Foreign Direct investment policies Essay

Recently Egypt has made whatsoever impressive reforms in reforming its foreign direct ratement policies but on that point argon still some hearty barriers. Currently the FDI stands at 12. 2 Billion up from unmatched billion in 2001. Barriers to entry have been eased for foreign investors the untaught has dedicated a ministry to propel the number of foreign investors. Egypt streamlined its value system with a reduction in corpo outrank income tax rate from among thirty two percent and cardinal percent to a uniform of twenty percent.In manufacturing, foreign investment has been fully liberalized other than in industries related to defense activities. Foreign equity is al beginninged to participate in privately owned communication and financial go up to bingle hundred percent. It has become cheaper and quicker for foreigners to register new companies (Ikram et al 1980) In some heavenss such as transport, electricity and eddy, foreign investment is restricted. For slip in construction foreign companies have to set up a joint venture, in which the equity of foreigner is only limited to forty nine percent.Economic Structure and performance The preservation of Egypt is undergoing a sweetheart harvest-festival in the last quarter of 2008. Egypts annual growth domestic production had emanationn from 7. 3 in 2006 to 8. 6 in 2008. The rate of inflation has also dropped from 18. 3% in 2003 to 3. 21% in 2008. However with the current economic downturn inflation rate in Egypt stand at 10. 87%. With the economic reforms that the g overnment has under slangn, private sector commands over eighty percent of Egypts economy. As economic reforms take root, the annual growth domestic percent is likely to accelerate.It has been predicted that it will light upon 13. 5 % by 2010. Economist agrees that the economic climate that shortly exists in Egypt is the best sensation for investing. The Egyptian economy as it is now is competent to create more opport unit o f measurementy for domestic growth of wealth and also has enormous potential over long term because of the following reasons backbreaking economic growth of 8. 6% in 2007, incentives and reforms given to foreign investors, low cost of living and availability of cheap labor. Since 2001, Egypt consumer price index, has registered a significant growth from 12.68% in 2004 to 3. 6% a fact that is attributed to the rise in the value of the Egyptian Pound. The current account of Egypt has also heavy(a) from a deficit of 1. 8% of the annual gross domestic product to an estimated 6. 1% in 2007. (ciao/EIU Partnership 2008) With the utmost population in Egypt, the county has a wider market of both skilled labor and unskilled labor. The ministry of education has constantly ensured that the courses offered in both private and frequent learning institutions are at par with the requirements in the job market.With the assistance of IMF and World, Egypt has embarked on a syllabus that will see the private sector takes a big character reference in the county. Egyptian government entrenched Law 203, which was to speed privatization of the public sector. Currently the degree of privatization in Egypt is high (72 percent). By 2007, the government had privatized over eighty percent of the 314 public enterprises which it had earmarked for privatization. The ministry of public enterprise in Egypt predicts that by 2010, all the public enterprises that were earmarked for privatization will have been privatized.With privatization of these public enterprises, the benefits accrued to the Egypt economy is an additional savings to the area. The total gain which has so far been established by privatization is that GDP has grown by 2. 8 %. With the growth in GDP, the commonwealths infrastructure has also noticed some improvement, because close to of the savings that the government is making as a result of privatization is currently being used for development (Sayed et al 2007 pp12- 29) The Egyptians passageway entanglement is somehow underdeveloped.It is currently being serviced by a network of over sixty eighty megabyte kilometers of both secondary and chief(a) roads. Despite modernizations of roads in Egypt in mid 1980s, most of them are either under construction or are in little condition. The level of congestion of automobiles has continued to rise due to the increase in the number of licensed automobiles. According to a report released by EIU (2006) rural area profile, Egypt reported the highest incidences of automobile fatalities in the entire world it was 44. 8 deaths per hotshot hundred thousand kilometers.In terms of energy Egypt has adequate summate of electricity from Egyptian Electricity Authority which produces over fifteen thousand megawatts of power. Plans are already underway for EAA to increase its power production by more than two thousands five hundred by 2010. Power outlay has reported a constant growth of 6. 1% per year. Telecommu nication services are cheaper and modern. According to reports by EIU country profile for 2006/2007, Egypt had more than heptad million lines. The lines are increasing at a rate of one million per year.The country has seventy nine internet providers (Economic intelligence unit country profile) Natural and Cultural factors Egypt has a diverse cultural flick which is ethical for investors. 80 percent of the Egyptian population is Muslims, while Christians and Hindu makes up the remaining percentage. The country observes religious practices like during the holy calendar month of Ramadhan the country is always in a prayer mood. Egypt also has an median(a) temperature of between 13 and 29 degree centigrade. For entry to Egypt, Visa is normally required. EU and U.S nationalities that are traveling or want to invest in Dahab, Taba, Sharm EL Shik and Hurghada are given a free visa st amp upon arriving at the airport Social and political stability Egypt is a democratic country with many political parties. The country has a fishing rig presidential system, where power has been split between the prime minister and the president. In 2005, Egypt changed its constitution to allow for more presidential candidates to take part in the elections. The county also has a good political temperature that is favorable for investors. The country was the first gear Arab country to embraces political relationship with Israel.It also plays in mediating conflict between different countries in the Middle East. The political life in Egypt is good for investors. Hence U. S stockmen who are currently doing their business there or who want to start doing their business should do so. Recommendation and last From the analysis carried, the writer of this paper is of the opinion that Egypt is a good country for any American companies who are thinking of investing there or who have already invested there to continue. The writer is of the opinion that Egypt has an attractive and perpetual m arket for property investors.The country has an emerging property market in tourist destinations and it is also offering a return that is excellent on property investment. Despite the fact that foreign equity in construction industry is standing at forty nine percent Americans companies should ventures into it because of the high rate of return that this industry commands in Egypt.ReferenceAbd al Salam, Abou Khaf M & Abu Qahf (2005) Foreign direct investment in developing countries, a comprehensive analysis of the determinants, policies, organization & impacts a case make of Egypt.Buckley P (2003) the changing global context of Egypt international Trade CIAO/EIU Partnership (2007) Economic structure of Egypt retrieved from www. ciaonet. org on March 26 2009 Egypt conduct summary PDF retrieved from www. ustr. gov/assets/Document_Library on March, 26 2009 Economic intelligence unit country profile 2006/2007 report retrieved from www. eiu. com/index. asp March, 26 2009 Galal A & Lawrence (1998) An Egypt US free trade Brookings Institution squeeze pp 23 -56 Ikram K & World camber (1980) Egypt, Economic management during transition period A mission report sent to Egypt by the World Bank pp 12 -42Kaudhar- Luis F (2006) Investing in Construction Industry in Egypt Alexandra University Press pp 9 30 Marks S & Ken K 2001 a comparative study of foreign direct investment in Egypt Published by USAID pp 9 -14 Olarreaga M & Madani D (2002) politically Optimal Tariffs- an application of Egypt pp 6 29 Sayed S, Idarat A. & Dawliyah (2007) international business in Egypt & Middle East Jordan Publisher 12 -65 Weigel D, Wagle D & Gregory W (1997) foreign direct investment World Bank Publications pp 1 -22