Streamlining Egypt’s investment landscape

 Analysis by Ahmed Kamel

A new investment bill will be a step on a long road towards improving Egypt’s business climate. However, it cannot on its own guarantee sustainable injections of local and foreign investments in the long run.

Last week, the Sherif Ismail-led cabinet approved a new investment bill in its second draft, and submitted it to parliament for endorsement. The new bill will replace the current Law No. 17/2015, which was passed in March 2015 ahead of the Egypt Economic Development Conference but has borne no fruit in terms of greenfield investment.

The new bill comprises of 115 articles, which financial analyst Ahmed El-Oteify described as a worryingly massive number. “Only specialists will understand it. This is wrong, as investors won’t assimilate it,” he said.

However, legal experts have welcomed the newly drafted bill, but stated that it would need to put an end to red tape, which has taken its toll on the business climate in Egypt over the past 40 years.

For business facilitation

The government is tipped to fully apply a one-stop shop system to facilitate licensing and other official procedures. Consecutive governments since 2002 have failed in putting the one-stop shop system into force.

It is the mentality of officials that must change, said Eissa Fathy, deputy head of the Securities Chamber of Commerce.

“The new bill won’t do anything if the old-fashioned mindset remains the same,” he noted.

 Analysts have called for a one-stop shop, where official delegates offer investors an “all-in-one service, including licensing, registration and property allocation procedures.”

 Free entry and exit of capital and eradicating bureaucracy are needed to attract foreign and local investments through well-designed, transparent and clear-cut legislations for investment, repatriation of profits, bankruptcy and dispute settlement.

Market-friendly environment

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Bankers upbeat about 2017 business outlook

By Ahmed Kamel

Bankers are keeping their crossed that 2017 will be a better year after undergoing tough circumstances in 2016, which is deemed as the hardest in terms of monetary, financial and foreign exchange policies.

The pound flotation on November 3 marked a milestone for local banks, which were entrusted with dealing in foreign currencies at free floated rates for the first time since 2003.

“The pound flotation has restored confidence into the Egyptian economy. Certainly, it boosted foreign investor confidence. It will increase exports too,” said Adnan Ahmed Yousif, Chairman of Al Baraka Bank Egypt.

The Central Bank of Egypt (CBE) free floated the pound versus the US currency, which jumped from LE8.78 to LE19 on the official market. The move was aimed at the uprooting of the black market and speculation on the greenback, economists say.

“The CBE does not interfere in pricing the US dollar anymore. The banks set prices according to the supply and demand mechanism,” said Abdel Hamid Abu Moussa, Governor of Faisal Islamic Bank of Egypt.

“The move has resulted in positive impacts. For instance, foreign investors are buying into treasury bills and bonds again, increasing Egypt’s net dollar inflows. The stock market has gained from the currency float. Foreign direct investment is expected to rise in the coming period,” Abu Moussa said.

In 2016, the central bank sought to curb retail credit in a bid to rein in inflationary pressures. The new measures will slash mortgage financing, car loans and other personal credit products offered by the local lenders in 2017.

It cut large exposure limits, set up a scheme to provide small and medium-sized enterprises  (SMEs) with funding worth LE200 billion at a decreasing fiver per cent rate over the coming four years, set a five per cent cap on bank investments in money market and fixed-income mutual funds.

But the initiative hasn’t borne fruit yet, one economist said.

“Away from the CBE initiative, SMEs in Egypt face a number of obstacles. There’s no tax system or an overall legislative framework for SMEs in Egypt,” said Mohsen Adel, deputy chairman of the Egyptian Association for Investment and Finance.

The CBE also sought to ease risks by the reducing of credit exposure. In early 2016, it reduced maximum limit for loans to customers and all their related members — subsidiaries — to 20 per cent of the capital base down from 25 per cent for each client. The CBE has given banks three-year grace to adjust to this new rule.

According to the new regulations, banks cannot provide loans that exceed 15 per cent of capital base. As for personal loans, the CBE set a lending cap of 35 per cent of a customer’s income after deducting tax and social insurance.

“The Egyptian banks will face tough challenges too in 2017. However, the hardest turmoil is now over with the currency float,” said banking expert Moustafa el-Sherif. 

