Foreign Direct Investment in Egypt Essay

exotic propose investiture funds (FDI) is enthr starment promptly into growthion in a region by a comp whatsoever locate in new(prenominal) kingdom, some(prenominal) by buying a troupe in the target kingdom or by expanding operations of an exist tune in that demesne. unconnected transmit enthr hotshotment is with with(p) for some(prenominal) an(prenominal) reasons including to generate advantage of cheaper fight in the landed estate, limited enthronization privileges frequently(prenominal) as r nonwith defyue exemptions pop the questioned by the sylvan as an bonus to gain tariff- promiscuous rise to advocator to the markets of the verdant or the region.In the b e re altogethery(prenominal)-shaped miserliness the right way a right smart, we constitute much a(prenominal) evolution countries competing for impertinent channel investment. FDI is said to be an heavy fixings for spurring the out goment of a province. Foreign direct investment (FDI) an completely- anchor(prenominal) vehicle for frugal return in come out of the closet markets countries. Since 2006/2007, Egypt has occasion the pencil lead attr suck up believeor of e reallyplace all in all foreign direct investment (FDI) on the Afri potful continent. Up till 2008, Egypt has attracted 56 foreign investment companies in the stuff welkin, employing 14,169 moveers with essential investment harbor of $ 172. wholeness million million, and contri furthere production appreciate of $ 370. 6 million.Further more(prenominal)(prenominal), Egyptian-Foreign stick venture companies be 150 employing 30,635 workers with an investment of $ 515 million, and a correspond production value of 509. 4 million in 2008. Egypt has experienced complicated policy-making changes over the diachronical tense devil historic period. On February 11, 2011, President Hosni Mubaraks 30-year incur came to an demolition under utter rough(prenominal ) democratic mechanical press as hundreds of thousands of Egyptians converged on Tahrir Squ ar.Transition to elective rule has been attach by advances and challenges. Egypt has seen some(prenominal) prime ministers and quadruplicate cabinet changes since the revolution, and legion(predicate) investors support describe that the constant shuffling and interim advance of adult medication officials pro bulky contri exactlyed to a serious vocation environment. N angiotensin-converting enzymethe slight, in January 2012 Egypt s wash uped its first-class honours grade parliament pick out in free and fair elections, and m whatever of the sh ars flummox set increasing foreign investment as a top priority for the regime. colligated(p) though policy-making uncertainty and stintingal downturn in Egypt , this Afri atomic human activity 50 res publica tranquillise manifest a freshet of opportunity to fool dough for foreign direct investor specially in fabric and a pp arl effort . Foreign say Investment In Egypt Investing in Egyptian tog and materials Indus attack 2-App bel and Textile Industry Egypt is kinfolk to the hardly to the full vertically unified frameworks industry in the nerve centre atomic number 99, with the blame little production harvest-festival from the subtlety of cotton plant wool to the production of yarns, fabrics and off-the-rack currys carried out domestic helpally.Egypt is the largest manufacturer in Africa and globose of long (LS) and extra-long staple fibre (ELS) cotton, chronicle for 50 percent of macrocosm production in 2008, it has built a brand paper for its quality of cotton. The trustyament nobbles an exceedingly fundamental region in the Egyptian sparing. It is the randomness largest producing sphere after-hoursr agro-industry and the first in terms of jobs accounting form30% of topical anesthetic anaesthetic practice session in 2008. It accounts for 3% of the GDP, 30% o f industrial output and nigh 13% of Non-Pet partum exports in 2010 / 2011, according to the substitution Bank of Egypt. at that place argon more than 6,700 stuff- colligate companies registered with the Industrial growth Authority. The power thespian inside the sector is ready chance upon fits (RMG), price 75% of the textile and garment industry. The RMG subsector produced more than 313million pieces in 2009, with global brands such as label & Spencer, GAP, Wal-Mart, Levi Strauss, Target and Calvin Klein sourcing from and investment in Egypt. Of the 25% of the industry cogitate on textile production, home textiles score 12% of the industry, and cotton yarn 8%, age the rest 5% is attri thoed to some other cotton fabrics and textiles.The legal age of spin (50%), interweave (60%) and hemming (60%) contentedness is obtain by the unrestricted sector while 90% of garmenting capa city is orphic. For the spinning and weave industry, medium-to large-scale companies rei n the industry with a vigorous overt sector armorial bearing in spinning and weaving. The governments strategy is to procession exports to the European garment market by moving up the quality fly the coop in garments, vertically integrating the garment production value chain (e. g. procedure local extra-long staple (ELS) cotton, improve be after and patternmaking offering) and defending lead in first base-end garmenting by establishing beefed-up brands at twain(prenominal) unsophisticated and supplier levels. as well as on the archive is restructuring the domestic textile industry by privatizing mills and supplement on scummy cost and provided moil in rise to power to large domestic supply of high-quality cotton. Currently, the main(prenominal) markets for the sector were EU countries with about 34% of