by Ahmed Shafiq
CAIRO, Jan. 22 (Xinhua) -- German carmaker Mercedes-Benz's decision to resume manufacturing and assembling lines in Egypt after a four-year halt will have positive effects on the country's investment climate, an Egyptian expert said Tuesday.
The German automaker announced on Friday that it is developing plans to open an assembly plant in Egypt.
Mercedes-Benz said the plant would be built in cooperation with a local partner, adding that successful discussions were being held with the Egyptian government to support the project.
In 2015, Mercedes-Benz suspended its relationship with the Egyptian-German Automotive Company, which assembles cars inside Egypt.
"The move is very important as it reflects the trust of such a big company in the Egyptian economy which has been rapidly developing," Hanan Fathy, head of economic unit at the al-Hewar Center for Political and Media Studies, told Xinhua.
The expert said the decision of the German automaker comes after the internationally-applauded Egyptian economic reform has proved a success.
Over the past few years, Egypt has been struggling to overcome an economic recession that resulted from political turmoil and relevant security challenges, which led the country in late 2016 to start a strict three-year economic reform program.
The program includes austerity measures, energy subsidy cuts and tax increases, in addition to local currency floatation to contain U.S. dollar shortage.
Despite the collateral damage such as price hikes and high inflation rates, the liberalization of the Egyptian pound's exchange rate encouraged the International Monetary Fund (IMF) to support Egypt's reform plan.
The IMF provided a 12-billion-dollar loan, two-thirds of which has already been delivered, while Egypt expects a tranche of 2 billion dollars from the loan within weeks.
"The presence of Mercedes-Benz in the Egyptian market will definitely attract more foreign companies to invest in Egypt, giving the Egyptian economy more international credit," Fathy pointed out.
More investments mean more development, she added, stressing that such projects will raise Egypt's world economic ranking.
Markus Schafer, a member of the Divisional Board of Mercedes-Benz, Production and Supply Chain, said in a statement on Friday that his company is confident to be able to expand its market position with the planned local assembly.
"The planned localization effort is being developed in close collaboration with the Egyptian government," the German automaker said in a recent statement.
"With its own import and sales organization, a central spare parts warehouse as well as numerous authorized retailers and workshops in Cairo, Giza, Alexandria and Hurghada, Mercedes-Benz secures more than 1,000 direct and indirect jobs in Egypt," the statement added.
For Egyptian officials, the good news of Mercedes-Benz's return was described as an indication of the government's success to improve the country's economy in a short period of time.
Presidential Spokesman Bassam Rady said the decision taken by Mercedes-Benz to resume activities in Egypt will have positive effects on the country's investment, expecting the move to encourage other companies to invest in Egypt.
The decision sends a positive message to the world's business community, Rady recently told official MENA news agency.
"It is not just about the return of a giant company to the Egyptian market, but will also help attract more investments into Egypt in the future," he added.
Meanwhile, the Egyptian economic expert said that the return of Mercedes-Benz is a great chance that should be perfectly used.
"The return of the giant company will revive the Egyptian industrial market," Fathy said, noting that there are many international and local expectations that the Egyptian economy will make leaps in the coming few years.
The London-based Standard Chartered Bank, said on Monday that Egypt will rank the 7th largest economy in the world by 2030.
According to a report conducted by the bank, the volume of Egypt's economy will hit 8.2 trillion U.S. dollars by 2030.
Egypt achieved a high economic growth of 5.3 percent in the 2017-18 fiscal year, which runs from the beginning of July to the end of June.
The Egyptian government expected the growth rate to reach 5.8 percent in the 2018-19 fiscal year.
