Setting targets
The cabinet once again stresses the role of the private sector in meeting its strategic goals, reports Sherine Nasr
The number of cabinet ministers, including the Prime Minister Ahmed Nazif, attending last week's fourth conference of the Egyptian Junior Business Association (EJB), underlined the central role being allocated to the private sector in the pursuit of government objectives. Throughout the conference officials repeatedly stressed that reform has never been more drastic, nor policies more target-oriented.
"Simply tweaking the mass of outdated legislation was never going to be good enough. A radical overhaul was needed to guarantee a fresh start," said Minister of Finance Youssef Boutros-Ghali. Hence the major shake-up of the customs and tax system, including the new tax law ratified by the People's Assembly last September which, he said, "was the only way to re-build the long-lost confidence between the government and the public".
"Both the customs and tax regimes have been revised to ensure that tax payers are no longer prey to outdated predatory policies," said Boutros-Ghali.
The coming parliamentary round includes a raft of additional legislation, including a consumer protection law, a new stamp tax law and, perhaps, a new sales tax law.
According to Nazif the government has prioritised building a solid base from which positive business-friendly policies can take off. "It was essential to promote the perception that government is there to support, and not to rob, business."
The ultimate goal is to ensure a better standard of living and to create more job opportunities.
"Although we are still far from reaching our goals indicators show that we are going down the right path," said Nazif, who added that Egypt had managed a growth rate of around four per cent in 2005 and was in a position to increase that to a more inspiring six per cent in 2006.
"We have the market. We can act as a trade - hub to the Middle East and Africa. We can be the main service provider in the region. We are a popular tourist destination and have the potential to expand both agriculture and manufacturing industry," he said.
While the government is committed to continuing to subsidise health, education, transport and housing it is increasingly understood that the subsidy system must be rationalised.
"Though the subsidy bill has reached LE100 billion annually it is increasingly clear that this huge sum is not targeting the poorest segments of society," said Nazif.
The government, as a result, is now looking to devise a more purpose-driven and target-oriented system of delivery and has charged the newly established Ministry of Social Solidarity with defining the needs of the poorest members of society and the best ways to meet them.
"Given the differences between various social groups it is only logical to introduce services at different levels and costs," said Nazif, who stressed the role of the private sector as the government's key partner in this process.
Accelerating growth rates and promoting industrial development now top the cabinet's agenda and the recently established Industrial Development Authority has been charged with defining the long-term goals of industrial strategy.
"The government is turning towards the idea of renting land instead of selling it for industrial purposes," said Nazif, who argued that coherent policies rather than land ownership have been shown to be the decisive element in informing decisions on whether to invest or not.
The government has targeted investments of LE175 billion in the industrial sector in Egypt over the coming few years, to which end meetings between the Central Bank of Egypt (CBE) and representatives from 15 national banks are currently underway.
"We aim to increase manufacturing industry's contribution to the national economy by 25 per cent within the next few years, and then by an average of nine per cent annually," said Nazif.
Al-Ahram Weekly Online : Located at: http://weekly.ahram.org.eg/2006/782/ec3.htm