​​A new bill could help drive the gov’t’s localization push — and help bring informal manufacturers into the formal economy: The House and Representatives and Senate industrial committees are currently debating a government-drafted bill that would, if approved, legalize hundreds of thousands of unlicensed industrial projects. The Senate Industrial Committee signed off on the two-article bill earlier this month, paving the way for it to head to plenary session for discussion and voting. The proposed amendments come as the government is pushing to localize manufacturing in a bid to boost exports and hack away at our import spending.

The details: The bill consists of proposed amendments to the 2017 Industrial Permits Act, which was designed to cut down on the amount of time it takes to license a new factory. The act allowed for “low-risk” manufacturers (industries without significant health, environment, or safety risks) to receive temporary 90-day licenses before receiving a full permit from the Industrial Development Authority (IDA) upon meeting certain standards. The new amendments would, if passed, temporarily grant the IDA the authority to offer existing factories a one-year grace period, which the trade and industry minister could then extend for an additional three years. Once that grace period elapses, factories need to meet licensing standards to obtain formal permits. The amendments would give the IDA this power for three years after the bill’s passing, after which the clause would sunset.

Hundreds of thousands of projects could be integrated into the formal economy: The bill’s primary objective is to “facilitate licensing small and medium-scale industrial projects to join the formal economy, while giving them a chance to operate legally for a temporary period,” Senate Industrial Committee head Mohamed Halawa told Enterprise. The amendments could “open the door for hundreds of thousands of unlicensed industrial projects to go legitimate at the end of the period,” as long as they get their ducks in a row and meet licensing standards, Halawa said. The majority of unlicensed industrial projects in Egypt are small and medium-sized, the committee’s Deputy Chairman, Tayseer Mattar, told us. It’s difficult to get an accurate or specific number on the exact number of unlicensed industrial projects that are currently operating across the country, “but we estimate that there are hundreds of thousands,” Halawa said.

Bringing these projects into the light could be a serious push for the legit economy: “The inclusion of these projects into the formal economy would be a very progressive step for the Egyptian industrial sector,” Halawa told us. Going legit and operating under formal licensing would allow these projects to expand, invest more, boost production, and create more jobs — not to mention that their output would actually count towards the state’s push to localize industry and boost exports to USD 100 bn a year, he noted.

Industry insiders think the bill is a solid move: “As far as I understand, this bill will not only help integrate hundreds of thousands of small-scale unlicensed industrial projects into the formal economy, but will also open the door for many other industrial projects that had to shut down because they were unable to secure a license,” deputy head of the Egyptian Federation of Investor Association (EFIA) Mohamed Khamis Shaaban previously told Al Shorouk. Small and medium-scale projects typically shut down due to difficulties getting the necessary licenses, or else end up operating illegally, Shaaban said. “Both cases are harmful for industry,” he said. “The EFIِA strongly welcomes the proposed amendments, which could open the door for shuttered projects to operate and also integrate informally operated projects into the formal economy — both of which would be positive outcomes,” he said.

The proposed amendments are also getting high praise from our lawmakers: “The government-drafted bill comes at the right time to support the government’s policy of boosting industrial exports and cutting down on imports,” Mattar told Enterprise.

Not the first gov’t measure to facilitate industrial licensing: Over the past several months, the Madbouly Cabinet has worked on rolling out various programs and initiatives designed to encourage local manufacturing by cutting red tape. In October, the government launched the National Initiative of Developing Egyptian Industry (Ebda) which will help support existing industrial projects and fast-track the development of new ones. The initiative will, among other things, help fast-track bureaucratic procedures and smooth out challenges for investors who want to establish a factory or invest in one. Cabinet has also been granting the single-approval “golden license” to large industrial projects, while the General Authority for Freezones and Investment (GAFI) is currently evaluating proposals to expand the licenses offered to investors to include diamond and silver-tiered licenses that would be issued depending on each sector’s priorities, GAFI head Hossam Heiba previously told Enterprise.

Your top industrial development stories for the week:

• A push to localize oncology drugs: Leading pharma group SEDICO began a trial operation for the country’s first factory to manufacture oncology drugs with an Italian firm, with investments worth up to EGP 1 bn. (Statement, pdf)
• Big steps forward for our national automotive strategy: The Madbouly government launched three key bodies that will work to implement its long-anticipated national automotive strategy.
• We could host Africa’s largest data center complex: El Sewedy Capital’s subsidiary, El Sewedy Data Centers, and Emirati firm Gulf Data Hub plan to invest USD 2.1 bn to build three data center complexes here.