Member of the Parliament Mohamed Abou El-Enein stressed that the small and medium sized enterprises (SMEs) bill would encourage youth to engage in technology-driven entrepreneurship of the fourth industrial revolution.
This came during his speech before the plenary session of the House of Representatives on Tuesday to discuss the draft law on SMEs in the presence of the Minister of Trade and Industry Nevine Gamea.
Abou El-Enein added that the law encourages investment in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, digital transformation projects that brings about new innovations, bearing in mind that foreign investor search for a climate, which includes strong presence of SMEs to serve mega projects.
The draft law will also promote renewable energy projects, and projects that serve agricultural or animal husbandry activities, giving investors incentives, including free land, deferred payment of utility delivery, technical training and tax incentives of only 2% on imports, as well as setting monetary incentive programs for these projects with a minimum of EGP 1.5 billion annually.
“The draft law was prepared in order to meet the requirements of the current stage, indicating that it addresses the obstacles facing these projects, building an integrated system to stimulate this sector and encourage entrepreneurship, linking small and mega projects,” the business tycoon noted.
He praised the central bank’s initiatives to support small enterprises, industry, tourism and real estate sectors, noting that the CBE allocated 5% loans for SMEs , and another EGP 50 billion to the tourism sector at an interest rate of 8% as well as EGP 100 billion for the industrial sector with another 8% , indicating that these initiatives helped enterprises affected by the Coronavirus outbreak to meet their obligations toward employees.
“The most successful way to develop SMEs is through linking them with large industries to operate as feeder industries, calling for the establishment of innovative companies’ zones to creates jobs, provide more tax revenue, giving Egypt a comparative advantage over other countries,” the MP said, adding that specialized industrial zones provide diversified services to attract more investments, reduce production costs, deepen industry through a spillover effect.
“In times of global economic crises, the importance of SMEs increase as they have a big ability to resist economic shocks as most their production is used locally. Also, these enterprises have a greater ability to generate jobs with low investments, raising the competitiveness of the national economy and enhancing it,” Abou El-Enein pointed out.
He called for the formation of industrial clusters specialized in small industries similar to the Japanese city of Kobe, which attracts young entrepreneurs and start ups due to its easy-to-grow environment.
He pointed out to the importance of establishing business clusters, creating a geographic concentration of interconnected businesses, suppliers, and associated institutions, leading to an increase in the productivity and competitions between enterprises.
The parliament member stressed the need to reduce the costs of investment and industrial production through a package of decisions that include; lowering energy prices, reducing transportation costs, labor costs, and industrial land prices, activating the industrial licensing law, and abolishing real estate taxes on factories, leading to a more competitive industry, increasing Egypt’s attractiveness in the global investment market.
He called for establishing new programs in universities and technical institutes to prepare a skilled general for future industries in the market place.
Abou El-Enein concluded that according to the latest economic data, the number of SMEs in Egypt reached 1.7 million, employing 5.8 million workers, and contributing to about 16.7% of industrial output and only 4% of Egypt’s exports, compared to 31% in Morocco, 36% in South Africa and 49% In Italy, pointing out that small industries are the backbone of major industrial economies, such as japan.