1 Key facts Political milestones Economic Review Demographic Trends Egypt Compared to the Region Foreign Interests in Egypt International Financial Institutions Examples of Planned Private Investment Present Dutch Interests in Egypt Concluding remarks 2 The Arab Republic of Egypt Area:1 mn km 2 Population:90 mn GDP:$255 bn (2013) 3 4 5 Natural Resources: oil & gas (70% self sufficiency), renewable energy, minerals Location: Strategically located between high purchasing markets of Europe and Gulf. Transport corridor between Mediterranean sea and Indian Pacific ocean. Fourth largest economy in Arab world after KSA, UAE and Algeria Huge market: 90 mn people Work force: Educated, skilled, moderate cost, majority of population is young Party to many bilateral and regional trade agreements Suez Canal: 8% of global maritime trade, turnover $5,5 bn Tourism: Long term global destination for cultural and leisure tourism. Oversees Remittances $18 bn in 2013 Egypt has the most diversified economy in the Middle East 6 GDP $255 bn $3,000 per capita 2.1% growth Rate (FY2012/13) 7 Unemployment13.3% Annual Headline Inflation11.4% Public Budget Deficit14% of GDP FY2012/13, 12% expected FY2013/14 NIR - May 2014$17,3 million (covers 3 months imports) BOP Surplus$2.2 bn (July/March 2013/14) Trade balance$-25 bn deficit in FY2009/10 $-33 bn deficit in FY2012/13 8 Total FDI reached $5.2 bn in 2012/13 from $8.1 bn in 2008/09. FDI has fallen dramatically after 2011 revolution. After 2012 we see FDI picking up again. 9 Netherlands is the 2 nd largest EU investor and the 7 th internationally (Accumulative data since 1970). 10 Main EU investors in Egypt The Netherlands is the fourth largest EU exporter to Egypt after Italy, Germany and France with exports of 1,276 million (2013) The Netherlands is the seventh largest EU importer from Egypt after Italy, Germany, France, Spain, UK and Greece with imports of 331 million (2013) 11 Morgan Stanley confirms confidence in Egyptian Stock Exchange (EGX), keeps it in Emerging Markets Index due to positive market developments. Benchmark index EGX 30 increased 85% since 30 th June EGX 30 value was 4,752 in 30/6/2013, recorded 8,746 in 12/6/2014. Market Capitalisation is currently $66 bn down from $139 bn in EIU GDP growth was 7.2% before the global financial crises; expected to recover to 5.5% in 2017/18 (Source: EIU). IMF IMF forecasts economic growth 4.3% in 2015; GoE estimates is 3.2% for 2014/15. Goldman Sachs Goldman Sachs includes Egypt in top 11 countries from which global growth will come in 15 years. World Bank World Bank expects Egypt to rank 15 th globally by GDP in 2050 ahead of Canada and Italy. Investment opportunities exist across a wide range of sectors (agriculture, transport, water, oil & gas, education & training, energy, engineering, ICT, retail, financial services, life sciences and security equipment). 13 Energy crisis (blackouts, inefficient usage, slowdown natural gas production) Fiscal balance (budget deficit, reliance on aid and grants) Subsidy schemes (1/5 of budget, not directed to needy, social sensitivity) Solvency crisis (Lack of hard currency, black market, delayed payment of obligations, etc.) Business and investment climate (complicated government procedures, changes in legislations, contract enforcement, tax conflicts, protecting investors etc.) Stability / security (dropped credit ratings, demonstrations and strikes, increased crime rates, etc.) GoE is aware of these challenges and has started to rebuild the country by: o Economic reforms started by reducing energy subsidies. o Major efforts to improve security. o Legislative reform to encourage investment o Use of International Advisory services (multilateral and private) 14 Most populous country in the Middle East and North Africa Population: 90 million (May 2014) expected to reach 150 million by 2035 Growth rate: 2.8% 50% population is under 25 yrs 45% of population live on less than $2/day 15 Compared to other countries in the Region: 16 USA: 2 missions to Egypt (infrastructure and safety), 1 ministerial visit (Foreign Affairs). Relieving $1 bn of Egypts debt for new educational and economic projects. Providing $1.7 bn in loans for infrastructure projects (water and transportation sectors) and SME support. Annual $1.3 bn military aid. In addition to training and investing in people initiatives. UK: 3 missions to Egypt (SCC, Waste Management, energy) and 3 events (tourism, nursing, banking), 1 Ministerial visit to the UK (education) and 3 events about Egypt in the UK (investment, ports and multi-sectorial) France: French Development Agency to provide 1.2 bn for financing the third phase of Cairo's third metro line Sep Financing 95 million for SMEs projects. 17 Italy: Italy is granting a 45 million credit line Egyptian and Italian small and medium- sized enterprises (SMEs) with projects in Egyptian industry, food and services sectors. China: Contracted new tunnel to Sinai under Suez canal; Negotiating electrified new rail line between Cairo and Alexandria (220 Km); Negotiating new Tram line (urban transport) in Greater Cairo. South Korea: Egypt South Korea Business Forum to launch in Aug 2014 (Energy, Chemicals, Transport, Construction, Electronics) Russia: Two Egyptian mission to Russia (Aug 13 & Feb 14) and one mission to Egypt (Nov 13) to discuss military cooperation. A Russia-Egypt intergovernmental commission on trade and economic cooperation was formed and a $2 bn arms deal finalised. UAE: Khalifa Fund to provide loans of $400 million to finance small, micro and medium enterprises in Egypt. 