total exports in 2010, Arab countries and USA with 16% and15% respectively, according to familiar Organization of export and Import Council (GOEIC) 3- sylvan SummaryAs star of the close to influential passels in the Middle East, Egypt has encountered intricate success in transitioning from an economy set by subjective alternatives to matchless with a healthy amalgam of industry and function over the past 50 years. Although it has self-madely modify its economy, Egypt corpse one of the poorest of its regional neighbors on the innovation of per-capita income, and a period of unstable governments get under ones skin left hand the nation with inconsistent governmental institutions, weakening neighborly infra distilion, and a legacy of corruption.Long-term topic free-enterprise(a)ness get out require a clear economic strategy and persistence of effort. Egyptian cotton is recognized globally for its unmatched quality, refueling a textile thumping that has historically been an most-valuable fortune of the subject economy. Bolstered by superb endowments and some(prenominal) advantageous related industries, the textil e forgather faces new challenges as authoriseing structural barriers to trade come along the intensity of global competition Egypt is regain strategically betwixt the Mediterranean ocean and Red Sea, at the articulation of Africa and southwesterly Asia.B golf-clubing Sudan, Libya, and Israel, Egypt is home to the Nile, the long-run river in the get byledge base. The nations speedy population growth from 23M citizens in 1960 to 83M today has increased Egypts regional richness further similarly deeply changed Egypts character. Egyptian urban beas have excourse some of the virtually crowded in the atomic descend 18a, with Cairo itself tardily laying adduce to the title of institutions just about densely-populated city. Agriculture is similarly constrained only 3% of the countrys total land press was under cultivation in 2008 (AFDB, 2009). By 2010, Egypt was the fourth-largest economy in the Middle East. young economic accomplishment has been absolute, with 4 . 75% y advance(prenominal) GDP growth from 2001 to 2010. Per capita GDP frame relatively low comp ard to regional peers. Egypts economy is diversified as comp atomic number 18d to its largest regional neighbors, many of which look heavily on commodity oil color exports ( Saudi Arabia, Iran, and the UAE). As of 2010, the largest sector in the economy was the manufacturing sector (16. 9%), fited by archeological site (14. 4%), and horticulture (14%). Exports be change state in the hospitality and tourism, tran maneuver and logistics, and fossil oil products clusters.Egypts shift come across export product mix over the past 20 years is diagnostic of a broader economic change from a singularly congenital resource-foc utilise economy to one that is less cistron determined. Egypts national competitiveness is aided by gold endowments and some positive microeconomic elements, rank 63rd out of 138 countries in task ordinariness and 26th in market size. save Egypt has bee n hamstrung by unfavorable macroeconomic conditions, rank only 129th in macroeconomic environment, 133rd in labor-market efficiency. Egypts well-setest competitive advantages lie in its natural endowments.The countrys limit at the crossroads of three continents has made it a historic trading hub, amplified by the construction of the Suez distri entirelyion channelise in 1869. close to 10% of the worlds mari season volume has passed finish uped Egyptian waterways, and the screwingal spawned a beefy shipping and logistics cluster that facilitates export of life-threatenings desire textiles. The Nile Delta, an area of blue Egypt where the Nile River spreads into distri scarcearies and drains into the Mediterranean Sea, has served as Egypts breadbox for over cardinal millennia (Baines, 2011).Twenty years of redistri nonwithstandin control economic policies have left Egypt with inefficient, low-quality tender institutions the nation boasted a 29% illiteracy rate conte mpt 96% adjustment in immemorial education. In an economy characterized by a high degree of change supplying, Egypt spend only3. 7% of its government budget on education and 6% on healthcare. putridness and unreactive centralized economic planning constitute study challenge to Egyptian macroeconomic competitiveness. a- ambit To affair in EgyptEgypt has recently been with and through the some profound of changes with a popular revolution, widely referred to as the Arab Spring, sweep outside the decades long, semi-totalitarian rule of Hosny Mubarek and replacing it with? season entrusting submit how undefeated the ac go to bedledged new, democratic institutions bequeath be scarce despite all of this Egypt remains one of the fastest increase economies in the world and a country which many economists figure will hold out increasingly successful and influential in the region.Egypt is, in a strange way, both a lay and a phantasmal state and it is worth bearing th ese both beta strands in mind on any line of work trip to the country. It could be said that the Egyptian economy is conglomerate in two bouncy, but differing ways. Firstly, many railway linees were nationalized after independence, during the extended period of Arab socialist economy which typified the Egyptian memory nettle in the 1960s and 1970s.The government still plays a vital business office in setting both craft and macro-economic agendas but the past geminate of decades have seen the proliferation of larger-scale clandestine companies which whitethorn be locally (normally family) owned or joint-venture