Egypt's Privatization Plans May Finally Be for Real Foreign Investors Show Interest in State Firms

Article excerpt

FOR years, the Egyptian government has stalled on privatizing its bloated public sector, promising to sell off its state-owned industries while failing to follow through.

But after the recent release of a list of 120 public companies, store outlets, and hotels to be sold this year, accounting for 45 percent of the entire public sector portfolio, Egypt's business community figures the government is serious this time.

"The new government is convinced that privatization can solve the economic problems in Egypt," said Fouad Sultan, chairman of Al-Ahly for Development and Investment, referring to the new cabinet formed after the country's parliamentary elections last fall. The real proof that privatization is taking off, businesspeople and economists say, will come this month. Some shares of a flour mill have already been offered on Egypt's stock market. Before the end of April, the authorities are expected to announce the sale of shares in Al-Ahram Beverages, the only brewery in Egypt. The cabinet under Prime Minister Kamal al-Ganzouri is pursuing economic reform more aggressively in general. Mr. al-Ganzouri's cabinet has reduced customs duties on capital goods, simplified investment regulations, and, most recently, issued several decrees to make exporting easier. The directive to sell public-sector entities has also come from the top, from Egyptian President Hosni Mubarak himself. Businesspeople say the president finally realizes that privatization is necessary for the country's economic progress. "If local savings are not enough, you have to seek international investments," Ates Obeid, minister of public enterprises, said. In the near term, he estimated, the government could gain $4.18 billion if it sells the companies on this list. Privatization is also the perfect way for Egypt to convince international donors that it is serious about reform. After Cairo agreed on an economic reform program with the International Monetary Fund (IMF), World Bank, and international aid donors in May 1991, it made little headway in selling its public-sector companies, which account for 70 percent of the country's industry. Of Egypt's 314 public sector industries, three have been sold outright by the government since 1991. …