Macroeconomics
Egypt exports few products and has maintained a foreign trade deficit for many years. It has implemented policies such as limiting imports and increasing exports and substituting domestic products. The total import and export volume in fiscal year 2010~2011 was US$85.5 billion, of which total imports were US$52.6 billion, exports were US$29.3 billion, and the trade deficit was US$26.9 billion. Data released by the Central Bank of Egypt show that Egypt’s GDP in the 2010-2011 fiscal year reached 1,371.5 billion Egyptian pounds, with an actual growth of 1.9%, an increase of 0.4 percentage points from the previous fiscal year. Egypt’s manufacturing, construction, wholesale and retail industries contribute significantly to GDP. The main sources of investment are the European Union, the United States, the Gulf Arab countries, etc., mainly investing in the oil and gas field.
From 2010 to 2011, affected by the political turmoil, the net inflow of foreign capital into Egypt dropped sharply, to approximately US$2.2 billion, a decrease of 68% from the previous fiscal year. Egypt has promulgated the “Investment Guarantee and Encouragement Law” and the “Special Economic Zone Law”, and established 40 industrial zones, 7 free zones and 1 special economic zone across the country. The General Administration of Investment and Free Zones (GAFI) is currently responsible for national investment affairs, vigorously carry out investment activities, and promote one-stop investment services.
Advantages of attracting investment
Egypt, located in the northeastern part of the African continent, has maritime and air transportation connections with countries in Europe, Asia and Africa, as well as a land transportation network with Africa. It has convenient transportation and a superior geographical location. Egypt joined the World Trade Organization in 1995 and actively participates in various multilateral and bilateral trade agreements. Currently, the regional trade agreements that Egypt has joined include the Egypt-EU Partnership Agreement, the Greater Arab Free Trade Area Agreement, the Qualified Industrial Zone Agreement, and the Eastern and Southern Africa Common Agreement. Market, Egypt-Turkey Free Trade Area Agreement.
By the end of 2011, China had invested in 1,066 cooperative enterprises in Egypt, with a registered capital of US$350 million. According to statistics from the Ministry of Commerce of China, China’s non-financial direct investment in Egypt in 2011 was US$403 million. The investment areas are mainly concentrated in the textile, clothing, luggage, stationery and plastic product processing industries.
Industry and demand
The oil and gas industry is Egypt’s key industry. Egypt’s oil reserves are 6 billion barrels and natural gas reserves are 2 trillion cubic meters. There are 49 foreign companies investing in oil development in Egypt. Egypt’s oil refining capacity ranks first on the African continent, with nine refineries with a daily crude oil processing capacity of 726,000 barrels. The textile industry chain is relatively complete. In the 2010~2011 fiscal year, Egypt’s export volume of various textile products was US$2.25 billion, accounting for 7.7% of the total export volume, and most of them were sold to the EU and the United States. Egypt is a traditional agricultural country, with agricultural output accounting for approximately 18% of the total output value. Cotton is Egypt’s most important cash crop. The service industry is dominated by tourism and the Suez Canal, with a GDP contribution rate of approximately 35%.
The consumption structure of Egyptian residents has gradually developed from the stage of basic life consumption to the stage of convenient life consumption. Currently, most of the necessary items rely on foreign imports, and the import value accounts for two-thirds of the total imports. From the perspective of imported products, durable goods such as cars and mobile phones have become hot spots for imports. Judging from Egypt’s consumer price index in recent years, food, clothing, automobiles, service industries, etc. have become the main driving forces for the growth of residents’ consumption.
Production and Financing
In mature industrial zones such as October 6th City, the infrastructure is complete, and water supply, drainage, electricity and other pipelines can be connected by paying a certain fee to the relevant service departments. In some privately developed industrial zones, the land provided by the developer is in a natural state. The developer is responsible for providing water supply, drainage, electricity, roads and communications to the outside of the plot. Investors must level the land and connect it to the public on their own. Infrastructure etc. The water price in Egypt is 1 Egyptian pound per cubic meter. Egypt’s power generation capacity ranks first in Africa and the Middle East. The industrial electricity price is 0.25 Egyptian pounds per kilowatt hour, and the natural gas price is 0.4 Egyptian pounds per cubic meter.
The conditions for loans to foreign-invested enterprises in Egypt are the same as those for local enterprises, requiring guarantees. Since Egypt is implementing banking reforms and vigorously reducing bank operating risks, and most Chinese companies are in their infancy in Egypt, the financing channels for Chinese companies to conduct business in Egypt mainly rely on domestic financial institutions, and there are certain limitations in financing from local financial institutions. degree of difficulty.
