All the investment laws that were applicable before the Egyptian
revolution of January 25th are still working. The investment
regimes are summarized as follows:
Investment law no 8 is enacted to attract foreign investors and
thus applies only to a specific number of activities:-
- Reclamation and cultivation of barren and desert lands.
- Animal, poultry and fish production.
- Manufacturing and mining.
- Preparation and development of selected industrial zones.
- Hotels, motels, hotel apartments, tourist villages and tourist
- Refrigerated transportation of goods, refrigerators for the
purposes of storing crops, manufactured products and foodstuffs,
container stations and grain silos.
- Air transport and directly related services.
- Overseas maritime transport.
- Petroleum services in support of drilling, exploration as well
as gas transport and delivery.
- Housing complexes for the purposes of full, unfurnished lease
for noncommercial users.
- Infrastructure operation including potable water, sewage,
electricity, roads and communications.
- Hospital, medical, and therapeutic centers that offer 10 per
cent of their capacities free of charge.
- Financial leasing.
- Underwriting of subscription to securities.
- Venture capital.
- Production of computer programs or systems.
- Projects funded by the Social Fund for Development.
- Development of new urban zones
- Software designing and production.
- Establishment and management of technological zones.
- Credit classification.
- Establishment, management and operation or maintenance of river
transportation for groups within and between new cities and urban
- Performance management of industrial projects.
- Collecting garbage, waste disposal (whether of production or
service activities), and waste treatment.
Investors engaged in sectors not covered by law 8 are subject to
corporate law no 159 of 1981. In both cases, The General Authority
for Investment (GAFI) acts as the official regulator for all
incorporations and licenses.
Among the incentives and guarantees, are protection against
expropriation and compulsory pricing, full right of profit and
dividend repatriation, no export requirements, access to dispute
resolution committees administered by GAFI, unfettered access to
land in Upper Egypt.
Other incentives include a standard income tax rate of 20% (oil
& gas sector companies at 40.55%), a 10 - year tax exemption
for land cultivation and production activities related to live
stock, poultry and fish, export duty ranging from 5 - 25% of the
value of whole sales transactions, and import duties ranging from
- Investment Zones were created under Law no. 19 of 2007, which
introduced a new investment scheme never included before in the
Investment Guarantees and Incentives Law, which is the Investment
Zones system. The new law allowed the establishment of investment
zones as per a Prime Minister decree to be specialized in whatever
investment domain stipulated by the law, and the provisions of
articles number 30, 31.38, 41, 42.46 which are mentioned in the
investment law are applied on these zones.
- The Prime Minister's Decree No. 1675 of 2007 was issued to
regulate work at investment zones.
- Establishing integrated clusters in all fields,
- Mandating the private sector to develop, manage and promote
- Widening the scope of economic and social development across
the country with the best employment of the nation's competitive
- Investment Zones' activities are not limited to industrial
activity but also include other activities as ( Education &
Scientific research - SME -Commercial Services - Tourism).
- Business homogeneousness in the single zone, offering
competitive costs for operation and marketing thanks to industrial
- Unique administration system that facilitate the application of
all management procedures through dealing with one single
- No restrictions over projects' capital and legal form,
- Streamlined customs system for smoother importation and
exportation for the projects at the zone,
- Availability of a package of logistic services for
- Goods manufactured within investment zones enjoy the Egyptian
origin feature as regards to bilateral agreements with Arab and
African countries (COMESA - European Association),
- Projects established in the investment zones enjoy the
incentives that are mentioned in the investment law,
- Projects established in the investment zones have the right to
deal with the local market.
- The entity willing to establish a zone fills in and submits an
application form attached with other required documents.
- The application is checked by the unit of investment zones to
see if any of the required documents are missing.
- The application is submitted to the committee in charge of
examining the investment zones establishment applications.
- GAFI - via that committee and jointly with the applicant -
obtains approvals from the bodies concerned with the type of
business or main types of business in the zone named in the
application, and approvals from the Armed Forces Operations
Authority, the National Center for Planning State Land Uses, the
Supreme Council for Antiquities, Environmental Affairs Agency and
the Civil Aviation Authority.
- The committee submits the application to GAFI's board of
directors for approval to establish the investment zone. Once
obtained, GAFI's approval is referred to the Prime Minister in
order to get a final decree on establishing the investment
- GAFI's chairman - based on GAFI's board of director's approval
- issues a decree for forming a board of directors for the
investment zone within 2 weeks at most as of the date the zone
establishment decree was issued.
