The US-Egypt Business Council is preparing to send a trade delegation comprised of a number of Egyptian companies to visit the United States in April, to discuss increasing investment and trade exchange between the two countries.
Omar Mohanna, chairperson of the US-Egypt Business Council, expects economic relations between Egypt and the US to recover under the new US administration led by president Donald Trump.
Mohanna said that total US investments in Egypt until March 2016 are estimated at about $21.4bn, and likely to increase in the next period. He told Daily News Egypt that the trade exchange between Egypt and US amounted to $3bn from January to June 2016, of which $2bn were imports, pointing out that the coming period will witness more trade cooperation between the two countries.
Mohanna said that US investments in Egypt and the volume of the trade exchange do not accurately reflect the real relationship between the two countries. He added that Egypt has witnessed significant economic changes in 2016, most notably the frequent hikes of the US dollar exchange rate and the Central Bank of Egypt’s (CBE) decision to float the Egyptian pound in November, as well as the partial liberalisation of fuel prices.
Mohanna called for the abolition of taxation at the Suez Canal Economic Zone to attract more foreign investments, similar to other world economic zones, such as Jebel Ali in the United Arab Emirates. He said that Egypt imposes an exaggerated tax of 22.5%, pointing out that the tax cuts would contribute to increase investment and production.
Mohanna pointed out that the CBE’s decision to liberalise the exchange rate was very important, as the existence of two prices of the dollar in the country represented an obstacle which prevented attracting foreign investment, as well as the scarcity of foreign currency at banks before the decision which had prevented corporations from transferring their profits abroad. He added that the flotation of the pound had significantly contributed to the improvement of the business environment, noting that the council has received positive reactions from US investors on the decision.
Mohanna considered the liberalisation of the local currency as the most important decision taken by the government in recent years, even more so than the issuance of a new investment law. He added that the Egyptian government had promised foreign companies to allow the transfer of their profits in dollars and the recent decisions showed that Egypt is serious about providing a good investment climate.
Mohanna pointed out that the lack of dollar liquidity in the official market led to the decline of trade exchange between Egypt and the US in 2016.
On the other hand, Mohanna expected more foreign investment after the recent amendments made to the new investment law, as well as the Bankruptcy Law. He called on the government and the CBE not to intervene in the pound exchange rate and allow banks to determine the foreign currency exchange rates according to supply and demand.
He stressed the importance of increasing the minimum wage and providing financial support for low-income people, in case the government decided to increase fuel prices in the first half of this year.
Mohanna, who also heads the Suez Cement Company, said that the cement market is like a “thermometer” of the real status of the Egyptian economy, noting that this sector depends on the implementation of more national projects.