By Mahmoud Hammad
“Exchange rate liberalization marks the beginning of re-attracting foreign investments in Egypt”
“Several Foreign investors are looking forward to issuance of the new investment law to inject their investments in Egypt”
“Egypt’s investment reform entails implementation of the Dubai Investment law”
Mohammed Sameh, Head of the Arab Union for Direct Investment, said, “The Central Bank of Egypt’s decision to liberalize the exchange rate is a good decision that marks the beginning of re-attracting foreign investments in Egypt over the coming period; however, the government must seek an alternative source of US dollar liquidity”. Mohammed Sameh said, in an exclusive interview with the MEO, “Arab and foreign investors are currently looking forward to issuance of Egypt’s new investment law in order to inject their investments into the domestic market”.
What do you think of the CBE’s decision to liberalize the exchange rate?
The decision to liberalize the exchange rate was necessary, as no investor will inject investments into Egypt and there are two USD selling rates. Hence, the CBE’s decision was to encourage foreign investment as it gives the investor a feeling of assurance that US dollar is available and that he/she can transfer his/her profits abroad whenever needed.
What measure must be taken by the government after the flotation decision?
The government and the CBE must seek an alternative source of US dollar liquidity rather than the traditional sources, as current sources will not help much with US dollar liquidity and meeting the market needs owing to the tourism industry’s delayed recovery and the current global economic slowdown causing a lower income from the Suez Canal.
Hence, the current main source of foreign currency is remittances of Egyptian citizens working abroad. While, the alternative source, I meant, is granting Egyptian nationality to foreign investors and I do not mean to ‘sell’ Egyptian nationality to yield money as some might have imagined. It is merely a new means to encourage investment as done by various countries around the world.
You have referred the proposal to grant the Egyptian nationality to foreign investors to the parliament, what has been the MPs’ reaction to this proposal?
I have met members of the Egyptian parliament and submitted the proposal to them in order to overcome Egypt’s current crisis. The parliament has approved the submitted proposal to grant the Egyptian nationality to foreign investors; however, it fears the miss-conception of people that the proposal offers the Egyptian nationality for sale, when actually it is offering investors incentives.
However, no alternative source of US dollar liquidity was proposed because the CBE needs cash flow if the bank sold US dollars on daily basis to importers or in order to meet the market needs with no US dollar cash flow, dollar revenues would be depleted and things would go back to the way they used to be.
How will the Egyptian economy benefit from implementation of this proposal?
If we granted the Egyptian nationality to some Libyan, Syrian or Iraqi investors in addition to foreign investors currently investing in Egypt after conducting deep security investigations, Egypt would make more than $50 billion.
According to the statistics, Egypt hosts nearly 5 million refugees, assuming that 10% of whom, nearly 500 thousand refugees, are well off and if we fixed the amount payable to grant the Egyptian nationality at $50,000, we would make $ 25 billion.
Moreover, implementing citizenship-by-investment programme will force many non-refugee Arab investors as well as foreign investors currently investing in Egypt to acquire the citizenship, which will contribute to an expected proceeds amounting to $50 billion dollars or even more.
What is the goal of this proposal?
The goal is encouraging investment through granting the Egyptian nationality to Arab and foreign investors. This will contribute to building sophisticated hospitals, and schools in Egypt’s villages and hamlets. If we plan to establish a project, we will look for Arab and foreign investors and grant them the Egyptian nationality provided that those who apply for citizenship must have a clean criminal record and are serious in their investments. If an investor has already completed and established a sound business within the community as per required specifications, why don’t we grant this investor the citizenship so that he/she can establish more projects?
Those who might say that this move will open the door to our enemies and spies, it is quite clear that no spy will need a citizenship to do his\her job. The espionage principles require that no spy will aspire to obtain the nationality of the country he\she are spying on. Moreover, all those who apply for the Egyptian nationality will undergo a security background and moral investigation to be conducted by Egypt’s security and sovereign bodies.
Has this proposal already been implemented in countries around the world?
Yes, the proposal to grant the nationality to foreign investors is not a novelty yet it has been already implemented in the United States, England, Spain, Austria, New Zealand, Australia, Malta and Cyprus. Implementation of this proposal will help in the fight against unemployment and poverty. Hence, young people will not be politically miss-lead towards violent and destructive activities. The impetus for my decision to submit this proposal is that many foreign countries have already offered citizenship to Egyptian businessmen in order to attract investment. Moreover, current political unrest in Libya, Syria and other countries has forced businessmen investing into these two countries to run away to other countries. Therefore, we should attract those investors to Egypt.
How do investors view Egypt now?
Several Arab and Foreign investors are looking forward to issuance of the investment law in order to inject there investments into Egypt and the exchange rate liberalization will definitely encourage them to change other investment destination and target the Egyptian market.
However, investors are currently attracted to Morocco and Dubai, because the Arab investor has not been recently motivated to inject investments into the Egyptian market. Assuming that the investor has injected hundreds or millions of dollars into Egypt in order to establish a profitable project and has paid all due taxes, this investor would want to convert Egyptian Pounds to US Dollars at any time to appropriate profits to the foreign stakeholders yet he\she had restrictions previously. However, after the decision to liberalize the exchange rate and issuance of the new investment law, the investor will have more confidence in the exchange rates set and should be able to transfer his/her profits abroad.
What do you think about Egypt’s investment recovery?
Egypt’s investment recovery requires implementation of the Dubai Investment Law while amending it to fit the Egyptian economy.
