A committee to settle problems surrounding investment contracts, announced by the government at the weekend, will help boost investment and build confidence in Egypt, say economic commentators.
On Sunday the website of Egypt’s cabinet said that Prime Minister Essam Sharaf had approved plans for a new dispute resolution committee, set to include a representative of the Ministry of Justice, the Head of the General Authority for Investment and Free Zones and several legal experts.
"This comes within the government's framework to support investment and clear all obstacles faced by investors," the cabinet said in a statement.
The decision comes after a string of legal challenges to sales of state land to real estate developers that have shaken confidence in Egypt's once booming property sector.
“It is extremely important, I’m happy that Sharaf has taken this step,” says Ahmed Darwish, a former Minister of State for Administrative Development, who believes the government plans may have changed the legal basis of investigations.
Instead of a judicial process – which implies legally binding conclusions – the new committee looks to be purely administrative and its findings only binding to one side.
“If an investor doesn’t like the administrative commission’s findings they can pursue it elsewhere,” says Darwish. “Any investor or company who has a dispute with government authority will benefit.”
Beltone Financial also welcomed the move. “This will boost investor confidence, and denote that the government is keen on encouraging private sector participation in economic activity,” said a note from the investment bank.
“[It] shows that Egypt is committed to making the transitional period of moving to a corruption-free government as smooth as possible without affecting private investors.”
Biggest beneficiaries, believes Beltone, will be beleaguered real estate firms, Talaat Moustafa Group (TMG) and Palm Hills Development, both of which have high exposure to disputed land banks.
TMG is currently facing a lawsuit over its flagship Madinaty project, which comprises 66 per cent of its 50 million square metre (sqm) total land bank. Palm Hills, meanwhile, is battling a dispute for 8 per cent of its 48 million sqm total.