Foreign investment critical to Egypt’s future

After seeing the inactions of the Morsi government following the crisis in Egypt in relation to foreign and direct investment, the current government of Egypt approved a series of positive reforms to stabilize the overall economic picture of Egypt.   This is particularly so with respect to the many cases filed challenging the sale of state enterprises to foreign entities. 

During the Mubarak era, 414 companies and assets representing a value of $12.7 billion USD were sold by the government to private investors in accordance with existing law.  This process contributed to a further influx of private capital.  Now, foreign direct investment (FDI) has receded dramatically and is one of the causes of Egypt's economic woes.  If there is a further increase of anti-privatization cases and decisions, not only will new FDI disappear but existing investors will divest and those investors whose property is taken will seek redress through international arbitration.

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Mounir Fakry Abdel Nour, one of the 20 ministers who survived Egypt’s cabinet reshuffle in March, was quick to act.  His Ministry of Trade, Industry and Investment drafted a new law designed to protect foreign investment in Egypt from these baseless suits, which had become a major obstacle for attracting investment and made Egyptian efforts to promote investment in Egypt more difficult.   Nour’s draft law was unanimously approved by the Cabinet and on April 22 President Mansour signed Presidential Decree 32  into law which prevents third parties from challenging sales of state enterprises. The new law will reestablish the rule of law and protect foreign entities that have made fair, open and transparent investments in Egypt. Decree 32 will restore investor confidence and restore the confidence of citizens in the state’s ability to enforce signed contracts, execute the law, and fulfill its obligations

These actions and new law passage were necessary as foreign investors were becoming increasingly troubled by what they see as a lack of legal and regulatory security. Three years ago, the theme was revolution as the heroes of Tahrir Square demonstrated that courage in the face of tyranny could produce societal change. Today, many are shying away from the term "revolution" as the fledgling democracy struggles to implement a new constitution and forge its institutions.

Since then things have changed under the Acting President Adly Mahmoud Mansour administration with the enactment of common sense reforms which promise stability, accountability and protection to foreign and domestic investors in Egypt.

Egypt will only be as strong as its economy and that is why business-friendly and investor-friendly reforms like the Investment Reform Law must continue to take place for Egypt, its people and the region.

Weber served Minnesota congressional districtsis from 1981 to 1993. He is member of the bipartisan Task Force on the Future of U.S.-Egypt Relations, which traveled to Egypt on a fact finding mission and made key recommendations to the Obama administration.

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