Egypt expects resistance to a new unified investment law designed to tackle stifling bureaucracy but hopes to implement it in March nevertheless, the investment minister told Reuters on Sunday.
Ashraf Salman said the law was critical to winning the confidence of foreign investors who currently must secure permits from 78 government agencies to start a company in Egypt, a process that can up to five years.
The idea is to create a one-stop shop that will make life easier for foreign investors also discouraged by political turmoil and militant violence which have weakened the economy since a popular uprising toppled autocrat Hosni Mubarak in 2011.
Salman acknowledged that winning effective backing for the law from numerous government agencies could be difficult.
“I will be naive if I say no. Definitely I will be getting resistance because this is a continuous change process,” he said Reuters in an interview.
“We are expecting that (government agencies) imagine I am taking their mandates. I am not taking their mandates. I am rearranging the process and automating the process.”
Salman identified red tape as the main impediment to more foreign investment in Egypt, where the economic growth rate over the last three years was around 2 percent, too slow to reduce widespread unemployment.
Egypt’s economy has been kept afloat by its Gulf Arab allies Saudi Arabia, the United Arab Emirates and Kuwait, who backed the army’s ouster of elected Islamist President Mohamed Mursi in July 2013 and support President Abdel Fattah al-Sisi as a bulwark against the spread of political Islam in the region.
Egypt aims for economic growth of at least 4 percent in 2015 and hopes to boost this gradually to at least 7 percent on average for the next decade.
The cumbersome process of getting the investment law passed highlights the bureaucracy that has hurt Egypt for decades.
The draft law was sent to 33 ministries and 16 institutions, from an economic ministerial committee to universities and lawyers for consultations, said Salman.
A planned “higher investment council” will help resolve the investor disputes and bureaucratic obstacles that have hampered investment, the minister said.
Getting the law passed before Egypt holds an investment conference in the resort city of Sharm el-Sheikh in mid-March — where it hopes to secure domestic and foreign investment of $10 billion-$12 billion — could send a signal that Egypt means business.
“It should be presented to the economic committee to take a decision to pass it to the legislative committee in order to put it into the process to the president to become a decree before the 10th of March,” said Salman.
The former banker said the law would also address other concerns for foreign investors, such as making their deals less vulnerable to legal disputes and changes in government and preserving the price of land agreed in contracts.
Foreign investment in Egypt is expected reach about $2 billion in the second quarter of the fiscal year, up from $1.8 billion dollars in the previous quarter, Salman said.
Egypt hopes to attract $18 billion a year by 2018 — a highly ambitious target.
Salman said Egypt also needed to fight corruption and make sure billions of dollars of debts to foreign oil companies are paid.
Sixty percent of foreign investment flows into the petroleum sector, said Salman. The government still owes foreign oil companies $3.2 billion, he added.
“Paying this will affect our (credit) rating, will affect our foreign direct investment from the oil sector, and from other sectoral investors,” said Salman.