How the business community is taking the government’s new investment incentives: Last month, the Supreme Investment Council (SIC) enacted a package of 22 new decisions geared towards encouraging investments and, ultimately, pushing more private sector investments. The decisions aim to address the demands and complaints of Egypt's industrial investors, and level all challenges and hindrances facing players in the industry sector, ultimately accelerating investments in Egypt's industry. Broadly speaking, the business community has reacted positively to the decisions, but sources Enterprise spoke with also stressed the importance of implementation.

REFRESHER- The decisions cover a wide range of issues that have previously been cited as obstacles for investors, including the procedures and bureaucracy to set up a company and complete the land allocation process, as well as addressing issues with transparency, leveling the playing field between the public and private sectors, and easing the financial burden on investors. The reforms also include changes to the jurisdiction of economic and district courts to expedite dispute resolution.

The incentives come as the government is pushing for more private sector activity + investment: The SIC’s decisions are geared towards driving private sector investments to be on par with or outpace the government’s investments, Prime Minister Moustafa Madbouly said at a presser to break down the decisions. The government is aiming to increase exports to USD 100 bn a year by the middle of the decade, and attract USD 40 bn in private investment by 2026 as it looks to increase the private sector’s footprint to 65% of the economy by 2025.

Broadly speaking, the private sector’s verdict on the reforms is “thumbs up”: The decisions are likely to open the door for FDI inflows and help support Egypt’s manufacturing sector, our sources agreed. “The decisions are expected to nearly double FDI inflows to USD 15 bn per year, from USD 8 bn,” Egyptian Businessmen’s Association member Ahmed El Zayat told Enterprise.

What’s going to be driving FDI? El Zayat pointed to several decisions as being key to attracting foreign investors, including opening up the real estate sector to foreign ownership by lifting limits on the number of properties non-residents are allowed to own, while expediting real estate registry procedures for investors. Also key, according to El Zayat, is the upcoming amendment to the law governing special economic zones to improve privileges, as well as a decision to allow natural gas-reliant industries to receive freezone benefits.

Less red tape = more streamlined process = more FDI: The new decisions cut lengthy processes and complicated procedures hindering industrial projects, which is expected to “strongly and quickly resolve many issues and challenges weighing on the economy and deterring foreign investments,” Secretary-General of the Chamber of International Transport and Logistics Amr El Samadony told Enterprise.

The business community is happy with importers register changes — and with the support given to export transport requirements: As part of the new decisions, foreign investors will be able to register on the importers (and exporters) register, allowing them to directly import without needing an Egyptian broker or to obtain citizenship. The reforms also include several incentives for projects producing green hydrogen and its derivatives — including customs and VAT cuss for imports required for these projects and exporting their output — which will be applied to other industry sectors within two months. This move will be critical to support exports, which “are the main focus at the current stage,” El Samadony stressed. “Supporting the transport side of the equation will help increase exports and secure FX income,” El Samadony said.

More industry-focused incentives: Madbouly has also introduced several decisions aimed at stimulating manufacturing industries, including a reduced 10% interest on land installments for two years, grants to industrial projects in new cities and all state districts, and granting customs breaks and other administrative fees to industrial zones in the fourth generation new cities and East Port Said, and projects in industries targeted in the government’s localization list, Also, a two-year grace period is being discussed to establish an industrial project, during which investors will only pay the down payment for the land, provided that they start paying the installments after the stated period.

All these decisions came in response to complaints and demands from manufacturers and investors, according to Alaa Abdel Meguid, head of the Federation of Egyptian Industries’ healthcare providers division. “We have been demanding these decisions to facilitate the process for investors, accelerate setting up their projects, and seamlessly operate them, which will benefit all parties,” Abdel Majid told Enterprise.

Time is of the essence: “Putting these decisions into action is most crucial,” head of the Federation of Egyptian Industries’ engineering division Mohamed El Mohandes told Enterprise. These decisions would be meaningless unless implemented according to the announced timetable, El Mohandes said, emphasizing that “our industry needs stable legislations, tax treatment, production inputs, and these decisions catering to the needs of the manufacturing sector means more production capacity, more supply, more stable prices, and consequently, lower price inflation.”

Your top industrial development stories for the week:

  • Misr Aluminum calls for factory rehab bids: The company issued a tender last week for Engineering, Procurement, and Construction (EPC) contracting companies to submit proposals for the rehabilitation of the existing factory, according to an EGX disclosure.
  • Madbouly gathers suggestions from industry, investment heads: Prime Minister Moustafa Madbouly discussed potential incentives to help boost localization across various industries with representatives of the Federation of Egyptian Industries, industrial chambers, and manufacturers.
  • Vivo starts local production: Chinese smartphone maker Vivo has begun manufacturing devices at its Tenth of Ramadan factory.
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