Back to the complete issue
Thursday, 30 September 2021

MPs have a very busy season ahead, to say the least

MPs face a packed agenda when the House of Representatives reconvenes on Saturday, 2 October, as summer recess ends and the 2021-2022 legislative session kicks off. The House will set a full agenda and with clear priorities over the coming week, Ehab Al Tamawi, deputy chair of the House Constitutional and Legislative Affairs Committee, tells us.

A sneak peek at the House’s priority list: We spoke with Al Tamawi and other MPs about what some of those priorities will be — and asked about a number of business-relevant bills that were shelved last session or that have come up in the news during summer break.

GOVERNMENT SPENDING

UNIFIED BUDGET ACT- The draft act proposes mering legislation governing the state’s annual budget and government accountability into an updated bill that accounts for modern budget preparation processes and erases overlap between different pieces of legislation. If passed, the bill would require the government to present a medium-term budgetary and fiscal strategy to the House of Representatives every year. The same policy strategy would also be a requirement for each new incoming government. The bill would also aim to impose a measure of fiscal discipline on the government through measures including a requirement that it set spending limits for each ministry, as well as new mechanisms to monitor budget performance. Expect graft and misuse of public funds to also be addressed.

Status: The bill earned preliminary approval from the Senate in July of this year after it was approved by the cabinet back in October 2020. The legislation will be high on the priority list due to interest from the IMFand the World Bank, who see that the bill would help streamline budget preparation and promote digitization and automation, Deputy Head of the House’s Planning and Budget Committee Yasser Omar told us. Still, it’s going to take some time to clear the House. It will be “months at least” before a final vote is held, Omar added.

BUSINESS + FINANCE

FINTECH- The FRA has been busy drafting a bill that would establish a framework to regulate the fintech space. Details are few right now, but we know the bill would allow the FRA to license and regulate fintech platforms — and to introduce new penalties for regulatory breaches.

Status: The FRA approved the draft legislation in September and it is now with the House to start the review process.

LABOR ACT- An overhaul of the Labor Act will lay out new rules on how employees can be dismissed, making it harder for employers to fire staff for illnesses but allowing workers to lose their jobs if convicted of a felony, according to Al Masry Al Youm. The legislation also includes provisions intended to encourage youth employment and could create special courts to handle labor-related cases.

Status: The House voted on a draft of the proposed act back in February 2020, but the bill has been on the back burner since. Expect that changes could still be made to its current form.

FRA ACT- If passed, the legislation would grant the FRA operational autonomy and give the authority status as a separate legal entity with its own balance sheet. The FRA will be required to submit an annual report on its activities and the performance of the non-banking financial services industry to the president, prime minister, and House speaker. The authority’s head would be appointed by the president and would effectively have cabinet rank.

Status: Cabinet approved the bill in February 2019, but since the law has been repeatedly delayed to companies expressing concern that this would grant the FRA sweeping powers, a parliamentary source told us previously

ANTITRUST ACT AMENDMENTS- Under the changes to the Antitrust Act, the Egyptian Competition Authority would be granted the power to sign off on M&As before they are finalized, giving them more discretion over what it considers a threat to competition.

Status: The changes were approved by cabinet at the end of November and will now be sent to the House.

UNIFIED INS. ACT- The draft bill has been at least three years in the making and aims to grant the FRA broad new powers to regulate the sector, make ins. compulsory for SMEs and freelancers, and set up new economic courts to mediate disputes.

Status: The Unified Ins. Act is now with the House Economic Committee after receiving cabinet approval in November 2020.

TOURISM + HOTELS LAW- A law simplifying licensing procedures for hotels and tourism companies is in the works. The government says it will “improve the business climate and enhance competitiveness” of the tourism sector, but little is known about its provisions.

Status: The cabinet approved the draft law yesterday.

TAXATION

VAT AMENDMENTS- Separate parcels of amendments to the 2016 Value Added Tax Act will change the list of goods and services on which VAT is remitted and imposed. The government plans to impose a 14% VAT on the sale of non-residential property, most commercial advertising, and to hike the 5% rate on many forms of snack foods. Other amendments include removing VAT paid on freight costs for strategic goods including legumes, grains, table salt, and spices. Real estate developers and food producers have both lobbied to roll back the tax over concern on how it would affect their sectors, however, their efforts have been fruitless until now. Neither office nor commercial rents will be subject to 14% VAT, the Tax Authority has previously said, but could be hit by a 1% schedule tax under the act.

