Hany Sarie-Eldin, head of Sarie-Eldin & Partners Legal Office which is part of the alliance to establish a general plan for the Suez Canal Axis Development project, said that the advisory committee of the Suez Canal Authority agreed to establish a specialised authority to facilitate investment procedures in the canal region within a legislative framework separate from current laws. The framework is intended to unify procedures and make them more transparent and flexible by avoiding bureaucracy.
Sarie-Eldin told Daily News Egypt that the Suez Canal Axis is a national project that attracts the largest public and private investments in Egypt, and its success in attracting real investments is a quantum leap for the canal region which will put it on the global investment map. He believes that the legislative environment in Egypt must be developed in order to restore confidence in the Egyptian economy.
How do you see the Suez Canal Axis Development project? What distinguishes it from unsuccessful projects in the past?
This project is the biggest in Egypt after the digging of both parallel canals and expansions for current canal projects. This development project targets public and private investments, and its success will provide many jobs and limit the growing unemployment problem that’s has resulted from economic weakness and political and security instability over the past three years.
There is no room for failure during the current phase. I expect that the project will succeed due to the seriousness of the current regime and the executive actions taken toward that end. Financing is available, the will to invest exists, and the regime’s support is strong, so why wouldn’t it succeed? We are also working on establishing a legislative investment framework to correct past mistakes.
What is the philosophy of the new legislation and what is the difference between this legislation and other amendments?
We are now in coordination with the Suez Canal Authority and the government to create a special body to facilitate investment procedures in the Suez Canal area. It will operate as an agent for the investor, finishing the procedures on the investor’s behalf with other government agencies.
Our philosophy is based on two pillars. The first is to create a special body to expedite investment proceedings which has jurisdiction over all things related to investment in the area, regardless of the type of investment (industrial, commercial, or logistic) and or its size, so long as its committed to the strategic policies of the area.
If we want to bring the project into operation and attract investors, we must move away from bureaucracy and facilitate licence issuance, incorporation processes, access to land. This of course does not mean moving away from the sovereignty of the state or the powers vested in the ministers of justice or defence or the police.
What is the second pillar of the Suez Canal investment law and facilitating investment procedures?
The second pillar is based on enacting a regulated, flexible and simplified legislative framework that avoids everything that currently hinders the influx of new investments or expansion of investment. This will accelerate procedures and provides licensing for land, operation, or energy.
However, this does not mean that we will replace GAFI [the General Authority for Investment] in providing incorporation services. Canal investors will have preference in completing the measures which will be undertaken by the body on their behalf. It will serve as an agent for investors and protect them from dealing with all government entities in order to help them achieve their objectives.
The body and its legislative framework will not include any preferential tax exemption for Suez Canal investors or customs exemptions.
We have finished the first draft in coordination with the Suez Canal Authority and its advisory committee and it has been submitted to the Department of Justice.
What roles do government agencies play in formulating legislation regarding this body?
All these ideas are still being discussed with various authorities, but we agreed in principle to form a committee comprising all government parties as representatives of the ministries of justice, trade, industry, investment, finance, and transport and a number of investors in addition to the Suez Canal Authority and the Sarie-Eldin Legal Office. The committee not yet been formed but an announcement regarding its formation will be made soon.
When will the draft see the light of day?
I expect that this will happen within a month from now or February at the latest. This will take place before the economic summit scheduled to be held from 13-15 of March in Sharm El-Sheikh.
What has Dar Al-Handasah achieved so far for the master plan of the Suez Canal Axis Development?
I expect that the plan will be completed before the economic summit, but now we have finished calculating the area that is allocated for investment in an area of 500 kilometres. I would like to point out that planning is underway for other ports in the area which will be developed and economically utilised, including East Port Said with an area of 200 kilometres, of which only two kilometres have been utilised.
The most important industries to be included in the master plan are complementary industries. We have finished calculating area sizes and divided them by sector.
Did your work as consultants on Al-Sisi’s presidential campaign help your consultant team win the bid to develop the scheme of the Suez Canal?
Of course not. My work as a member of the advisory body to the presidential campaign of Abdel Fattah al-Sisi and my participation in the preparation of his electoral programme does not have the slightest relation to my coalition winning this bid. The selection process was done completely transparently through a French consulting firm that was nominated by the World Bank.
You met with a delegation of Saudi businessmen headed by Saleh Kamel at the Suez Canal Authority recently. What happened?
Yes I did. A delegation of top Saudi finance and businessmen headed by Sheikh Saleh Kamel, chairman of the Egyptian Saudi Business Council on the Saudi side, visited the Suez Canal drilling site. He announced the creation of a Saudi company with capital worth EGP 3bn, EGP 1.5bn of which was collected on Saturday. The company will conduct consultative and investment works in the Suez Canal development axis.
In the first phase, the company will provide consultancy to the Suez Canal Authority and help build infrastructure in the area. Later, it will supply investments into the different sectors of the project.
The government settled a dispute with the UAE’s Al-Futtaim Group. What is the impact of that on the investment and business climate?
Improving the business climate will require settlement of all investment and trade disputes and conflicts to reassure investors, attract new investments, and allow existing investments to expand. The slow pace of litigation and enforcement of contracts delays the entry of new investments, increasing unemployment and disrupting economy recovery.
I expect that the implementation of this settlement will be complemented by implementation of the Cairo Festival City project, whose investments are no less than EGP 20bn over three years. The total value of the project is EGP 24bn of which the company has invested less than a quarter so far.
Al-Futtaim obtained a 700 acre land plot to establish real estate projects in New Cairo under the contract signed in 1997. Following former housing minister Ahmed Al-Maghraby’s taking office, he requested that the contract be amended to include additional payments due to implementation delays. The contract was amended in 2007 and the remaining value of the land after the price difference was paid.
Following the 25 January Revolution, the company faced accusations of collusion between its officials and Al-Maghreby, and of land allocations that violated the law. Al-Futtaim has invested EGP 5.2bn in Egypt since January 2011 through now, more than EGP 4bn of which is invested in the Cairo Festival City project.
The remaining investments were pumped into the establishment of Swedish furniture chain IKEA which opened in Egypt last April. Al-Futtaim is the exclusive agent for IKEA in the Middle East. The investments were intended to go toward a Toyota assembly project in Egypt.
All of these investments were based on building permits obtained by the company in 2009 and 2010, but Al-Futtaim has not obtained new licences for more than four years, so work on Cairo Festival City has remained stalled for two years.
How do major Gulf real estate companies which are Sarie El Din’s clients view the investment climate in Egypt?
Investors are in a state of alert at present regarding the situation in Egypt, and they need a clear declaration of tax and energy policies as well as the direction that government economic policy will move towards in the next phase. This matter requires much work but unfortunately has not been taken seriously.
I believe that the dispute settlement committee has proven effective in resolving the problems that have arisen recently, but it demands a greater activation of the role of such committees and quicker referral.
But what should the government do to end these commercial disputes once and for all?
What is more important than settling disputes is eliminating policies, procedures, and legislation that produce these disputes. This includes land pricing policies, tender methods, and laws that protect decision-makers.
Egypt must stop politicisation resulting from administrative errors and I hope the government realises its goal of settling 75% of investment disputes before the economic summit is held in March to attract investments, increase employment, and restore the economy.