Democratic Egypt will foster investor confidence, economists say

Apr 6, 2011, 17:16 GMT

Cairo - A democratic Egypt will lead to a more powerful economy, despite losses in the short-term, economic analysts said Wednesday.
The country's revolution will create a better investment climate in the medium- and long-term, said the chairman of Egypt's General Authority for Investment (GAFI), Osama Saleh, at a forum of economists and CEOs.
'We expect that establishing democracy, transparency and anti- corruption measures, which come at the forefront of the revolution's goals, will open the door for more investment,' said Saleh. GAFI operates under the auspices of the cabinet.
Saleh said the economy had already started recovering from a sharp decline following 18 days of protests that shook investor confidence and toppled president Hosny Mubarak.
The stock market reopened last month after being closed for seven weeks, following a sharp drop in the main EGX 30 index during the first few days of anti-government protests.
During the uprising, banks remained closed and a military-imposed curfew meant that businesses could not operate normally for weeks. Egypt lost an estimated 230 billion dollars, including some 5 billion dollars in foreign capital, and billions in tourism.
The main concern of investors is the issue of succession, according to economic experts.
The military, in charge after Mubarak stepped down on February 11, announced that parliamentary elections would held in be September, but stopped short of setting a date for presidential elections.
'We all know the regime as we know it is gone forever. It will never be the same again,' said Kareem Helal, the head of CI Capital - the investment banking arm of Egypt's Commercial International Bank, in an interview with Egypt's Daily News.
Helal, who as also at the forum, said that even though it is unclear who will lead the country after Mubarak, he is optimistic about the country's post-revolution economic future.
'The price of corruption during Mubarak's era used to be a huge obstacle for investors, but now the foreign investor will feel safer,' said Helal.
Saleh said GAFI was working on a package of incentives to encourage foreign investors to continue expansion in Egypt, which has the largest market in the Arab world with a population of just over 80 million people.
'When I say incentives I don't mean only tax evasions or cutting down on some charges, but I mean real incentives that would provide a more simplified process of getting the licenses and access to land and utilities,' Saleh said.