Saturday,18 November, 2017
Current issue | Issue 1369, (16-22 November 2017)
Saturday,18 November, 2017
Issue 1369, (16-22 November 2017)

Ahram Weekly

Stable investment

The recent arrests of Saudi businessmen are unlikely to affect investment in Egypt, writes Nesma Nowar

 Sheikh Kamel (l) and Bin Talal are among the Saudi investors in Egypt
Sheikh Kamel (l) and Bin Talal are among the Saudi investors in Egypt

The announcement by Saudi Arabia of the arrest of some Saudi ministers and princes on corruption charges last week has sent shockwaves worldwide.

The sweeping crackdown has involved some of the kingdom’s most prominent princes and investors, including Al-Walid bin Talal, the kingdom’s most famous investor, and Sheikh Saleh Kamel, owner of the media conglomerate the Arab Radio and Television (ART) network.

The arrests have raised questions in Egypt on the impact they might have on the detained businessmen’s investments in the country. 

Saudi billionaire Bin Talal owns about 40 hotels and resorts in Egypt, in addition to 18 others that are still under construction. He was set to invest about $800 million to expand the Four Seasons Resort in the Red Sea resort of Sharm El-Sheikh, in partnership with the Talaat Mustafa Holding Group, Minister of International Cooperation and Investment Sahar Nasr said in August.

His investments were also supposed to include establishing two new hotels in Alamein on Egypt’s Mediterranean coast and Madinaty, a residential compound east of Cairo.

Kamel has shares in a number of businesses in Egypt, including the Al-Baraka Bank, Ismailia Misr Poultry, Arab Moltaka Investment and Arab Engineering companies.

Al-Baraka Bank Egypt issued a statement saying it had no direct ties with Kamel though he owns a personal stake in the bank. The statement said the bank had not been officially informed about the arrest, adding that Kamel was not a member of the bank’s board and therefore had no influence over its operations.

Ismalia Misr Poultry said it had no information on the arrest of Kamel and that its business was operating as usual. It said that the management of the company was separate from its shareholders. 

Banking sources told the Hona Al-Assema TV programme last week that Egypt’s banking system had not received directions to freeze the domestic assets of the Saudi investors that had been arrested and neither had the stock market.

Al-Tayyar Group Egypt Chairman Ashraf Shiha told the programme that the company was unaffected by the developments in Saudi Arabia, despite the fact that the company’s owner, Nasser bin Aqeel Al-Tayyar, is believed to be among the Saudi businessmen arrested.

Shiha said the company was operating normally.

Former assistant minister of foreign affairs Gamal Bayoumi downplayed the potential for negative repercussions for Egypt from the corruption probe in Saudi Arabia. He said the impact was likely to be “marginal” as Saudi investments in Egypt were set up under Egyptian law.

He also differentiated between two types of investment: public investment, which will not be impacted as it is led by the Saudi government, and private investment that could be impacted depending on the owners of the investment concerned.

Bayoumi also downplayed negative impacts from the current tensions in the Middle East, saying that these might harm the general atmosphere of the region, but that they would not impact Egypt directly.

Tensions in the Middle East have been escalating recently, especially with the resignation of Lebanese prime minister Saad Al-Hariri earlier this month while in Riyadh in tandem with the arrest of the Saudi princes over allegations of corruption.

International economics expert Rashad Abdou said the impact of the arrests was “not significant”. He said that the Saudi businessmen that had been arrested had had investments all over the world.

In most cases, the businesses concerned were run separately from their ownership and were run by professional management on the shareholders’ behalf.

He said the Saudi government had not made changes to the management of the businesses affiliated to the Saudi businessmen who were under investigation, sending positive signs that the businesses would not be affected.

“The Saudi investments here will not be affected as they are being operated by professional management,” Abdou told Al-Ahram Weekly.

However, the arrests had had a “shock” factor that had resulted in spontaneous reactions from the stock market, Abdou said. This was normal, he added, “but reversed once things started to stabilise”.

On Wednesday last week, the Egyptian Stock Exchange (EGX) closed in green for the first time after dropping for three consecutive sessions after the Saudi corruption probe. The benchmark EGX30 index increased by 1.05 per cent on Wednesday and 1.02 per cent on Thursday.

Abdou also downplayed any negative impact from the current tensions in the Middle East. “We’re still in their shadow, and nothing has happened yet,” he said.

Egypt and Saudi Arabia have thriving economic relations. Some 4,309 Saudi companies have investments in Egypt, with capital inflows of $7.218 billion, according to the General Authority for Investment and Free Zones. 

Ranked as the second-largest Arab investor in Egypt, Saudi Arabia has 854 companies working in Egypt’s industrial sector, 1,366 in services, 784 in construction, 322 in tourism, 111 in the financial sector, 490 in agriculture and 382 in communications and information technology. 

During Saudi King Salman’s official visit to Cairo in April 2016, Egypt and Saudi Arabia signed loan agreements worth over $24 billion. They also signed an agreement to set up a $16 billion Saudi-Egyptian investment fund.

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