Legal Update 01
Chapter One
Introduction
All state bodies in the Arab Republic of Egypt work to attract and promote local and foreign investments with the aim of raising the country’s economic growth rates, increasing local production rates, providing job opportunities, encouraging exports, and increasing competition in a way that contributes to achieving comprehensive and sustainable development.
To achieve this purpose, the Egyptian legislator enacted Investment Law No. 72 of 2017 with the aim of achieving equality in investment opportunities and taking into account equal opportunities regardless of the size of projects and without any discrimination based on Nationality, supporting the state’s role in sponsoring projects and emerging companies and working to raise growth rates and increase projects and small enterprises.
In the following, we will demonstrate the most important incentives and guarantees covered by the investment law:
First: The most important investment incentives:
1.General incentive
2.Special incentive
3.Additional incentive
Second: The most important investment guarantees.
Chapter Two
Investment Incentives and Guarantees
First: The most important investment incentives:
1.General incentives:
Exemption from stamp duty, Fees of notarization and Publication (contracts of incorporation of companies, contracts of credit facilities and mortgage related to their business for a period of 5 years from the date of their registration in the commercial register).
Exemption from tax and fees for land registration necessary for establishment of companies and facilities.
companies and enterprises which subject to the provisions of this law shall be subject to the provisions of Article 4 of the law regulating customs exemptions provided by law no. 186 of 1986 regarding the collection of a customs tax of a standard category of 2% of the value.
2.Special incentive:
Including the geographical areas most in need of development according to the investment map and based on data and statistics issued by the Central Agency for Public Mobilization and Statistics. For example, but not limited to:
1.South of Giza Governorate.
2.The governorates of the Suez Canal region.
3.It also includes investments established in the industrial zone in the Suez Canal and the economic zone in the Golden Triangle.
It includes the whole country according to the distribution of investment activities, for example, but not limited to: Medium and small enterprises.
1.Projects depending on renewable energy or producing it.
2.electricity production projects.
The investment incentive can reach up to 80% of the capital.
3.Additional incentives:
The state bears the value of what the investor costs to connect the utilities to the property allocated to investment project or part of it.
The state bears a part of the cost of technical training for worker.
Allocating lands free of charge for some activities and refunding half of the value of the land allocated for industrial projects in the event that production begins within two years from the date of handing over the land.
-All investments Established in Egypt enjoy fair and equitable treatment.
–The state grants non-Egyptians investors residence visa in Egypt for duration of the project without violation to the provisions of the law regulating this.
–Investment projects may not be nationalized and neither guardianship, seizure nor freezing can be imposed on it except on the basis of a court ruling.
-The administrative authorities may not cancel or suspend the licenses issued for the investment project or withdraw the properties that has been allocated for the project except after legal notice to the investor of the violations attributed to him.
–The state allows cash transfer related to foreign investment freely and without delay to its lands and abroad.
-The investment project has the right to employ foreign workers within the limits of 10% of the total number of workers in the project, and the percentage may be increased up to 20%.
Chapter Three
Investment Opportunities in Egypt
Farming:
The Egyptian state provided the highest levels of interest in the agricultural sector, inaugurating the One and Half Acre Project, and worked to provide all the services and infrastructure necessary to increase its chances of success.
We highlight some of the most important activities, includes but not limited to :
Investment Laws provides various opportunities and areas of investments for all investors, and below are best areas:
Industry:
The Egyptian state has provided substantial facilitations to investors wishing to establish industrial projects, through a set of mechanisms that are characterized by simplicity and ease in obtaining approvals, licenses and permits necessary to establish and operate projects.
Within the framework of the state’s keenness to facilitate the investment process, the investment law exempted machinery, equipment, and capital goods for projects from all fees, customs and taxes, and obligated the administrative authority to decide promptly on investors’ requests within a maximum period of 30 days.
Textiles and Garments:
Egypt is famous for the spinning, weaving and fabrics industry, as it is one of the main industries in it, as the textile and clothing sector represents the second largest industrial sector in it after the food industries; Therefore, Egypt is the center of the integrated textile industry in the Middle East and on the level of the African continent, meaning that the entire production process takes place within the country, starting from cotton cultivation to spinning and manufacturing textiles and clothing.
