I write this week from Cairo, where the Egypt-Gulf Investment Forum was held to discuss investment opportunities in Egypt. The meeting was timely because Egypt has suffered greatly over the past two years as investment flows slowed down and investors became apprehensive about returning to Egypt waiting for the dust to settle.

Given those circumstances, it was surprising to see how well-attended the forum was. Organizers estimated that 1,400 businesspeople took part, including about 400 from GCC countries. Egypt’s Prime Minister Hazem Al-Biblawi and most of his cabinet members were also in attendance.

There was an upbeat mood at the forum, which was held in a resort just outside the hustle and bustle (and daily demonstrations) of Cairo. The conclusion of the constitutional conference, known as the “Committee of 50,” the day before the forum opened buoyed the mood. The committee agreed to a draft constitution, which will be put for referendum in coming weeks. Its chairman was at the forum to celebrate that milestone.

Officials in particular were sanguine about the prospects for the Egyptian economy, promising wide-ranging changes in investment rules and regulations to attract investors and stimulate the economy. The investment minister optimistically expected foreign investment to reach $25 billion by mid-2014, an increase during the next six months of $3 billion from its current level. By contrast, FDI flows during 2012 totalled only $2.2 billion. About 50 percent of foreign investment in Egypt comes from GCC countries, according to officials addressing the forum.

Al-Biblawi, who was a well-known economist in his own right before becoming prime minister earlier this year, was more realistic about the pace of those promised reforms. He said, only partly in jest I thought, that we had to keep in mind that we were talking about the oldest bureaucracy in the world. It has not had a strong appetite for quick change in the past.

Trade and cultural relations between Egypt and Arabia (including the Gulf) go back thousands of years. As a result, the two sides of the Red Sea are almost indistinguishable from each other, physically and culturally. Even 2,500 years ago, the ancient Greek historian Herodotus found it hard to delineate the borders between Arabia and Egypt proper.

However intimate and close relations are between the two sides of the Red Sea, and no matter how much political will and goodwill exist, trade and investment have logics of their own. The secret lies in matching the needs of the host country with those of private investors and traders. The host government is naturally interested in investments that create jobs, contribute to the GDP growth, and help in the transfer of technologies and best practices. On the other hand, investors are interested in safety of their capital and getting the highest returns to their investment. Gulf investors are no different in this regard from Egyptians or other international investors. In addition, Gulf investors, many of whom live and work in Egypt, are genuinely interested in contributing to Egypt’s prosperity and the wellbeing of its people.

Before delivering my keynote address at the forum, I spoke with businessmen from GCC countries, some of whom had been investing in Egypt for many years. Some were new to the scene and keen to explore new opportunities in Egypt, but had questions about its economic prospects, as well as concerns about stability, security and investment risks.

I tried to highlight some of those concerns in the following points:

First, Egypt needs to restore security and political stability as soon as possible, and project a new image to investors. Faithfully implementing the declared “roadmap” and the just-concluded constitutional conference are key elements toward that goal.

Second, promote investment opportunities that fulfill government policy objectives, while providing safe and profitable returns. Directly engaging investors will help.

Third, reform the business legal environment, including reform of the foreign investment law, the conclusion of more double-taxation agreements, and establishment of clear legal dispute-resolution mechanisms. It was encouraging that several officials indicated that reforms in this area were already under way.

Fourth, offer investment guarantees. While legal assurances are important, financial guarantees will reassure investors more. Those guarantees can be obtained from banks and financial markets, as well as regional and international organizations.

Fifth, provide economic incentives, including easing export and import procedures, reducing or removing tariffs on investment-relevant imports, and maintaining stability of the foreign exchange rate.

Sixth, develop infrastructure. While slowly improving, Egypt is still straddled with an outdated infrastructure that reduces its pull for investors. Roads, ports and communications have a long way to become world class. Fortunately, GCC companies have developed a niche in this area and can help. Some of those developers were at the forum, bullish on Egypt’s future.

By the end of the two-day forum, it was encouraging to note that officials and investors were on the same page. Both agreed that Egypt, centrally located and most populous Arab country, possesses great unexplored potential." It has more university-educated people than any other country in the Arab region. All of these factors should make Egypt a logical destination for investment, local and international.

At the same time, while promoting some 60 major investment projects throughout Egypt, officials announced that they were ready to offer assurances and guarantees to reduce risk. They also announced improved dispute-resolution procedures that have resulted in settling 19 cases involving Gulf investors, with more on the way.

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