1. Egypt Open for Business By Dr. Hany Barakat Ministry of Trade & Industry Egypt 2008

2.  Sustainable economic growth  Deregulation as a driver for success  Public-private partnership as a vehicle for growth  Investor-friendly business environment  Stable political conditions  Reliable and transparent operating legal environment Key Reform Objectives Introduction Principles Values

3. Macro-economic Fundamentals

4. Real Economy  GDP growth rate increased to 6 % and expected to reach over 7% in 2007  GOE introduced significant changes in the past 36 months increasing the ability of the economy to withstand exogenous shocks  Inflation down by approx. 13 percentage points between 2003/2004 and 2005/2006  Stable exchange rate

5. External position  C/A posted its fourth surplus in a row reaching $2.9Bn in 2005/2006  Key current inflows: hydrocarbons, Suez Canal, tourism, Exports, private remittances and FDI  C/A balance reached 3% of GDP in 2005/2006  Current Account Surpluses & capital inflows (2006) led to a significant rise in CBE reserves.

6. FDI Surge  Non-oil FDI tripled to USD 1.3 Bn bringing total FDI in June 2006 to USD 6 B.  In 2005/2006, newly established companies reached 6236 with an issued capital amounting to EGP 19.3 B, representing a leap from 1434 established in 2002/2003 with only EGP 3.8 B in issued capital  Issued capital from foreign sources doubled in 2005  Issued capital from Egyptian sources was twice as much as capital from foreign sources  68% of total issued capital was in the industrial and finance and services sectors in 2006

7. Privatization  Reform of the public sector has been the hallmark of the new Govt.  Cumulative Privatization proceeds over the period July 2005 - 2006 reached LE 20 B representing 55 deals  This value is approximately equivalent to the total privatization proceeds between the years 1995-2000

8. Banking Sector Reform  A plan has been initiated to restructure the six main Public Banks in Egypt.  Privatizing State owned Banks and Divesting Public Shares in Joint Venture Banks  Bank of Alexandria was totally acquired by Sao Paolo  10 major transactions over a period of 12 months

9. Stock Market  Market cap rose to 83% of GDP in April 2006 up from 50% in January 2005.  Reshaping of the organizational structure of the CMA and introduction of corporate governance department  Issuance of the executive regulation of the securitization law.

10. Strong Earnings Reports  Attractive valuations in absolute terms  Attractive valuations in comparison with other emerging markets  Average price earnings ratio of most of the actively traded securities is 14-16 times 2005 earnings.  Strong fundamental economic backdrop  Strong earnings reports  Active Mergers and Acquisitions Market  Attractive dividend yields  Many companies offer yields in excess of 10% Stock Market

11. Mergers & Acquisitions  A 4-fold increase in M&A transactions between 2004 and 2006  15 M&A Major transactions in the financial sector in 2006  22 M&A Major transactions in the Industrial sector in 2006

12. Source: CBE and EFG-Hermes The privatization program has regained momentum under the current government The pace is likely to pick up in 2007 with additional targets in industries including banking, oil and gas, cement and insurance Acquiring PartyDate Italcementi GroupMarch 2005 Consortium led by Citadel Capital July 2005 NSGBAugust 2005 IPODecember 2005 CalyonJanuary 2006 SIDPEC IPOMay 2005 Acquisitions in 2006

13. Measures to Improve Business Climate

14.  New Customs Law  New Tax Law  Mortgage Law  Securitization Law  An amendment on the Corporate Law to allow the adoption of Employee Stock Option (ESP) Plans  Established the Investor Protection Fund (IPF) against non-commercial risk  Issuance of Codes of Ethics and Conduct for the Brokerage and Fund Management Activities Legal and Structural Reforms

15. Europe-Mediterranean Partnership Trade and Investment Framework Agreement (TIFA) (with the US) Greater Arab Free Trade Area Bilateral Agreements with Libya, Tunisia, Morocco, Lebanon, Jordan and Syria World Trade Organization Free trade zone Agreement with Israel Common Market for Eastern and Southern Africa (COMESA) EGYPT Preferential Trade Agreements Immediate access to over 1 billion customers

