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Al-Ahram Weekly 28 Oct. - 3 Nov. 1999 Issue No. 453 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 28 Oct. - 3 Nov. 1999 Issue No. 453
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Profile Study Special Sports People Time Out Chronicles Cartoons Letters Bills in the works
By Gamal Essam El-DinFollowing the new cabinet's first meeting last week, Safwat El-Sherif, the information minister, announced that the People's Assembly is expected in its new session -- the last before parliamentary elections are held next summer -- to pass a number of key political and economic bills. El-Sherif added that the cabinet had reviewed a report submitted by Kamal El-Shazli, minister of state for parliamentary affairs, on the most important draft laws that have to be passed in the parliament's coming session.
MPs and government insiders expect three especially controversial bills to be included in the coming parliamentary session's agenda.
Topping the list is a long-awaited bill called the 'Unified Companies Law'. In a press interview this week, Economy and Foreign Trade Minister Youssef Boutros Ghali said that this bill, which is the first of its kind in Egypt, is aimed at unifying all previous laws governing companies and investment projects in order to reduce red tape and encourage investors to launch new enterprises.
According to the bill's explanatory report, this proposed legislation supersedes as many as 15 existing investments laws, including Public Sector Law 203 of 1991. The bill, the report added, also includes a special chapter on companies that are 100 per cent state-owned. The new legislation seeks to govern all kinds of companies, regardless of their legal status (e.g. joint stock, limited liability) and regardless of the sector under which they are categorised (private or public or investment sectors). It also introduces a new type of company, the 'one-man project company', as well as a new system for corporate amalgamations and mergers.
Ghali explained that the one-man project company will help many small businesses take an accepted legal form. "The national economy is rife with many informal and marginal activities which are not categorised under any legal form. The law will help them attain this form so that they could be eligible for banking loans and tax incentives," Ghali said.
The Unified Companies Law, which is part of a long-term programme of reform of economic legislation, was first drafted five years ago. However, after one and a half years of deliberation, the cabinet decided to divide this unified bill into two measures. The first of these, known as the Investment Incentives and Guarantees Law, was passed in May 1997. MPs now think that it is high time for the second measure, which deals with the establishment of companies, to be submitted to parliament as soon as possible.
Abdel-Rahman Baraka, deputy chairman of parliament's economic affairs committee, told Al-Ahram Weekly, "While the Investment Incentives and Guarantees Law provided investors with a generous package of extended tax exemptions and protection from nationalisation of industries and assets, it has to be complemented by the Companies Law to facilitate investment procedures and licensing regulations."
Next on the list of expected economic bills is one aimed at regulating the performance of the Central Bank of Egypt (CBE). Two recent dramatic blows to the banking sector have pushed many economists and parliamentarians to call for amendment of the CBE bill. The first of these was the four-year saga known as the 'case of the loan deputies', in which 32 businessmen and bankers are currently standing trial for alleged financial irregularities involving more than LE1 billion. The case brought into question the extent of the CBE's current viability and powers in supervising and monitoring banking operations.
The second blow, which many economists believe was the primary reason behind the dismissal earlier this month of former Prime Minister Kamal El-Ganzouri, was the dollar crisis which affected the banking sector over the last eight months. The CBE was strongly criticised for poor performance in tackling this crisis and for being too submissive to the influence of El-Ganzouri.
According to former Finance Minister Ahmed Abu Ismail, while the central banking institutions of major industrialised countries such as the UK and Germany are fully independent institutions, the CBE is still largely controlled by the government and rarely acts as an independent financial watchdog.
During stormy debates last year on the privatisation of public sector banks, El-Ganzouri promised that the CBE law -- No 120 of 1975 -- would be amended to increase the bank's autonomy in decision-making. El-Ganzouri's system of over-centralised power, however, seems to have obstructed the submission of this amendment.
The suggested amendment to the CBE law states that the Central Bank, which is currently affiliated to the Ministry of Economy, will be transferred to the jurisdiction of the president of the republic. According to Abu Ismail, placing the CBE under the president's direct purview would provide it with the necessary independence, ridding it of ministerial bureaucracy, and would give the governor the power and immunity he will need both to reinforce the bank's supervisory role and to formulate state monetary and financial policy. "These greater powers are also designed to effectively help the CBE monitor banking mergers, protect public banks from foreign intervention and financial irregularities and ensure that their policies remain in line with the government's socio-economic objectives and plans," Abu Ismail said.
Equally important is a draft law aimed at encouraging banks to extend housing loans to limited-income clients. This draft law, known as the Mortgage Law, was submitted by Alexandrian business tycoon Talaat Mustafa. It was, however, rejected by the parliament when it came up for discussion two years ago. It was turned down because it violated Article 1052 of the civil code which bans any form of confiscation of mortgaged, public or private housing units.
Mustafa, however, proposed that the draft law be amended to exempt banks from civil code Article 1025 in order to encourage them to grant housing loans by giving them the right to repossess the housing units in case of buyer default. The Grand Sheikh of Al-Azhar, Mohamed Sayed Tantawi, announced last week that such loans should not be considered "haram" (prohibited by religion) as long as they are aimed at addressing social problems.
Tantawi's argument was hailed by economists who deemed it as the signal that would open the door for the mortgage bill to be passed by parliament at its next session.