Pursuant to the Prime Minister's Decree No. 1675, the following
documents must be obtained in order to issue an investment zone
- A description for the site needed to be transformed into an
investment zone, including its area, location, coordinates, a
recent cadastral map, and the legal nature of the site
- A report on all already-existing and required utilities and
infrastructure elements and a statement on how much water and
energy is needed throughout the phases,
- The zone development and promotion strategy, including a
general description of the type of projects likely to be attracted,
how many projects, their capital and their estimated total
- A layout of the zone, including the services to be provided by
- Information about the company making application, including its
experience history, stockholders and capital structure,
- Time schedule for zone establishment and utilization,
- An affirmation from the applicant on their full compliance with
all environment, health, security and safety standards and
compliance with the zone establishment decree,
- The contract to be signed with willing-investors at the zone,
including their compliance with standards and conditions specified
in the previous paragraph, as well as conditions of land retrieval
in case the land remained unused for a certain period of time.
Administrative System of the Investment Zone
- The investment zone will be run by a board of directors
comprised of a representative of the General Authority for
Investment (GAFI), a representative of the developer in charge of
the zone's development, one or more investors in the zone, in
addition to representatives of the Ministry of Finance, the
governorate where the zone is, and the bodies concerned with the
licensed activities. The board shall develop standards, regulations
and rules of investment in the zone.
- The board will have an office within the investment zone,
provided that the members of the Executive Office shall be from
staff at GAFI. The Executive Office shall be responsible for the
Executive Office's Tasks
- Receiving applications from investors wishing to establish
projects within the investment zone and presenting them to the
board of directors for decision,
- Issuing all license for projects within investment zones after
receiving the board's approval.
- Implementing the board of directors' resolutions,
- Ensuring compliance with the zone's general rules,
- Following up procedures for the entry and exit of goods,
- Engaging with external bodies in supervision and
The main role of the developer of the Investment Zones
The investor or developer bears the main burden of the
establishment of the zone, the implementation of infrastructure and
also provide all the services to the zone, whether the developer is
a private company or governmental authority.
Existing Investment Zones
Until May 16, 2011, there have been 13 investment zones
specialized in various fields and distributed among 8 Egyptian
governorates as follows:
CBC Egypt for Industrial Development
Polaris International Industrial Park
The Industrial Development Group
Pyramids Industrial Parks
Al-Tajamouat Industrial Park for industrial cities and mortgage
Textiles and ready-made garments
Small and medium enterprises (SMEs)
City of Scientific Research and Technology Applications
Nanotechnology and biotechnology
Higher education and scientific research
Ain Shams University
Higher education and scientific research
Higher education and scientific research
Ministry of Communication Investment Zone, Maadi
Cairo Airport Investment Zone
Commercial and service
GAFI Intention to Establish and Develop Investment Zones
As a part of a plan to develop investment zones, GAFI started to
establish a range of investment zones. Taking into account all
environmental requirements, GAFI will develop and manage such zones
in various governorates in accordance with the competitive
advantages they enjoy.
- Creating new job opportunities, and training and qualifying
- Developing the local investment by focusing on SMEs,
- Achieving comprehensive development for surrounding
- Stimulating internal trade,
- Establishing industrial clusters meeting all environmental
- Promoting and developing the private investment.
GAFI has collaborated with a number of industrial developer as (
CPC , Polaris , The Industrial Development Group , Al-Tajamouat
Industrial Park) as it facilitated the administrative system of the
Investment Zones through the Board of Directors, as well as
procedures for Issuing all license for projects' construction and
operation through the Executive Office of the Investment Zones.
Southern Egypt Development Program
- The Egyptian government believes that Upper Egypt is a region
that has the potential to develop into a new hub for both
manufacturing and services projects. Governorates located in
southern Egypt are equipped with many competitive advantages: 30%
of Egypt's total population, abundant natural resources and a
diversified economic base.
- The government has put in place various initiatives to
encourage investment in Upper Egypt; the establishment of clusters,
investment incentives and employment grants; free land to investors
in Upper Egyptian governorates (with the exception of Fayoum);
technical assistance through Egypt's Industrial Modernization
Center (IMC); and technology centers and training.
- The Upper Egypt Development Company is a company that has been
established to encourage private-sector investment in Upper Egypt.
