FJP 2011 Program on Economic Development
|Saturday, December 3,2011 20:24|
Economic development depends on the following basis:
- Realisation of the Legal State (or Rule of Law), creating a climate of legislative requirements of economic reform.
- Self-reliance and taking advantage of local resources "natural, financial and human" and the adoption of a production system based on a strategy to replace imports with local produce and products.
- Achieving partnership with the private sector and the Egyptian business sector only in the implementation of the state plan.
- Reconsidering the economic role of the state, giving a greater role for the private sector without eliminating the role of the state.
- Achieving transparency, creating an accurate database and an investment climate characterised by stability and clarity of the factors governing it.
- Recognising the sanctity of public money and respecting private property, unless inconsistent with the public interest.
- Gradual replacement of usurious institutions and transactions with Islamic ones.
A. The privatisation program:
Approach new forms of privatisation more effective and appropriate for the Egyptian economy, such as the privatisation of management, partnership and raising the efficiency of management…
- Refrain from privatisation of strategic industries such as medicine, food, energy etc.
- In the case of privatisation, it is essential that assets should be evaluated fairly and with total transparency.
- Priority should be given to national investors to buy these assets.
- Assets sold off should be replaced by new productive assets.
B. Competition, antitrust and consumer protection:
- Amend the law to protect competition and prevent monopolistic practices by abolishing the penalty on the first amount, to encourage informants on crimes of monopoly, while toughening sanctions on the perpetrators of these crimes.
- Rejuvenate the performance and the role of Competition Management and Antitrust Authority, away from the control of businesses and businessmen.
- Revitalise the important role of law and the Consumer Protection Agency.
C. The State general budget:
Recommendations to increase the State's resources and finance of the budget
10. Reviewing prices of electricity for the upper segments consumption, which exceed 500 kilowatt hours per month.
11. Collecting taxes due for payment – amounted to 5 billion Egyptian pounds last year – of which 37 billion is owed to senior financiers directorate, including 6.2 billion pounds in taxes owed by news organizations.
12. Reviewing the Income Tax Act to revitalise its role in increasing the state's resources, in addition to its role in supporting economic policies by reducing the tax rate on labour-intensive sectors of industry such as ready-made garments and textile or environment-friendly industries, such as cleaning and recycling of garbage, with rising tax rate on the rentier or commercial projects and businesses, in a progressive manner with suitable preparation for investment. For example, increasing the tax on income for the communications sector by only 10%, will lead to well over one billion Egyptian pounds extra for the state treasury.
13. Imposing a tax on capital gains, for example: trading in the stock market. Tax on the profits of stock should be 3% on the funds that come out of the market during a period of less than 6 months, 2% on the funds that come out of the market after a period of six months but less than a year, and 1% on the funds that remain in the market a year or more. A tax should also be imposed on the sale of land after ‘conversion’ (transforming land from agriculture to other purposes).
14. Restructuring real estate tax policies to support the implementation of the strategy to get out of the Nile Delta valley to the new regional growth areas.
15. Fighting tax evasion, to raise tax revenue on commercial and industrial activities, which currently does not exceed 5.5 billion Egyptian pounds, while the value of taxes on employment income amounts to 13 billion pounds.
16. Modifying and enacting the competition protection and monopoly prevention (antitrust) law.
17. Addressing the delayed implementation of the stalled 5-year plan projects, which leads to additional financial burdens as a result of overrunning planned costs.
18. Disposing of government idle stockpiles and setting controls to rationalize operations, such as coding and centralized procurement.
19. Fighting corruption, and providing efficient management of economic organisations and public companies.
20. Making best use of foreign loans and grants, and not resorting to those except after the completion of feasibility studies and necessary preparations for implementation.
21. Using financing instruments to finance State budget, which will lead to investing a large portion of idle deposits in the banking system – estimated at 500 billion Egyptian pounds – and will ease the burden of public debt.
The following should be taken into account when preparing estimates of expenditure in the general budget: