A busy week in Egypt

Ahead of the ruling National Democratic Party's convention in a little over a week's time, the new Nazif government is unleashing a wave of new policies to get the message out that it is serious about reform. Just consider that since the beginning of this week, we've had:

An impressive reduction in tariffs and customs duties, which goes some way in answering the requests of the business community and key trading partners, as well as the no. 2 complaint about doing Egyptian business after forex instability: the labyrinthine and often corrupt customs system. As I found out in previous research, businessmen have long complained that customs policies are complicated, opaque and sometimes illogical, stressing an already under-equipped bureaucracy and making corruption easier. The complexity of customs has also engendered a parasitic intermediary industry which has a vested interest in the customs system remaining opaque and adds to the cost of doing business. Let's hope they don't survive long.

Subsidies on diesel fuel has been cut by 50%. This could be the beginning of one of the most important reforms in the Egyptian economy. Egypt is approaching the point where its oil production will be outstripped by domestic consumption, and furthermore it has already had to begin importing premium-quality fuels such as kerosene because local crude is too heavy to make them. Addressing fuel subsidies not only tackles the growing public debt and budget deficit, but will also have environmental implications. A small step but perhaps the beginning of a change of mentality about subsidies. You can find a longer piece I wrote on this issue in this post.

The government is finally paying attention to investment in high-tech and R&D, a personal pet peeve of mine. This may not be an obvious priority in a country where so many live a life of poverty, but technology and its benefits is not only for the rich, or at least it wouldn't be if it was only developed in the richest parts of the world. See the Green Revolution, the birth control pill, modern plastics, and yes, the internet. I covered the first announcement of this story here.

All of this comes while Egypt is hosting a pan-Arab meeting of economic policymakers, and of amidst speculation that the NDP conference will be used to outline a new reform program and give more attention to Gamal Mubarak, who has gone from the candidate the army wouldn't stand for to heir apparent (also here) in less than two years.

Not everyone is happy about that, of course. And there is much skepticism about next week's NDP conference. But all this activity has been long-awaited in a country that has been dormant for most of the past decade. It might not be good change, but it's change.

Comments

[Jonathan Edelstein]

investment in high-tech and R&D [...] may not be an obvious priority in a country where so many live a life of poverty, but technology and its benefits is not only for the rich, or at least it wouldn’t be if it was only developed in the richest parts of the world

I think the example of India proves that a developing country can benefit from a high-tech sector.