Draft of Investment Act executive regulations is out
The first draft of the executive regulations to the Investment Act is out: After weeks of closed-door sessions, a draft of the Investment Act’s executive regulations is out (which you can view in full here courtesy of AMAY). The 108-page document outlines the state’s investment-promotion framework for everything from manufacturing to healthcare. The regulations also clarify which companies or investments are eligible for incentives. Among the document’s highlights:
- Projects eligible for the incentive program must begin production or break ground within the first three years of the executive regulations coming into effect;
- 50% of manufacturing inputs and raw materials must be sourced locally in order for an investment to be eligible;
- 20% of total output has to be exported for an investment to qualify;
- Incentives may also be granted based on the level of corporate social responsibility activities;
- Foreign investors are guaranteed the right and ability to repatriate profits and earnings;
- Foreign labor must not exceed 10% of the total workforce, except during exceptional circumstances which would allow for a cap of 20% if a General Authority for Freezones Zones and Investment (GAFI) assessment committee concurs that the higher level is required.
As for private freezones, the GAFI will only allow for the establishment of new private freezones if it decides that existing state-run zones won’t serve the same purpose. Additionally, companies established in private freezones must have a capital of no less than USD 10 mn. Companies in private freezones must also employ at least 500 workers and export at least 80% of their total output. Want to produce alcoholic beverages, weapons and ammunition, fuel, fertilizers, or any other energy-intensive product in a private freezone? Forget it — they’re all on the list of proscribed activities. GAFI will also be forming a committee to draft a comprehensive development plan for the areas, Al Mal reported.
Meanwhile, the Investment Ministry will be working on new digital services for the one-stop shop service centers created under the act, meant to serve as a one-stop-shop for all related matters. E-payments platform Fawry has signed on to provide electronic payment solutions that will allow investors to automatically transfer fees, according to AMAY.
The incentives could help Egypt reach its goal of attracting USD 8.7 bn in foreign direct investment in 2017, Investment Minister Sahar Nasr said, Al Mal reports. Total investments will increase to EGP 482 bn by end of 2017, compared with EGP 290 bn in 2014, Nasr added.