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Egypt minister projects $10b foreign investment next year Salman hints may not scrap new tax on stock market gains

CAIRO, June 22, (RTRS): Egypt’s newly appointed investment minister Ashraf Salman said he targets $10 billion in foreign direct investment (FDI) for the coming fiscal year and $14 billion in three years. Egypt had been hit by an economic crisis following a 2011 uprising that ousted autocratic Hosni Mubarak. Since then, the state’s successive governments have been trying to steer a course between boosting revenues without discouraging investors. FDI for Egypt’s first nine months of the 2013-14 fiscal year that starts on July 1 stood at $4.4 billion. It was $3 billion in the year ended June 2013, almost $1 billion less than in the previous year. “I need FDI. It has a magical effect in creating jobs and lowering poverty,” said Salman, a veteran banker speaking in a late TV interview with Egypt’s private CBC TV on Saturday.

He said he wants to attract more FDI by passing legislation to help businesses and minimizing bureaucracy. Salman also hinted he was not intending to reverse a decision by the state earlier this month to impose a new 10 percent tax on dividends and share transactions’ gains that sent the country’s bourse to records low. Salman said the issue was discussed with the market before a decision was made. After the law went into effect, the market rebounded, he noted. Salman was appointed last week in a limited cabinet reshuffle that followed the election of former army chief Abdel Fattah al-Sisi as president. The decision to appoint a separate investment minister reverses a decision this year to merge the ministry with that of industry and trade, a move that shows Sisi’s keen to attract foreign funds back to stimulate the economy. Sisi had last year ousted elected Islamist President Mohamed Morsi in reaction to mass unrest against his rule.

Crisis
Morsi’s downfall prompted a wave of violence and protests that deepened the economic crisis. Sisi’s Gulf Arab allies have sent billions of dollars in aid to Egypt after Morsi’s fall which analysts said had saved Egypt from bankruptcy. Last week, Egypt’s economy is forecast to grow at just 3.2 percent in the fiscal year that begins on July 1, well below levels needed to create sufficient jobs for a rapidly growing population of 86 million and to ease widening poverty. The turmoil of the last three years, when two presidents were overthrown, hundreds of people were killed and tourism and investment were battered, have contributed to high unemployment and a widening budget deficit. The government will also have to tackle the legacy of decades of corruption and red tape and a costly subsidy system - fuel subsidies alone cost the state nearly $19 billion a year.

The new cabinet includes 34 ministers, of whom 14 were newly appointed. Just four of the ministers are women. Salman, a US-educated investment banker is the co-founder and co-CEO of Cairo Financial Holding, an Egyptian asset management, corporate finance and investment banking firm. He previously held a senior position at Arab African International Bank-Egypt and has worked on privatisation policies, according to the Cairo Financial Holding website. Other new faces in the government include former ambassador to Washington Sameh Shukri, who was appointed foreign minister, and Naglaa El Ahwany, a university professor who was named minister for international cooperation. But most ministers are holdovers from the previous regime, including the ministers for finance, defence, interior, planning, oil, electricity, supplies and communications. Keeping the cabinet largely intact could allow Sisi to quickly implement the kind of reforms urged by the United Arab Emirates, which, along with Saudi Arabia and Kuwait, gave billions of dollars in aid after Islamist President Mohamed Mursi was ousted by Sisi and the army last July.

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