Egypt seeks to increase Turkish investment

Egypt aims to attract $1 billion worth of Turkish capital by 2026 in various sectors, including garments, household appliances and electricity. 

Currently, the total volume of Turkish investment in the Egyptian market exceeds $3 billion through 1,700 companies, according to the latest data published by the Egyptian Ministry of Industry and Trade. 

In addition to increasing Turkish capital, Cairo is also seeking to increase trade relations with Ankara by 15% in the current and next year to reach 7.2 billion dollars, up from 6.3 billion dollars by the end of 2023, a senior Egyptian official tells Al-Arab.  

The most important sectors of trade between the two countries are fertilisers, electrical cables, textiles, ready-made garments, reinforcing steel, automobiles, soybean oil, yellow corn, fodder and household appliances. 

Regarding the textile industry, last month Turkish clothing company Çırıkçıoğlu obtained approval to establish a jeans factory in Egypt's Port Said governorate with an area of 100,000 square metres and valued at $700 million. 

Since the outbreak of the war in Ukraine, Turkish companies, which are Europe's third largest supplier, have faced rising production costs as the companies risk falling even further behind their Asian rivals.  

For this reason, Ankara decided last November to raise customs tariffs by 30 to 100% on hundreds of imported textile products in order to support local textile manufacturers. 

The efforts to improve investment and trade come after Turkish President Recep Tayyip Erdogan visited Cairo for the first time in more than 11 years last February at the invitation of Egyptian President Abdel Fattah El-Sisi. This meeting cemented the rapprochement between the two countries after years of tensions related to Ankara's ties with the Muslim Brotherhood, an Islamist organisation considered terrorist by Cairo. 

Turkish investment may help Egypt out of the crisis that has engulfed the industrial sector for the past two years due to high production costs and the scarcity of the dollar, factors that threatened to close a large number of factories operating in strategic sectors. 

The war in Ukraine caused major investments to flee the local market and affected supplies from abroad, leading Cairo to reduce the value of the pound in the face of unprecedented inflationary pressures.  

This created a state of paralysis in most economic sectors, driving the country into a financial crisis and forcing it to boost trade with other nations in order to overcome the current difficult circumstances.  

This is why the rapprochement and restoration of diplomatic relations between Turkey and Egypt is an important step forward for Egyptian trade and economy. This new phase in the two countries' bilateral relations began to bear fruit last year, when Turkish companies pledged to invest 500 million dollars in Egypt, adding to current investments of more than 2 billion dollars. 

Egypt is looking to increase the value of industrial investments by about 10% this year to 3.6 billion dollars, focusing mainly on the medical, agricultural manufacturing, petrochemicals, food and beverages, and construction materials sectors. 

Many Turkish companies want to transfer their businesses to Egypt, while those already operating in the Egyptian market are also looking to expand their existing businesses due to the opportunities offered by the Arab country as a gateway to the African continent. 

The head of Turkey's Foreign Economic Relations Council (DEIK) confirmed last February that Turkish investments in Egypt provide 70,000 direct and 100,000 indirect employment opportunities, achieving a total annual return of 1.5 billion dollars. 

Turkish entrepreneurs working with Egypt manage one third of the country's total textile and garment exports. They are also gradually increasing as a result of investments in the sector and in other sectors such as tourism, logistics and retail.  

The volume of exchanges started to increase since 2007 thanks to the signing of the free trade agreement, currently reaching 10 billion dollars, Mustafa Denizer, president of the Turkish-Egyptian Business Council, said during an interview with the Turkish news agency Anadolu que. Denizer also stressed "the importance of trade relations between the two countries", expressing his desire for the trade volume to reach between 15 and 20 billion dollars in the next five years.  

Turkish products are popular in the Egyptian market due to their high quality and brand recognition at a time when both the Egyptian pound and the Turkish lira are facing a sharp fall in their values. This has led to a rise in inflation in both countries, which has had a negative impact on the prices of many goods and services.