Representatives of the Egyptian business community believe the uniform investment law, which the government is currently considering, is a positive step. The businessmen said they are optimistic regarding the law but are currently awaiting implementation, adding that the investment minister will face fierce opposition if the ‘one-stop shop’ system is put into force.
Former Federation of Egyptian Industries Chairman Galal Al-Zorba said the draft uniform investment law has some “good” points.
He added: “What is important is its being implemented and put into force on the ground, to speed up a revival of confidence in the economy and capital flow in order to begin to address the issue of unemployment.”
According to Al-Zorba the investment minister “will face a fierce war with all government agencies, especially local governments and the Industrial Development Authority”, in order to activate the ‘one-stop shop’ system.
Investment Minister Ashraf Salman told Daily News Egypt last week that the law faces opposition from some. This is especially in relation to the ‘one-stop shop’ system which will be charged with issuing all licences under the General Authority for Investment (GAFI).
He continued: “Right now I am struggling to obtain approval from state agencies responsible for granting lands, so that GAFI becomes an agent for those agencies and pay the value of the land to the owners to save time and effort for the investor.”
Al-Zorba requested that the law facilitate procedures for entry into and exit from the market, in addition to expediting litigation and dispute resolutions that guarantee the right of the state and do not adversely affect the investors.
The uniform investment law will include several laws, including Law 8 relating to incentives and investment guarantees, including an economic zones law. The law will also include Law 159 which pertains to joint stock companies, all of which together will unify the system of direct investment, as well as free, economic and investment zones. The law focuses on identifying one authority to be responsible for investment in Egypt, which is expected to be GAFI.
According to Salman, the new law will protect investments from nationalisation as well as entry and exit using the dollar. The law will identify a unified mechanism to settle investment disputes and prohibit any regulatory body from investment.
The new law will also grant tax exemptions estimated at EGP 15,000 to investors for each job opportunity created. The exemptions will not take the form of cash, instead comprising a deduction from government transactions including water, electricity or gas bills or other government services, according to government sources.
Hisham Tawfiq, board member of the Egyptian Stock Exchange, said that what has been announced so far regarding the law is “acceptable”, but implementation has yet to be seen. He said that the one-stop shop system remains a dream because it will contradict all government agencies and local governments unless the investment minister receives strong political backing to strengthen his position.
Tawfiq, a founder of the first company to generate electricity from solar energy, said that any new solar energy projects will not succeed unless the ‘one-stop shop’ system is implemented. He added the Minister should enable his authorities to grant all licenses in a step toward improve the business environment and expanding economic activity.
He believes that the other articles announced will protect investors from nationalisation and protect investors of entering and leaving with the dollar. Tawfiq added that the laws also outline a unified mechanism for settling investment dispute in addition to the tax exemption for every job opportunity created. He added that implementing the one stop shop will reduce bureaucracy and will speed the licensing procedures.
Hussein Sabour, Chairman of the Egyptian Businessmen’s Association, said that bureaucracy is the main obstacle toward investment in Egypt. The tax exemptions the new law provides to encourage the speedy resolution of disputes without a unifying the process of issuing licensing and granting land is pointless.
Sabbour went on to say, “The government should facilitate the work of foreign and local private sector, especially after bureaucracy and legal disputes made investors reluctant to invest.”
The government aims to attain no less than $8bn in foreign direct investment for fiscal year (FY) 2014/2015 and over $10bn for FY 2015/2016, according to Minister of Planning Ashraf El-Araby.