The Egyptian government has adopted a series of economic reform measures during the past period. Both countries have entered into a new phase of bilateral relations. In spite of that, the inflow of new US investment is not growing at the same level. Why is that the case?
I would disagree. I strongly believe that the interests of US companies in the Egyptian market have been really expanding during the past year. We’ve seen new investments and expansions of existing operations within different sectors. The US private sector has shown a lot of interest in the Egyptian market, given the economic reforms adopted by the government, especially since November of last year, following the flotation of the Egyptian pound, which was a milestone for US investors. We have many examples of these successes, including PepsiCo, P&G, IBM, Cargill, Mars, etc. We have also seen many companies moving their regional manufacturing hubs to Egypt to make use of low production costs and free market access to neighbouring countries. In addition, the enacting of the new investment law sent out waves of optimism among investors and we do expect to witness a flow of new investments into the country within the coming months.
The US has decided recently to cut military aid to Egypt. How will this step impact the future of bilateral relations?
The relationship between the two countries has many facets. Although aid was reduced, we’ve seen the resumption of the Bright Star joint military training for the first time since 2009. Moreover, President Abdel Fattah Al-Sisi met with President Trump twice since his election less than one year ago, with an important visit to New York scheduled within days.
On the margins of this important visit, the US Chamber of Commerce’s US-Egypt Business Council, jointly with AmCham Egypt and the Egypt-US Business Council, are hosting a high-level roundtable meeting for President Al-Sisi with CEOs of major US investors. This has become an annual tradition.
Through the years, the bilateral relationship has witnessed many ups and downs. It is worth mentioning that the recent cutting of aid is not significant; however, it signals that both sides need to take active steps and engage in constructive dialogue to resolve issues of bilateral significance.
What are some of the investment concerns expressed by US firms?
Each sector has its needs and concerns. At one point, the electricity shortages and black outs were one of the main concerns of companies working in Egypt, but the government resolved this issue last year. Also the shortage of foreign currency was another major concern, which was overcome following the flotation of the pound last November. Other longstanding hurdles are related to the government bureaucracy, which I think will gradually become less prevalent.
There has been no progress with regards to the Free Trade Agreement (FTA). Is this still on the table for future discussions?
The new US administration expressed its position very clearly, stating that bilateral trade deals are better for America than regional or multilateral agreements. More importantly, several sources have expressed that the new administration would welcome the start of FTA negotiations with Egypt. However, the United States Trade Representative (USTR), the primary entity in charge of trade negotiations, is currently engaged in NAFTA negotiations, which could delay any possibilities for beginning the negotiations with Egypt within the coming months.
Are there any private sector business missions to Egypt scheduled in the near future?
A large US business mission is scheduled for early 2018. Prior to that, there could be visits by small delegations and institutional investors to Egypt to explore opportunities and partnerships. Investors need time to evaluate the business environment and to conduct their feasibility studies prior to entering a new market. The economic reforms that came into effect recently have certainly given incentives to many investors to seriously consider Egypt as a favourable destination, and we are yet to reap the rewards of these reforms.
