The Egyptian economy needs $40bln in investments to regain trust
Ahmed el-Sewedy, Managing Director El-Sewedy Electric:
‘The Egyptian economy needs 40 billion dollars to regain trust. The Suez Canal project will face Toshka’s fate and needs ten years for execution. We made around 166 million pounds in profit during the last six months and we do not want to co-operate with the government in our projects.’
Ahmed el-Sewedy, the Managing Director for El-Sewedy Electric Group, asserted that the Egyptian economy requires 40 billion dollars in investments in order to regain international trust and to decrease the high unemployment rates.
El-Sewedy stated in his exclusive interview with Amwal Al-Ghad that there are several distressing indicators, primarily the loss of the government’s revolutionary tendencies as well as the economic crisis that needs creative and innovative solutions that would utilize Egypt’s resources appropriately.
He urges the government to form a dialogue between businessmen to discuss the laws and legislations that need to be reformed in the upcoming period. These reforms should entail that the Egyptian law would include articles that attract investment and that this would serve as a reassuring message to foreign investors regarding the stability of the country.
He shed light on the success of the current government, headed by Dr. Beblawi, in handling the political and security issues in the past period as well as in following the roadmap it has set earlier on. He claims that there have been visible improvements in the stability of the country and the regained respect for the law and institutions.
El-Sewedy believes that the national projects, which the government is planning to implement, such as the Suez Canal Project, are nothing but a dream and could not possibly be implemented due to the economic recession. He states that the only projects that need to be focused on in at present are short-term labor-intensive investment projects. He urges the state to find solutions for investors as well as finalizing the settlements with businessmen, believing that this is a reason behind the lack of investment.
He mentioned that there is a resemblance between the Suez Canal Project that the Beblawi government has just announced and the inaugurationof the Toskha Project by the previous president Mohamed Hosni Mubarak in 1999. He believes that these are long-term projects that were both announced with wrong timing and need at least 10 years to be fully implemented.
El- Sewedy said that the government should provide two driving forces that would increase investments, the first being jurists who are proficient in international law and would be able to draft new legal contracts for investment projects. The second is financial and economic experts who create investment benefits packages that would encourage investors to enter the Egyptian economy. He suggested that the investment benefits that the government should offer to investors would be under the condition that investors would provide a specific amount of jobs and work opportunities.
Regarding the enforcement of the minimum wage law in the private sector, El-Sewedy disagrees with the government and instead urges it to focus on job creation, instead of taking populist decisions while disregarding the Egyptian economy. He says that the private sector, small- and medium-sized enterprises in particular, would not be able withstand the enforcement of this law. This would lead to the shutting down of factories and increasing unemployment, and would have a negative impact on foreign investment, given that the Egyptian competitive advantage is the low labor costs.
He believes that the best solution to the energy crisis is increasing investments in the fields of electricity and renewable energy. Seeing that they already exist in Al-Zafaraana and Ein el-Sokhna, they could be used as focal points for electricity exports for the neighboring Arab and African states. El- Sewedy Electric Group had a set plan that addressed the energy issue but the lack of governmental focus left it unchanged.
El-Sewedy considers the banking sector to be a fundamental pillar in sustaining the country during the past period; its co-operation in governmental development and investment plans is crucial in the near future.
The banking sector needs reform through a set of laws that would regulate the sector as well as changing the direction of the stock market to ease the operation for investing businessmen. Regarding the group’s thriving investment, el-Sewedy stated that there is increasing confusion regarding this group’s yearly fiscal budget, especially after stopping investments worth 100 million dollars in Syria as well as decreasing investment in Libya after the revolution. He asserts that regardless of the failing economic conditions, El- Sewedy Group still dominates over 50% of Egypt’s mechanical and electrical exports; they export largely to European markets, German markets in particular, as well as the African markets.
The group has witnessed slight improvements in the first half of the current fiscal year; currently, their net profit stands at 166.529 million pounds; which shows a 24.9% increase compared with last year’s 133.293 million pounds. The group is also keen on making priorities in the Egyptian market in the upcoming period; it is attempting to utilize Egypt’s natural resources to create new sources of energy. This would create another investment edge for the Egyptian market to the African and European markets.
He concludes by stating that the Libyan and Iraqi markets are the largest emerging markets for investment in the region; El- Sewedy Electric Group is attempting to invest in the rebuilding of these states. The group will be working with the Iraqi Ministry of Electricity in providing medium-voltage cables to Iraq worth 65 million dollars, which would be done in co-operation with The Arab Contractors Company.
The group’s wind energy company is collaborating with the Jordanian government to create wind-power generating projects that would reach 50 mega watts and are worth 100 million euros.
