The General Authority for Investment and Free Zones (GAFI) is expanding the scope of its so-called “golden licence” regulations through legislative amendments that are set to be approved by the House of Representatives, the lower house of Egypt’s parliament.
A golden licence gives “comprehensive approval of the set up, operations, and management of a project, including building licences and the allocation of the necessary real estate. It may be granted to companies upon” cabinet decree, says the GAFI’s Golden Licence Guidebook.
Golden licence holders are also eligible to apply for “general, special, and additional” incentives that are determined according to the nature of their projects.
Also called a “single approval licence”, the golden licences were originally introduced as part of Investment Law 20/2017, but they were only activated in September 2022.
The amendments the GAFI is now aiming to introduce are intended to expand the use of the golden licences in order to encompass other sectors in addition to granting incentives to entities not eligible to receive them under the current Investment Law, according to statements by Hossam Heiba, chair of the GAFI.
Parties that can currently acquire golden licences include companies that establish strategic or national projects that contribute to sustainable development or partnership projects between the private sector and the state, the public sector, or the public business sector.
These projects can be a host of fields, including public utilities and infrastructure, new and renewable energy, roads and transportation, ports, communication and information technology.
Heiba told the Al-Arabiya TV Channel on Sunday that some 40 applications had been submitted for golden licences thus far, adding that the GAFI is working on granting them to the largest possible number of companies.
It is expected that this process will be finalised by the first week of April, he noted.
He said on an earlier occasion that 13 companies had acquired golden licences for a total investment of $7 billion.
The golden licences aim at reducing the amount of time and effort taken by investors in acquiring approvals for their projects by consolidating them into a single application instead of continuing with the present system that requires seeking a green light from different entities.
Heiba said he would like to see this concept generalised across the board.
Ahmed Khalifa, deputy chairman of the board of the Emirati fertiliser company the CFC Group, told Al-Ahram Weekly that the company was the first to acquire its golden licence in September.
It wanted to establish an industrial complex producing feed supplements and chemicals in Egypt, he said, adding that before the introduction of the golden licence investors had been concerned that they would have to be granted 26 approvals in order to initiate the production phase.
Khalifa said that due to an “impractical requirement” in the executive regulations of Investment Law 17/2017 that prohibited the granting of certain incentives, no golden licences were issued from 2017 until late 2022.
In March 2022, the prime minister was sent a recommendation to amend the executive regulations of the law and responded positively. Thanks to this step, investors had then filed applications to acquire golden licences, Khalifa said.
The condition had required joint-stock companies and corporates with limited liability status to have issued capital worth more than 50 per cent of a project’s total investment. After an appeal to the prime minister, that figure went down to 20 per cent.
Khalifa said that according to the law, the golden licences target “strategic” projects, but added that the definition of this was “loose” and subject to the opinion of the cabinet. He has asked President Abdel-Fattah Al-Sisi to scrap the word, he said.
“In the light of present import challenges due to the dollar shortage, the manufacturer of pencils could also be seen as a ‘strategic’ manufacturer,” Khalifa said.
A GAFI official said that the criteria for granting golden licences included technology transfer, replacing imports with local products, increasing exports, generating more jobs, or establishing large projects that help to implement the country’s sustainable development strategy by increasing energy production or producing clean energy.
To obtain a golden licence, applicants should meet a set of terms and conditions, including that the companies they represent are in the form of joint-stock or limited liability companies in accordance with the provisions of Investment Law 72/2017, or joint-stock companies, partnerships limited by shares, limited liability companies, or single-member companies, as enacted by Law 159/1981.
The companies should provide evidence of financial solvency during the implementation of the project applied for and submit a preliminary feasibility study prepared by a reputable and licensed national or international consultancy firm.
They should submit a schedule for implementation and acknowledgment of the provision of all utilities necessary for the project’s infrastructure, including roads, water, sewage, electricity, communications, and waste management.
Bassel Shaira, head of the Industrial Pelletising Division at the Federation of Egyptian Industries, said facilitated procedures to set up projects should be the norm and available for all.
Equally important was simplifying procedures should investors wish to exit the market, as this was a factor that could make investors hesitant about taking first steps.
* A version of this article appears in print in the 30 March, 2023 edition of Al-Ahram Weekly