Students: Popa Olivia Ionescu Alexandru Paucean Ioan

Topics of Presentation

Structure of Economy & Trade Why & How in Egypt Challenges

Egypts Economic Indicators to 2004

Domestic Economy GDP (US$ bn) at market price Real GDP growth (%) GDP per capita (US$) Budget deficit (% of GDP) Inflation (%, Consumer price) Population (in mln) Unemployment (%) External Sector Exports (US$ bn) Imports (US$ bn) Trade balance (US$ bn) Country Risk Indicators Foreign reserves (US$ bn) Import cover (months) External debt (US$ bn) External debt (% of GDP) 24 46 -22 36 10 31 17
June

2009 Compared
2009
June

2004

180 4.5 (7.2 in2008) 2,250 14.8 15 80 12 8 15 -7 15 12

29.1

130 3.2 1,860 6 4 71 17

23

Sources: Central Bank of Egypt, World Bank and other International Reports

Structure of the Economy 2009 - Sector Share of GDP Production Sector: 41% Services Sector : 59%
Government Services 5% Real Estate Social Services 2% 6% Agriculture 15%

Trade, Finance & Insurance 22%

Tourism 9%

Transportation & Telecommunication 9% Construction 4% Electricity 2% Petroleum & Products 8%

Manufacturing & Mining 18%

Source: Central Bank of Egypt

Egypts GDP Growth Per Sector 2009

Total GDP Growth: 4.5%

Tourism, 0.6 Suez Canal, 0.4 Transportation, 0.3 Financial Services, 0.2

Communication, 0.6 Agriculture, 0.3 Oil & Gas, 0.4

Wholesale & Retail Trade, 0.5

Manufacturing, 0.8 Construction & Building, 0.4

Egypts Exports Structure 2009

High Value Added Exports: 56% Low Value Added Exports: 44%

Others 10%

Crude Oil 28%

Finished Products 37%

Oil Products 11%

Source: Central Bank of Egypt

Semifinished Products 8%

Raw Cotton 2% Raw Materials 4%

Egypts Exports by Region 2009

Europe & US: 79% Europe 42% Others 2% US 37%

Middle East 9%
Source: Central Bank of Egypt

Asia 10%

Egypts Imports Structure 2009

For Production Sector: 79% Consumer Products: 21%

Non-Durable Consumer Goods, 13% Durable Consumer Goods, 8% Capital Goods, 25%
Source: Central Bank of Egypt

Others, 3%

Fuels, Minerals Oil & Products, 7%

Raw Materials, 15%

Intermediate Goods, 29%

Egypts Imports by Region 2009

Europe & US: 71% Russia 4% Other 5%

Middle East 6%

US 25%

Asia 14%

Source: Central Bank of Egypt

Europe 46%

UK / Egypt Trade

(in Million)

Year

UK Exports to Egypt

Egypt Export to UK

Total Trade Volume

2008 2009 Change

909 945 4%

617 656 6.5%

1526 1601 5%

Ranked 4th. importer and 7th exporter among 20 MENA countries.

Ranked 2nd. largest exporter after Israel if oil excluded.

Source: DTI Analysis of HM Revenue & Customs data.

Why Egypt?
Supportive reforming government since 2004 Access to a market of 74 million consumers

Modern infrastructure ( over $250bn. investment in 25 years)

Strong manufacturing base and fast-growing services sector Stability in the foreign exchange and stock markets Encouraging Tax policies - 20% Income & Corporate Tax, 10% Sales Tax Availability of low cost semi-skilled, skilled and highly qualified labour Access to three major regional free trade agreements: EU, COMESA and Greater Arab,

Turkey and shortly the U.S.

Free zones, Investment Zones, Special Economic Zones & Qualifying Industrial Zones (QIZ)

Location Options For Investment

Free Zones
Investment Zones

Special Economic Zones

Qualifying Industrial Zones (QIZ) Inland
Source: GAFI

Free Zones
9 public free zones

Free customs duties

Tax free except for high energy consumption industries Developed and managed by GOE

 Developed and managed by private enterprises Bureaucracy-free environment through a one-stop-shop for

Investment Zones

incorporation, licensing, and support services.

Custom management through localized dry ports

Special Economic Zones (SEZ)

North-West Suez Special Economic Zone 10% corporate tax on all activities 5% flat rate on personal income tax Integrated custom and tax administration Certificates of origin valid in all free trade agreement countries Dispute settlement service

Source: GAFI

Qualifying Industrial Zones (QIZ)

Egypt QIZ agreement with the United States 20 zones within Egypt are enjoying a duty free status with

the U.S.
Business should import at least 11.7% of components from

Israel
Egypts textile exports to the US quadrupled in 4 years

Infrastructure
Sector Telecom
Telephone lines Internet service providers Cellular phone users ( 3 operators)

2009
16 million Close to1200 55 million(68% of population) 22 GW 107,000 Km 5,063 Km 29 Close to 200.000 400,000 tons 15 commercial/ 30 specialized 76 million tons

Electricity
Installed power capacity (4.5 % Renewables)

Roads
Lengths of paved roads

Railways
Lengths of lines

Airways
Airports Number of flights / year

Air cargo capacity / year

Maritime
Sea ports

Total Capacity / year

Utilities and Labour Costs

(Figures in US$)

Egypt
Electricity (per kilowatt hour) Water (per cubic meter) Unleaded petrol/ liter 0.044 0.209 0.300 (subsidised)

Ireland
0.093 0.996 1.72

UK
0.054 1.23 1.76

Average hourly labour cost in manufacturing

1.089

15.93

19.37

Source: National Utility Services

Skilled Labour at Competitive Price

Labour cost in Europe is almost 16 times higher

17.69 14.38 13.55 19

20 18 16 14 12 10 8 6 4 2 0
Source: IFC

Egypt

Italy

Germany

France

UK

Tips -How in Egypt?

Choose your right Egyptian partner Study the market and the market needs Choose your right location Arrange your finance Study the laws and regulations (investment , tax, labour, trade...etc) Use the available programmes in the regional and international trade

agreements

Stay in the market, and do not manage your business from afar

Choose your proper local staff

Build up your social life within the Egyptian friendly society

Challenges
Bureaucracy & Over staffed Government The Central vs Local Governments The Legal System The Education System Information Supply Access to Credit Unemployment