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Wednesday, 12 February 2020

Proposed amendments to Egypt’s sovereign fund law get House committee nod

LEGISLATION WATCH- House mulls tax breaks for companies owned by Sovereign Fund of Egypt: The House Planning and Budget Committee approved yesterday proposed amendments to the Sovereign Fund of Egypt (SFE) law that would provide VAT refunds to any company that is more than 50% owned by the SFE and its sub-funds, Al Mal reports. The government plans to set up sub-funds for the SFE to set up to attract investment into the logistics, renewables and manufacturing sectors.

Limiting legal action against the fund also approved: The amendments, which the Madbouly Cabinet had approved in December, would also limit the scope of legal action that can be taken against the fund and would shield contracts the fund has signed from third-party legal challenge. Presidential decrees to transfer public assets to the fund can also only be appealed by the entity which directly owns those assets or by the fund’s management team. Don’t assume the move is state encroachment: There’s a long track record of self-appointed (and very media-hungry) guardians of the public interest challenging privatization decisions taken in the open by cabinet and / or government officials.

The amendments will now make their way to the House general assembly for a final review and vote.

In other SFE news, the sovereign wealth fund will only hold minority stakes in military-owned companies under a recent agreement that will see the fund market army companies to prospective investors, said Planning and Economic Development Minister Hala El Said, according to Al Mal. The cooperation agreement, signed last week between the SFE and military-affiliated National Service Products Organization (NSPO), allows the private sector to obtain stakes of up to 100% in the companies, and paves the way for the companies to sell stakes on the EGX. Its signing came after President Abdel Fattah El Sisi twice said we could soon see army-owned companies and assets on sale as part of the state privatization program.

The SFE is also in talks with several unnamed multinationals to get them to invest in the health and education sectors, El Said told reporters yesterday.

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