Egypt’s New Investment Law breaks down years of bureaucracy to open the market to foreign investors. The law will streamline the investment process, and aims to promote investments in under-developed areas and industries by offering some serious incentives for potential investors. Foreign Direct Investment in Egypt is currently assessed as one of the strongest economic competitors in the Middle East and North Africa (MENA) region due to factors such as its young population, and its sustainable and diverse talent pool. Additionally, foreign direct investment (FDI) has been on the rise in the country. This 2016/17 fiscal year has seen a 12 percent increase, reaching $6.6 billion, compared $5.9 billion last year. The New Investment Law, once signed by Egypt’s President, brings the potential to bolster FDI in the country dramatically by streamlining the process and incentivizing potential foreign investors.
Takeaways from the New InvestmentLaw
While the New Investment Law has a lot to offer for foreign investors, there are three key takeaways that are really crucial to FDI in Egypt.
Repatriating Profits: While not an entirely new concept for FDI in Egypt, under this law, investors are now guaranteed the right to transfer profits abroad. Another repatriation guarantee that is given under this law is the transfer of financial dues from Egypt as well. While repatriation has been introduced prior in early Egyptian legislation, having it written in as guarantees for investors in this new 2017 law will hopefully garner support from other aspects of the Egyptian government to put in clear, and transparent rules to make these guarantees effective.
One-Stop-Shop: In this new law, the General Authority for Investment (GAFI) and Free Zones will be converted to the General Authority for Investment (GAI). The GAI will be charged with implementing the minutia of the law, including building off of the One-Stop-Shop (OSS) design that GAFI had previously taken on. For this program, Investors’ Service Centers will become the OSS: a place where an investor is able to obtain all of the licenses they need without having to deal with other bureaucratic authorities. Like the repatriation guarantees, however, the effectiveness of the OSS initiative will depend on the support and tools that are built out of the passage of this law.
Ease of Entry: Under this new law, foreign investors will receive no less than national treatment, with the opportunity to receive preferential treatment depending on some the Council of Ministers and economic circumstance. While national treatment of foreign investors, like OSS and repatriation, is not necessarily a new concept in FDI in Egypt, this law includes it as a written, legal, guarantee. Getting into the market has never been easier thanks to the OSS updates, and the new concept of unified approval that is being adopted. Unified approval gives big-ticket investors the opportunity to receive a blanket approval, or a Golden License, from the Cabinet of Ministers, without having to stand in line with other applicants. This Golden License will cover all required establishment and operating licenses at the same time, vastly streamlining the application process.
Sectors to Watch: Currently, there are five sectors to watch for FDI in Egypt: infrastructure, utilities, high tech, tourism, and sustainability.