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Tuesday, 15 November 2016

Business associations aren’t pleased with the new Investment Act?

Business associations aren’t pleased with the new Investment Act? Business associations appear uniformly unhappy with Investment Minister Dalia Khorshid’s proposed draft of the new Investment Act, media reports suggest, though we caution that (a) the industry associations love to gripe, (b) the domestic press loves to quote industry association figures who are, in effect, professional industry association people to the exclusion of all else; and (c) it may be that folks are too busy with earnings season, but no senior executive with whom we have spoken in the past week has said one word about the proposed act. We’ll be asking in the days ahead. Meanwhile, the sum the complaints:

  • Taxation: The Egyptian Businessmen’s Association (EBA) recommended that the tax code should remain as is for at least 10 years to maintain consistency for investors;
  • Prices: Articles that appear to give the government leeway to enforce price caps on strategic goods need to go;
  • Labor: Elements of the bill that would set a 10% limit on employing foreigners if qualified Egyptians cannot be found to fill these vacancies;
  • The failed one-stop shop policy lives on: Leaving the General Authority for Investments and Free Zone (GAFI) primacy over land sales, and the formation of committees with members from varying other government bodies to grant licenses;
  • Accreditation agencies: Allowing for private agencies to certify that the investor has met licensing requirements (effectively the privatization of regulatory compliance checks — something to which only a committed, already-lobotomized Nasserist could object, in our view.)

The Federation of Egyptian Industries (FEI) was among those that says it would reject the bill altogether, suggesting it be thrown out and that the previous 2015 draft be revived and modified, said FEI board member Mahmoud Suleiman. Suleiman did not specify what articles the FEI found objectionable, only adding that the it would draft its recommended amendments to old 1997 law and forward its views to the Investment Ministry. EBA head Ali Eissa tells Al Borsa that many features of the act require clarification.

If the grousing is real, it could call into question Khorshid’s timeline for the law, which she said she wanted to send to Cabinet for review by the end of this month, with a view to it becoming law by the end of the year. The minister had said on Monday that the law would not pass until consensus had been reached, and there were rumblings that the Finance Ministry might want to tweak the bill.

Khorshid appears to be having better luck with the Housing Ministry than with the industry associations, with Housing Minister Moustafa Madbouly announcing that the two had agreed on land sales to the private sector for real estate projects, licensing, and jurisdiction. This is a major step forward for Khorshid, as one of the main sticking points in the 2015 law was the overlapping jurisdiction on land sales, which had caused beef between the GAFI and the New Urban Communities Authority.

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