The PFI process
Egypt was the first country to conduct a formal investment policy review based on the PFI. By volunteering to be the PFI’s ‘pilot case study’, Egypt provided useful feedback to the OECD for developing guidelines on using the PFI. The review also allowed Egypt to showcase its Investment Climate Reform Strategy. The PFI assessment involved several stages, beginning first with an independent self-evaluation and then turning to a broader, more in-depth assessment in collaboration with the OECD.
An initial scoping study was undertaken based on the first three chapters of the PFI: investment policy; investment promotion and facilitation; and trade policy. The process took only three months so as to be able to present the results at the 2006 Global Forum on International Investment. The presentation based on the PFI allowed the Egyptian government to highlight recent reforms in areas covered in the first three PFI chapters, as well as to point out areas, such as dispute settlement, which continued to present challenges.
A second, more complete assessment was conducted jointly with the OECD in the context of Egypt’s adherence to the OECD Declaration and Decisions on International Investment and Multinational Enterprises. The second PFI assessment took six months and covered the first three chapters, together with some questions related to Competition Policy (Chapter 4) and a selective discussion of the remaining chapters. The results were examined by the OECD Investment Committee as part of the adherence process and published as an OECD Investment Policy Review.
The Declaration provides both rights and responsibilities for Egypt. Egyptian firms now enjoy national treatment in signatory countries, and other adherents are to encourage their multinational enterprises operating in Egypt to contribute to economic, social and environmental progress. It now participates in the OECD Investment Committee work and contribute to ongoing OECD projects, as well as joining in discussions on freedom of investment.
At the same time, Egypt commits to providing national treatment to foreign investors and to promoting responsible international business conduct. The OECD Guidelines on Multinational Enterprises are an integral part of the Declaration and are a code of conduct for responsible international business operations in and from Egypt and the other 40 adherent countries. As part of the Guidelines, Egypt set up a National Contact Point in 2008 within the Ministry of Investment reporting directly to the Minister and responsible for promoting observance of the Guidelines and for helping to make the Guidelines better known to business, labour and civil society.
The PFI assessment was conducted at a time when Egypt had already undertaken substantial reforms to improve the investment climate, including efforts to reduce and streamline administrative procedures, the initiation of a privatisation programme, a major reform of the tax system, and the establishment of a new ministry in July 2004 specifically responsible for investment policy. Investment has been encouraged through non-discriminatory investment policies, a pro-active strategy of investment promotion, emphasising the role of government as a service provider rather than as a regulator, a drastic reduction of trade impediments to capital imports, streamlining of previously cumbersome and costly customs procedures, and the adoption of a competition law and the establishment of a dedicated competition authority.
The PFI assessment has been complemented by many other cooperative initiatives involving international organisations:
- World Bank Investment Climate Assessment of Egypt and an assessment of Free Zones
- Investment Policy Review of Egypt by UNCTAD, 1999; with subsequent follow-up activities and an implementation report
- Trade Policy Review of Egypt by WTO, 2005
- Institutional and capacity building with MIGA
- EU twinning programme with European IPAs
- IMF assistance on FDI statistics
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