1. Foreign Investment in MENA: Features and Recent Developments Mark Neal

2. Foreign Direct Investment What is Foreign Direct Investment? Why do firms often prefer FDI to other market entry strategies? Why is FDI increasing in MENA? Why are certain MENA locations favored for FDI? What are key FDI related costs and benefits for receiving and source countries? How does political ideology affect FDI policy? Focus on UAE, Saudi Arabia and Egypt

3. Foreign direct investment “Foreign direct investment (FDI) is the category of international investment that reflects the objective of a resident entity in one economy to obtain a lasting interest in an enterprise resident in another economy.” (OECD)

4. OECD Definition: Lasting Interest “Lasting interest” implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the direct investment enterprise. (OECD)

5. OECD Definition: Foreign direct investment enterprise “A foreign direct investment enterprise is an incorporated or unincorporated enterprise in which a direct investor resident in another economy owns 10 per cent or more of the ordinary shares or voting power (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise).” (OECD)

6. OECD Definition: Direct foreign investment enterprise “Direct foreign investment enterprises comprise those entities that are identified as subsidiaries (investor owns more than 50 per cent), associates (investor owns 50 per cent or less) and branches (wholly or jointly owned unincorporated enterprises), either directly or indirectly owned by the investor.” (OECD).

7. Importance of FDI for GDP and GNP Gross Domestic Product: “The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.”

8. Gross National Product (GNP) The market value of all products and services produced in one year by labour and property supplied by the residents of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership.

9. FDI Products and service produced by FDI go into the home country’s GNP, but the host country’s GDP.

10. Internal Integration and Transaction Costs Administration Sourcing Selling Enforcing Contracts

11. Foreign Direct Investment Involves ownership of entity abroad for – Production – Marketing/service – R&D – Access to raw materials or other resources Parent has direct managerial control – Depending on its extent of ownership – On other contractual terms of the FDI No managerial involvement = portfolio investment

12. Changing Directions and Sources of FDI 1. Most FDI flow has been to developed countries from developed countries Much to the US from EU, Japan 2. FDI increase to developing countries Much to the emerging Asian and Latin American economies Africa lagging MENA doing better 3. From Developing Countries to Developed Countries.

13. Forms of FDI – Purchase of assets: Quick entry, local market know-how, local financing may be possible, eliminate competitor, buying problems – New investment: No local entity is available for sale, local financial incentives, no inherited problems, long lead time to generation of sales – International joint-venture Shared ownership with local and/or other non-local partner Shared risk

14. Alternative Modes of Market Entry FDI – FDI - 100% ownership – FDI < 100% ownership, – International Joint Venture Strategic Alliances (non-equity) Franchising Licensing Exports: Direct vs Indirect

15. Why FDI? FDI over exporting – High transportation costs, trade barriers FDI over licensing or franchising – Need to retain strategic control – Need to protect technological know-how – Capabilities not suitable for licensing/franchising Follow few main competitors – Immediate strategic responses

16. Product Life Cycle Stage 1: Introduction Stage 2: Growth Stage 3: Maturity Stage 4: Saturation Stage 5: Decline

17. Eclectic Paradigm of FDI (Dunning)  Ownership advantage: sustains a monopolistic advantage to be used in markets abroad – Unique advantage protected through ownership e.g., brand, technology, economies of scale, management know-how  Location advantage: the FDI destination market must offer factors (land, capital, know-how, cost/quality of labor, economies of scale) that are advantageous for the firm to locate its investment there (link to trade theory)  Internalization advantage: transaction costs of an arms-length relationship - licensing, exports - higher than managing the activity within the MNC’s boundaries

18. Host Country Effects of FDI Benefits – Resource-transfer – Employment – Balance-of-payment (BOP) Import substitution Source of export increase Costs – Adverse effects on the BOP Capital inflow followed by capital outflow + profits Production input importation – Threat to national sovereignty and autonomy Loss of economic independence

19. Government Policy and FDI Home country – Outward FDI encouragement Risk reduction policies (financing, insurance, tax incentives) – Outward FDI restrictions National security, BOP Host country – Inward FDI encouragement Investment incentives Job creation incentives – Inward FDI restrictions Ownership extent restrictions (national security; local nationals can safeguard host country’s interests

