Sunday,17 February, 2019
Current issue | Issue 1341, (20 - 26 April 2017)
Sunday,17 February, 2019
Issue 1341, (20 - 26 April 2017)

Ahram Weekly

Investment law awaits approval

Final amendments to the new investment law will be presented to a general session of parliament ahead of its ratification, reports Safiya Mounir

 The new investment law has been in the making since the Egypt Economic Development Conference in March 2015
The new investment law has been in the making since the Egypt Economic Development Conference in March 2015

In March 2015, the government unveiled the draft of a new investment law, saying that this would trigger foreign investment returning to Egypt. However, the jury is still out about whether this has happened.

Former investment minister Dalia Khorshid said last year that dialogue had begun with those affected by the new investment law in order to ensure that the draft legislation eliminated problems facing investors in Egypt.

These include the system of land allocation for investment, procedural obstacles for licensing, legal deadlines for investor applications, and incentives to attract more investment.

Amr Ghalab, chairman of parliament’s Economy Committee, told Al-Ahram Weekly that the committee would meet next week to discuss activities eligible for incentives to investment in free economic zones. He said the new law would require project owners to hire more labour in order to benefit from incentives in such zones.

Ghalab added that some articles of the new law were contentious, including the creation of an arbitration centre to deal with disputes between investors and the state. Some members of the committee believe investors should have the freedom to go to an independent centre instead of having to resort to a specific one, he said.

Mohamed Saad Badrawi, a member of the committee, said it had completed most of its amendments and was awaiting responses from the government. “The committee made some amendments to the draft law, including to Article 6 regarding the creation of a commercial register that requires the Investment Authority to complete the registration process within one day of declaring a new business,” Badrawi explained.

Article 8 of the new law states that the Investment Authority must decide on a new project within one business day at most, and a company acquires legal status as soon as a certificate of incorporation is issued.

Badrawi added that other amendments include those related to free economic zones that were eliminated in 2015, but will now be restored and come under strict supervision to prevent abuses or the undermining of local production.

The zones are exempt from taxes and tariffs because they export their entire production, and as a result goods made in them cost less than similar goods on the local market.

The cabinet began discussing the amendments to the new law last October. At the end of January, the State Council approved the amendments presented by the cabinet and sent them to parliament for discussion. The Economy Committee has since cut the legislation’s articles from 114 to 99.

Badrawi said the amendments would ensure that companies can transfer their profits overseas since this has been a source of contention in the past.

Another article from the 2015 law that is being revisited is Article 18 which bans agencies in charge of land, such as the Tourism Development Authority or the Industrial Development Authority, from calculating the price of the land they hold.

This has in the past delayed land allocation because the law states that only four organisations can price land, namely the Land Usage Agency, the Investment Authority, the Government Services Authority and the Urban Communities Authority.

This article has sometimes delayed land allocation decrees for investors and hindered land pricing, causing the process to take up to six months, according to Essam Imam, an official at the Tourism Development Authority.

Imam said the revised article eliminated a key responsibility of organisations in charge of land, namely pricing. The draft legislation states that such organisations in charge of land represented by government agencies will now submit to the Investment Authority a map of the land under their authority to show investors and explore how to facilitate procedures for investment projects.

The draft law also gives advantages to investors in terms of enhanced incentives. Article 20 allows investors to employ foreign labour at between 10 and 20 per cent of a project’s labour force. “This allows the employment of a large amount of foreign labour, with the possibility of an added exemption up to 30 per cent,” according to committee member Amr Gohari.

Ghalab noted that the relevant minister must approve the hiring of foreign labour, with criteria being stated in the bylaws of the legislation.

The writer is a freelance journalist.

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