Saudi-based industries are expected to contribute substantial foreign direct investment (FDI) to Egypt over the next several months, a senior Egyptian government official has suggested.

“Saudi Arabia is one of Egypt’s most important Gulf investment partners, with a longstanding record of business success in the country,” said Dr. Ziad Bahaa el Din, chairman of Egypt’s General Authority for Investment and Free Zones (Gafi), in Riyadh.
“From investment in construction to foodstuffs and fast moving consumer goods, Saudi Arabia has invested millions of US dollars in the Egyptian economy, and we expect the contributions will only increase as Egypt continues on its path toward greater economic reform,” added the official.
Already Egypt is showing signs of progress as its economic reform programmes begin to take effect.  Its GDP grew by 4.9 per cent in 2004/05, with inflation declining from 12 per cent in 2004 to 4.8 per cent in the fourth quarter of the year. 
Market capitalisation doubled between June 2004 and June 2005, and the Capital Market Index increased 860 points during 2004/05. 
Foreign direct investment rose by 146 per cent, and company-issued capital from Egyptian and international sources almost tripled between 2002/03 and 2004/05.
Dr El Din described the key elements of Egypt’s value proposition for Saudi investors as including “excellent” preferential access to the largest and wealthiest markets in the world; a large, young and rapidly growing domestic market; an educated and technically trained workforce; low cost and reliable energy, water and labour as well as declining start-up costs.
Other factors he listed were abundant and accessible raw material, a developed infrastructure of communications and information technology, transportation, utility and business support services and an attractive quality of life. 
 Saudi investments have been concentrated in the industrial (39 per cent), tourism (27 per cent) and financial services (12 per cent) sectors. Within the industrial sector, Saudi investors have focused on food products and processing (44 per cent), building materials (17 per cent) and chemicals (11 per cent).
Saudi investments in Egypt have tripled in the last year over the previous year.
The Gafi chairman also added that the improving business environment was supported by ongoing reforms in the government’s tax, customs, regulatory, financial services, and privatisation policies.