18 Has a portfolio of over 900 million; current projects include: Education and TVET ( 220 million) Health ( 110 million) Water ( 116 million) Energy ( 110 million) Emergency employment 70 million (Social Safety Net ) Transport ( 80 million) Environment ( 40 million) Socio-economic development and Civil Society ( 90 million) Business Development and Trade ( 64 million) 19 EIB Portfolio for 2009/2014 is 1,7 bn: After 2011 investments million/year, top year 2010 ( 900 million) Energy, 865 million Oil/gas (2010), 346 million Transport (2012/13), 250 million SME credit (2013), 80 million 20 EBRD Portfolio for 2013/14 is 1,25 bn; major allocations are: Power 650 mn Transport 171 mn Agribusiness loans 190 mn SME loans 73 mn 21 WB current portfolio in Egypt is $4.9 bn: (through IBRD and IDA) Power $2,177 mn Finance $900 mn Transport $880 mn Social sectors (health, education and employment) $418 mn Water and sanitation $416 mn Agriculture $100 mn Environment $27 mn Additionally IFC, part of WB group, has total commitments in Egypt since 2011 close to $1 bn. IFC mission is private sector development. 22 23 Current portfolio consists of 27 projects with ongoing commitment of Euro 1.4 bn: 7 public sector loans (87% of ongoing commitments) 3 private sector loans (12% of ongoing commitments) 17 grants (1% of ongoing commitments) Ongoing commitment by sector: Power (80%), finance (12.2%), water and sanitation (4%), social (3.6%), and agriculture (0.2%) 24 Nationality Name of the company Amount of investment Timing of the investment Type of investmentEmployment NLShellUSD 402 million2014/2015 Budget Investment in Badr El Din Petroleum Company used in excavation, exploration, development and establishment of new production facilities NLOrascom Construction BVUSD 300 millionto support real estate developers including Emaar Misr & Palm Hills developments Int'lCoca ColaUSD 500 millionin 3 years time new factories12000 Int'lChipsyUSD 64 millionin 5 years time new production line9000 USAApache Corporation$24 millionOil & gas exploration UKBritish Dragon Oil$39 millionOil & gas exploration GernmayPorsche Automobiles EUR450,000Construction of dealerships in Egypt KoreaSamsungEGP 1.7 bn2014transform its Upper Egypt plant into an integrated LED screen production center RussiaNew Russian Industrial zoneRenovation of Helwan Iron & Steel Factory, Renovation of Nasr Automotive Company ItalyEUR 45 millionto finance small & medium-sized enterprises (SMEs) in Egypt JapanJICAEUR 260 million (loan) to be repaid over 25 years to establish a new wind farm plant in Suez Gulf Area JapanPanasonicEGP 200 millionOver 2 yearsEstablish a new factory in Bani Suef to produce an export home appliances 25 Nationality Name of the company Amount of investment Timing of the investment Type of investmentEmployment RussiaGazprom Neft-LubricantsDistributorship agreement with GB Auto to include lubricants and other products to the automotive market in Egypt UAEEmaarEGP 8 bnestablish the largest commercial, office and housing center in Cairo UAEAl-FuttaimEGP 16.5 bnin 5 years timeCommercial Malls38000 opportunities UAECollaboration between United Arab Shipping Company & Holding Company for Inland and Maritime Transport USD 760 millionto establish a container handling facility UAEFinancial Aid of EGP 20 bnEGP 20 bnconstructing 50,000 residential units, completing sewage projects in 151 villages & building 100 new schools UAEKhalifa Fund for Enterprise DevelopmentUSD 200 million (loan) to be repaid over 15 years to finance SME-projects in Egypt ChinaChina Harbor EngineeringEGP 3 bn (loan)to finance Ismailia governorate's "Thalatini tunnel" project. Gulf CountriesAl-Ahly for Real Estate + Saudi Group Al- Rabeaat EGP 1.2 bnresidential project in New Cairo KSAAlmarai Dairy CompanyUSD 345 millionOver 5 yearsexpansion of its subsidiary Bayti existing factory in addition to establishing new plant for juices and dairy products KSASaudi Egyptian Construction Company (SECON) USD 245housing project to establish large number of med- income housing units in three different cities. 26 Egypt has a long term potential for economic development and offers an important market for Dutch companies. Clearly Egypt has its challenges, however, the present government is aware of the problems and has started economic reforms. Many countries, in the gulf region but also in Europe, Asia and the US, are showing interest in Egypt for investment and trade. The large international companies are ready to increase investments if the present trend of reforms materialises and security further improves. No companies have withdrawn. Investments are picking up and stock market has recovered, reflecting improved investors confidence. Large investment projects, like the Suez Canal Corridor, offer opportunities for Dutch business. Now is the time to get reconnected. 27