The Company currently has two branches in Cairo and Assiut and has
begun to launch projects in several governorates. A new road has
been established to link Upper Egyptian governorates with Safaga
Port and Sohag Airport.
- Companies established within southern Egypt are incorporated in
accordance with investment law 8 of 1997 or law 159 of 1981(Inland
Special Economic Zones (SEZ)
- Law 83 of 2002 established Special Economic Zone (SEZ) that
provides significant incentives and competitive advantages for
investors. Each of the zones is autonomous and has its own Board of
Directors who handle incorporation, licensing procedures as well as
other investor services.
- The North West Suez Special Economic Zone was the first zone
created under the said law, and will serve as a model for the
future development of other SEZs in Egypt. The North West Suez SEZ
stretches over 20 square kilometers strategically located directly
adjacent to the Sokhna Port about 45kilometers southeast of Suez
City near the southern entrance of the Suez Canal.
- A Master Development Company (MDC) was established by the SEZ
Authority in 2006 to create a master plan for the promotion and
management SEZs. The final zoning and infrastructure strategy for
the SEZs will be put in place by the second half of 2008.
- Within close proximity to the North West Suez are several
projects incorporated under the general land investment regime,
which create an additional flow of commercial activities to the
- The privately managed Red Sea Port of Sokhna is being hailed by
the cargo industry as a quiet revolution in Egyptian logistics. The
port will serve more than 20,000 vessels sailing through the Suez
Canal each year. The Sokhna Port is strategically positioned to
serve as a trade and logistics hub between the EU, the Far East and
- SEZ incentives and guarantees include a 5% flat rate on
personal income tax; integrated custom administration, tax
administration, dispute settlements, licensing as well as general
investors services for projects incorporated within the zones; a
10% tax rate on all activities within the SEZ; and Egyptian
certificates of origin for SEZ - based exporters, allowing them to
make use of Egypt's international trade agreements.
Qualifying Industrial Zones (QIZs)
- The QIZ protocol between Egypt and the United States grants
certain products manufactured in Egypt preferential access to the
United States as long as they satisfy the rules of origin related
to local content. They are currently 19 QIZs located within 4
geographical areas: Greater Cairo, Middle Delta, Alexandria and the
Suez Canal Zone,
- Both Egyptian and Israeli companies must contribute and
maintain at least 10.5 % of the minimum 35% local content required
under the legislation in order to qualify duty-free access to the
- Manufacturers on both sides must also contribute and maintain
at least 20% of the total cost of production of goods eligible for
duty/-free access, excluding profits, even if the cost can not be
considered as a part of the 35% minimum content requirement.
- For this purpose, costs may include originating materials,
wages and salaries, design, research and development, depreciation
of capital investment and overheads.
- The QIZ protocol was signed in December 2004, and today they
are 705 companies eligible to export under QIZ. Qizs are expected
to help further develop Egypt's robust textile and garment industry
as well as supporting sectors. Qiz incentives and guarantees
include duty - free access to the US market for products that
comply with the rules of origin requirements; flexible application
of the requirements; no quotas on exported products; and open -
ended validity, in that the QIZ protocol does not have an
- Egypt has been advocating the creation of Free Zones since the
early 1970s in an attempt to increase exports, attract foreign
in¬vestment, introduce advanced technology and create more job
opportunities. Free Zones are located within national territo¬ry
but are considered offshore areas. Investors operating inside the
Free Zones must export more than 50% of their total pro-duction. To
facilitate import/export procedures, Free Zones are usually located
adjacent to sea ports and airports.
- There are two different kinds of Free Zones; public and
pri¬vate. Egypt currently has nine Free Zones located in: Nasr
City, Alexandria, Port Said, Suez, Ismailia, Damietta, Shebein El
Kom, Media Production City and Keft. Two additional free zones are
under development in Badr and East Port Said. Among the Free Zone
incentives and guarantees are a life¬time exemption from all taxes
and customs; exemption from all import/export regulations; the
option to sell a certain percent¬age of production domestically if
custom duties are paid; and limited exemptions from labor
provisions. Tax incentives for energy intensive industries
operating in Free Zones (fertilizers; iron and steel; petroleum
production; and production, liquefac¬tion and transportation of
natural gas) have been abolished as of May 2008. In addition, all
equipment, machinery and essential means of transport (excluding
sedan cars) necessary for main¬taining the licensed activities of a
project are exempted from all customs,
- Egypt's Free Zones Offer Competitive Utility Prices: A new
pricing mechanism for electricity used by energy-intensive
in¬dustrial sectors (above 50 million kilowatts) is currently being
applied to all sectors with the exception of food processing and
textiles. Electricity costs are approximately 4 cents/kilowatt
(KW). Potable water costs are approximately 20-30 cents
per-cubic-meter. Fees and Charges Applicable to Free-Zone
Companies: Manufacturing or assembly projects pay an annual charge
of 1% of the total value of their products excluding all raw
materi¬als. Storage facilities are to pay 1% of the value of goods
enter¬ing the Free Zones while service projects pay 1% of total
annu¬al revenue. Goods in transit to specific destinations are
exempt from any charges.