The factors for the success of the textile and spinning industry in Egypt lie first in the availability of raw materials, the most important of which is Egyptian cotton, to the extent that quantities of it are exported to several countries, in addition to the availability of trained manpower, as the Egyptian government offers several continuous training programs in order to develop and raise the level of workforce skills and keen to give them stable and competitive wages. This makes investing in this field a fertile ground field for many investors due to the incentives provided by the state to support and advance this field.
Retail Trade:
The state encourages investment in the field of retail trade, so it took the campaign of the Central Bank of Egypt to finance small and medium enterprises by encouraging banks to facilitate the lending process. In addition to the allocation of investment areas for small and medium enterprises by the General Authority for Investment and the introduction of industrial complexes by the Industrial Development Authority.
The state also encourages the increase in the spread of a wide range of modern forms of commercial stores such as supermarkets, hypermarkets, supermarkets and malls that specialize in international brands throughout the country to meet the needs of the residents of the new capitals, who more familiar with the latest technological methods and applications.
Communications and Information Technology:
Egypt is witnessing an unprecedented breakthrough in digital transformation within the framework of the state’s vision to adapt digital technology in order to improve the quality of services provided to citizens.
The Information Technology Industry Development Agency protects your investment and obtains investment incentives and support necessary to provide ICT services and products from Egypt.
Exporting companies registered under Law No. 8 of 2007 can obtain exemptions and certain advantages in customs duties and sales tax
Petrochemicals:
Egypt’s geographical location is close to the international markets of the European Union, the Middle East, and Africa, and it has also become the natural maritime partner of the European Union through the Mediterranean and the Red Sea, and this partnership took place through the fast sea lanes project linking the European Union with all ports Neighboring countries such as the ports of Alexandria, West Port Said, which are included in the project, in addition to other promising ports on the Red Sea (Ras Shukair, Adabiya, and Sokhna), which makes investment in the petrochemical field a fertile ground field for many investors due to the incentives provided by the state to support this field and upgrading it.
Financial Services:
One of the most important and most developed sectors in Egypt. The Egyptian insurance market has achieved remarkable success in providing insurance coverage, which reflects its rapid response to the new requirements of the market, its alignment with new events and the development of many ongoing activities.
The Financial Regulatory Authority has facilitated and simplified many procedures for investors in this field specifically and raised the efficiency of employees working in it.
The laws regulating the financing of real estate markets in Egypt are of paramount importance, as many facilities have been added to market dealers with regard to methods of proving the investor’s income, determining the beneficiaries of the real estate financing fund, and criteria for accrediting brokers and evaluation experts.
Financial leasing is also one of the financial instruments that play a major role in financing investments, especially those related to small and medium industries that plan to purchase equipment, machinery and related inputs for industrial activities. These needs are funded over several years with the purpose of reducing start-up costs.
Education:
The Government of Egypt encourages private sector participation in education, the existence of a stable institutional environment due to the maturity of the education system in Egypt, the need to invest in bridging skills gaps through vocational training and the development of higher education, in addition to the presence of a lot that must be covered in the Egyptian education system, all of this Factors that add to the attractiveness of investment in the sector.
The Egyptian legislator was interested in issuing a law regulating the establishment of branches of foreign international universities in Egypt under Law No. 162 of 2018 and entered into force in August 2018 to facilitate procedures and facilitate licensing requirements to establish a branch of foreign universities.
Development of New Urban Communities:
Within the framework of the state’s keenness to promote the development wheel in new cities and encourage investors to invest by providing investment opportunities in different areas and activities in all of the new cities, and among the most important activities, for example, but not limited to:
Infrastructure Areas
Egypt has recently made substantial and unprecedented achievements in the field of infrastructure projects. State bodies have taken care of encouraging investors to invest in this field and have provided a variety of advantages in the field of infrastructure.
Among the most important activities that encourage the state to invest in it:
Establishing and operating the management of drinking water and sewage plants.
Power plants.
Construction of roads and transportation lines
Tourism:
The geographical location, climatic nature and Egyptian heritage provide an opportunity for investors to invest in various fields of tourism.