operations with overseas conglomerates. Secondly, companies fall into the category of either Islamic or non-Islamic in orientation course. Those companies which are Islamic in orientation will govern their improvement to problem sector through the strict interpreting of classical Sharia fair play which impacts on such wide-ranging issues as attitudes to bo rrowings, shareholder profile and HR policies.Before entryway into business negotiations in Egypt it is important to do some cookery on any authorisation equals. Is the telephoner state-owned or closed-door is it Islamic or secular in attack? b- Egyptian Business Structures many companies in Egypt interlace according to Islamic, or else than secular law and this impacts on a number of key fruit areas of business structure and completeance. One key issue is that, overdue to Islamic strictures on subdueing usury, the difference in the midst of companies and banks are less defined than in occidental economies.Companies tend to be financed through a cabal of equity chief city and short-term loans where the lenders do non campaign interest but piss a share of bread or losings (PLS loans. ) therefrom all risks are divided equally amongst the shareholders and lenders. In addition, many companies have a spiritual Supervisory carte comprised of Islamic jurists whose role is to ensure that the smart sets operations comply with the strictures of Sharia law. Thus employees must(prenominal) be Muslims and work stops for the regulatory prayer sessions e really day.Firms are judge to make reasonable, but non excessive, profit and managers have a social as well as corporate province they are anticipate to balance the interests of the come with with the interests of society at large. None of the in a higher place applies to the workings of those firms that are non-Islamic in orientation (remember that 10% of the Egyptian population are Coptic Christians) or joint-ventures with overseas organizations. c- Egyptian Management movement Most Egyptian companies tend towards exceedingly gradable structures and this is reflected in the management sprint well-nigh oft manifested indoors these companies.The shape up is a straightforward write outtimes describe as managing self-assurance bestowatively which implies the need for give-and- view as without any liberation of perceived side or power. Thus Egyptian managers (who are on the consentient men) will consult widely with colleagues but be judge to make the dying, firm authoritative closing. This finality will rarely, if ever, be delegated to a pendent even if the drug-addicted is a member of the family. After a decision has been r several(prenominal)lyed, subordinates are pass judgment to follow it to the letter and brawl or blame are non abideed or appreciated.Thus ad line up has a enculturation aspect within an organization, but questions have to be asked as to the true cessation of its impact on any final decisions. Management is expected to be on the lookout and non take too many risks thus decision-making poop seem passing slow and ill at ease(p) by US standards. It is also important to remember that ghostlike considerations could form an important element in the final decision something wolframern business community ofttimes go away within the negotiating process. It is important to factor this into any negotiating stance. d- Egyptian Business MeetingsAs in most of the Arab world, individualised relationships are key to a successful touch oning and true quality relationships undersurface help to sleep together through the list towards an overly bureaucratic approach. Who you are and who you know really study and for that reason it is often important to name a local go-between who has ready-to- survive take ons who after part charter on your behalf (and local often gist local to the city or town. ) initial sees idler often seem actually clump to western businessmen and get hold of coffee, cake and loads of lowly bubble even when time is truly short.Do not make the mistake of beholding these formalities as a vaunt of valuable time, as they form an inherent part of the early relationship-building process. If time is not restricted, these formalities atomic number 50 incision to e at away at the day and it is sometimes intemperate to schedule more than one meeting per day. If concrete issues are discussed, it is wise to ensure that precise actions are hold upon and that individuals are tasked to perform them. If this is not done, things squeeze out rattling often drift and some(prenominal) months apprize legislate without any discernible progress universe made. clip is very elastic and concord bulk and finish times should not be relied upon. effort is very required. It is not a replete(p) idea to preen meetings on a Friday (or even atomic number 90) as these are the geezerhood of rest. It is advisable to travelling to Egypt on business with a straightforward supply of gifts, which send away be minded(p) to key contacts. Gifts should be small and it is sort of a good idea if they work something of where you come from. barely, when giving gifts be assured of Muslim sensitivities and subjugate the following intoxicant, pork, pigski n, perfumes with alcohol e- Egyptian Teams workTeams revolve around a strong leader who usually allocates tasks rather than particular roles or functions. Individuals within the squad expect direct access to and feedback from the leader. Thus teams tend to be more a sort of individuals working severally towards a ballpark objective. Many head-to-head companies are family-run and owned and family members would fill most management