20. Decision Framework for FDI Export FDI License Yes Import Barriers? No Yes No Are transportation costs high? Is know-how easy to license? Tight control over foreign ops required? Is know-how valuable and is protection possible? No Yes No Yes

21. MENA on a “middle of the pack” growth path 12% 10% 8% Oil Exporters 6% 4% 2% 0 -2% -4% -6% BRICs Non-Oil Exporters MENA OECD 2001200220032004200520062007200820092010*2011* MENANon-Oil ExportersOil ExportersOECDBRICs Real GDP growth in the ten fastest-growing MENA economies of 2000 - 2008 (CAGR) LibyaTunisiaEgyptMoroccoOmanBahrainUAEJordanKuwaitQatarMENAOECDBRICs 20004.5%4.8% 5.1%5.5%6.5%6.7%7.1% 10.2%4.7%2.0%8.1% - 2008 20092.1%3.3%4.7%5.0%3.4%2.9%-0.7%2.85%-2.7%9.0%2.1%-3.4%5.7% 2010*10.6%3.8%5.3%4.0%4.7%4.0%2.4%3.4%2.3%16%4.9%2.6%9.3% *2010 and 2011 data are IMF forecasts PNA data is missing Egypt is among the non-oil exporting countries. Egypt exports oil, but production has been falling steadily since 1995 and growing domestic consumption means the volume of oil available for export has been reduced to marginal levels. Additionally Egypt's economy is not over reliant on oil revenue. Sources: World Bank (WDI) 2010 (for the years 2000-2009), IMF 2010 (for the 2010 and 2011 projections)

22. FDI has grown fastest in MENA and a relatively rapid recovery is expected 600 000 500 000 400 000 300 000 FDI Inflows (in millions of current USD) MENA x17 India x11 MENA 100 000 75 000 MENA FDI Inflows (in millions of current USD) -19% +13% 200 000 100 000 0 India LAC China 2000 China +86% +68% LAC India MENA LAC China 2008 50 000 25 000 0 MENA 2008 2009 2010* Source: 2008 and 2009 are from UNCTAD 2010; the 2010 projections are from Arab Investment & Export Credit Guarantee Corporation 2010

23. The impact of the crisis and the extent of expected recovery vary across countries 40.000 35.000 12.500 10.000 7.500 5.000 2.500 0 2008 2009 17500,00 15000,00 12500,00 10000,00 7500,00 5000,00 2500,00 0,00 North Africa Levant 2010* Gulf and Arab peninsula Source: 2008 and 2009 are from UNCTAD 2010; the 2010 projections are from Arab Investment & Export Credit Guarantee Corporation 2010

24. FDI is still mainly directed to oil and gas exporting countries Tunisia 2% Syria Oman 2% 3% Jordan 3% Lebanon Others 15% EU 33% US/Canada China CIS 6% India 3% Morocco 6% 2% Qatar 11% Egypt* 9% Libya 4% Algeria 4% Saudi Arabia UAE 47% 13% Latin America 10% 5% 13% 2009 MENA FDI Share  Oil Exporters: 76%  Non oil Exporters: 24 % Need for diversification of foreign direct investment Source: UNCTAD 2010

25. Sustaining investment and competitiveness in the post-crisis era Key challenges to address Promote diversification of sectors Link to new sources of growth  Diversify exports and outward investment to Central & East Asia and Sub-Saharan Africa Develop local markets  Expand market size through regional trade and investment frameworks Build on global demand for local assets (e.g. wind and sun) Address priority areas for reform

26. Priority areas for reform Results of the Business Climate Development Strategy (BCDS) Egypt and Morocco - Weighted Average Scores Morocco Egypt Anti-Corruption Infrastructure Access to Finance 2,10 2,12 2,74 2,39 2,76 2,60 2,97 Reform priorities: 1. Rule of law 2. Infrastructure 3. Access to finance Business Law and Commercial Courts 2,68 SME Policy and Promotion 2,70 3,07 Better Business Regulation 2,59 3,28 Investment Policy and Promotion 2,84 3,73 Trade Policy and Facilitation 3,243,52 Privatisation and PPP 3,03 3,84 00,511,522,533,544,5

28. Of the total FDI in the region in 2010 (%) Saudi Arabia 33.5 Qatar 10.3 Egypt 9.9 Lebanon 7.7 Morocco 6.8 UAE 6.1 Sudan 3.7 Libya 4.8 Algeria 3.2 Iraq 2.9 Syria 2.9 Tunisia 2.5 Yemen 0.3 Bahrain 0.2 Kuwait 0.12 Mauritania 0.09 Djibouti 0.06

29. Saudi Arabia The Saudi Arabian General Investment Authority (SAGIA) plays an important role in creating an environment conducive to investment in the Kingdom. SAGIA has been striving since 2004 to place the Kingdom among the top 10 most competitive nations in the world.