“The lenders should adjust to the regulations set by the CBE in 2016. Pooling, and better application of risk management policies will boost the banking sector in 2017,” el-Sherif added.

Petroleum sector seen booming in 2017

By Ahmed Kamel

After a year of major oil and natural gas finds, the petroleum sector is expected to boom in 2017, analysts say.

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Economists divided over growth rates in 2017

By Ahmed Kamel

Economists are divided over the nation’s economic growth outlook in 2017. While some of them expect the government to achieve its financial and monetary objectives, others say the exchange rate woes may hold back growth next year.

Finance Minister Amr el-Garhy said the government would target a five per cent growth, and to slash unemployment to 11 per cent of labor force in the fiscal year 2017/18.

Egypt’s gross domestic product (GDP) grew by 4.3 per cent in the fiscal year 2015/16, down from 4.4 per cent a year earlier, according to Planning Ministry data.

Egypt’s fiscal year begins on July 1. The nation’s GDP totaled LE 2.708 trillion ($142.5 billion) in the fiscal year 2015/16, Planning Ministry data showed.

“The government has overestimated growth forecasts for 2017. It has taken some measures which will negatively affect consumption, which is the main growth driver in Egypt. Consumption accounts for around 95 per cent of economic growth in this country,” said economist Medhat Nafie.

“How come the government eyes lower state budget deficit in 2017/18 without higher growth rate of GDP?” wondered Nafie.

The government said it would target a state budget deficit of 9.5 per cent of GDP, down from 12.2 per cent in the fiscal year 2015/16. It also eyes the reduction of sovereign debt to 94 per cent of GDP, down from 98 per cent at present. A number of economists said the pound would undergo more pressures in 2017, casting a shadow on the state budget. The Finance Ministry has not set the US dollar rate to be a basis for drafting the nation’s 2017/18 budget.

One source said the ministry would set the greenback rate used in drafting the budget in April 2017.  

“A Fitch report said Egypt would face tough challenges in 2017. The government’s economic reform program will not bear fruit in the short term. Social pressures will require the government to act fast,” said Mohsen Adel, deputy chairman of the Egyptian Association for Investment and Finance.

Earlier this month, Fitch Ratings affirmed Egypt’s senior unsecured foreign- and local-currency bonds at ‘B’. The rating agency also kept the country’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘B’ with “a stable outlook”.

“We expect greater fiscal consolidation in the fiscal year 2018, with the budget deficit narrowing to nine per cent of gross domestic product (GDP),” Fitch said in a statement on its website.

To overcome the dollar crunch, Adel urged the government to launch investment incentives in a bid to create jobs and inject hard currency into the economy.

Egypt is seeking to secure higher inflows of foreign direct investment to repay its international dues.

Economist Hany Tawfik, chairman of Cairo-based investment and private equity firm Union Capital and former head of the Egyptian Private Equity Association, forecast a surge in foreign direct investment in 2017.

He said Egypt would net higher inflows of remittances by Egyptian expatriates, citing that the FX black market took a blow after the currency float on November 3.

Stocks heading to fresh highs in 2017

By Ahmed Kamel

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SYDNEY and LOS ANGELES – Australia’s Solar D Sunscreen, the manufacturer of the world’s first vitamin D promoting sunscreen and KW International, a US based supply chain and distribution company that specialises in introducing innovative products into the marketplace, have announced a new exclusive strategic partnership in North America and Asia.
The two-year deal is worth over AU$30 Million in sales and will focus on the United States, Canada, Mexico, Brazil, South Korea, Japan, China and Taiwan.
The partnership will combine Solar D’s patented vitamin D promoting sunscreen and KW International’s distribution, sales, marketing, financing and fulfillment to expand Solar D Sunscreen into the broader international market.

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The most successful businesses and industries in the world are those that understand the necessity of change. Evolution is a constant reality that doesn’t only move the natural world, it moves industries and technology with just as much force. A company may be founded upon a game-changing idea, discovering a new market , or even a venture in a dependable old one; if that company does not evolve it will most certainly perish. This may seem like an obvious truism, yet it is one that for so long has gone ignored in businesses across the world and the price they’ve paid has been public and devastating.

Which is why I’m here to tell you about an old hobbyhorse of mine – THQ.