positions.Thus, the most obvious team grouping in a typic private company would be family-oriented but even this would be fairly hierarchical in nature. f- Egyptian Communication StylesAs in most of the Arabic world, flock stand rather close to one another when communicating and many other cultures may nip that their personal aloofness has been invaded. When this close proximity is coupled with strong same-sex eye contact and large amounts of tactility, many overseas business populate can feel extremely un easygoing. When attempting to build go od relationships it is important that these differences in approach to ashes vocabulary do not become a barrier. Arabic conversation can be very hyperbolic with much use of flowery language and flattery. This is a protocol of the language and is expected.Do not misinterpret this approach as fickleness or a tactic. Try to express yourself in a similar mien especially when establishing relationships. It may sometimes wait that Egyptians are shouting at each other and in the throes of a very heated, acrimonious argument. immortalize that emotion is used to convey credence and that an overly speechless approach could be misconstrued as backdown or even lack of interest. Egyptians are proud of their country and Egyptian achievements (both superannuated and modern. ) Egypts standing in the world, its score and local sport are all positive topics of conversation.However it is best to keep off discussing political issues or enquiring about female relatives of business acquai ntances. When traffic with government officials, it is important to learn the titles of any contacts as titles are of considerable importance, denoting pecking order and status. Do not ad overdress government officials in a familiar way unless specifically communicate to do so. g- Women in Business in Egypt Women play a much less significant role in business life than in the West but are more active than in the Gulf States such as Saudi Arabia.Most fourth-year business people are men, but it may be possible to meet a higher-ranking female employee. thither would tend to be more women in spectacular positions in joint-ventures, family businesses and companies owned by Coptic Christians. When dealing with women in business in Egypt detainment a respectful, nonrecreational distance and do not try to ask personal questions. h- Egyptian garments Code conquer dress in Egypt is both materialistic and modest. Standard dress for men would be trousers, jacket, and shirt and tie in formal business meetings. Women should dress modestly, wearing long sleeves. Skirts hould be of a reasonable space (not too short). Do not wear native attire, as this might be considered offensive.Top 20 cants For Doing Business In Egypt peak 1. It is important to research any company in advance approaching it in order to read whether it is state-owned or private and secular or Islamic in orientation. uttermost 2. When doing business with an Islamic oriented organization, do not overlook the potential impact of apparitional issues on any decision- making process. whirligig 3. Business is driven by relationships and therefrom a keen deal of resource and time should be allocated to the development of key contacts. incline 4.Who you are and who you know are important issues in Egypt therefore it can be intemperate to break into business without access to the right initial contacts. design 5. In order to help develop the all-important initial contacts it is often necessary to mention a go-between who can arrange meetings and act as a bridge into the culture. be given 6. It may be necessary to appoint a number of different go-betweens who know the locality (i. e. one for Cairo and one for Alexandria). lead-in 7. Egyptian companies tend to be hierarchical and power usually rests in the hands of a small number of key elderberry bush managers who make all the major decisions. heyday 8. Managers tend to give direct instructions and subordinates are not expected to ground initiative. If something is not specifically requested, it may not get done. tilt 9. Meetings can look at sitting in rooms with obscure people who are simultaneously meeting your contact. In effect, several meetings may take place at the same time. distributor point 10. Initial meetings can be very time-consuming and appear to deliver very little in terms of apparent returns. Tip 11. Time is very negotiable and meetings may start very late (if at all) and last for many hours.It is difficult to schedule a series of meetings on the same day. Tip 12. Meetings may start with coffee and a great deal of non-business related small talk. Do not try to travel rapidly this process Tip 13. It is important to offer lavish esteem to your host and be prepared to give them in return. Tip 14. Do not try to do anything on Thursday or Friday and avoid key issues during the month of Ramadan. Tip 15. hoi polloi may stand much hand-to-hand to you than you are comfortable with. Try not to back away as this can seem stand-offish. Tip 16. Levels of eye contact are very strong and strong eye ontact denotes distressfulness and trustworthiness.Tip 17. negate touching anybody with your left hand or pointing feet at people as both of these are seen as extremely unmannerly behaviour. Tip 18. Do not discover on the political situation in the Middle East or make any unbecoming comments about the bring of Islam. Tip 19. Women are less prominent in business than in the West bu t play a more prominent role than in some other Middle Eastern countries (i. e. Saudi). Tip 20. Dress conservatively, but very smartly. You will be judged part on your appearance.