Egypt ministry finalises the investment law regulations

Cairo expects FDI boost

CAIRO, June 21, (RTRS): Egypt’s investment ministry has finalised a much-anticipated set of regulations outlining incentives that it hopes will lure back badly needed foreign investors, Investment Minister Sahar Nasr told Reuters on Wednesday.

Egypt’s economy has been struggling since a 2011 uprising drove foreign investors and tourists away. The government is hoping a $12 billion International Monetary Fund lending programme signed last year will put it on the road to recovery, together with a rebound in investment.

Investors have been keen to see the executive regulations in the new investment law, which provide details on what types of projects and investment will be eligible for tax breaks and how the investment process will be streamlined.

President Abdel Fattah el-Sisi on June 1 ratified the long-delayed investment law, which provides a raft of incentives like tax breaks and rebates while reducing red tape for new projects.

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Nasr said the related regulations were submitted to the cabinet on Wednesday for the prime minister’s approval, which is required within 90 days of the initial law’s ratification.

She sees the investor-friendly law along with the IMF programme as boosting foreign direct investment for the 2017-18 fiscal year starting in July past an initial $10 billion target.

“Within the last 4 months (ending in May) we already achieved $6.8 billion and based on that I am projecting that we go beyond the initial target,” Nasr said from her downtown office.

The executive regulations are likely to take an expansive view on what qualifies as new investment, opening up tax breaks to a broad range of investors, not just those establishing entirely new projects, said Nasr.

“The general consensus is that if it is really a new production line, that entails new land, new business, new recruitment and staffing. The majority are labelling that as new investment and it will be eligible,” Nasr said.

The initial investment law stipulates investors get back half of what they pay to acquire land for industrial projects if production begins within two years, and provides a 50 percent tax discount on investments made in underdeveloped areas.

The executive regulations will for the first time stipulate a specific number of days that the government will have to approve new licenses and clearances, said Nasr, reducing the waiting time for starting new businesses.

Egypt is more than doubling monthly food subsidies, to 50 Egyptian pounds per person from 21 pounds currently, President Abdel Fattah el-Sisi said on Tuesday while announcing a raft of measures intended to ease the effects of austerity.

Egypt has been hit by soaring inflation since it floated its pound currency in November, leading it to halve in value. The float was the opening salvo in a $12 billion three-year International Monetary Fund lending programme tied to reforms such as raising taxes and hiking energy subsidies.

The higher monthly food subsidy allowance will come into effect starting July 1, an official at the supply ministry told Reuters.

The measure will increase Egypt’s food subsidy bill for the 2017-18 fiscal year beginning in July to 85 billion Egyptian pounds from the 45 billion allocated this year, state news MENA reported.

About 70 million Egyptians hold subsidy cards that allow them to purchase a range of staple goods like sugar, cooking oil and rice at outlets around the country.

Average yields on Egypt’s three- and seven-year treasury bonds were mixed at an auction on Wednesday, while average yields on six-month and one-year treasury bills rose at another auction on the same day, data from the central bank showed.

The average yields on the threeyear bonds rose to 18.382 percent from 18.271 percent at the last auction on June 12, while the sevenyear bond yields dipped to 18.346 percent from 18.377 percent.

At another auction on Wednesday, the average yield on the 182day bill rose to 20.413 percent from 20.384 percent at the last sale on June 15, while the yield on the 364-day bill rose to 20.390 percent from 20.307 percent at a previous auction.