CAIRO: Prime Minister Ahmed Nazif announced yesterday that a long-anticipated law for special economic courts will be sent to parliament in two weeks.
Speaking at the fourth annual Economist Conference, Nazif says that the law has been prepared and is being reviewed by the cabinet.
The law will create separate courts for settling commercial disputes. The special courts are expected to address the common complaint of prolonged cases and poorly prepared judges in the conventional court system.
Nazif explains that the judges in the new courts will be more oriented toward laws that relate to business.
The idea of special courts for commercial disputes is popular within the business community, which anticipates that the new courts will accelerate the resolution of cases and improve the quality of judgments on complex cases.
But some question the fate of the rest of the judiciary and fear that the creation of a separate court system may be symptomatic of an unhealthy general approach to reform.
“It might be a pragmatic solution, economist Ahmed Galal told The Daily Star Egypt in January, “but it is very problematic in a fundamental way. It’s problematic in the sense that every time you have a serious problem, you leave it and you go and fix something on the side.
A new higher ministerial committee has also recently been created to settle disputes between businesses and the government. Nazif explains that the rulings of the committee will be binding on the government but not on businesses. In other words, the government is obliged to comply with any ruling against it, while a business may choose to ignore the committee s rulings.
Nazif reflected on his government s economic accomplishments, reiterating his view that investment is a fundamental driver for growth, adding that development must spread to rural areas in order for economic prosperity to reach the poorer segments of society.
This development requires the construction of basic infrastructure, such as sewage, water and roads, according Nazif, which presents opportunities for partnership between the government and the private sector.
The mismatch between the demand and supply of skills in the labor market is frequently cited as one of the country s most substantial economic challenges. To address this, Nazif says that he plans to introduce a program for internships in which the government will cover the salary of new employees for a six-month training period in the private sector, provided the employer retains the worker when the training period ends.
Stimulation of small and medium-sized businesses is also seen as critical to widespread economic growth. Nazif says that the high cost of land is one of the major impediments for small businesses, and that his government intends to reduce the price of land in new industrial areas in the future.
On the trade front, Egypt benefits from close ties with Europe, Africa and other Arab countries through various trade agreements. The Greater Arab Free Trade Area was created to encourage closer commercial ties between Arab countries, but its effectiveness has been diminished due to the incorporation of negative lists, whereby each country can choose products which are excluded from the agreement.
Nazif explains that further economic integration between Arab countries is unlikely to occur in the near future, but he expects stronger links with Europe, particularly after the implementation of the Neighborhood Policy.
Egypt has signed an Association Agreement with the European Union, covering areas of technical cooperation. An action plan is currently being negotiated within the framework of the EU s Neighborhood Policy, which eases trade restrictions in exchange for economic and political reform commitments. Details of the action plan have not been disclosed to the public, but Klaus Ebermann, the head of the EU delegation in Egypt, said last month that he expects a substantial increase in trade and cooperation once the action plan is finalized.
With regard to the state budget, which is heavily funded by domestic debt, Nazif says that parliament and the public must decide their priorities and that this will be reflected in the budget. Nazif emphasizes that the current system of subsidies needs to change while recognizing the political sensitivity of such issues.
Specifically, Nazif reiterates his government s stance that fuel subsidies benefit the rich more than the poor, with two-thirds of gasoline subsidies being paid to affluent members of society. The government s objective on subsidies is to target the poorest fifth of the population, which Nazif estimates at three million households; this is the primary task of the new Ministry of Social Solidarity for the coming 12 months.
Egypt has made substantial natural gas discoveries in recent years. The Prime Minister explains that a clear energy policy is necessary that strikes an appropriate balance between oil and gas export, domestic use and preservation of reserves.
He adds that the nation s natural gas reserves have attracted a great deal of interest from foreign investors, although existing oil and gas companies are outside of the scope of the Ministry of Investment s privatization program. However, the government is in the process of writing a policy for the energy sector and Nazif expects this to be finalized by the end of the year.
The Economist Conference continued yesterday with closed sessions between businesses and other government officials. All our Government Roundtables around the world are held in an off-the-record atmosphere in order to facilitate a very open exchange of ideas between the government and business, says Nenad Pacek, regional director of the Economist Intelligence Unit.
However, the government is already accused by many in the local press of catering too much to business interests and ignoring the needs of society-at-large. Such concerns were partly manifested in the recent row over the privatization program of Minister of Investment Mahmoud Mohieddin.
The government s sale of Egyptian American Bank to Calyon earlier this year prompted an outcry from legislators with charges of favoritism due to the fact that two of Calyon s local partners are cabinet ministers. This was followed by the ongoing controversial sale of the state-owned department store Omar Effendi, which dissidents claim is being sold below the value of the land and buildings.
Nazif acknowledges that the government needs to improve its communication of its economic agenda to the public, but explains that the legal case against the sale of Omar Effendi, made by the head of one of its affiliate companies, had prevented the cabinet from discussing the sale with the public.