CAIRO: In an interview with CNN’s John Defterios aired Friday, Minister of Investment Mahmoud Mohieldin talked about policy formulation in the future, his expectations for foreign direct investment, Egypt’s place in the global economy and the prospect of a free trade agreement with the United States.
Egypt’s policies are becoming more inclusive, focused on building the capacity of the labor force as well as “improving the access to finance, to land, to education, to resources, to every Egyptian.
John Defterios: As you know, the Gulf countries are linked to the dollar. And Egypt, for all its intents and purposes, is a dollar-based economy. With the dollar falling as severely as it has, what sort of pressures is it putting on Egypt in terms of day-to-day operations, even inflation?
Mahmoud Mohieldin: Well, despite all of the talks, after 9/11 many countries, including the Gulf countries, became more dollar-concentrated. But then I think during the last 18 months or so, there have been some revisions of that. In the case of Egypt, we re not really that pegged to the dollar and you can major changes in the value of our currency versus the dollar, changes in trade composition, and changes in capital inflow.
We re seeing as you know there is an intense level of uncertainty. Do you get a sense that in the Middle East perspective, the bottom is almost near?
Well, all crises do have an end. But [the question is] how are they going to end? All of these problems and the turbulence that we re seeing in the markets, what kind of new arrangements? After a crisis, you get new rules, new arrangements, some winners, some losers. I m much more concerned about the policy formulations in the future. We need more from the global civil servants in the international financial institutions and in the world trade organizations; and better representation from emerging markets in the debates and the discussion in order to put emphasis on the rules of the game in the future.
You re coming off of a record year for foreign direct investment (FDI). Will this actually hurt US investment decisions into Egypt or are you buffered now, more so than in the past?
Well, Egypt is becoming a well-integrated economy with the rest of the world. From the sources of FDI, you can see greater diversity if you compare to the past what is happening [now[ to the last two years, compared to what happened in the past 20 years. There are more sources of FDI from the US, from Canada, from rest of the OECD countries, but [also] more FDI coming from the Gulf states, from India, China and Turkey.
Do you try at this stage of the cycle to redefine where Egypt places in the global economy in terms of its low cost labor, in terms of it human capital to attract FDI from other parts of the world?
We have, in terms of geography, a better location than India. We re a smaller country so we could be more competitive and agile. As an example, we have policies to integrate us further, to have more diversified trade links. At the same time, we are sharpening the skills of our workers, we re [implementing] an inclusive policy that is improving the access to finance, to land, to education, to resources, to every Egyptian. We re not going to be leaving an Egyptian behind as far as the benefits of growth are concerned.
There was discussion about a free trade agreement (FTA) with the United States in light of this global slowdown. Do you see that coming back onto the table?
Well, a free trade agreement could be beneficial to the two countries so it will be considered with that spirit. Having said that, and without a free trade agreement, statistics have shown positive export growth of Egyptian products to the United States. So [while] the FTA is important, I don’t think it is really an issue of make it or break it as far bilateral arrangements are concerned. If it happens it is going to be good because we believe in the benefits of free trade in general.
