Friday, 27 May 2011
Al Arabiya presenter Nadine Hani. (File photo)
Egyptians called for the change of the regime and they succeeded. Their most persistent demands were eradicating corruption, achieving democracy and economic development. The political demands were partially achieved, but that came at the expense of the economy.
With the stepping down of president Hosni Mubarak, the probes and lawsuits started against members of the former regime. A number of contracts, concluded during Mr. Mubarak’s rule, have been annulled, including those involving foreign investors. The problem is that most of the big companies in Egypt are owned by loyalists to Mr. Mubarak and his son Gamal. Corruption allegations disrupted the business of those companies.
With the stepping down of president Hosni Mubarak, the probes and lawsuits started against members of the former regime. A number of contracts, concluded during Mr. Mubarak’s rule, have been annulled, including those involving foreign investors. The problem is that most of the big companies in Egypt are owned by loyalists to Mr. Mubarak and his son Gamal. Corruption allegations disrupted the business of those companies.
Annulling some contracts that were concluded between the former regime and foreign investors—regardless of whether they are justified or not—would no doubt scare investors out, because they might affect all investors whether they are innocent or guilty. Accordingly, this would negatively affect the flow of foreign investments, which Egypt is in desperate need of.
It is essential that foreign investors regain their trust in the investment climate in Egypt. A state of fury has spread among Arab businessmen lately following Egypt’s annulling of some contracts which granted them farming lands; plots of land on which they can build commercial and residential projects; and some privatization operations that were completed during Mr. Mubarak’s regime—such as the selling of the Omar Effendi chain to the Saudi Anwal company, which is owned by Saudi investor Jameel al-Qanbit. The Egyptian Administrative Court has annulled this deal.
The story started by opening a case in court against Talaat Mustafa Group alleging that the process by which the company was granted the land on which the "Madinaty" project was being built did not protect the public finances. The case ended by annulling the land sale contract of the plot in New Cairo. The court ruling was based on the fact that the land was granted to the company directly without any bidding or public sale. Accordingly, the land was sold at a very cheap price. This case was followed by the annulling of the land sold to Palm Hills as well as a third case against SODIC. All those companies are owned by businessmen who were close to Mr. Gamal Mubarak.
The following cases targeted Gulf businessmen and companies. The list includes the annulling of the contract of selling lands in Toshka to Saudi Prince al-Waleed bin Talal. It also includes the project of establishing the Cairo Festival City project by UAE’s Futtaim Group, which threatened to resort to international arbitration. The same thing happened with UAE’s DAMAC over its land in the Red Sea Governorate and the Egyptian-Kuwaiti Co. for Investment and Development over its land in the Town of Ayyat.
Egypt regards those contracts as of no benefit to the state. The direct granting of land should be done only in cases of emergency. There should be bidding or public sale in order to achieve the highest revenue for the state. On the other hand, and from the foreign investor's perspective, contracts should be respected regardless of the political regime. The Egyptian government realized this issue and set up an ‘Investment Contracts Settlement Committee’, chaired by the Egyptian Prime Minister, to study each and every contract and find a suitable settlement for it.
The step taken by the Egyptian government was essential so as not to lose the flow of investments. The international community is currently supporting Egypt through financial grants and loans—from the World Bank, the United States or Saudi Arabia. Egypt should seize this opportunity and assure foreign investors, so that the revolution would achieve its targets, not only politically but also economically.
(Nadine Hani, Senior Business News Presenter at Al Arabiya, can be reached at Nadine.hani@mbc.net and on twitter @Nadine_bn. This column originally appeared in Arabic in Lebanon’s An Nahar newspaper on Friday, May 27. Ms. Hani will be writing regularly for Al Arabiya English Website.)
It is essential that foreign investors regain their trust in the investment climate in Egypt. A state of fury has spread among Arab businessmen lately following Egypt’s annulling of some contracts which granted them farming lands; plots of land on which they can build commercial and residential projects; and some privatization operations that were completed during Mr. Mubarak’s regime—such as the selling of the Omar Effendi chain to the Saudi Anwal company, which is owned by Saudi investor Jameel al-Qanbit. The Egyptian Administrative Court has annulled this deal.
The story started by opening a case in court against Talaat Mustafa Group alleging that the process by which the company was granted the land on which the "Madinaty" project was being built did not protect the public finances. The case ended by annulling the land sale contract of the plot in New Cairo. The court ruling was based on the fact that the land was granted to the company directly without any bidding or public sale. Accordingly, the land was sold at a very cheap price. This case was followed by the annulling of the land sold to Palm Hills as well as a third case against SODIC. All those companies are owned by businessmen who were close to Mr. Gamal Mubarak.
The following cases targeted Gulf businessmen and companies. The list includes the annulling of the contract of selling lands in Toshka to Saudi Prince al-Waleed bin Talal. It also includes the project of establishing the Cairo Festival City project by UAE’s Futtaim Group, which threatened to resort to international arbitration. The same thing happened with UAE’s DAMAC over its land in the Red Sea Governorate and the Egyptian-Kuwaiti Co. for Investment and Development over its land in the Town of Ayyat.
Egypt regards those contracts as of no benefit to the state. The direct granting of land should be done only in cases of emergency. There should be bidding or public sale in order to achieve the highest revenue for the state. On the other hand, and from the foreign investor's perspective, contracts should be respected regardless of the political regime. The Egyptian government realized this issue and set up an ‘Investment Contracts Settlement Committee’, chaired by the Egyptian Prime Minister, to study each and every contract and find a suitable settlement for it.
The step taken by the Egyptian government was essential so as not to lose the flow of investments. The international community is currently supporting Egypt through financial grants and loans—from the World Bank, the United States or Saudi Arabia. Egypt should seize this opportunity and assure foreign investors, so that the revolution would achieve its targets, not only politically but also economically.
(Nadine Hani, Senior Business News Presenter at Al Arabiya, can be reached at Nadine.hani@mbc.net and on twitter @Nadine_bn. This column originally appeared in Arabic in Lebanon’s An Nahar newspaper on Friday, May 27. Ms. Hani will be writing regularly for Al Arabiya English Website.)
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