According to the 2030 vision, Egypt plans to be amongst the top 30 economies worldwide, implementing the sustainable development strategies through the following:
Petroleum Products:
Egypt plays a key role in energy markets at the regional and international stake, due to its geographical proximity and strategic location at the crossroads of international trade routes for oil and gas, in addition to controlling two main transport routes in the Suez Canal, the Suez Pipeline and the Mediterranean Sea.
Discovering a group of gas fields (Zohr field, BP’s West Nile Delta project, Atoll and Nooros) that set to boost Egypt gas production to be self-sufficient by 2019 and net exporter by 2022, which turning Egypt into a regional energy hub.
Transportation and Logistics:
Over the past years, the Ministry of Transport has been able to implement many projects in various fields of transport and logistics, within the framework of interest in developing and raising the efficiency of the transport and logistics system according to the latest technological systems.
The competent authorities in the state were also interested in raising the capacity of the Suez Canal, and that was through the establishment of the new Suez Canal in 2015, as its construction contributed to reducing the transit period of ships by about 11 hours, which led to flexibility and facilitation of the navigational traffic in the Canal and had A significant positive impact on the transport and navigation companies. and international trade in general.
The state also paid attention to the establishment of the industrial zone in the Suez Canal, which led to the creation of many investment opportunities in various sectors of the Suez Canal such as industrial and commercial institutions, infrastructure, real estate development, logistics services, amenities and technology.
One of the most important activities in the field of transport and logistics that the state has also been interested in developing is the development of shipyards and ship maintenance. Egypt owns a number of marine arsenals for the manufacture of cargo ships, such as the Alexandria Arsenal Company, which is one of the largest fortresses of heavy industry and a pioneer in the shipbuilding and repair industry in Egypt and the Middle East.
Healthcare:
The health care sector in Egypt is attractive for investment. The health care sector in Egypt is witnessing many activities in the recent period, the most important of which is the 100 Million Seha campaign and Egypt’s prominent role in the Corona pandemic.
100 Million Seha compaign: The campaign succeeded in providing free treatment for Hepatitis C patients to 2 million citizens within 7 months. As part of the campaign of the President of the Republic to eliminate Hepatitis C and early detection of non-communicable diseases (NCDs). Currently, Egypt is on its way to obtaining the international certification of being free of hepatitis viruses.
The health care sector was able to reduce the losses of COVID-19 through the establishment of safe health service outlets, the formation of an adequate reserve of medical supplies and medicines, the production and distribution of vaccines throughout the Republic, and the allocation of a specialized quarantine hospital in each governorate.
One of the most important requirements for the advancement of health care in Egypt is to encourage the private sector to invest in the field of providing health services of various kinds, as well as the private medical sector, in addition to making the public space for expanding investments in this sector in order to ensure the achievement and activation of competitiveness among all investors in this sector.
Sustainable Energy:
Egypt is characterized by its vast land, sunny weather and high wind speed, which makes it a major supplier of three renewable energy sources:
Egypt is also one of the countries in the Sunbelt region, which is considered the most suitable for solar energy generation devices.
The West Gulf of Suez is considered one of the most promising locations for the construction of large wind farm projects due to the high wind speed.
In view of this, Egypt encourages investors to invest in the field of renewable energy and has included it among the most important investment projects for which the state provides many guarantees and incentives to encourage its consideration to keep pace with the state’s plan to exploit clean energy, preserve clean environment and provide non-renewable energy resources.
Chapter Four
Conclusion
In conclusion, we have presented the main features and the most important advantages of investing in Egypt in accordance with the provisions of Investment Law No. 72 of 2017, by presenting the most important incentives, guarantees and investment opportunities offered by the state in various sectors as follows:
Which showed the prominent role of the state in terms of facilities and support for the investor to improve the investment climate in Egypt. As a result, Egypt has become one of the top 10 African countries to invest in for the year 2021 according to “RMB” bank report.
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Responsibility & Commitment
ALPHA ADVISORS legal team has prepared this summarized memorandum to clarify the most important investment incentives and guarantees according to Investment Law No. 72 of 2017.
Efforts have been combined to produce this memorandum with clear and accurate content; however, this memorandum aims only to spread general information and not intended to be relied upon as legal or other professional advice. Please contract ALPHA ADVISORS for tailor made solutions.
Prepared By:
Omnia Saleh – Attorney – Legal Service Line
Reviewed By:
Mohamed Selim – Partner – Legal Service Line
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