Tuesday,25 September, 2018
Current issue | Issue 1276, (31 December 2015 - 6 January 2016))
Tuesday,25 September, 2018
Issue 1276, (31 December 2015 - 6 January 2016))

Ahram Weekly

Investment amendments not welcome

Investors are not happy with the new amendments made to the investment law, reports Ahmed Kotb

Al-Ahram Weekly

Amendments to Egypt’s investment law 8/1997, which were approved by the cabinet on 16 December, have been faced with wide scale rejection from investors.

Minister of Investment Ashraf Salman announced at a press conference that the amendments were aimed at attracting more investments to Egypt by removing obstacles, simplifying procedures and offering incentives and that they included modifications to the one-stop shop system which enables investors to obtain permits and licenses from only one place, the General Authority for Investment (GAFI), instead of multiple government entities.

Despite not disclosing all the details surrounding the amendments, Salman added that the changes had been made to the ministerial Dispute Resolution Committee (DRC) to authorise it to carry out law-enforcement decisions as well as solve problems relating to free zones.

However, many businessmen and investors along with the Federation of Egyptian Industries (FEI) oppose the amendments. “The law is full of defects and does not help investment in the way that it should,” said Khaled Abul-Makarem, head of the Export Council for Chemicals and Fertilisers.

The regulations for the allocation of land were not clear because investors were supposed only to deal with the GAFI under the one-stop shop system, but the new amendments to the investment law gave other entities authority to issue permits complicating procedures for the allocation of land to investors, he said.

A five-point proposal was prepared by the FEI and submitted to president Abdel-Fattah Al-Sisi last week to explain why the latest amendments should not be implemented, he added.

The proposal describes the amendments as “extremely harmful” to national investment and several industrial sectors. It states that the amendments do not make land allocations clear or clarify the mechanisms of the one-stop shop system. It requests further discussion of investment law 8/1997 in order to reach the best course for attracting more investments to Egypt.

Salman said in a press conference on Sunday that the FEI had been represented in the legislative committee that had formulated the law’s amendments and that these had been approved and were now being implemented.

“There is no intention to suspend or modify the law again,” he said.

But Tarek Tewfik, the FEI’s vice-chairman, said that he had been part of the committee that had formulated the amendments last March but had not been involved in the latest amendments. 

“The amendments which were passed by the cabinet are shocking to the investment community,” he said, adding that the proposal submitted to the president was an “essential step because we need to clarify that the investment law should take Egypt’s investment system into consideration.”

The system has to be properly prepared for any law before implementing it, Tewfik added, since otherwise things could backfire “as they would under the latest amendments.”

“It would be best for all to adopt investment law 8 of 1997 as it was before the amendments,” Abul-Makarem said, since this would be the best in terms of attracting investments, as had been evident in the number of investments that took place following its implementation.

Previous amendments to the law were passed and approved by presidential decree 17/2015 prior to the Egypt Economic Development Conference (EEDC) in March.

They included new provisions to lower sales taxes and customs duties on imports of machines and equipment, easing the establishment and activation of free-trade zones, and organising the disposition of lands and buildings as well as the ownership of land.

One of the most important issues tackled in the amendments in March was dispute resolution, which has cost Egypt billions since the 25 January Revolution because of the rising number of cases initiated against the country regarding the settlement of investment disputes.

The amendments included new provisions to encourage the settlement of state-investor disputes out of court. They were part of Egypt’s efforts to enhance the investment environment in order to attract more investors and help support economic mobility.

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