Momen Selim writes | The State Ownership Policy Document

The Egyptian government is preparing to launch the State Ownership Policy Document, which includes the announcement, evaluation, and proposed sectors and economic activities from which the state will exit. It also aims to enhance private sector participation in other sectors where the state will remain involved, after improving and increasing their efficiency through leveraging digital transformation programs. Finally, the document is expected to include the guiding principles for the state's economic activity and how to ensure competitive neutrality between its role as a market regulator and its role as a competitor at the same time.

For more than seven years, the Egyptian government has been working to improve the economy to attract direct foreign investments. This drive led to the flotation of the currency and the launch of the economic reform program, followed by the structural reform program. It also included infrastructure projects such as roads, new cities, national construction projects, and the expansion of industrial zones, free economic zones, and free trade zones. Additionally, there were legislative changes, including investment laws, the Central Bank law, capital market regulations, company laws, tax laws, and the much-anticipated labor law, all of which are critical for investors. Yet, despite these efforts, foreign investments have not met the expected levels, especially due to the impact of the COVID-19 pandemic.

Whenever a political or societal dialogue is held to discuss the reasons behind the slowdown in direct foreign investment in Egypt and the obstacles to investment, the conversation often revolves around procedural and administrative barriers, tax reductions, energy prices, land allocations, and so on. These are indeed obstacles, but they can be negotiated, and the government is actively working to address them. However, the main obstacle to direct foreign investment in Egypt is the "market" itself. This refers not just to purchasing power, but also to the overall investment climate, competition levels, and the neutrality of the state towards all investors.

Egypt suffers from the excessive economic involvement of the state through its various ministries, agencies, and organizations. This overreach is the primary reason foreign direct investors are deterred. The state's role should be limited to monitoring and regulating the market. If the state must engage in economic activity for political or economic reasons, this activity must be subject to market rules like any other competitor, without enjoying advantages due to state ownership. Moreover, the market should not be distributed among allied companies or partner investors. Thus, the State Ownership Policy Document is seen as a potential lifeline for the Egyptian economy, provided it includes full transparency about the state’s assets, identifies the sectors that will operate under public-private partnerships, and outlines the legal framework governing these partnerships, ensuring a clear and attractive vision for investors.

To further the document's objectives of attracting direct foreign investments, there must also be a review of the security approvals required to establish companies, especially for those operating in the Suez Canal Economic Zone. It is difficult to attract foreign direct investment when investors face a flood of security approvals from the time of the company's founding through its operation and even after its dissolution, particularly when the state is a major player in the same market, making it both competitor and regulator.

• Momen Selim, member of the Coordination of Youth Parties and Politicians.