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Wednesday, 30 August 2017

On the horizon

LEGISLATION WATCH- September is almost upon us, and with it will come the antics of our esteemed members of the House of Representatives as they contemplate — and seek to impose their unique stamp on — the Ismail government’s very busy legislative agenda. Here’s what you need to know:

Date note set yet: President Abdel Fattah El Sisi has yet to decide when the fall session will begin.

Amendments to the Central Bank and Banking Act: Proposed amendments stirred controversy when details emerged last month, particularly including over term limits for managing directors, CBE representation on bank boards, and a proposal that banks kick in 5% of their bottom lines annually for an industry development fund. The CBE is in talks with the Federation of Egyptian Banks to iron out these controversies, where we hear that progress is being made.

The Bankruptcy Act: This long-awaited piece of legislation is expected to improve Egypt’s ranking in the World Bank’s Doing Business report by introducing for the first time measures that would give struggling companies a window in which to reorganize. The bill would effectively decriminalize bankruptcy and could make it possible for companies to request time to re-structure under US “chapter 11” style bankruptcy protection. This bill is expected to be among the first key pieces of legislation that House will look at in the fall session.

M&A to be subject to prior approval from competition authority? The Egyptian Competition Authority is pushing for the introduction of legislation within the coming two months that would require its stamp of approval on M&A transactions. At its initial phase, M&A larger than EGP 100 mn will require the ECA’s approval, but ECA chief Mona El Garf hinted that the bill may be amended at some point in the future to include smaller transactions.

The Universal Healthcare Act: Probably one of the most important social legislation this year, the Universal Healthcare aims to completely revamp healthcare in the country by ensuring quality of service in all public hospitals and making them available to the every Egyptian. Implementing the Act is expected to cost the state EGP 130 bn this current fiscal year. Employers and workers will both be paying into the national health insurance fund. The Ismail cabinet is expected to review the law today with an eye towards shepherding it through the House in September.

Other bills to keep your eye on:

  • The Automotive Directive: The law, which has been stalled due to an outcry from auto importers, may be put up to a vote by November. It would give assemblers incentives to go further up the value chain into manufacturing, giving them a measure of protection against what they say are unfair benefits enjoyed by Turkish, EU and Moroccan imports.
  • Legislation to set prices for private sector healthcare: The latest hair-brained scheme from the Health Ministry to cap prices for private healthcare is in the midst of “national dialogue,” which we hope turns into a national filibuster.
  • Privatizing railway? House to introduce new legislation that would allow the private sector to directly build, manage, and conduct maintenance of railway infrastructure. The Transport Ministry finished drafting similar legislation.
  • Uber, Careem and other ride-sharing apps could face regulation under a bill now before the House that would also require servers be based in Egypt — and that access be granted to relevant government bodies.

And don’t forget about the executive regulations — that’s where the rubber meets the road. The executive regs of the Investment Act are yet to receive final signoff (they’re now with the State Council for review after being blessed by the Ismail cabinet), and a first draft of the regs on the natural gas industry deregulation act has yet to be made public.

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