CAIRO, Aug 17, (RTRS): Egypt is hoping that long-awaited regulations approved on Thursday to its new investment code will draw in fresh and needed cash from abroad as the country pushes ahead with reforms.
Investment Minister Sahar Nasr told Reuters in an interview that the law could now be active within days.
“Establishing (a company) will literally now take hours. It used to take months. This is massive,” she said.
The government has been on a drive to reform the economy and lure back foreign investors that fled after the 2011 uprising. It signed a $12 billion three-year loan agreement with the International Monetary Fund last November tied to austerity measures such as slashing subsidies and raising taxes.
The new investment law includes a raft of incentives, from tax breaks and rebates on projects established in underdeveloped areas to government support for connecting utilities.
Speaking to Reuters by phone immediately after the cabinet’s approval, Nasr said the new law would be active once it passes through the Council of State, an administrative judicial body that provides a final legal review.
President Abdel Fattah el-Sisi ratified the more general law in June but the regulations spell out who is eligible for incentives and how they work.
Egypt netted about $8.7 billion in foreign direct investment in the 2016-17 fiscal year that ended in June and the government hopes to push this to over $10 billion this year.
Nasr said the law had already piqued foreign interest.
“You look at the months since the president has ratified the law and there are companies that have been asking their legal advisers about it; from the United Arab Emirates, Saudi Arabia, the United Kingdom, France, and Germany,” she said.
She named French cosmetics group L’Oreal, cosmetics brand Nivea, owned by Germany’s Beiersdorf Global AG , and US candymaker Mars Inc as expressing strong interest to invest.
As part of the law, a new investment services centre will be operational starting next month that allows investors to legally establish companies online and make payments, said Nasr.
The new law will also guarantee currency convertibility, providing, for the first time, “the right of the investor to have his currency converted to that which he used to invest in his project,” said Nasr.
Egypt has been squeezed by a shortage of foreign currency that has limited the ability of companies to move their profits abroad in recent years, though capital controls imposed during the height of the shortage have in recent months been lifted as part of the IMF reform programme.
The new regulations also stipulate that the Suez Canal Economic Zone, a mega-project launched in 2015 to create an international hub for global manufacturers along the canal, will be eligible for the investment law incentives.
“There was a legal debate over this, but we have now cleared that it will be eligible. The canal zone will benefit from all the incentives and streamlining and the packages offered under the investment law,” said Nasr, who next week will lead a roadshow for the zone in Singapore, Vietnam, and China.
“The bottom line is that this law puts in place a new contractual arrangement between the government and the private sector, one of mutual trust.”