3/12/2018 0 Comments Investment Climate in EgyptThe Egyptian equity market is one of the most developed in the region with more than 633 listed companies. Market capitalization on the exchange climbed in 2005 from الجنيه المصري مقابل الدولار الامريكي 47.2 billion to USD 93.5 billion in 2006, peaking at USD 139 billion in 2007. Afterward, it has dropped to USD 58 billion in 2012, with turnover surging from USD 1.16 billion in January 2005 to USD 6 billion in January 2006. Private equity hasn't been widely utilized in Egypt in the past as a source of financing for businesses. The government, however, has staged several policy changes and reforms specifically intended to create internal private equity funds and also to attract private equity financing from global sources. The significant industries include textiles, hydrocarbon and chemical manufacturing, and generic pharmaceutical production. Unemployment is high at approximately 10.5%. Until 2003, the Egyptian market suffered from shortages in foreign currency and excessively elevated interest rates. A string of budget reforms were conducted in order to fix flaws in Egypt's economic environment and to boost private sector involvement and confidence in the economy. Major fiscal reforms were introduced in 2005 so as to attack the informal sector which according to quotes signifies somewhere between 30% to 60% of GDP. Tax cuts for corporations have been introduced for the first time in Egyptian history. The new revenue tax Law No 91 for 2005 decreased the tax rate from 40% to 20%. According to government figures, tax filing by corporations and individuals increased by 100%. Lots of changes were made to cut trade tariffs. One of the legislators' aims were handling the black market, reducing bureaucracy and pushing through trade liberalization steps. Amendments to Investment and business law were introduced so as to attract foreign investors. By way of example, the number of times needed for establishing a business was dramatically reduced. Significant improvement to the domestic economic environment increased shareholders' confidence in Egypt. The Cairo & Alexandria Stock Exchange is considered among the best ten emerging markets on earth. The changes to the coverage also attracted increased levels of foreign direct investment in Egypt. According to the UN Conference on Trade and Development's World Investment Report, Egypt was rated the second largest nation in bringing foreign investment in Africa. Given the large number of amendments to legislation and regulations, Egypt has succeeded to a certain extent in adapting to global standards. Lately the Cairo & Alexandria Stock Exchange (CASE) was welcomed with complete membership into the World Federation of Exchanges (WFE)--the first Arab country to be invited. Enforcement of those recently adopted regulatory frameworks remain, sometime debatable. Issues like corruption hamper economic growth in Egypt. Many scandals involving bribery were reported throughout the previous years. "In 2002 alone, as many as 48 high-profile officials--including former cabinet ministers, provincial governors and MPs were convicted of influence peddling, profiteering and embezzlement. Maintaining good relations with politicians is sometimes a secret to business success in Egypt. Based on the 2006 Corruption Perception Index developed by Transparency International (in which the higher the ranking the greater the amount of corruption), Egypt ranked 70 out of 163. On a scale from 0 to 10 (with 0 being highly corrupt), Egypt scored a 3.3 . According to a study by the International Organization for Migration, 20 percent of Egyptian remittance-receiving families interviewed steered the remittances towards various forms of investment, while the huge majority (80 percent) was more concerned about utilizing remittances for meeting the everyday needs of their families such as spending on health care and education. Among the 20% of households that chose to spend, 39% spent in real estate, 22% spent in tiny businesses employing fewer than five people and the tiniest percentages of investors (6%) invested in moderate private business using no more than 20 people. According to Egypt's Human Development Report 2008, despite representing roughly 5 percent of GDP, remittances provided the initial capital for just 1.4 percent of newly established small and medium enterprises in Egypt in 2003-2004. The Stock Exchange capitalisation of listed companies in Egypt was valued at الجنيه المصري مقابل الدولار الامريكي 79.672 billion in 2005 from the World Bank Falling to $58 billion in 2012
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