30. Saudi Arabia FDI The sources of the largest FDI inflows into the Kingdom in 2009 were: US $5.8 billion, Kuwait $4.3 billion, UAE $3.8 billion, France $2.6 billion Japan $2 billion.

31. Saudi Arabia FDI Much of the country’s FDI in 2010 was destined for high-tech projects and services. Inflows covered a wide range of economic sectors such as: Real-estate investment and infrastructure, building contracts, banking and insurance, quarrying, mining, oil and gas exploration, transportation, telecommunications and information technology.

32. Saudi Arabia FDI According to NCB Capital report: FDI projects in Saudi Arabia are estimated to employ 375,000 people — 27 % of them Saudis — Generate salaries of $7.8 billion.

33. Saudi Railways http://www.saudirailways.org/portal/page/p ortal/PRTS/root

34. Saudi railway to be built by Spanish-led consortium Spain's own high-speed rail network is the longest in Europe A Spanish consortium has won a contract to build a high-speed rail link in Saudi Arabia. The contract, worth 6.7bn euros ($9.3bn; £5.8bn) involves supplying 35 trains and operating the network for 12 years, the Saudi Railways Organisation said. The project links the two holy cities of Mecca and Medina. The UK firm Invensys Rail forms part of the consortium and will supply software systems for 485m euros. Invensys Chief Executive, Wayne Edmunds described the deal as "a major breakthrough for Invensys Rail'. The Spanish consortium, called Al Shoula, beat its French rival, SNCF Alstom to the multi- billion euro contract. Spain overtook France in 2010 with its high-speed rail link which is the largest in Europe and accounts for 40% of Spain's 4.8 million long-distance passengers. Mecca in particular is a well-visited city with around 2.5 million Muslims making the annual hajj pilgrimage to each year.

35. King Abdullah Economic City http://www.kaec.net/en/Home/index.html

37. Dubai Industrial Zones Industrial Areas Al Awir Road industrial area 661 hectares Al Quoz Industrial area 1,838 hectares Al Safa area 20 hectares Only for consumer food stuff. Al Khubaisi Area 102 hectares Um Ramool Industrial Area 391 hectares Al Qusais Industrial Area 545 hectares Jebel Ali Industrial Area 84 hectares

38. Jebel Ali Free Zone 1985, established. JAFZ, an industrial area surrounding the port, allows the international companies who relocate there to enjoy the special privileges of the free zone. These include exemption from corporate tax for fifteen years, no personal income tax, no import or export duties, no restriction on currency, and easy labour recruitment. Al Maktoum International Airport (formerly Dubai World Central International Airport) is being constructed in the area.

39. Jebel Ali Contributed to Dubai’s GDP at 25% on a year-to-year basis Sustained more than 160,000 jobs in the UAE through its companies Accounted for more than 50% of Dubai’s total exports. It also accounts for 25% of all container throughputs through the Jebel Ali Port and 12% of all air freight at Dubai International Airport. Accounts for 20% of all FDI inflow into the UAE.

40. Dubai International Financial Centre The DFIC is the Middle East’s regional financial centre. Established in 2004. Types of firms in the DIFC include banking, asset management, brokerage, Insurance financial operational services.

41. Dubai International Financial Centre Typical benefits of starting a business in the centre are 100% foreign ownership on all parts of the established business, 0% tax on profits, no restrictions on capital and foreign exchange repatriation and transparent and a highly developed operating environment. Compared to the majority of tax havens which are offshore, the DFIC is onshore. In terms of the physical structure of the center, the DFIC has developed modern day offices and technology to attract the best companies as well as smaller financial start-ups.

