Gov’t approves investment law draft
Habemus investment act: The Ismail cabinet approved the final draft of the investment act at its meeting last Thursday and sent it to the State Council (Maglis Al Dowla) for final review prior. The Council will then forward the law to the House of Representatives for debate. Investment Minister Dalia Khorshid said her ministry has already begun drafting the executive regulations for the act and added that the bill is one of a number of pieces of legislation that aim to improve the investment climate in Egypt. The law does not impact any existing agreements or benefits already in place.
Who benefits? Priority industries, the ministry said, include manufacturing, mining and quarrying, land reclamation, agricultural production, transportation, oil and gas, energy, hospital care, hotels, CIT, education services, and sports investments, among others. We don’t really get the sports bit (though our ballooning waistlines could benefit), but the rest of it is really on point — and we’re delighted to see communications and information technology included.
The General Authority for Investment (GAFI) will be the sole authority responsible for providing permits to establish companies under the investment law. You’ll be able to incorporate a company online and, once the system is in place, it will become the only way for companies to be set up under the law. The law requires GAFI to assess requests to form companies under the investment act within one working day and guarantees that foreign investors will be treated the same as domestic ones with protection against nationalisation, confiscation, and immediate permit cancellation and any decisions that would add financial requirements to investors without GAFI’s approval.
The law also allows investors to repatriate profits freely and to import inputs without having to register with the import registry. Companies are also allowed to employ expats up to 10% of the business’ workforce, increasing it to up to 20% in case the company requires specific specialties not available in the local labour market.
Incentives include exemptions from stamp and registration tax for five years and a restriction on customs duties to 2% on all inputs and machinery imports, as well as a yet-to-be determined incentives based on the industry and the geographic location of the project. The details on this last bit are unclear, but that’s the stuff that’s typically left to executive regulations. We expect the additional exemptions and incentives will be centered around Upper Egypt, Port Said and the New Administrative Capital in line with a policy statement from the Supreme Investment Council made on 1 November 2016.
Interestingly, the act does not appear to cover private free zones, extending incentives kindly to public free zones and special investment / economic zones, if we’re reading it correctly.