According to data gathered by the UN Center on Transnational Corporations, the overwhelming majority of foreign investment in Egypt has been from the United States, with the exception of the banking sector. There has been very little European investment, and virtually no Japanese presence. The UN data, covering the period from 1978 through early 1982, is incomplete, as it relies on public sources. It reflects mainly Western corporate investments and understates Arab investment concentrated in tourism and real estate. It does not provide the sums invested, but does break down the investments by parent company, country of origin, and line of business. According to the Financial Times (October 1981), foreign and joint venture investments total about $9.5 billion, of which some $2 billion have been in production.
The two sectors attracting substantial foreign interest are petroleum and banking. Petroleum seems to have attracted the largest sums, while banking investments have been more numerous. Oil investments include both major international firms and smaller, specialized oil service companies, some 48 in all. Their investments have been mostly in exploration and production rather than marketing. They have developed Egypt’s eastern fields in the Red Sea area, and there was an important new find in the western desert in early 1982.
The UN data on banking is especially incomplete. Estimates are that more than 70 investments were made in this period. About half of these were full-service commercial banks, and the remainder specialized banks for investment, trade and other services. They include Arab, Asian and European as well as American banks. Though some capital entered Egypt through these investments, Egyptian capital also left the country through these banks. The deputy prime minister for economic affairs has indicated that new foreign bank branches or joint ventures may be prohibited from financing imports, and restricted to investments.
The third largest sector for foreign investments was chemicals and pharmaceuticals, drawing many major US multinationals in this field. Paradoxically, Egypt has one of the most highly developed pharmaceutical industries in the Third World. Nearly all of it is in the public sector. Egyptian industry produces over 90 percent of Egypt’s pharmaceutical needs. It appears that these new foreign investments were not directed at establishing new production facilities, but rather at establishing mechanisms for overseas marketing cooperation, product licensing, and other forms of joint endeavor. This may open up new outlets for the Egyptian industry, while integrating it into the world pharmaceutical market.
There were some 18 investments in other branches of manufacturing, the most important being electronics (eight) and transportation equipment (two). Some of these are simple importing and marketing facilities; others are geared to production. Ford, for instance, builds auto parts for the Egyptian market, and some electronics firms may become involved in production on the fringes of Egypt’s growing arms industry.
Construction and engineering attracted 13 investments, including heavy equipment as well as offices. These projects include oil-related construction, shipping facilities and some public works. US military-related construction may also involve some firms. Tourism, including hotel management and airline offices and services, drew four investments. Film importers and distributors accounted for five. There is a sole foreign agribusiness investment: Coca-Cola’s citrus plantation, which was undertaken in order to gain a place in the Egyptian soft drink market.
A major example of the gaps in the UN data is the $120 million Ramses Hilton. Investors included Prince ‘Abdallah of Saudi Arabia, the Arab Libyan Bank, the Arab International Bank, the government of Abu Dhabi and Kuwait Hotels, Inc., as well as Egyptian interests.