It represents a major step forward in improving investor confidence in the Egyptian economy and stimulating private-sector activity.

Incentives offered by the amendments have the state bearing many of the establishment costs of projects, among them covering part of the cost of connecting utilities once a project is up and running. The state will also bear part of the cost of technical training for workers and will refund half the value of land allocated for industrial projects if production begins within two years from the date it is made available.

The state is also ready to allocate land free of charge for some strategic activities.

The new amendments are “part of a series that Parliament has been introducing with the aim of generating a supportive investment environment in Egypt,” said Yasser Omar, a deputy chair of parliament’s Planning and Budget Committee.

He said that the provisions increase the special incentives granted to investment projects, develop the distribution of investments across the country, and expand the range of companies eligible for single licenses to establish, operate, and manage projects.

All this will encourage larger investments and help to generate an environment that will attract more foreign direct investment (FDI). The amendments are in line with the government’s aim to promote comprehensive and sustainable development, overcome the current economic difficulties, and improve living standards.

Head of the Industrial Investors Syndicate Mohamed Geneidi said that the amendments to the investment law should help to attract more direct investment to combat unemployment and create jobs, boost production, and stimulate the private sector.

They would help to boost exports and generate a higher influx of foreign currency, he said, adding there was also a need to keep pace with global developments in order to better target incentives to attract large investments.

However, there have been some concerns regarding the geographical distribution of investment opportunities.

Mustafa Salem, also a deputy chair of parliament’s Planning and Budget Committee, agreed that the amendments were needed in order to improve the investment climate and attract more foreign and domestic investment.

But while they offered many incentives for investment in activities in certain areas, the southern governorates were not among them. “Billions of pounds have been spent on infrastructure development in these governorates, yet this infrastructure is not being taken advantage of,” he said.

Even though LE350 billion has been spent on developing these governorates in the framework of the Decent Life initiative, they still need more investment, Salem said.

He urged the government to do more to direct new investments to the Upper Egyptian governorates by showcasing investment opportunities and offering more incentives. Such steps were essential in order to ensure the fair geographical distribution of investments, he said.

In another step to encourage investment, lawmakers also passed a law revoking tax exemptions granted to state entities involved in economic and investment activities in response to frequently voiced demands on the part of domestic private-sector firms, foreign investors, and international financial institutions.

Revoking the tax and other exemptions enjoyed by public-sector firms or firms in which the state is a majority shareholder ensures a level playing field, committee members said.

Alaa Al-Saqti, CEO of the Association of Small and Medium-Sized Enterprises, said the moves were in line with government plans to provide equal opportunities in investment activities and promote fair competition in an impartial and transparent framework that did not discriminate between public and private-sector firms.

The new law would help to boost tax revenues and reduce the government budget deficit without having to raise taxes, he said, adding that the revenue increase could come to around LE100 billion over the next five years.

* A version of this article appears in print in the 20 July, 2023 edition of Al-Ahram Weekly