Status: The amendments are moving through the government at different speeds. Scrapping the VAT from strategic goods was approved by the House Planning and Budgeting Committee back in January, while the rest of the amendments received cabinet approval in October 2020.

CAPITAL GAINS TAX- The debate about whether to introduce capital gains tax on EGX transactions may return to the House next month as some MPs push back against the Finance Ministry’s decision to reintroduce the tax on local investors next year. As of now, Egypt-domiciled investors will face an annual 10% capital gains tax on their net portfolio earnings from 1 January, which investors and the securities industry claim will hurt EGX trading volumes. A group of MPs said it will will call next week on Finance Minister Mohamed Maait to delay the tax or replace it with a development levy.

DEVELOPMENT + INFRASTRUCTURE

PPP ACT- The bill aims to streamline public-private partnership (PPP) contracts in fields including transport, energy, communications, and healthcare. It would also add provisions meant to ensure higher quality standards and cut the time to issue tenders by introducing new mechanisms for how the government contracts with private businesses. Private-sector players will be able submit unsolicited proposals, while the government would also be allowed to negotiate directly with a sole bidder without needing to take the project through the competitive bidding process.

Status: The House Planning Committee approved amendments to the PPP Act early this year. The changes will now make their way to the House general assembly for a final vote, before being handed over to President Abdel Fattah El Sisi to be signed into law.

UNIFIED PLANNING ACT- The bill will dictate how governorate-level economic, social, and urban development plans are implemented. Last year, the government said it would set up a planning committee headed by the president under the legislation.

Status: Last we heard, the bill was with the House Planning and Budget Committee.

UNIFIED BUILDING CODE- The long-awaited piece of legislation gives the government sharper teeth to clamp down on illegal construction by imposing harsher penalties on violators and state officials found guilty of not acting to penalize building code violations, especially for building on agricultural land. Otherwise, the bill will streamline procedures and cut red tape to obtain building permits, and would make permits valid for three years instead of one. It also requires developers putting up buildings taller than five storeys or valued at over EGP 3 mn to buy ins. against construction-related damage to cover for any damages during construction and the guarantee period.

Status: The House of Representatives passed the Unified Building Code in March 2020. Last we heard, Prime Minister Moustafa Madbouly presented the proposed building and planning criteria to the House Local Administration and House Housing committees.

SOCIAL + POLITICAL

PERSONAL STATUS ACT AMENDMENTS- The bill has come under fire for attempting to take away women’s rights and legal protections. Some of the amendments could prevent women from travelling abroad without a male guardian's consent and could bar mothers from registering a child's birth certificate or passport.

Status: The amendments were proposed earlier this year, but were shelved after backlash

VOCATIONAL SCHOOLSSeveral ministries are working together on a bill that would set up a new public authority responsible for accrediting institutions offering technical learning and training programs. Government schools and private institutions, which will both be under the authority’s oversight, will have no more than five years to meet the authority’s quality standards and obtain accreditation once the bill makes it through the House.

Status: Lawmakers are a little behind on this one. The cabinet green-lit the proposals in September 2020, but there has been no mention of it since then.

DISABILITIES ACT AMENDMENTS- The amendments will toughen penalties for those convicted of bullying persons with disabilities, increasing the minimum sentence to two years from one, and to three years if the perpetrator is the guardian of the bullied person. The bill would also impose fines.

Status: The amendments were approved by the Senate in May.

SENIOR CARE ACT- The draft bill would outlaw age discrimination against people aged 65 and above and legislate rights and benefits for senior citizens. Not much else is known about the proposal.

Status: It is unclear where the Senior Care Act now stands. Last we heard, it was heading to the Council of State (Maglis El Dawla) before going up for discussion and a final vote in the House.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of Commercial International Bank (tax ID: 204-891-949), the largest private-sector bank in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Act Financial (tax ID: 493-924-612), the leading activist investor in Egypt.