Egypt seeks to lure Gulf investors amid turmoil
Cairo, October 27, 2013
Egypt is planning a charm offensive to persuade Gulf Arab entrepreneurs to invest in its economy, battered by political upheaval, protests and violence.
Investment Minister Osama Saleh told Reuters Cairo would host a conference in early December, and had already contacted thousands of businessmen, to try to sell the region's most populous nation to wealthy Arabs.
Saudi Arabia, Kuwait and the United Arab Emirates promised Egypt more than $12 billion in loans, grants and petroleum product shipments after Islamist President Mohamed Mursi was deposed by the army on July 3.
Now Egypt is hoping private investors from the Gulf will pour in money as well, Saleh said, despite ongoing unrest.
"All of the Gulf in general is standing by Egypt ... We are already discussing the projects they will bring," Saleh told Reuters in an interview.
He said his ministry had set up country-specific desk officers to deal with interested investors. Delegations from Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, and possibly Oman would attend the conference he added.
Ministry officials face a tough sell. Gulf Arab tourists who once spent big money at hotels are now rarely seen in Cairo.
The government has launched a fierce crackdown on Mursi's Muslim Brotherhood, killing hundreds of people during protests. Mursi and other top Brotherhood leaders have been arrested.
Cairo has run through more than $20 billion in reserves and delayed payments to oil companies since an uprising toppled Mursi's predecessor, veteran autocrat Hosni Mubarak, in 2011, scaring off tourists and investors.
Other potential obstacles to investment include cumbersome and shifting regulations, fears the Egyptian pound may be devalued and protracted lawsuits against local and foreign companies.
The economy is in a "very challenging period ... How do we start again to achieve high growth rates and at the same time work hard to reduce the budget deficit?," Saleh said on Wednesday.
The Mubarak-era bureaucrat who served in the same post under Mursi, also acknowledged instability posed a challenge.
"There is a problem that I can't resolve and that takes time. It is the problem of security. It comes above all the problems," he added.
Militant attacks on security forces in the Sinai Peninsula that borders Israel have also risen sharply since Mursi's ouster.
Fears are growing that an Islamist insurgency will take hold beyond the Sinai. In September, a Sinai-based group claimed responsibility for a failed suicide bombing attack on the interior minister.
Egypt's interim government has said it is working to get the economy back on track.
The cabinet approved a 22.3 billion Egyptian pound stimulus package in August, mainly for infrastructure projects, and plans another package for early next year.
But it is avoiding politically sensitive measures needed to get control of the budget deficit, which has jumped since the beginning of the year to nearly half of all government spending.
Many of Egypt's 85 million citizens are highly dependent on costly food and energy subsidies, which account for a quarter of all state spending. – Reuters