- Land Rental Prices are as Follows: US$ 3.50 per square me¬ter
per year for industrial projects; US$ 7.00 per square meter per
year for all other projects (storage and services). A reduc¬tion of
50% of the above rate is available in three of the nine public free
zones: Ismailia (for industrial and service projects only),
Damietta and Shebein El Kom.
- Private Free Zones: In addition to public Free Zones, private
zones may also be established, each limited to a single project.
The same privileges and incentives granted to public free zones
apply to private zones as well.
Public- Private Partnership (PPP)
- Not only is the state encouraging more foreign and inland
investment in the country's burgeoning industrial and service
sectors, but they have also allowed the private sector to deepen
its participation in the economic reform process through a
public-private partnership (PPP) strategy that aims to enhance the
quality of services available in the country while simultaneously
decreasing the financial burden on the government.
- In 2006, the Ministry of Investment initiated a comprehensive
PPP promotion strategy, which included the creation of a
legislative and institutional framework that will facilitate the
execution of major PPP infrastructure projects and encourage more
local and foreign investors to partner with the government in
priority sectors including water, transportation, health and
- On the legislative front, the Ministry of Finance is currently
drafting new PPP legislation to govern the relationship between the
government and the private sector detailing the responsibilities of
each side. The law is expected to become final later this
- On the institutional and capacity building fronts, a joint PPP
Unit has been established by the Ministries of Investment and
Finance. Sector specific regulatory agencies have also been
established to deal directly with various projects that are already
in the works.
- Between 1990 and 2005, the private sector was involved with
PPPs in four infrastructure domains, including telecommunication,
transportation, water and sewage, carrying out 20 projects with a
total investment of US$ 7.5 billion. The telecom sector accounted
for the lion's share of investment at US$ 5.27 billion. This was,
however just the beginning of a successful experiment that the
government intends to replicate and vastly expand in the future.
More recently, the government has tendered for the construction and
operation of schools as part of program aiming to build 2,210 new
schools; fresh and sewage water treatment projects in Cairo and
Borg El Arab; and billions of dollars in new highway projects that
will speed traffic between the nation's north and south, between
industrial zones and ports. Tenders for more projects are in the
- In the transportation sector alone, a projected US$ 16.45
billion in public and private investments will target upgrades in
railways, roads, ports and Nile transportation during the next five
years. According to the Egyptian Ministry of Transportation, US$
9.14 billion of private-sector investments will go into ports; US$
5.48 billion will go into building and upgrading roads and US$ 3.66
billion will go into railways. Approximately one third of total
investments will come from the state and the rest will come from
- Foreign companies have already placed sizable investments into
Egyptian ports. Danish shipping and oil group AP Moller - Maersk
signed an agreement with the Egyptian government to double the
capacity of it s East Port Said terminal by 2011. In October 2007,
Dubai port operator DP World acquired a 90% stake in the Egyptian
Container Handling Co., located near the mouth of the Suez Canal
for US$ 670 million.
- In the field of education, the Egyptian Education Initiative
(EEI) is a PPP between the government of Egypt, the World Economic
Forum's IT member community and multinationals including Cisco, HP,
Intel, Oracle, IBM, Microsoft, Siemens and Computer Associates. The
initiative supports Egypt overall education reform efforts and
maximizes the potential for a collaborative partnership. The main
objectives of the initiatives are to improve the development of and
delivery of education, to raise the quality of teacher training, to
develop skills needed for a knowledge society and to provide
education to a wider sector of the population.
- The increased involvement of the private sector in major
initiatives such as these reflects the government firm commitment
towards upgrading the quality of services and facilities for its