New Egyptian Legislation Aimed At Attracting Foreign Direct Investment
In an effort to attract foreign direct investment back to the country, Egypt has passed legislation that is designed to cut red tape and make conducting business in the country far easier and more attractive.
Along with reducing bureaucracy for new business ventures in the country, incentives have been created to persuade businesses and investors to return to the North African nation.
Egypt’s economy has been struggling in the last six years since the 2011 uprising that saw Hosni Mubarak overthrown as Egyptian president.
The revolution prompted violent clashes between security forces and protesters, with at least 846 people killed and over 6,000 injured as a result of the fighting, according to the BBC.
The political instability and terrorism fears have therefore scared investors and tourists away from Egypt as an investment destination, but this new law aims to attract investors back to the country.
“A large number of investors were waiting impatiently for the law in order to understand the investment environment in Egypt and its incentives, especially with regards to the cost of starting a project and incentives for land,” said Arqaam Capital economist, Reham El-Desouki, according to ENCA.
In November Egypt floated its pound currency and accepted a three-year $12 billion International Monetary Fund program that was aimed at boosting the economy and making the country more investor-friendly.
This new investment law is a continuation of that push to cut red tape and overregulation in an effort to get foreign entities to open businesses or complete projects in Egypt.
Incentives to attract foreign direct investment
Under the new law, which is still to be approved by the president, investors who choose to put their money into Egypt will be rewarded for doing so, through a carefully designed set of benefits that will be put in place to motivate investor behavior.
Some of the incentives mentioned in the law include a new service center, private sector free zones, a 50 percent tax discount on investments made in underdeveloped areas, financial government support for the connecting of utilities to new projects, and a return on investment scheme for those acquiring industrial land, as they stand to receive half of the money back if they begin production within two years of the acquisition.
Foreign direct investment into Egypt fell sharply over the better part of the last decade, with $6.8 billion invested in the year to June 2016 compared with a figure of around $13.2 billion before the Arab Spring and the political turmoil that came with it, according to News24.
It is hoped that a combination of these incentives as set out in the new law will see foreign direct investment numbers into Egypt climb substantially.