Foreign Direct Investment

Reform measures undertaken by the government of Egypt have played a key role in terms of improving the outlook for Egyptian, Arab and foreign investment, as well as instigating and sustaining high levels of growth and employment creation. A positive response to streamlining investment procedures has been reflected in the increase in the number of newly established companies as well as expansions undertaken by companies already in operation. Inflows of foreign direct investment (FDI) have also significantly increased, particularly starting FY 2003/04.

The following sections present a brief overview of the inflows as well as sectoral composition of FDI in Egypt over a period which begins with FY 2000/2001 up to July-March of FY 2008/09.

NET FDI Inflows:  FY 2000/01 - July-March 2008/09

Net FDI inflows increased from USD 509.4 million in FY 2000/01, to reach USD 6.1 billion in FY 2005/06, USD 11.1 billion in FY 2006/07, USD 13.2 billion in FY 2007/08. Net FDI inflows stood at USD 5.2 billion during the first nine months (July-March) of FY 2008/09. Figure 1 reflects the increase in net FDI inflows during the period 2000/01 - July-March of FY 2008/09.

Source: Central Bank of Egypt

As a percent of GDP net FDI inflows have increased from 0.6% in FY 2000/01 to reach 8.1% in FY 2007/08.

Source: Central Bank of Egypt

Sectoral Distribution of FDI: FY 2000/01 - July-December 2008/09

With respect to the distribution of FDI inflows, the petroleum sector absorbed USD  2,772.0 million worth of net inflows during the first half (July-December) of FY 2008/09 (68.8 percent of net inflows) compared to USD 2,923.3 million during same period of FY 2007/08 (37.6 percent of net inflows). Net FDI inflows in the non-petroleum sectors have reached USD 1,255.6 million during the first half (July-December) of FY 2008/09, compared to USD 4,846.2 million during same period of FY 2007/08. Table 1 compares net FDI inflows in the petroleum and non-petroleum sectors during the period FY 2004/05- first half of FY 2008/09:

Table 1: Sectoral Distribution of Net FDI Inflows (USD million)

Source: Central Bank of Egypt
 

During the first half (July-December) of FY 2008/09 a total of USD 880.9 million was accounted for by the establishment of new companies as well as increases in the issued capital of companies already in operation (21.9 percent of net inflows). The sale of companies and productive assets (both in the private and public sectors) to non-residents stood at USD 268.5 million (6.7 percent of net inflows). FDI inflows in the real estate sector have reached USD 106.2 million (2.6 percent of net inflows) during same period.

* FDI in the real estate sector has remained consistently at an average of 0.4% during the period 04/05-06/07, then it raised up to 3% during 07/08 and 2.6% during the First Half 08/09.

Source: Central Bank of Egypt