International Private Enterprise. The delegation wasn’t specifically timed to give a boost to Egypt’s bid for an IMF facility, they said, but they’re not going to complain if it’s interpreted that way. In a sit-down earlier this week with Enterprise, the two speak of why Egypt needs to stop talking to the think-tank community and start talking to business — and why they’ve invited President Abdel Fattah El Sisi to visit the US heartland. Tap or click here to read the interview in full.

WHAT THE MINISTERS SAID…

The second day of the U.S. Business Mission to Egypt saw a panel of ministers from the Ismail cabinet’s economic group paint an overview of the economy, touching equally on what has been done and what needs to be done. A few spoilers: Trade and Industry Minister Tarek Kabil said the government’s trade and industry strategy will be unveiled in a couple of weeks, Investment Minister Dalia Khorshid again confirmed the Bankruptcy Protection and Liquidation Law is in the works, Finance Minister Amr El Garhy said the roadshow for Egypt’s eurobond issuance will take place second half of November, and International Cooperation Minister Sahar Nasr said we have signed loans and grants worth USD 15 bn in the past year, of which a total of USD 5.3 bn has so far flowed into the country.
Tarek Kabil, Industry and Trade Minister
Key takeaways:

• The government’s “mega projects” are “extremely important for investment.”
• The government is taking steps to make it easier to do business in Egypt: Witness the Industrial Licenses Act (which he said will cut the average time required to get a license to less than a month from 634 days), the Import Registry Law (an import control measure that he defended as actually being better for foreign sellers), and the Industrial Land Allocation Law (which will which create one entity for allocation).
• The goal is to grow industry by 8% by 2020 and for industry to reach 21% of GDP from a current 17.7%.
• The industry and trade strategy launch in a couple of weeks.
• The ministry has a particular focus on engineering & technology, textiles, building materials and chemical industries.
• The ministry will open a leather cluster this year and is working on both a furniture cluster and a chemical cluster. The goal is to have 22 clusters nationwide that build competence in industries by basing feeder companies in close proximity to major manufacturers.
• The government is trying to develop an institution of some form or another to drive SME policy, working on feasibility studies, lining up program funding, and delivering training and development.
• Africa is a major focus: Egypt exports USD 4 bn to African countries, and aims at doubling the number in the next five years.
• The aim is to make Egypt a manufacturing hub for Africa (especially Kenya and western African countries) and an exports hub given its access to USD 1.6 bn through free trade agreements.

Best quote: “It is not a secret that we are going through an economic challenge. We are in a bottleneck — and I say ‘a bottleneck’ because we will get out of it.”
Dalia Khorshid, Investment Minister
Key takeaways:

• The first meeting of the Supreme Investment Council will be held “in a short while,” Khorshid said.
• The ministry has identified that 60% of problems facing investors have to do with land allocation, while 25% are procedural and related to red tape.
• Investment incentives are back on agenda with the new investment law, which will also shore-up clauses with which the business community has had issues. Khorshid said that the next draft of the law would ready within weeks.
• The ministry is working on the Bankruptcy Protection and Liquidation Law. The aim is to make it a tool that is useable by businesses.

Best quote: “The establishment of the Supreme Investment Council led by Egyptian President Abdel-Fattah El-Sisi indicates that investments are a top priority.”
Amr El Garhy, Finance Minister
Key takeaways:

• The government’s macroeconomic targets: 5-6% growth rate, 6-7% budget deficit, and 80% debt-to-GDP ratio
• The roadshow for the eurobond offering will take place “hopefully in the second or third week of November,” El Garhy said, putting the value of the offering at USD 2-2.5 bn. In that sense, Saud’s USD 17.5 bn international bond, which generated a demand book of USD 67 bn, is promising, indicating “appetite for debt with good yield.”
• Key to the subsidy system is to make it more efficient — to ensure it benefits those who need it most. Building the quality of the state’s database will be key.
• The government’s economic reform program is fundamentally Made in Egypt: “We are doing what we need to do, not what the IMF wants us to do.” There is no set date for when the IMF would decide on the USD 12 bn loan.
• On VAT, he said “we are facing some issues,” but that the ministry is in contact with stakeholders to make sure it is implemented in the best way possible. Executive regulations will be issued in the next two to three weeks, he suggested.
• He downplayed the social impact of the reform program, saying it will “not really be as people think.” Still, the deficit has to come down. We need a sustainable economy that will attract investment, that can grow sustainability.
• He sees particular opportunities in widening the tax base, attracting FDI and public markets investors, pressing forward with the program to IPO state assets, including Banque du Caire and AAIB.
• Taxes are 12.65% of GDP today: “We want to take it to 16-17% in 5-6 years,” he said, by expanding the tax base.
• “We want to activate the capital market to become a catalyst for investment.”
• Egypt’s capital market is equivalent in size to 20% of GDP today — that figure stood at 70% in 2007-08. The aggregate market cap is maybe EGP 500-600 bn today. Move forward with devaluation and expanding the market with new IPOs and we can easily see that at EGP 3 tn.
• The government wants to see the private sector account for 70% of the economy.
• Infrastructure is important to unlock economic value.

Best quote: “We want to unleash the beast.” –An expression El Garhy first coined at Euromoney earlier this fall.
Sahar Nasr, International Cooperation Minister
Key takeaways:

• The International Cooperation Ministry has signed agreements for loans and grants worth USD 15 bn in the period September 2015 through today. Cash of USD 5.3 bn has flowed into Egypt as a result of those agreements.
• Nasr emphasized the government is taking a consultative approach to the economic reform process, talking with all stakeholders, including business.
• She stressed the importance not only of legislation, but the ability of the state to implement it.
• Economic reforms without social development programs will not be sustainable.
• Working on infrastructure is a priority; infrastructure creates jobs and stimulates follow-on investments.

Best quote: “It will only be a successful reform program if it is done in an inclusive manner.”
David Thorne, Senior Advisor to the U.S. Secretary of State
Key takeaways:

• “A prosperous Egypt is essential to the stability and prosperity of the region,” Thorne said.
• “The US will remain an actively engaged ally. The US supports a stable, prosperous, democratic Egypt.”
• “The US government supports Egypt’s economic reforms and its IMF program.”
• He said Egypt is undertaking “strong steps on the road to restructuring the economy.”
• He also emphasized the power of civil society and of SME development, saying entrepreneurship is a “powerful force for change and a creator of jobs.”

Best quote: “We are working closing with our G7 partners to ensure the IMF program is fully funded,” said Thorne, reiterating earlier statements by the U.S. Treasury.

Snippets from top executives:

• Omar Mohanna, Chairman, Egypt-U.S. Business Council: “Tough decisions have been made and tougher decisions will be made,” adding they will “unleash Egypt’s potential.”
• Tarek Youssef, Regional Head of Africa and the Middle East, Pfizer: “We believe in Egypt and in its investments. We will definitely continue to invest in Egypt.”
• Tamer El Naggar, CEO, AmCham Egypt: “Egypt’s economy has been remarkably resilient.”

Also speaking from the business community was Pepsico MEA Omar Farid, who stated that the investment climate in Egypt remains challenging. Farid did not comment on reports that one of Pepsi’s factories had halted production after state inspectors seized its sugar supply, but said that the FX crunch and inflation are the two biggest challenges facing the country.

David Thorne, Senior Advisor to the Secretary of State, who also spoke at the gathering, said the US is committed to helping Egypt get the funding it needs for the reform agenda.