{"id":639987,"date":"2024-08-18T00:00:00","date_gmt":"2024-08-18T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/govt-has-taken-major-steps-to-support-the-industrial-sector-what-are-they\/"},"modified":"2024-08-18T00:00:00","modified_gmt":"2024-08-18T00:00:00","slug":"govt-has-taken-major-steps-to-support-the-industrial-sector-what-are-they","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/govt-has-taken-major-steps-to-support-the-industrial-sector-what-are-they\/","title":{"rendered":"Gov\u2019t has taken major steps to support the industrial sector, what are they?"},"content":{"rendered":"

Whatever it takes to boost industry: <\/strong>The industrial sector is seeing unprecedented support from the state as it works to boost industrial growth which is translating into happier industrial players.<\/p>\n

The end goal:<\/strong> Recent government efforts aim to streamline procedures, cut back on red tape, and provide more support for both local and foreign investors in the industrial sector, as part of a broader strategy to boost Egypt's industrial output and export capabilities.<\/p>\n

Remember: <\/strong>The cabinet has presented President Abdel Fattah El Sisi with a comprehensive plan to boost the industrial sector, Prime Minister Moustafa Madbouly said last week<\/a>. The plan has three main objectives \u2014 enhancing the industrial investment environment to encourage the establishment of new factories and attract fresh investments, improving the quality of Egyptian products and increasing their competitiveness, reviving factories that shut off operations due to economic challenges and providing the necessary support for struggling factories.<\/p>\n

MP NOW NEEDS TO SIGN OFF ON SHUTTING DOWN FACILITIES- <\/p>\n

Step one:<\/strong> Madbouly said<\/a> that industrial facilities now require the greenlight from him to shut down operations. The move would mean factories that have halted operations will need to once again kick off operations if not given the prime minister\u2019s greenlight. <\/p>\n

Why it matters: <\/strong>Many factories have drained their funds before even starting operations, either due to bureaucracy or current economic conditions, Mohamed El Bahy, board member at the Federation of Egyptian Industries, told Enterprise. Shutting down a facility means a lot of wasted resources, seeing as typically it would take around two years for a factory to be up and running from setting the foundation stone to kicking off operations. <\/p>\n

The outcome: <\/strong>Reviving stalled facilities would increase the availability of raw materials and goods in the market, enhancing competition and exports, he added. <\/p>\n

FAST TRACKING THE PROCESS- <\/p>\n

Cutting the red tape:<\/strong> The move to have a single authority take care of all the necessary approvals to set up a facility will significantly speed up the process \u2014 initially investors had to receive approvals from 23 separate entities to set up a plant, a move which made the process of receiving the necessary licenses a months- or even years-long process, Samir Aref, head of the Tenth of Ramadan City Investors Association, told Enterprise. <\/p>\n

Putting things on the fast track: <\/strong>Factories will be classified into two categories based on their risk levels and the period of their application process will depend on which category they fall into, Aref said. Low-risk factories<\/strong> will receive a preliminary license to immediately kick off construction until they receive the remaining permits. Meanwhile, high-risk factories<\/strong> will have to wait up to two weeks as the responsible authorities ensure safety and industrial security requirements are met.<\/p>\n

The golden license effect:<\/strong> Industrial players had been calling for a conditions-free golden license with an expanded scope, El Bahy said, adding that the decision to fast track license approvals is far more attractive than the golden license. <\/p>\n

Long-awaited decisions: <\/strong>Industry players have for years been calling for a way to speed things up after constant struggling with red tape, Bassim Youssef, a member of the Chamber of Engineering Industries, told us. <\/p>\n

To sweeten the pot more:<\/strong> The Transport and Industry Ministry plans to launch a digital platform for industry within days. The platform will facilitate land allocation, allow manufacturers to digitally pick their desired plot, and grant building and operating licenses all in less than a week and in exchange a single fee.<\/p>\n

LAND REMAINS AN ISSUE- <\/p>\n

Land availability:<\/strong> Aref confirmed that the lack of affordable serviced land remains one of the biggest challenges facing local industry and foreign investment alike.<\/p>\n

Work in progress: <\/strong>The state is working on expand the amount of industrial land available, Transport and Industry Minister Kamel El Wazir said, adding that land will be made available for all industrial investors starting from early September, with industrial land plots to be offered periodically every three months. <\/p>\n

What's next?<\/strong> Sources previously confirmed<\/a> to Enterprise that large areas of industrial land will be offered to investors through the industrial developer system \u2014 which allows private companies to develop land for industrial use. Last week, El Wazir said that the state will offer some 10 mn sqm of industrial land to investors under its plan to boost the sector in Sadat City, Borg El Arab, Sixth of October, Tenth of Ramadan, and Badr City. <\/p>\n

Also planned: <\/strong>There is also a plan<\/a> to allow manufacturers to directly secure land from the state for no charge and install utilities themselves by contracting with the utility provider of their choice. <\/p>\n

Legalizing factory violations could help with the issue:<\/strong> One of the most important steps of supporting industry is the plan to legalize the status of factories built on agricultural land \u2014 last month El Wazir tasked<\/a> the Industrial Development Authority with drawing up legislative amendments to legalize the status of any industrial institution built on agricultural land that is already licensed and operational. The move would result in a dip in demand for offered industrial land plots, El Bahy said. <\/p>\n

ALSO ON THE AGENDA-<\/p>\n

Tax breaks:<\/strong> The government is mulling over canceling property tax on factories, El Wazir previously said<\/a>. But players want more, players told us that they are looking for additional tax breaks in the coming period. <\/p>\n

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WHAT DO INDUSTRIAL PLAYERS WANT- <\/p>\n

Industry player want cheap financing:<\/strong> All the industry players Enterprise spoke to agreed on the need for more affordable financing, adding that the EGP 120 bn in subsidized loan<\/a> s the Madbouly government has allocated to support industry and agriculture is not enough.<\/p>\n

Investors want actions: <\/strong>Investors are waiting for the state to fulfill promises made, Aref said. <\/p>\n

Refresher:<\/strong> The new cabinet intends<\/a> to double down on finalizing a new national strategy for industry and trade competitiveness, with an emphasis on positioning Egypt as a hub for sustainable industry and trade. The initiative targets an annual growth of 31.2% in industrial output by FY 26-27 and USD 103.4 bn in total exports in the period between 2024 and 2026, and to USD 130 bn by FY 26-27.<\/p>\n

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