42. Dubai International Financial Centre The main objective of developing the centre was because of the large amounts of money that was invested and spent abroad. In terms of high net worth individuals in the Middle East, the size of the asset pools which are invested abroad amounted to over 1.5 trillion USD. The lack of available liquidity and political risk as well as bad banking practices of the region caused investors to send their funds in foreign institutions.

43. Dubai International Financial Centre The development of the centre allowed for the efficient transferring of funds in the local region as well as allowing potential profits to be locked in the Emirates, rather than abroad. The increased liquidity which the center created also reduced the investment risk in the region and created better credit ratings for local banks as they had more efficient funds available.

44. Dubai International Financial Centre Many companies in the Middle East are seeking to make themselves public as a means of raising capital. This has been especially true with the growth in privatization, the fact that Dubai is the 3rd biggest re-export centre in the world and the increasing amounts of foreign direct investment in the region by foreign multinationals. The IPO market for Middle Eastern countries flourishing and DFIC will attract a lot of IPOs and POs as well as fixed income and money market originations. DFIC intended to be the Wall Street of the Middle East.

45. Investment Portal for FDI (and smaller investors) http://www.nasdaqdubai.com/home/home.ht ml

46. Abu Dhabi Securities Exchange Abu Dhabi Securities Exchange (ADX) (formerly Abu Dhabi Securities Market) [ADSM] is a stock exchange in Abu Dhabi It was established on 15 November 2000 to trade shares of UAE companies. There are trading locations in Abu Dhabi, Al Ain, Fujeirah, Sharjah, and Ras Al Khaimah.

47. Abu Dhabi Securities Exchange http://www.adx.ae/English/Pages/default.asp x

48. Dubai Financial Market Dubai Financial Market was established as a public institution having its own independent corporate body by a Resolution from the Ministry of Economy No 14 of 2000. DFM is operating as a secondary market for trading of securities issued by public joint-stock companies, bonds issued by the Federal Government or any of the Local Governments and public institutions in the country, units of investment funds and any other financial instruments, local or foreign, which are accepted by the Market. The Market commenced operations on 26th March 2000.

49. Dubai Financial Market As decided by the Executive Council Decree on 27 th December 2005, DFM us set up as a Public Joint stock Company in the UAE with paid up capital of AED 8 Billion allocated over 8 Billion shares, with a par value of AED 1 per share, and the twenty percent (20%) of DFM shares be offered for public subscription. This IPO, the first of its kind in the region, was highly oversubscribed and generated more than AED 201 billion. The trading of shares of Dubai Financial Market (DFM) began on Wednesday 7 th March 2007.

50. Dubai Financial Market http://www.dfm.ae/Default.aspx

51. Dubai Internet City Dubai Internet City was set up by the government in 2004 and is a member of TECOM Investments. Like many of Dubai’s other important business districts it is a trade free zone. It was built as a strategic base for companies engaging in the international marketing of their technology businesses. The theme of the region is designed as an information technology park.

52. Dubai Internet City The main incentive which the center brings to foreign investors are zero taxes and 100% ownership for the next 50 years. The DIC has over 1 ½ million square feet of commercial office space as accommodating over 10’000 workers. Typical companies which have offices in the center include: - Microsoft, Cisco, Nokia and Sun Microsystems. Many small to medium sized enterprises are also part of the community.

53. Dubai Media City Dubai Media City has the same tax free structure that DIC has to offer. It has been built to boost the UAE’s media capabilities and recognitions as the next “Hollywood” of the Middle East. It has been developed as a conventional market where different businesses work together to form a unit. The DMC has many different business segments not limited to broadcasting, media support services filmed entertainment/production and publishing. Other Benefits that the DMC has to offer are fully furnished business units, flexible leasing terms, flexible visa and work permit structures to benefit foreign entrepreneurs. Other similar districts include Dubiotech which target biotech companies with the aim of growing the regions medical and pharmaceutical research capabilities.

54. Egypt Free zones were introduced in Egypt in the early 1970s to guarantee the supply of some strategic products; however, the objectives soon changed to become more aligned with international practice, i.e. to “increase exports, attract FDI, introduce advanced technology and create more job opportunities”. The main incentives provided in the free zones are exemptions from taxes and custom duties for the lifetime of the project. There are nine public free zones in Egypt as well as dozens of private ones.

