Hot on the heels of amendments to the laws governing exports, earlier this year the Egyptian President, Abdel Fattah El Sisi, passed Law No. 72 of 2017 along with his Minister of Investment and International Cooperation, Dr Sahar Nasr. Law No. 72 of 2017 is a reform of Investment Law No. 8 of 1997 and aims to bring about reform to an economy that has seemingly under-performed in terms of its expectations in recent years. The law is an ambitious one and aims to attract foreign direct investment to Egypt through:
- instituting of a set of enticing investment guarantees and incentives;
- codifying social responsibility norms;
- introducing new investment systems;and
- establishing a new arbitration centre which aims to make settling disputes easier and cheaper.
Egypt is Africa’s second largest economy and is projected to grow at 4.5 percent in fiscal year 2017/18, according to the International Monetary Fund. The Egyptian government has been credited with making positive regulatory changes to facilitate the growth of the economy (for example, the amendment to the laws governing exports).
Of the developments in the law, the investment guarantees will certainly be of interest. The investment guarantees seek to establish and provide a sense of financial comfort and security to the investors, in order to further encourage economic development and growth throughout Egypt and include :
- The right of a “fair and equitable treatment” to all investors, domestic or foreign;
- The legislation further expands on its nature of equality, stating the guarantee that no sort of discrimination regarding gender or project size would take place;
- Foreign investors are guaranteed the right to a residence permit for the duration of their investment project;
- All investment projects are guaranteed immunity from nationalization;
- Funds from investment projects are guaranteed not to be seized, except if required for the public good, and not without full compensation preceding the actual date of expropriation;
- Investors have the full right to “create, manage, and expand,” their project whilst abroad, and with foreign currency. In managing their project from abroad, the right is further guaranteed to transfer and liquidate project profits without restriction;
- All cash transfers related to foreign investment are guaranteed the right to free movement and full conversion to a recognized currency, without any delay;
- Foreign investors have the ability to import and export any and all raw materials, products, production requirements, machinery, transportation means, and other essentials related to the project without having to register for a license from either the Register of Imports/Exports;
- Foreign Investment projects are allowed to employ up to 20% of the workforce from abroad – a statistic that was increased from the previous 10%;
- Foreign workers employed to a FDI project are also guaranteed the right to transfer their “financial entitlements” freely abroad.
Adams & Adams welcomes the legal reform and have confidence that it may have a positive effect on the economic climate in Egypt. A previous post on the Adams & Adams website referred to the new laws governing export in Egypt;
“The decree (Decree No. 43 of 2016) provides that a record shall be created at the General Organisation for Export and Import Control (“GOEIC”) for factories and companies eligible to export their products into Egypt. This amends Decree 992 of 2015 and all previous contradicting legislation and changes the position for exporters of products into Egypt substantially. The purpose of the legislation is to act as a safeguard against counterfeit products entering the Egyptian market with a view of protecting the interests of both consumers and trade mark owners.
Certain formalities are prescribed by the decree and we recommend engaging with us as to whether it is necessary for your products to be registered with the GOEIC in Egypt, if you intend trading in that jurisdiction.”
Allied to GOEIC approval, there is, naturally, a pressing need to secure trade mark registrations in this African economic powerhouse as soon as possible. In this regard, we are currently offering significantly discounted rates for obtaining trade mark protection in Egypt. Despite the very recent increase in the gazetted official fees, we can file an application for under $600.