08/07/2020 - The Investment Policy Review is the result of a comprehensive two-year process of research, analysis and policy dialogue conducted by the OECD in co-operation with the General Authority for Investment (GAFI), along with line ministries, public agencies, and the private sector. The report acknowledges the substantial reforms achieved by the government of Egypt to improve the investment climate for both domestic and foreign enterprises and reinforce its position as an investment destination. It also provides targeted recommendations based on international practices and standards, for the authorities to enhance the economic and societal benefits of its investment strategy.
The Investment Policy Review follows a thorough and evaluative approach to investment climate reforms using the OECD Policy Framework for Investment, which has been deployed in almost 40 countries worldwide. The report examines trends in foreign investment and their socio-economic benefits, the country’s wider regulatory framework on investors’ entry and expansion, its legal framework for investment, and its strategy for investment promotion and facilitation. It also looks at Egypt’s zone-based policies, tax policy and investment incentives, its strategies to promote responsible business conduct, and touches upon progress in infrastructure connectivity.
The government has committed to a proactive reform agenda to improve the business climate, attract more foreign and domestic investment, and reap the benefits of openness to FDI and participation in global value chains. Succesful macroeconomic stabilisation and market reforms have prompted a surge in foreign investors’ interest in Egypt in the last years. Despite remaining challenges, Egypt has made major progress, starting with the adoption of a comprehensive and modern legislative framework for investment and business activities. As part of institutional reforms, GAFI was recently put under the direct authority of the Council of Ministers to provide a more streamlined allocation of responsibilities and policy-making processes. The establishment of a centralised one-stop-shop and the operationalisation of a nation-wide Investment Map were other major breakthroughs in the services offered to investors. Both are expected to substantially improve investors’ access to land and business opportunities. The government of Egypt has also revised its SEZ policy, and several state-owned enterprises have taken steps to incorporate corporate governance standards.
While there is a strong political will in Egypt to pursue an ambitious reform agenda, the government is encouraged to continue building a more sustainable and transparent investment environment that can support economic diversification and create more and better quality jobs for Egypt’s growing population. In the aftermath of the COVID-19 crisis, the government will need to push forward recovery measures for a more resilient economy, and FDI attraction and retention can play a central role in the ongoing structural reform agenda.The Investment Policy Review supports the government of Egypt in its efforts to continue to develop a more consistent institutional and legal framework for investment. It also strongly encourages the authorities to reinforce transparency of policy-making, inter-government co-ordination, and engagement with stakeholders to further harmonise administrative practices and streamline investment procedures. The report provides a list of policy options to improve the design and allocation of tax incentives and further promote responsible business conduct. The OECD now stands ready to support Egypt in the implementation of the main policy recommendations provided in the report.
The report benefited from a fruitful and frank dialogue between the OECD and the Egyptian government. The OECD Investment Policy Review was first presented to the OECD Investment community by a team of senior officials from the Ministry of Investment and International Co-operation in October 2019. The report was funded by the G7 Deauville Partnership Fund for Arab in Transition, under the EASE project.
As an adherent to the OECD Declaration on International Investment and Multinational Enterprises, Egypt is a member of the OECD investment community since 2007. Since the beginning of the Investment Policy Review project, the OECD enhanced its co-operation with Egypt and has since supported the country’s investment policy reforms in line with international standards through other projects with various administrative bodies, such as the Ministry of Finances, the Suez Canal Economic Zone, and the Ministry of International Cooperation.
Building on this collaboration, the OECD Council invited Egypt to engage in an OECD Country Programme, which will incorporate an ambitious agenda to progressively approximate Egypt to OECD standards and practices and will be launched in the coming months.