16. Free Zones Corporate income tax exemption Low infrastructure cost No customs duty (except for sales into Egypt) No Sales tax Mere 1%annual duty on the value added of the project Inland Low infrastructure cost Project contracts exempted from stamp duties and fees for five years from the date of registry in the commercial register (Bank loan agreements, Mortgages) Free land in Upper (South) Egypt 20% Tax rate on industrial projects 0- 5% customs duties on imported machinery Incentive Schemes

17.  Qualified Industrial Zones (QIZ) Agreement with the United States and Israel in December 2004 & other FT agreements  Special Economic Zones (SEZ) –The tax rate on all activities within these zones is 10% –First Zone Created under the new law: The North West Suez Special Economic Zone. The Red Sea port of Ain Sokhna East Port Said located on the Mediterranean Sea. Incentive Schemes

18. Establishing a ‘One-Stop-Shop’ at the General Authority for Investment Promotion (GAFI)  The one Stop Shop started operating in Cairo head office in 2004, Opened in Alexandria in 2005 Three other governorates (Assiut, Giza and Ismailia).  Reduction of some administrative start up and operational barriers Simplification Procedures

19. Investor Protection & Transparency Implementation of the executive regulations of Intellectual Property Rights Law passed in 2002 Issuance of Antitrust Law (August 2005) Set up Competition Council to ensure the prohibition of anti- competition practices Institute of Directors (IOD) was established with the aim of strengthening corporate governance practices Issuance of the Corporate Governance Best Practice Code in Aug 2005

20. Restructure of the Ministerial Committee for Dispute Settlement Specialized Economic Courts (in Progress) A new budget classification system compliant with IMF has been adopted to improve transparency on budget reporting Investor Protection & Transparency

21. Fortune Global 500 (2006)Egypt

22. And the list goes on…..Egypt

23. Industrial profileprofile  Strategic Vision &Targets

24. Real Growth of the Industrial Sec. Ministry of Trade and Industry Trade & Industry Growth Plans Industrial Growth

25.  Factories Built and Operated ( 2005 – 2006 ) : 610 –Number : Large ( <15 M ) : 110 Medium ( 5 – 15 M ) : 140 Small ( > 5 M ) : 360 –Total Investments : 10 B –Employment : 100 Thousand Direct Jobs

26.  Factories Under Construction –Number of Factories Under Construction : 1227 – Land Allocated for new factories ( 2005 – 2006 ) : 4.8 M Sq meter for 496 factories Total Number of Factories Under Construction : 1723

27. New Industrial Parks (Under Construction) #CityProject Total Area (Acers) Total Investments (LEM) 1 Robaiky / Badr City Leather Tanning and Manufacturing 110500 2 Al Safa / Kalioubeia Foundries142596 3Borg El Arab Textile & Ready Made Garments 60420 4Damietta Furniture & Wood Products 150378 5 Al Mahalla Al Kobra Textile35249 6AssiutFurniture City20120 Ministry of Trade and Industry Trade & Industry Growth Plans

28. Exports Performance

29.  Total Exports (M$) : 2004/2005 : 6201 2005/2006 : 8826  Growth : 42%  Sectorial Distribution Exports Performance

30. Million $ 05/06 ExportsSector 2425Building Materials 620Finished Garments TEX 394Home Wear 294Spinning and Textiles 1308**Total TEX 1420Chemicals 1179Engineering 1665Agriculture 519Food Industry 109Pharma 102Furniture 82Tannery Leather 17Leather Products 99**Total Leather 8826TOTAL 05/06 Exports Sectorial Distribution

31.  Strategic Thrusts –Industrial Zones –Human Resource Development –Industrial Modernization –Technology Transfer Centers –Exports Promotion –Development of Local Market

32. Egypt Open for Business