TOM Says | Recent Analysis of Egypt's Investment Environment

TOM Says | Recent Analysis of Egypt's Investment Environment

2020 is destined to be a year of ups and downs, with the sudden "new crown" virus spreading around the world, affecting politics, the economy and life. China has become the "forerunner" of the global epidemic prevention and control work, although the domestic "new crown" epidemic has stabilized, but the impact on the economy is not short-term recovery, after all, foreign countries are still in an important stage of epidemic prevention.

Since March this year, enterprises in various parts of China have resumed work flexibly and resumed production and operation. However, from the perspective of supply and demand, foreign trade enterprises are still struggling to survive. The delay, cancellation and uncertainty of overseas orders have seriously affected the normal operation of these enterprises. As far as Egypt is concerned, the current epidemic prevention and control in Egypt is still in a serious situation, and China is at a different pace, for some enterprises that have business dealings with Egypt or intend to invest in Egypt, undoubtedly caused trouble and obstacles.

According to data released by the General Administration of Customs on May 7, domestic processing trade imports and exports in the first four months of 2020 were $2.18 trillion, down 8.4 percent; exports were $1.35 trillion, down 10.9 percent; and imports were $833.3 billion, down 4.2 percent year-on-year. Exports of mechanical and electrical products and labor-intensive products (except masks) are on a downward trend. In addition, steel exports were 20.601 million tons, down 11.7 per cent, and 319000 cars (including chassis), down 7.2 per cent. Foreign markets affected by the epidemic is still in a state of tightening, some foreign trade enterprises also began to think of ways to "turn domestic sales" to seek business opportunities. For enterprises that intend to invest and build factories overseas or have already invested overseas, due to various constraints, they have to slow down the pace of investment, and stabilizing the foundation has become the key to the survival of enterprises.

At present, the neo-crown epidemic in Egypt has not been effectively controlled. In order to prevent the neo-crown epidemic from continuing to spread, Egyptian Prime Minister Mustafa Madbouli has announced that the Egyptian government will implement new epidemic prevention measures for a period of 15 days starting from the Eid al-Fitr holiday (May 30), including curfews, closure of tourist places such as beaches and hotels, closure of crowded places such as large shopping malls, and suspension of all international flights and other measures. Egypt's three main sources of foreign exchange, including tourism, Suez Canal charges, and overseas remittances, have been severely affected by the epidemic. According to Egyptian official estimates, Egypt's tourism is affected by the epidemic and its income is expected to decrease by US $5 billion. It can be seen that the government's epidemic prevention measures are the key to stop losses. If the spread of the epidemic can be effectively controlled in time, local tourism and investment will gradually recover, and the economy will gradually recover.

At present, most of the projects with intention or plan to invest in Egypt have maintained a wait-and-see attitude, delayed or suspended overseas investment layout, from the investment point of view, although the impact of the epidemic is short-term sustainability, but under the effective intervention and control of the Egyptian government, risks and opportunities coexist. Whether it is the local market or the market of other countries such as the Middle East and Europe, Egypt's location advantages, business environment, investment policies, market space and other investment advantages are still competitive. After the outbreak, the relevant departments of the Egyptian government returned to normal operation, enterprises gradually resumed work and production, and the local and international markets were liberalized again, which undoubtedly brought new opportunities for investors.

Instead of waiting for the moment, it is better to prepare as early as possible. Enterprises that are interested in investing in Egypt or are optimistic about the local and peripheral markets of Egypt can take advantage of the time difference of the epidemic to prepare the pre-investment plan in advance, the epidemic will always pass, the economy will gradually pick up, prepare in advance, in order to seize the opportunity after the epidemic.