* Gulf Arab investors hesitate
* Egyptian government promises to improve investment climate
* Egypt under pressure to fix economy on its own
By Asma Alsharif and Shadia Nasralla
CAIRO, Dec 5 Gulf Arab governments are willing
to pour billions of dollars into Egypt to prop up an ally's
economy, but businessmen from the wealthy region are far more
wary of a country where they have been burned before.
Saudi Arabia, Kuwait and the United Arab Emirates came to
Egypt's aid after the army toppled Islamist President Mohamed
Mursi in July following mass protests against his rule.
The oil-producing states, deeply distrustful of Mursi's
Muslim Brotherhood, pledged over $12 billion to help an economy
that has been battered by political upheaval since a popular
uprising ousted autocrat Hosni Mubarak in 2011.
This week at a Cairo conference designed to lure Gulf
investors, officials promised to pay back some of the $6 billion
Egypt owes foreign oil firms, reform legislation that hurts
investors, and reduce the country's cumbersome bureaucracy.
For private Gulf Arab investors, whose businesses in Egypt
faced legal challenges after Mubarak's ouster, a return will
only come with guarantees that their money will be safe.
Egyptian courts have issued at least 11 rulings since the
revolution that toppled Mubarak, ordering the state to reverse
deals signed by the former president's administration.
The lawsuits have been brought by activists and lawyers who
alleged that companies were sold off too cheaply in moves
representative of the corrupt business practices during the
Subsequent rulings have plunged a number of foreign
companies operating in Egypt into legal limbo, which could scare
off much-needed investment from abroad and add to an already
difficult business climate.
Many Gulf companies were exposed to the risk of
"We really need to overcome these uncertainties to make
meaningful investment in Egypt. I am more optimistic but
cautious ... They have to act quickly," said Omar Al-Futtaim,
CEO and Vice Chairman of Al Futtaim Real Estate of the United
"To attract big investment it's a need (to have) an
attractive environment,... a lot of transparency, especially
when it comes to law and regulation, and enforcement of
UAE Minister of State Sultan Al Jaber called for the right
legal framework to reassure investors who are interested in
various sectors including agriculture and energy.
The Egyptian government is preparing a law to reinforce the
legal standing of past contracts with the state, but investors
say they will not make a move until they see serious progress.
"Many of the Saudi and Emirati investors are worried the
current government will abrogate contracts made in the previous
era," said Abdullah bin Mahfouz, Chairman of the Saudi Egyptian
Business Council, referring to contracts made before 2011.
The country's interim prime minister announced that Egypt
has successfully resolved 19 disputes with businessmen and
promised to look into the remaining cases.
But concerns are deep-seated.
Eighteen Saudi businessmen, who had met at a Saudi-owned
luxury mall in Cairo and drafted a set of demands that all
previous contracts be honoured, presented them to
interim-President Adly Mansour on Thursday.
Aside from the legal obstacles to investment, conditions on
the ground in Egypt remain discouraging, with the possibility
that a political roadmap meant to lead to free elections may not
be enough to bring stability.
Political upheaval has hammered tourism, a pillar of the
economy, and there are no signs that the government and the
Brotherhood will reconcile their difference. Since Mursi's
ouster, attacks by Islamist militants on security forces have
The country's foreign reserves plunged to a low of $13.4
billion in March, compared with $36 billion on the eve of the
Gulf states, with the exception of Qatar which supported the
Brotherhood, have promised to stand by Egypt.
But the most populous Arab state will eventually come under
pressure to find solutions on its own. That will require luring
private sector investment.
When an Egyptian delegation visited the UAE in October,
Deputy Prime Minister Mansour bin Zayed al-Nahyan said Egypt
cannot live on Gulf aid alone and must think of "innovative and
unusual ways" to revive its economy.
To encourage action, five Saudi businessmen have set up a
company called Furas, Arabic for 'Chances', with paid in capital
of 10 million Saudi Riyals ($2.7 million) which they intend to
increase to 100 million riyals if the Egyptian government meets
"If the Egyptian government amends its regulations, current
investors will increase their investments. But if it does not,
we will stay with the same capital that was paid. That's it, no
more," Bin Mahfouz said, summing up the mood of Gulf Arab
($1 = 3.7506 Saudi riyals)
(Editing by Michael Georgy and Hugh Lawson)