ALC’s Bahaa Alieldean on why freezones are key for FDI and exports
We recently had breakfast with 20 top CEOs to talk about why exports and FDI are key to our economy going forward. After reading our five-step recipe for turning Egypt into a global export hub and FDI magnet, participating CEOs agreed to answer two questions on the record for our latest CEO Poll.
We have already heard from:
- GSK’s Mohamed El Dababy, who says the starting point is tourism;
- McKinsey’s Jalil Bensouda, who points to business process outsourcing and customer relationship management.
- Somabay’s Ibrahim El Missiri, who believes tourism and aviation can be quick draws for FX.
TODAY- Bahaa Alieldean (bio) is managing partner at ALC Alieldean Weshahi & Partners, where he specializes in capital market, banking, and projects and infrastructure with a deep roster of foreign clients who invest across a range of industries here in Egypt. He holds a PhD in business law from King’s College London. Excerpts from our discussion:
ENTERPRISE- Which industry would you put on a focused short list — and why?
BAHAA ALIELDEAN- Part of the five-step plan that Enterprise proposed and that people loved was the enabling environment. As a lawyer, I’d be stepping out of my lane if I talk about which industries make the most sense. Instead, I’ll say that from where I sit, the make it or break it is the enabling environment.
The enabling environment is something we’ve been trying to create since 1952. Did you know that the nation’s first freezone law dates back to December 1952? That’s 70 years ago almost to the day. It’s telling, and it makes sense: Given our geographic location, our interlocking web of trade agreements, our abundance of energy, and our large (trainable) workforce? We need to look at exports, and I would frankly propose that we have freezones for every priority industry. And I’m not talking just about land, energy, and a highly functional customs window. I’m talking about freezones with strong management teams that understand exactly how to pitch themselves to global companies and local giants alike — and who understand that feeder industries are key.
I see this all the time as a lawyer: This desire to transcend the past and learn something new. But that just won’t work in Egypt. The one thing that has succeeded in Egypt is the freezone concept. Regulators understand it. Businesses understand it. And we have success stories: The SCZone is fantastic and it has all the right ingredients. So my approach would be to build on what has worked in the past — as if your five-step plan was not about what I’m going to focus on, but how I’m going to focus on those things.
E- Why are exports and FDI the way forward?
BA- There’s no doubt that exports and FDI are the way forward. They are key to our survival, foreign currency, employment, etc. Hot money is not the solution, and asset sales will only get us so far. We need to attract foreign investment — capital and know-how — into industries that will help us become an export powerhouse and lock in positions in the global supply chains of multinationals of all descriptions, whether they’re buying from us strawberry jam, call center services, or electrolyzers.