PM:State Ownership Policy Document Sets Egypt's Approach Toward Assets

Prime Minister Mostafa Madbouli said the main goal of the State Ownership Policy Document is to outline the State's policy toward its own assets and the economic domains in which it will operate in the coming period.

In a panel discussion with a number of experts on the document, Madbouli stressed the government is keen on listening to the opinions of all experts on Egypt's economy, noting the government targets enhancing the private sector's role in leading all economic activities in the country.

The document has been prepared since November 2021, the premier underlined.

Taking part in the session are Planning and Economic Development Minister Hala El Said, Finance Minister Mohamed Maait, Minister of Public Business Sector Hesham Tawfik, First Assistant Prime Minister Randa El Menshawi, Chairman of the General Authority for Investment and Free Zones Mohamed Abdel Wahab, and CEO of Egypt's Sovereign Fund Ayman Soliman.

Madbouli pointed out that ministries, experts, and representatives of the private sector took part in drawing up the document, saying over seven months, more than one document had been prepared and discussed during closed meetings to ensure that all discussions were held in and independent and impartial atmosphere.

Regarding reasons for issuing such a document, the prime minister pointed to the challenges that the world faces, noting that three countries have already issued similar documents; namely China, Indonesia, and India to regulate markets, liberate trade, and enhance competition.

Since 2011, the State has had no option but to increase the volume of public investments in many sectors to generate more jobs especially that the difficult circumstances at that time were not favorable for the private sector, he added.

Madbouli elaborated that the government's decision to increase public investments during a certain phase was an exceptional and temporary step, noting that half of the public investments at the time were directed to the sectors of infrastructure, transport, education, and health.

The premier pointed out that 50% of the GDP is assets owned by the state compared to other countries, a matter which shows that the State's economic presence is higher than assumed.

Upon President Abdel Fattah El Sisi’s directives, the private sector's participation in public investments will be increased in the coming three years to 65% from the present 30% to maintain the growth of the Egyptian economy to reach 7% in the coming period despite global challenges.

The main features of the document were approved after studying 30 international cases and comparing Egypt with different countries, he said, adding that this took place with the participation of 20 experts.

Madbouli said the 20-paper document, which includes eight topics, determines the governing principles of the State's economic presence, competitive neutrality, legislative environment, and mechanism to implement the policy toward its assets as well as bolster the partnership between the public and private sectors.

Reminiscing about the terrifying economic figures recorded from 2011 to 2015, he said back then the State adopted three approaches to bend its economic trajectory toward resilient growth which included increasing public investments, implementing national projects especially those related to infrastructure and generating jobs

The prime minister explained that two groups were formed; the first one from the Planning and Economic Development Ministry and the second of experts from different government bodies, saying the two groups reached the same set of criteria - six criteria - which govern the way of choosing the economic activities which the government is set to exit or remain engaged in.

The first criteria is linked to the connection of the good, service, or activity with national security. The second is related to how far a certain economic activity is attractive to the private sector.

The third criteria is about the state's exit from some consumer industries.

The fourth is related to the role of the state as a regulator, financier, and supporter of future technological industries associated with the Fourth Industrial Revolution.

The fifth criteria is about making sure that the state's investments in some activities do not negatively affect private sector investments.

The sixth and last criteria is connected with the state’s exit from some sectors where it believes that its investments have been mismanaged and that they would be better managed by the private sector.

Madbouli noted that the government would completely exit a certain number of sectors within three years and lower its presence gradually in other ones. He stressed, however, that some other sectors will witness an increase in the public investments.

Madbouli elaborated that the state's exit from some economic activities is being implemented by selling some of its assets, whether totally or partially, offering a percentage of the state-owned assets and companies on the stock exchange, or holding on to the assets while allowing the private sector to manage and fully operate them.

The government works on restructuring its assets for integrating and re-evaluating them, he pointed out.

He also stressed the importance of ensuring competitive neutrality, enhancing the role and effectiveness of the Egyptian Competition Authority, and approving legal amendments to give a greater oversight role to the authority during the coming period.

Through this document, an accurately detailed schedule for asset assessment will be developed, he said, adding representatives of the House of Representatives, the Senate, the private sector, and chambers of industries and people of academia were present to give their opinions on the document.

Workshops, which will gather experts and specialists, will be held in addition to launching a mobile app to expand the participation of the citizens, who are interested in expressing their opinions, Madbouli said.

He wished that the document would be finalized within three months to be officially published and be like an “economic constitution” of the state in the coming period.

This document is part of the governmental reforms, he added.

Madbouli said even in Western capitalist regimes, the government is still pretty much involved in the economy.

More importantly, the state should act as a regulating and overseeing body to ensure a sense of balance and justice, as well as fair competition, and equal opportunities to all, the premier pointed out.

Madbouli urged experts to have their say about the executive steps needed for a sustained implementation of the 'State Ownership Policy Document'; stressing that it is not a rigid instrument, but a living and alterable document.

Speaking about the private sector's role in public investments over the past few years, Madbouli said 99 per cent of these investments had been undertaken by the private sector.

As for the private sector's involvement in the mining industry, the premier said some areas had been made available for exploration activities, and the government is keen on maximizing the private sector's role in this vital industry over the period ahead.