Privatization debate in Egypt .. Why the government slaughters the chicken that bleeds gold?

Al-Jazeera-Cairo

The term "privatization", which the opposition sees as the back door of corruption and the destruction of the Egyptian economy, may not have borne the negative connotations of Egypt. The government sees the optimal solution to develop the public sector and achieve targeted growth rates.

In this context, the Ministry of the business sector is seeking to sell a number of the assets of the companies affiliated to the Ministry to pay its debts to a number of bodies such as electricity and taxes.

Economists saw the government move as a continuation of the policy announced years ago, and Ballon tested a larger trend by selling more assets to repay Egypt's debts.

Egypt's foreign debt stood at about $ 93.1 billion, while total domestic debt reached about 3.887 trillion pounds (about 17.3 pounds) at the end of September, according to the Central Bank of Egypt.

Three years ago, during a meeting held by the Economic Committee of the Egyptian parliament in mid-2016, Central Bank Governor Tariq Amer explained his vision to promote and stimulate the Egyptian economy, revealing the sale of state assets.

In the same context, former investment minister Dalia Khurshid said that quotas will be put in public companies, including oil companies.

Previous statements
In November 2016, Minister of Cooperation Sahar Nasr wrote an article in the Wall Street Journal saying that the government plans to introduce government companies to trade on the stock exchange, including utility companies such as water and electricity. The country, which prompted the government to deny the privatization of utility companies.

At the time, MP Alaa Abdel Moneim made an urgent statement to the Speaker of the House of Representatives. He asked: "How dare the government to declare the sale of public utilities?" He added that "these assets belong to the people and the government has no right to dispose of them."

Two months earlier, former business sector minister Ashraf al-Sharqawi announced that the government had drawn up a plan to privatize 115 public companies.

The government confirms fears
The government has confirmed these concerns by announcing the sale of the United Bank to a US investment fund within three months, without announcing the name of the fund. This has compounded doubts about its intentions, especially since it comes about two weeks after the announcement of the sale of Banque du Caire.

Earlier this month, the government offered a surprise and special offer to 4.5% of the shares of Eastern Tobacco, most of which went to private funds.

The stock was sold at around 17 pounds (slightly less than one dollar) for foreign and Arab investors, most notably UAE billionaire Mohammed Alabbar and a group of Saudi investors who bought a quarter of the shares offered.

The share was sold at the minimum price and less than the February investment bank Pharos, which said the fair value of the share in Eastern Tobacco exceeded that figure by two pounds, which left about half a billion pounds on the state, raising suspicions of courtesy of UAE and Saudi investors At the expense of Egyptians' property.

This trend is inseparable from the establishment of the Egyptian sovereign fund to limit all unused and unused state lands, in preparation for "exploiting" them in the words of officials, or "selling them," according to observers' concerns.

The Minister of Business Sector Hisham Tawfiq recently said that the ministry is preparing to sell 20 million meters of untapped land from the assets of the ministry's companies, to use proceeds of sale to develop and repay the debts of the ministry, amounting to 38 billion pounds at the Ministries of Electricity and Petroleum, and is scheduled to land during the next month.

Sales Plan
The Ministry's plan includes the sale of the unutilized assets in the companies, which are land belonging to the textile and textile companies of the Ministry of Public Works Sector, where 14 plots of cotton out of 25 will be sold, with a total area of ​​40 acres.

The government faces a number of obstacles to the sale of assets, especially the need for approval by the General Assembly of the company, as confirmed by the Cairo Economic Court in a ruling in 2016, when canceled the contract for the sale of mill in a province of Upper Egypt.

The Minister of Public Business Sector Hisham Tawfiq that the number of companies that will be the Ministry of land after the approval of the Council of Ministers to change the investment activity from industrial to residential up to 182 companies.

This change is dangerous, according to the writer and economic expert Mamdouh al-Wali, who said that "this means limiting these companies from the possibility of using their lands for industrial projects for local or foreign investors."

In an interview with Al Jazeera Net, Wali stressed that the trend to sell the assets of the public business sector is not new, and that the current Minister Hisham Tawfiq completes, but the expansion is unprecedented.

"If the development trend exists with the PA, the land would be sold as an industrial land," he said. "But there is no parliament that can discuss the issue, or the media can put the case up for discussion or bring a lawsuit to stop the proceedings."

He said that the absence of Parliament and the media from the discussion made the upper word for those who aim to liquidate many companies of the public business sector gradually. "Although the IMF demanded privatization or sale to the private sector, it did not demand the liquidation, as happened with the National Cement,

The slaughter of the hen
For his part, said Professor of Economics at the University of Auckland, US Mustafa Shahin that the government does not have the right to sell the assets of these companies, because they do not already own, they are either state-owned or land free of their owners for the public benefit in exchange for cheap, according to his description.

Shaheen promised this step the beginning of a plan for what he called "the empowerment of foreigners from the economy on the pretext of debt repayment, in a very malignant way, to convince the public and the liquidation of the business on the pretext of debt."

Shaheen said in his speech to Al-Jazeera Net that there was a pretext to liquidate the public sector on the pretext of developing it after introducing the private sector as a partner of a certain percentage to lead development. "No development has taken place, the industry has not progressed and exports have collapsed."

He criticized the lack of transparency and impartiality of such trends, so that the Egyptians know how to sell their assets and to whom and with you, noting that the land is the only remaining asset dependable for any future development, which will be dissipated by such policies.

Mustafa Shahin likens the government's plan to the behavior of the hen, who was cooking gold and slaughtered it in search of treasure.

Future deals
On the other hand, the financial expert and banker Mutasim Al-Shahidi said that investing in Egypt is a great opportunity for international institutions and investment entities in light of the decline in the value of assets compared to their values ​​in the markets and other countries. He stressed that the sale of the United Bank to a global institution could be the beginning of a series of future deals within the current economic reform program .

In a press statement, Al-Shehadi pointed out that the investment opportunities in Egypt are very large, especially as they read the future of the reform program, pointing out that the banking sector is the highest in terms of profitability compared to other sectors, which prompted the American Investment Fund to choose the United Bank.