The Minister of Investment and International Cooperation: The Executive Regulations contains special and additional incentives and guarantees to attract investors.. It comprises of 132 Articles divided into 5 Parts.. It includes terms of establishing Private Free Zones projects.
The Minister: Forming the Permanent Committee of the Approval Offices, along with procedures for subsequent monitoring, inspection and governance.. Encouraging the investor to rely on local workers by allowing him/her to employ no more than 20% of foreign workers.
Granting companies and establishments additional incentives is made in case of exporting part of their products in Egypt by at least 50%, and increasing the local component of their products by not less than 50%.
The Minister of Investment and International Cooperation Dr. Sahar Nasr assured that the Executive Regulations of the Investment Law comes under a series of procedures taken by the Ministry to create an encouraging and attractive investment climate. It includes legislative, institutional and administrative reforms, all of which were carried out in parallel. It is worth mentioning that the Executive Regulations was approved by the Council of Ministers at its last meeting, chaired by the Prime Minister Engineer Sherif Ismail, and preceded by His Excellency President Abdel Fattah Al-Sisi's ratification of the Investment Law.
Dr. Nasr added that the Investment Law with its Executive Regulations is one of the main pillars of reforming the legislative environment of investment climate, which the Ministry is working on, such as amendments to the Companies Law and the Capital Market Law, in addition to the Finance Leasing and Factoring Law that was first approved by the Council of Ministers and was sent to the Parliament.
Dr. Nasr also said that the Ministry has not stopped reforms during the last period prior to the issuance of such laws; it has carried out many reforms that pave the way to the implementation of the legislative reforms that have been made. She indicated that the Executive Regulations of the Investment Law includes a number of special and additional incentives and guarantees that attract investors and enforce the Investment Law.
Dr. Nasr expressed her thanks and appreciation to Prime Minister, relevant ministries, the State Council and the members of the Economic Committee of the Parliament for their efforts during preparing and reviewing the Executive Regulations' draft that was issued by the Prime Minister.
Dr. Nasr explained that the Executive Regulations comprises of 132 Articles, divided into 5 Parts which are: General Provisions, Facilitations and Incentives related to the Investor, the Investor Service Center (ISC), Investment, the Technological and Free Zones and regulating the Investment environment.
Dr. Nasr stated that the First Part, concerning the General Provisions, includes a number of provisions specifying the investment activities subject to the provisions of the Investment Law in the industry, agriculture, trade, education, health, transport, tourism, housing, construction, sports, electricity, energy, petroleum, natural resources, communications and information technology sectors. Moreover, it includes a Chapter for social responsibility of the investor in which a percentage of his/her profits shall be allocated to social development, apart from his/her investment project, in areas such as renewable energy, health care, social, cultural and sports, and in funding awareness-raising campaigns of limiting the illegal immigration and fostering talented and innovative people.
The Minister clarified that the Second Part relating to Facilitations and Incentives offered to the investor, includes a Chapter about the organization of non-Egyptian investors' residence and the employment of foreign workers up to 10% of the total number of investment project workers. The percentage subject to increase up to 20% in the event of not having national workers with the required qualifications, which comes within the framework of encouraging the investor to rely on the national labor and encouraging the national production.
The Minister confirmed that the Executive Regulations stipulated that foreign workers in an investment project should have the right to transfer their financial dues, in whole or in part, abroad. In addition, it includes multiple guarantees for the investor such as; the appropriate administrative bodies may not revoke or suspend the licenses issued for the Investment Project, nor may it reclaim the real property allocated for it, unless it has served a notice on investor by the virtue of a registered letter with an acknowledgement of receipt comprising the violations with which investor is charged, has heard Investor’s view point and has given investor an adequate grace period, which may not exceed 60 days, to rectify the violations. If the grace period ended without the violations being rectified by the investor, the appropriate administrative body, before taking any decision in this regard, should seek the opinion of the General Authority for Investment and Free Zones (GAFI) by the virtue of a letter includes all the legal procedures taken against the investor. Then, GAFI should give its opinion within 7 days from date of receiving the letter. The investor may file a grievance against the aforementioned actions before the Grievance Committee stated in Article (83) of the Investment Law.
The Minister stated that the Executive Regulations includes multiple special and additional incentives where Sector "A" was defined and comprised the Suez Canal Economic Zone, the Golden Triangle Economic Zone and other zones designated as most in need of development specified under the resolution of the Council of Ministers. These zones are characterized by low levels of economic developments, low domestic product, large size of the informal sector, low levels of employment and job opportunities and the increase of unemployment rates. In addition to the social indicators related to the obvious increase of population density, the decrease of the quality of education as well as the increase of illiteracy rates, the decrease of health services levels and the increase of poverty rates.
While Sector "B" comprised the remaining areas in the Republic of Egypt, areas that enjoy the availability of development components and attract investments in order to use the development opportunities provided to develop such zones and their adjacent areas.
The Minister referred that in order to grant companies and establishments any of the additional incentives stipulated in Article (13) of the Investment Law, Egypt has to be one of the countries of origin to produce the products they specialize in and to rely on its resources of foreign exchange transferred from abroad along with the exportation of part of their production abroad, of no less than 50%, in addition to increasing the domestic components in the project's products of no less than 50%.
The Minister stated that the Third Part of the Executive Regulations, concerning regulation of the Investors Services Centre (ISC) and the investment's guides and procedures, includes the formation of the Permanent Committee of the Approval Offices to consider their licensing. The Third Part as well determines incorporation and post incorporation services for companies, in addition to obtaining approvals, permits or licenses required for the establishment of investment activities on lands designated for investment before allocating it to investors. This Part also contains a Chapter with regard to allocation of real estate required for investment and the role of the investment map in determining the type, system, conditions, geographical regions and sectors of the investment. Meanwhile, GAFI is preparing for the investment map project in full coordination and cooperation with all relevant bodies, along with providing online link to exchange such maps and data among administrative bodies of competent jurisdiction and GAFI, in addition to reviewing the investment map at least once every three years.
The Minister explained that the Fourth Part, related to the Investment, Technological and Free Zones, includes the establishment procedures of such zones, and the formation of a permanent technical committee of the Free Zones' affaires to study the applications for establishment of Public Free Zones' projects. In addition, it includes the approval on amendments of companies' Articles of Association and legal forms, besides providing solutions for problems facing Free Zones' projects and overcoming their obstacles to ensure the implementation of GAFI's policy in encouraging and attracting investments.
The Minister stated that the approval on the establishment of Private Free Zones' projects includes the existence of suitable site for the project's activity inside the Public Free Zones. The required site for the Private Free Zone must be the effective factor for the project's economic aspects, besides, the project must be incorporated in the form of a Joint Stock Company or a Limited Liability Company.
The project's issued capital must not be less than USD10 million and its investment costs must not be less than USD20 million or their equivalent by free currencies. The permanent labour in the industrial projects must not counted less than 500 workers and the project's surface area must not be less than 20 thousand m2. The local component must not be less than 30% and the percentage of export outside the country must not be less than 80%. An exception is made in respect of the aforementioned percentage for the strategic projects with particular significance, provided that the industrial safety, civil defence, and fire conditions are applied in accordance with the Egyptian code practice in this regard. The final approval on the project shall be null and void in case the investor fails to take serious implementing procedures.
The Minister assured that the Fifth Part, concerning the regulation of investment climate, defines the bodies in charge of investment affaires. It stipulated convening a meeting of GAFI's BoD at least once per month. Moreover, it includes a Chapter on subsequent monitoring procedures, inspection and governance.