55. Egypt Another more recent investment regime is that of the Special Economic Zones (SEZ). Law 83 of 2002 provides a number of incentives for investors operating in SEZs including a flat 5% personal income tax; a 10% tax rate on all activities within each SEZ; and integrated customs and tax administration with an autonomous board of directors, which handles licensing and other investor services. Only one SEZ has been established to date, the North West Suez Special Economic Zone.

56. Egypt The latest investment policy introduced in Egypt relates to the investment zones established under Law 19 of 2007. This regime offers the administrative advantages of free zones in terms of dealing with a single regulator but without tax or customs duty holidays. According to GAFI, the private sector will “develop, manage and promote these zones”, 23 creating integrated clusters in various sectors.

57. 10 Statistical annex Annex table 1. Egypt: inward FDI stock, 2000-2010 (US$ billion) Economy20002001200220032004200520062007200820092010 Egypt20.020.521.121.323.528.938.950.560.066.773.1 Memorandum: comparator economies Argentina67.679.543.148.352.555.260.367.676.181.086.7 South Africa43.530.6 46.964.479.087.8110.468.0117.4132.4 Republic of Korea38.253.262.766.187.8104.9119.1119.694.7117.7127.0 Turkey19.219.718.833.538.571.395.1154.080.2143.6181.9 Source: UNCTAD, FDISTAT, available at: www.unctadstat.unctad.org. Annex table 2. Egypt: inward FDI flows, 2000-2010 (US$ billion) Economy20002001200220032004200520062007200820092010 Egypt1.20.50.60.22.25.410.011.69.56.76.4 Memorandum: comparator economies Argentina10.42.22.11.74.15.35.56.59.74.06.3 Republic of Korea9.04.13.44.49.07.14.92.68.47.56.9 South Africa0.96.81.60.70.86.6-0.55.79.05.41.6 Turkey1.03.41.11.72.810.020.222.019.58.49.1 Source: UNCTAD, FDISTAT, available at: http:// www.unctadstat.unctad.org.

58. 11 Annex table 3. Egypt: distribution of inward FDI flows, by industry, 2006/2007- 2009/2010 a (US$ million) Total (2006/2007- Sector / industry2006/20072007/20082008/20092009/20102009/2010) All sectors/industries b 13,084.3 17,802.2 12,836.111,008.154,730.7 Primary Oil and gas 4,904.58,098.39,666.67,577.430,246.8 Agriculture 29.5123.376.3261.6490.7 Secondary Manufacturing industry 1, 054.6 1,526.9851.9456.33,889.7 Construction 60.5423.8225.5303.81,013.6 Services Financial services 2,314.72,187.6440.7873.95,816.9 IT and communication 1,923.718.5727.362.82,732.3 Tourism 429.1193.7121.7246.9991.4 Real estate 39.0, 394.9 138.4 305.3877.6 Other services 261.5928.4282.5382.61,855.0 Unclassified 2,067.23,906.8305.2537.56,816.7 Source: Central Bank of Egypt (CBE) (unpublished data). a Data are reported on a fiscal year basis. b Author’s calculation, obtained by addition of industry data in each column. Annex table 3a. Egypt: Inward FDI flows through greenfield projects and M&As to industries other than oil and gas and real estate, 2004/2005 - 2009/2010 a (US$ million) 2004/20052005/20062006/20072007/20082008/2009 2009/2010 b Greenfield1,060.43,792.95,368.66,972.02,749.62,952.3 M&As419.5905.72,772.22,337.0303.5173.1 Source: Central Bank of Egypt (CBE) (unpublished data obtained from the CBE). a Data are reported on a fiscal year basis. Data exclude FDI in oil and gas and real estate as they are treated as separate categories by the CBE. b 2009/2010 data: preliminary.