While my usual corner at The Australia Times has been writing for the GAMES magazine, I felt this story about THQ fit far more into BUSINESS as it is about an issue concerning almost every industry worldwide.

THQ was a games developer and publisher that went bankrupt in 2012, moving from a billion dollar company to defunct in an incredibly short time. It was a huge surprise to our industry, the equivalent of something like Disney or Telstra suddenly disappearing off the face of the map.

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To all members of our TAT family, readers and contributors, who celebrate Diwali..

We wish you Safety, Good Health, Happiness, Prosperity and Good Fortune.

May they all be with you in the coming year.

   HAPPY DIWALI!

It’s grown from humble beginnings in 1983 and now building company G.J. Gardner Homes has been recognised for its international footprint, having taken out a prestigious national award at the Franchise Council of Australia awards evening held in Canberra this week.

G.J. Gardner Homes CEO and Managing Director Darren Wallis said the award – for excellence in international franchising – was a major coup for the company, which has 127 franchises across Australia, New Zealand and the United States of America.

“A lot of vision and hard work has gone into building the G.J. Gardner brand into what it is today and this win really is testament to the dedication shown by our team members across the globe,” Mr Wallis said.

“It’s mind-blowing to think that what started out as a small home building business on Queensland’s Sunshine Coast has grown into a multi-national company building more than 4,000 homes in 2015 alone.”

Mr Wallis said as part of the judging process, the company had been assessed on its expansion strategies, approaches to market entry, financial performance, risk management and brand compliance.

“The drive to deliver high quality workmanship and exceed expectations in everything we do is deeply ingrained in our corporate culture so it’s really rewarding to see this commitment to quality across all facets of the business reflected in the award win,” Mr Wallis said.

“Our team has been diligent in carefully researching new markets and I believe part of our success can be attributed to selecting countries with similarities in language, culture and business ethics to launch master franchises as it has ensured our products and services have been well received.”

“Our New Zealand operations are a clear example of this, with G.J. Gardner Homes having grown to become the largest home builder in the country within just four years of launching into the market in 1996, and retaining this position to-date.”

Mr Wallis said after commencing operations in New Zealand, the company went on to expand into the US in 2005, opening its first office in California.

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The inaugural ‘The 8 Percent Festival’ (www.festival.the8percent.com) will be held in Melbourne on 10-11 October where Australia’s budding entrepreneurs will come together at Melbourne’s Plaza Ballroom this October to celebrate the biggest thinkers and leaders who aim to disrupt and provoke social change.

Keynote speakers will include, lead singer of rock band Everclear, Art Alexakis; undefeated martial arts artist, TEDX Sydney speaker and Cancer survivor, Nadine Champion, South Sudanese refugee and law graduate Deng Thiak Adut as well as author, journalist and television presenter, Indira Naidoo Hosted by one of Australia’s top marketers, Leela Cosgrove, the two-day festival will invite the brightest minds in business and the arts to discuss live on stage, problems facing the health, film, media, education and business industries, designed to prompt thought, question and debate on industry specific topics.

The festival will run across two days from 10 October and consists of four keynotes, 8 Think Tank panels and a number of breakout workshops.

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14th April 2016

Nicholas Health and Nutrition Pty Ltd is proud to announce the iconic AKTA-VITE brand is “back in its family’s hands” for a bright new future.

The need for AKTA-VITE was identified in the 1930’s, when it was realised that ill health was not just linked to poor hygiene and sanitation, but also to nutritional status. Various studies proved the linkage between vitamin and mineral deficiencies and certain diseases.

The Nicholas family was well suited to formulate AKTA-VITE, after successfully creating “Aspro” in 1915, as an Australian made aspirin.

George Nicholas formulated AKTA-VITE in 1943 as a nutritional supplement for children, pregnant women, the sick and the elderly.

 AKTA-VITE, in its distinctive orange can, was so high in terms of vitamin content that it was originally only sold in pharmacies. Furthermore, due to its enhanced nutritional value, AKTA-VITE was sent to supplement the soldiers in World War 2.

It had interesting ingredients as, originally, many of the minerals and vitamins could not be purchased synthetically. George Nicholas and his crew would go down to Port Fairy to catch sharks and harvest their livers for Vitamin A. 

