By: Dr.Azab Alaziz Alhashemi (Investment and International Arbitration Expert and a member of the World Economic Forum, Switzerland.) 

Many practical variables affect foreign investment strategy and work mechanisms. In terms of specialization in significant sectors, these variables constitute the added value of the country’s gross domestic product. This necessitates many questions like, will foreign direct investment depend on extracting and manufacturing natural resources? Thus, this investment will lead to search markets for specific products and services to replace imports. And another question such as: Will foreign investment focus on increasing production and efficiency? Will this graphically affect the macroeconomic indicators? Therefore, the investment policy does not choose between domestic and foreign investment but links them through the value chain at the local, regional, and global levels.

The aim of the investment policy is not limited to choosing between domestic and foreign investment only. But the goal is to link through the added value chain at the local, regional, and global levels.

The reality is that there is no one-size-fits-all solution for effective investment policies. An approach that works in one country for one type of investment at a given time may need to be constantly revised and reformed. To consider changes or unique circumstances that occur in the economy. Governments can create policies that work in their countries using a framework such as the Investment Reform and Adaptation Map. In an increasingly globalized world, foreign investment has a significant role in driving developing economies forward and linking them to larger markets. The only question we can ask is how governments can use foreign investment strategically to close global inequality and maximize benefits for their people.

Egypt and the economic reform policy towards attractive investment.

The International Monetary Fund confirmed that the Egyptian state has been able to implement a robust economic reform program. It has been able to practice balanced fiscal and monetary policies. It also dealt with and adapted to global challenges and crises and developed appropriate solutions. It contained its negative repercussions and minimized its effects on the Egyptian economy. At a time when efforts to improve the work and investment environment, support productive sectors, and expand social protection initiatives were unstoppable. To makes Egypt one of the countries that achieved a strong growth rate when global economic growth was slowing down. This reflected the optimistic view of the major international institutions of the Egyptian economy. The International Monetary Fund report provided expectations for growth rates for 2022/2023. Egypt recorded the fourth-highest growth rate among the most important global economies, with a rate of 4.8%. It also expected unemployment rates to decrease to 6.9% in 2022 and 2023 compared to 2021, during which unemployment rates reached 7.3%.

The “Global Economic Outlook” report issued by the World Bank in June 2022 predicted a decrease in the total deficit of the public budget (the ratio of gross domestic product) to 6.8% during the fiscal year 2022/2023, by about 7.2% during the fiscal year 2021/2022. The World Bank also expected that the trade balance deficit (the percentage of gross domestic product) would decrease to 9.6% during the fiscal year 2022/2023 by about 10.5% during the fiscal year 2021/2022. The primary surplus of the public budget rose to 2% during the fiscal year 2022/2023 by about 1.8% during the fiscal year 2021/2022.

Moody’s report downgraded Egypt’s credit rating in February 2023 to B3. He pointed to the possibility of raising Egypt’s credit rating in the future through the Egyptian state’s implementation of a set of reforms. These reforms relate to enhancing economic competitiveness and foreign direct investment flows. The country is implementing reforms to attract more foreign direct investment. To support Egyptian products that enhance the growth of Egyptian exports.

The economic reform policies adopted by Egypt succeeded in improving growth rates significantly. The GDP growth rate during the fiscal year 2022/2023 reached about 6.6%, despite the negative repercussions of the crisis of the spread of the Coronavirus and the Russian-Ukrainian war.

The strengths of the Egyptian economy are that attracts foreign investments.

Egypt’s economic structure is distinguished by diversity and flexibility in responding to market forces and interactions. This constitutes a firm basis for the positive contribution of all economic sectors to economic growth. Egypt’s sustainable development plan also gives priority to the high-productivity, fast-growing pioneering industries that are closely related to stimulating transactions in the internal markets.

When defining and promoting the sectors that target the country, several criteria are relied upon to attract more local and foreign investments to work, and these criteria are as follows:

1- Investment stimulating tax reforms.

2- Freedom in the movement of capital.

3- A flexible economy and an encouraging legal environment for foreign investment.

4- A large and diversified consumer market and a distinct population distribution.

5- Egypt is characterized by distinguished, qualitative, specialized, highly professional, and internationally competitive employment.

6- Praising international reports and studies through significant institutions for the effectiveness of economic policy and reformism.