59. 12 Annex table 4. Egypt: geographical distribution of inward FDI flows, 2005/2006-2009/2010 a (US$ million) Region/economy2005/20062006/20072007/20082008/20092009/2010 World9,097.913,080.317,790.612,814.610,989.7 Developed economies7,599.88,809.612,181.29,407.18,338.2 Europe3,035.04,110.65,668.25,738.76,880.7 European Union2,954.34,061.05,430.15,578.46,763.2 Austria1.51.70.810.63.9 Belgium0.08.7326.91,541.6930.1 Bulgaria0.0 0.10.0 Cyprus6.32.810.04.1100.9 Czech Republic0.0 0.3 0.0 Denmark1.42.510.98.26.8 Estonia0.0 0.40.0 France565.736.71,302.7254.3286.2 Germany113.697.2250.3102.6109.7 Greece140.222.2109.3153.464.7 Hungary0.0 0.10.4 Ireland0.0 1.31.64.9 Luxembourg0.01.063.326.93.7 Malta0.0 1.30.61.2 Latvia0.00.30.20.60.1 Poland0.0 0.610.01.3 Netherlands8.439.655.7134.0128.8 Portugal0.0 0.40.10.0 Italy20.21,631.431.670.167.8 Romania10.50.10.00.1 Spain361.46.720.827.080.5 Sweden0.40.54.30.046.0 United Kingdom1,724.72,209.63,239.33,231.84,926.1 Other developed Europe80.749.6238.1160.3117.5 Norway2.40.22.15.76.1 Switzerland78.349.4236.0154.6111.4 North America 4,554.34,686.16,485.83,615.91,433.1 Canada0.84.838.0100.98.2 United States4,553.54,681.36,447.83,515.01,424.9 Other developed economies10.512.927.252.524.4 Australia6.39.34.77.61.4 Bermuda0.03.07.10.010.0 Japan4.20.615.444.913.0 Developing economies1,498.14,270.75,609.43,407.52,651.5 Africa3.822.7140.87.3339.7 North Africa3.822.7140.87.3339.7 Libyan Arab Jamahiriya3.820.6137.32.6337.1 Sudan0.01.52.22.31.3 Tunisia0.00.61.32.41.3 Asia555.03,346.03,119.32,184.71,145.1

60. 13 Region/economy2005/20062006/20072007/20082008/20092009/2010 West Asia551.53,333.33,097.52,069.91,106.8 Bahrain65.618.639.620.564.1 Jordan9.03.539.8170.881.8 Kuwait72.524.81,597.2118.0188.7 Lebanon233.611.4122.467.410.6 Qatar6.42.5184.853.070.4 Saudi Arabia99.0204.0365.4514.1323.4 Turkey0.88.614.369.025.4 United Arab Emirates63.03,049.5726.21,037.4303.5 Other West Asian countries1.610.47.819.738.9 South, East and South- East Asia3.512.721.8114.838.3 East Asia0.88.417.562.927.7 China0.88.417.560.026.9 Republic of Korea0.0 1.00.4 Taiwan Province of China0.0 1.90.4 South Asia0.04.14.351.48.7 India0.04.14.351.48.7 South-East Asia2.70.20.00.51.9 Singapore2.70.20.00.51.9 Other countries939.3902.02,349.31,215.51,166.7 Source: Central Bank of Egypt (CBE) (unpublished data). a Data are reported on a fiscal year basis.

61. 14 Annex table 5. Egypt: principal foreign affiliates in the economy, ranked by issued capital, as of end of 2010 Company name 1 Etisalat Misr 2 CIB - Egypt 3 Libyan Investment 4 TMG for Real Estate Investment & Tourism 5 Bank of Alexandria 6 National Societe Generale Bank - NSGB 7 The Coca-Cola Bottling Company of Egypt 8 ASEC Cement 9 The Egyptian Company for Urea and Petrochemicals 10 National Bank for Development 11 Citadel Capital 12 Giza New Development and Real Estate Development 13 Golden Pyramids Plaza 14 HSBC - Egypt 15 Ahli United Bank (Egypt) 16 Alexandria for Portland Cement 17 Cimpor Egypt Cement 18 South Valley Cement company Nationality of foreign investor(s) United Arab Emirates Saudi Arabia Non-disclosed nationalities United States United Kingdom Libya Saudi Arabia United Kingdom Italy France United Kingdom Saudi Arabia United Arab Emirates Kuwait Cayman Islands United Arab Emirates England United Arab Emirates Saudi Arabia Cayman Islands United Kingdom Saudi Arabia Netherlands Kuwait United States Saudi Arabia Qatar Iraq England Spain United Kingdom Industry Communication Banking Diversified Banking Consumer goods Cement Pharmaceutical Banking Private equity Real estate Real estate Banking Banking Cement Cement Cement Foreign assets 1 Issued (US$ million) capital (US$ million) 2,054 39 2,616.7 1,206 189 174 1,885.1 1,758 1,758.1 286 54 1,565.2 914 1,142.9 721 933.7 433 773.9 139 98 2 720.2 675 675.0 641.6 412 289 95 590.2 13 551.4 221 303 539.0 196 483.5 457 270 28 20 15 478.7 4 464.2 409 455.0 455 444.4 210