Purchased by Sara Lee in 1984, then on-sold to the Myerton group , AKTA-VITE has now returned to the family of its original creators.

So what is the future of AKTA-VITE now that it is back in the hands of its original owners?

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Want to break out of the career cage and start your dream business but not sure where to begin?

 

Join Melbourne Entrepreneur Social Club for their two-day Success Accelerator and hear from a crew of industry experts who can help you rapidly develop your ideas and grow your business.

 

You’ll learn the business fundamentals as part of jam-packed program covering branding, product development, publicity and marketing, video storytelling, social media, sales, coding and web development, legal, public speaking, lead funnels and more.

 

Whether you’re an entrepreneur, a solopreneur, a side hustler, or wanting to upskill and prepare yourself for your future business journey, this program will give you all the tools you need to take your business vision to another level.

 

For tickets and event details visit https://www.entrepreneursocialclub.com.au/success-accelerator/ 

NEWS RELEASE
9th December 2015
SMALL BUSINESS KEY TO COMMUNITY AND ECONOMY

 

Today, the Council of Small Business Australia’s (COSBOA) MicroEconomic Challenge took place, reinforcing and invigorating the message that small business is crucial to growing and sustaining the Australian economy.

Throughout the day small business owners and their supporters heard from government and industry leaders and regulators, including the Australian Taxation Office (ATO), Fair Work Ombudsman (FWO) and Justice Iain Ross from the Fair Work Commission (FWC), to name but a few.
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Small businesses will join a host of business leaders and inspirational speakers this week to learn how they can influence and improve their local economies at COSBOA’s MicroEconomic Challenge labelled It’s Our Economy. Continue reading

Darren Thomas, CEO of Thomas Food International has announced the launch of Thomas Farms Kitchen, a new direct-to-consumer meal kit delivery service that is 100% Australian owned.

Thomas said their model aims to change the category by offering flexibility to their customers and delivering truly, fresh produce with less food miles from farm to plate.

“Given our substantial network here in Australia, we are able to draw on the best produce in each state and deliver it direct to the consumer. If you live in Sydney, your produce comes from NSW,” he said.

The new service also allows customers choice for the first time.

“There are no mystery boxes in this model. Choice is king and it’s what consumers want, therefore it’s a leading part of our strategy to market. The venture leads the category in that customers have the freedom to come and go as they please, as well as a greater number of dishes to choose from each week.”

Find out more information at Thomas Farms.

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20 SEPTEMBER, 2015: The Australian Retailers Association (ARA) is calling on the new Turnbull Government Ministry to follow through on the commitments made to small businesses and tax reforms.

Key reforms include the introduction of a competition effects test and instatement of the zero value import threshold before July 2017.

ARA Executive Director, Russell Zimmerman, welcomed the announcement of the new Turnbull Government Ministry on Sunday, including the retention of Small Business in Cabinet with Kelly O’Dwyer to carry through these all important reforms.

“The surge in confidence expressed this week within business is reflective of the Government’s commitment to address issues including GST collection on overseas purchases and the possibility of real reform of competition policy,” said Mr Zimmerman.

Retailers are looking forward to the Government further lifting retail, consumer and business confidence through support for further GST reform, employment law reform and changes to the payments system recommended by the Financial Systems Inquiry (FSI).

“The ARA is pleased to see small business remains in the Cabinet, with the Assistant Treasury portfolio covering off many important areas for the retail sector, from the FSI payments reform to the Harper Review competition recommendations.

“It is now incumbent on the Turnbull Government to commence the task of implementing many of the recommendations which have been made in recent reviews from the Productivity Commission, Harper Review to the FSI,” Mr Zimmerman said.

“The 140,000 Australian independent retail business are demanding that the coalition bring in an effects test as per the recommendations of the Harper review, while a reduction in penalty rates for retailers is crucial in the upcoming Fariwork review.

With the new Turnbull Ministry now in place the ARA is reminding Ministers of the importance of role the retail sector as Australia’s largest private sector employer with more than 10 percent of the working population employed in the retail industry.

“The ARA looks forward to working with all key economic productivity Ministers, including Treasurer, Scott Morrison, Simon Birmingham through Education, Alex Hawke as Assistant Minister to the Treasurer, and Mathias Cormann in Finance.”

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