House could vote on Investment Act today
The House of Representatives’ general assembly is set to begin debate on theproposed Investment Act today. The prelude to a final vote on the bill comes after the House Economic Committee concluded its review, according to Al Borsa. We’ll believe that when we see it, as the government is reportedly yet to sign off on new amendments recently introduced by the House’s Economic Committee that don’t seem to be sitting well with the Finance Ministry, particularly a decision to bring back private free zones, but with added stipulations, state officials tell Al Mal.
Private-sector owned free zones: Real controversy or straw man? Economic Committee chair Amr Ghallab had announced on Sunday night that private free zones were a necessity in light of Egypt’s economic difficulties and the need to attract more investment. The decision, which makes the establishment of new private free zones subject to government approval, is not yet final, high-ranking government officials also tell Al Borsa. New private free zones were banned by amendments introduced to the Investment Law in 2015, but existing zones were allowed to continue operations until the end of their contracts. MPs and members of the business community have been lobbying for their comeback since discussions over the new Investment Act began, but the Finance Ministry had voiced repeated objections to the idea over the last several months. The Federation of Egyptian Chambers of Commerce and other businessmen and associations naturally applauded the move. The Finance Ministry is yet to issue a formal response on the issue but Investment and International Cooperation Minister Sahar Nasr is set to attend the discussions at the general assembly session, she told the press on Monday.
Investment incentives and a ‘new’ one-stop shop: Other amendments to the Investment Act, which has now been reduced to 95 from 99 articles, include slightly amending the one-stop-shop window to an Investor Service Center that would operate under the jurisdiction of the General Authority for Free Zones and Investment (GAFI). In addition to setting the cap for foreign labor at 20% at most for exceptional cases, the amended bill also offers further incentives, such as allocating free land and offering higher tax rebates to investors operating certain types of projects in strategic locations, including Upper Egypt, Fayoum, Marsa Matrouh, and the Suez Canal Economic Zone, to name a few.
Retroactivity — in a good way: Under the amendments coming out of the Economic Committee, any investment or new company that formed up to 30 months before the law’s passage would be eligible to benefit from the incentives outlined in the act and its subsequent executive regulations.
Caveat: The law sets a broad framework, but you’ll want to read it against (a) the policy framework it’s designed to turn into reality and (b) the executive regulations on the act, which are where the proverbial rubber meets the road. Investment Minister Sahar Nasr has promised to do her best to expedite issuance of the executive regs for the act.
Background on the framework: This is all in line with the broad principles handed down last year by the Supreme Investment Council headed by President Abdel Fattah El Sisi
This is a developing story, so look for more tomorrow as additional media reports surface. In the meantime, start with a read of Al Ahram’s rundown of the amendments passed by the committee.