62. 15 Company name 19 Egypt for the Production of Fertilizers MOPCO 20 Suez Cement Nationality of foreign investor(s) Saudi Arabia Canada Saudi Arabia France Morocco Saudi Arabia Italy Industry Foreign assets 1 Issued (US$ million) capital (US$ million) 38 Fertilizer 113 435.8 13 Cement 190 41 95 435.0 15 Source: General Authority for Investment (GAI) (unpublished data) and company websites. 1 These figures represent the foreign ownership structure in each firm -- in other words, the cumulative values of FDI by the foreign companies over time.

63. 16 Annex table 6. Egypt: main M&A deals, by inward investing firm, 2007-2009 Estimated/ announced transaction value Shares(US$ AcquiringTargetacquiredmillion) YearcompanyHome economyTarget companyindustry(%) 2009Edison SpAItalyEGPC-Abu QirEnergy1001,405 Concession 2009IFCUnited StatesBank of AlexandriaBanking9.8199 SAE 2009Investor GroupUnited ArabOras InvestVenture capital100180 Emirates 2009Alavesa deSpainEl Masreyah GlassManufacturing10085 Promociones 2009HJ Heinz CoUnited StatesCairo FoodFood10062 Industries SAEprocessing 2008Lafarge SAFranceOCI Cement GroupCement10015,018 2008DP WorldUnited ArabEgyptian ContainerLogistics90.0670 EmiratesHandling Co 2008Titan Cement CoGreeceLafarge Titan EgyptCement100513 SA 2008Dubai CapitalUnited ArabCommercial IntlBanking5.2147 GroupEmiratesBank Egypt SAE 2008Abraaj SPV 62United KingdomAl Borg LaboratoryMedical76.9143 Ltdservices 2007Abraaj CapitalUnited ArabEgyptian FertilizersChemical1001,410 LtdEmiratesCo SAE 2007National Bank ofKuwaitAl Watany Bank ofBanking93.7962 KuwaitEgypt 2007France TelecomFranceMobiNilCommunication71.3252 SATelecommunications SAE 2007ChemplastIndiaTrust ChemicalChemical100200 Sanmar LtdIndustries Source: The author, based on Thomson ONE Banker and Thomson Reuters.

64. 17 Annex table 7. Egypt: main greenfield projects, by inward investing firm, 2007-2009 Estimated/announced Year Investing company 2009 British Gas Group (BG) 2009 Barwa Real Estate 2009 Fomento de Construcciones y Contratas (FCC) 2009 Al-Futtaim Group 2008 Cementos La Union 2008 Sultan Center Food Products (TCS Sultan Centre) 2008 Cayan Investment and Development 2008 Alshoula 2008 Emaar Properties 2007 DAMAC Holding 2007 Saint-Gobain 2007 Reliance Industries 2007 Emaar Properties 2007 Savola Home economy Industry United Natural gas Kingdom extraction Qatar Construction Spain Manufacturing United Arab Emirates Construction Spain Manufacturing Kuwait Retail United Arab Emirates Construction Saudi Arabia Construction United Arab Emirates Construction United Arab Emirates Construction France Manufacturing India Manufacturing United Arab Emirates Construction Saudi Arabia Manufacturing investment value (US$ million) 1,000 9,000 427 340 500 800 408 1,000 5,400 176 1,000 700 187 Source: The author, based on fDi Intelligence, a service from the Financial Times Ltd.

65. Government Policy and FDI The radical view: inbound FDI harmful; MNEs – Are imperialist dominators – Exploit host to the advantage of home country – Extract profits from host country; give nothing back – Keep LDCs backward and dependent for investment, technology and jobs The free market view: FDI should be encouraged – Adam Smith, Ricardo, et al: international production should be distributed per national comparative advantage – An MNE increases the world economy efficiency Brings to bear unique ownership advantages Adds to local economy’s comparative advantages

66. Questions?