African Investment Promotion Forum in Japan - 2016 1 Egypt Macro Challenges Political Roadmap Executed Egypt is progressing with confidence towards building its democratic institutions and political system; 1. constitution referendum, 2. presidential elections, 3. and parliamentary elections. The solid progress of the roadmap and improving stability is positively reflected on business activity and investors’ sentiment, both local and international. 3 Rebounding Real GDP growth 2,000.0 1,800.0 1,600.0 1,400.0 1,200.0 1,000.0 EGP Billion EGP 800.0 600.0 400.0 200.0 835.5 878.5 894.0 1,575.5 1,608.6 1,729.2 1,801.9 - 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 Real GDP ^ Source: Central bank of Egypt 4 Diversified Economy 2013/14 2014/15 Agriculture, Agriculture, Forestry & Forestry & Others* Fishing Others* Fishing 9% 9% General 11% 11% Government General Government 9% Oil Oil 10% 6% 6% Real Estate Natural Gas Natural Gas 10% 7% 6% Real Estate 9% Tourism Tourism Insurance 2% Insurance2% 1% 1% Oil & Other Financial Oil & Other Financial Manufacturing Services Manufacturing Services Ind. 4% Ind. 4% 16% 16% Wholesale & Wholesale & Retail Trade Retail Trade 13% Suez Canal 13% Suez Canal Transport & Const. & Building Transport & 2%Communications Const. & Building 2% Warehousing 5% Warehousing Communications 2% 4% 4% 4% 2% Source: Central bank of Egypt 5 Implemented Investments growing 350,000 300,000 250,000 200,000 150,000 EGP Million 100,000 50,000 - 2008/09 2009/10 2010/11 2011/2012 2012/2013 2013/2014 2014/2015 Agriculture Oil & Gas Industry & refining Wholesale & retail trade Tourism Electicity & Water Construction Transportation & storage Communication Real estate Education & health Others* Source: Central bank of Egypt 6 Improving Liquidity levels Total Domestic Liquidity (M2) 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 EGP Million EGP 600,000 400,000 200,000 - 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 (Oct) Money Supply - M1 Quasi Money Source: Central bank of Egypt 7 International Reserves are stable Net International Reserves 40,000 35,000 30,000 25,000 20,000 15,000 USD MillionUSD 10,000 5,000 - 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 (Nov) Net International Reserves Source: Central bank of Egypt 8 Suez Canal receipts receipts Suez Canal stable Source: Central bank of of Egypt bank Central Source: 6 5 4 3 USD USD Billion 2 9 1 - 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 12M 12M 12M 12M 12M 12M 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Suez Canal Receipts FDIs on the rise 8 7 6 5 4 3 USD USD Billion 2 1 - (1) 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 6M 9M 3M 12M 12M 12M 12M 12M 12M 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Direct Investment in Egypt (net) Source: Central bank of Egypt 10 Egypt latest Credit Ratings S&P B Stable Moody’s B3 Stable Fitch B Stable 11 A business environment favorable to investment Investor Protection 52 Double Tax Avoidance Agreements 111 Investment Protection Agreements Member of OECD Investment Committee 5 main investor protection schemes endorsed by GAFI Member of MIGA (Multilateral Investment Guarantee Agency) 12 Trade Agreements Egypt-EU Association Agreement. Egypt-EFTA Free Trade Agreement. EFTA (Iceland, Liechtenstein, Norway and Switzerland). Qualified Industrial Zones (QIZ). Common Market for Eastern and Southern Africa (COMESA). Agadir Free Trade Agreement. Greater Arab Free Trade Agreement (GAFTA). Pan Arab Free Trade Agreement. Egypt Turkey Free Trade Agreement. Egypt-MERCOSUR Free Trade Agreement. 13 Top FDI Companies’ Contribution 2014/2015 Company Sector Nationality FDI ($ Mn.) 1 Emaar for Development Construction UAE 454.18 2 Alkuwaiti Holding for Investments Construction Kuwait 123.1 3 National United Bank-Egypt Finance UAE 87.1 4 Egyptian Refining Company Services Britain 69 5 Audi Bank Finance Lebanon 42 6 Al Nakhla Tobacco Egypt Manufacturing Netherlands 32 Mazn for Real Estate and Tourism 7 Construction Britain 28.04 Invetsment 8 Aujan Industries Company Manufacturing UAE 26 9 Alexandria for Sugar Manufacturing Saudi Arabia 23 10 Mondelez Egypt Foods Manufacturing Switzerland 17 14 Source: General Authority for Investment & Free Zones. 