Foreign Direct Investment in Egypt

Topics: Economics, Egypt, Investment Pages: 14 (4675 words) Published: May 14, 2013

Foreign Direct Investment In Egypt
Investing in Egyptian Apparel and Textiles Industry
Senol Sas
Wilmington University

Foreign direct investment (FDI) is investment directly into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive to gain tariff-free access to the markets of the country or the region. In the global economy today, we see many developing countries competing for foreign direct investment. FDI is said to be an important factor for spurring the development of a nation. Foreign direct investment (FDI) an important vehicle for economic growth in emerging markets countries. Since 2006/2007, Egypt has become the leading attractor of overall foreign direct investment (FDI) on the African continent. Up till 2008, Egypt has attracted 56 foreign investment companies in the textile sector, employing 14,169 workers with total investment value of $ 172.3 million, and total production value of $ 370.6 million. Furthermore, Egyptian-Foreign joint venture companies totaled 150; employing 30,635 workers; with an investment of $ 515 million, and a total production value of 509.4 million in 2008. Egypt has experienced profound political changes over the past two years. On February 11, 2011, President Hosni Mubarak’s 30-year rule came to an end under intense popular pressure as hundreds of thousands of Egyptians converged on Tahrir Square. Transition to democratic rule has been marked by advances and challenges. Egypt has seen several prime ministers and multiple cabinet changes since the revolution, and many investors have reported that the constant shuffle and interim tenure of government officials have contributed to a difficult business environment. Nonetheless, in January 2012 Egypt seated its first parliament elected in free and fair elections, and many of the members have identified increasing foreign investment as a top priority for the government. Even though political uncertainty and economic downturn in Egypt , this African country still present a lot of opportunity to make profit for foreign direct investor especially in textile and apparel industry .

Foreign Direct Investment In Egypt
Investing in Egyptian Apparel and Textiles Industry
2-Apparel and Textile Industry

Egypt is home to the only fully vertically integrated textiles industry in the Middle East, with the entire production process —from the cultivation of cotton to the production of yarns, fabrics and ready-made garments —carried out domestically. Egypt is the largest producer in Africa and worldwide of long (LS) and extra-long staple (ELS) cotton, accounting for 50 percent of world production in 2008, it has built a brand reputation for its quality of cotton. The sector plays an extremely central role in the Egyptian economy. It is the second largest producing sector after agro-industry and the first in terms of jobs accounting form30% of local employment in 2008.It accounts for 3% of the GDP, 30% of industrial output and around 13% of Non-Petroleum exports in 2010 / 2011, according to the Central Bank of Egypt. There are more than 6,700 textile-related companies registered with the Industrial Development Authority. The power player within the sector is readymade garments (RMG), worth 75% of the textile and garment industry. The RMG subsector produced more than 313million pieces in 2009, with global brands such as Marks & Spencer, GAP, Wal-Mart, Levi Strauss, Target and Calvin Klein sourcing from and investing in Egypt. Of the 25% of the industry focused on textile production, home textiles constitute 12% of the...
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