14 Investment Trends Egypt - Japan 15 Bilateral trade - Egypt and Japan 1,800,000 4.0% 3.4% 1,600,000 3.5% 1,400,000 3.0% 1,200,000 2.3% 2.2% 2.2% 2.5% 1,000,000 2.0% 800,000 1.6% 1.4% USD thousand 1.5% 600,000 1.0% 400,000 824 358 861 592 , , , , 152 784 , 200,000 , 0.5% 591 007 449 576 , , , , 1 1 1 1 363 456 - 0.0% 2012 2013 2014 Egypt's imports from Japan Egypt's exports to Japan Japan's share from Egypt's total imports Japan's share from Egypt's total exports Source: Trademap website http://www.trademap.org/Bilateral_TS.aspx 16 Bilateral Trade - Egypt & Japan • Liquefied natural gas • Refined Oil • Textiles • Cement Top Exports Top • Vegetables & Fruits • Transportation Equipments • Machines • Vehicles & Tractors • Electronic and electric devices • Iron & Steel products Top Imports Top • Rubber and plastic 17 Source: CAPMAS 17 Japan’s share in Egypt’s FDI Inflows 3,500 5.0% 4.4% 4.5% 3,000 4.0% 2,500 3.5% 2.9% 3.0% 2,000 2.4% 2.2% 2.5% 2.0% 2.0% 2.0% 1,500 1.8% USD Million 2.0% 1.5% 1.3% 1,000 1.5% 0.8% 0.8% 1.0% 500 0.4% 0.5% - 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012/13 2013/14 2014/15 2015/16 FDI Inflows Japan's share in FDI Source: Central bank of Egypt 18 Total FDI Japanese Inflows in Egypt • Total No. of the Japanese companies operating in Egypt reached 61 Companies. • Japan is ranked the 32st among the countries investing in Egypt. 66.4 98.4 65 60 55 50.6 50 44.9 45 40 36.7 35 30 27.4 28.1 25 20 15.4 15 13 10 5 USD million USD 0 2007/08 2008/09 2009/10 2010/20112011/2012 2013/20142014/2015 Q1 2012/2013 2015/2016 19 Source: CBE 19 Japanese Investments in Egypt Japanese investments in Egypt by sector 6% 5% 15% Industry 57% Services Finance 17% Contruction Agriculture 20 Source: GAFI 20 Labor Cost Average Salary $3400/month Average Salary $1074/month Source: Salary explorer website 21 Challenges Japan side: Japanese companies take a long time to decide on investing. Cultural differences may cause miscommunication Egypt side: Lack of foreign currency: The CBE eased the cap on USD deposits by raising the monthly limit to $250,000 from $50,000 for importers of food, machinery, spare parts, capital goods and medicine. Licensing: The new One Stop Shop Land allocation: The new One Stop Shop 22 Investment Promotion Strategy in Asia 23 Source Countries: Asia Targeted Asian Countries are Japan, China, India, and South Korea. Targeted Sectors in Japan Energy (Renewable & conventional) Infrastructure Industrial - Automotive Food processing 24 Promotion Strategy The adoption of an aggressive proactive promotion strategy Image Building Campaign. • Create positive awareness regarding recent Developments in Egypt. • Facilitate targeted promotion and increase its effectiveness. Investor Targeting and Facilitation Services. • Investment seminars/road shows. • Mailings and e-marketing. • Intermediaries / Testimonials. • Information Provision & site visits Existing Investments. 25 • Proactive Aftercare Program. 25 Sectors Overview 26 Renewable Energy Egypt has a Strategic geo-climatic location: abundance of land, sunny weather and high wind speeds, making it a prime resource for three renewable energy sources: wind, solar and biomass. High intensity solar radiation (2000-2600 KWh/m2). total annual sunshine duration of up to 4,000 hours The leader producer: as Egypt produces almost 57% of the region’s total wind energy 20% of total power generation by 2020, 20% of which from Wind Energy 800 700 600 500 400 300 200 100 0 Development of wind energy MW 27 Infrastructure - Logistics Unique geographic location combined with an expanding infrastructure base 8% of the world’s maritime shipping passes through the Suez Canal. Accounting for 4.1% of GDP. The SC zone 28 Automotive/ Feeding Industry 3rd largest car-producing market in Africa (Nissan, Toyota, Jeep, BMW, Mercedes-Benz, etc.) Vehicle sales in 2014: 289,606 units Passenger car sales in 2014: 207,973 units Total exports of vehicles and car component products reached USD 311 million up to Aug. 2015 with increase 10% from 2014 29 Agribusiness/ Food Processing Sector Egypt’s market of 90 million consumers Ranked among the top 5 global exporters of vegetable and fruit juices in the Mediterranean basin 5809 business establishments operating in the sector – total capital of EGP 9.6 billion Key exports include cooked cheese, processed sugar, aromatic oils, raisins, non-olive oils, juices and concentrates and frozen vegetables 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Number of companies working in the food processing sector 30 New Investment Law 31 New Investment Law A transparent, stable investment law expected to improve Egypt’s investment environment and designed to ease the Foreign Direct Investment attractiveness, looks set to unleash a fresh wave of inflows into the country including: Creating a one stop shop allowing investors to approach a single body for approval.