Investment Zones regime is one of the latest investment schemes that is recently formulated with the objective of boosting economic development among the other investment schemes existing in the country.
Investment Zones regime was introduced in 2007 (law no 19 of 2007) with the following objectives:
- Promote economic clusters by the private sector; industry, services, tourism, agribusiness, etc.
- Private sector is mandated for developing, promoting, managing these zones, as well as economically benefiting from them.
- Provide a Bureaucracy-free environment through a one-window for incorporation, licensing, and support services in the zone.
- Offer streamlined custom management through localized dry ports within the zone
Investment Zone Opportunities are offered throughout various regions within the country to match competitive advantages, human and natural resources of each.
Establishment of the investment zones are allowed across all sectors from tourism to finance, from agriculture, and industry to services projects, Investment zone is run within a well- developed administrative frame in terms of timing & facilities granted concerning license issuing & dealing with entities through an integrated one stop shop affiliated to the General Authority for Investment.
Qualifications of Investment Zones
The investment zones possess a unique package of qualifications:
- Providing a bureaucracy-free environment through a one stop shop for incorporation, licensing and support services in the zone.
- Encouraging the creation of specialized sector clusters (industry, services, agriculture, tourism, finance, entrepreneurship, renewable energy..etc.) in order to reach a high standard of integration within every zone, and maximize value added services within each zone.
- Private sector is mandated for developing, promoting, managing these zones, as well as economically benefiting from them. The private sector is represented also in the board of these zones which grants it the right to contribute in the decision making process.
- All the products manufactured within the investment zone enjoy the merits of the rule of origin according to the bilateral treaties and preferential trade agreements with Arab, African and other countries (GAFTA, COMESA and Egypt-EU partnership)
- customs procedures for production inputs will be administered in the investment zone, not airports/ports;
- companies established within Investment Zones are incorporated under investment law 8 of 1997 or 159 of 1981(Inland Investment)
- Customs and sales taxes are paid in 5- 10 years installments; exported goods are tax exempted
- Training centers are to be established by the investor with the help of the Ministry of Manpower and Industrial Training Center
- R& D center is to be established in every investment zone to support development of products & enhancement of industrial operations in the zone.
- Investment projects with industrial nature operating in Upper Egypt enjoy additional incentives: free industrial land, employment grants / cash credits, and additional export development rebate
- The regulatory board is granted authority by law to incorporate and license projects within each zone. each zone has its own one stop shop;
- Investment zone is established with the objective of:
- Encouraging industries that are based mainly on local inputs.
- Priority of establishing the projects that require a wide range of small and medium feeding industries.
- Upon giving licenses for industrial gatherings/ consortiums inside the investment zones, the board aims at creating gatherings for all projects of similar industries, alongside with the gatherings of its feeding industries in order to minimize time, cost and effort exerted.
Advantages and guarantees granted
The investment zone has besides the following advantages:
- Availability of establishing investment zones across the whole country.
- Diversity of marketing for the products either domestically or internationally (where it's not obligatory for those companies to export its products)
- Projects enjoy all the privilege granted according to the comparative trade agreement signed with all countries.
- Customs procedures for production input will be administered in the investment zone rather than in the ports and airports.
- A special privilege package offered to the industrial projects in Upper Egypt (Free Land is granted, grant amount for each employment opportunity).
- All relevant services are centralized in One Stop Shop implemented in the zone
- IDA has the mandate of offering the infra structure for the zone up to its outermost points (outskirts), however the developer has to implement all the necessary utilities.
Guarantees granted in accordance with the investment law
- The projects have full Protection against Expropriation, Nationalization, where the assets are protected against expropriation & freezing.
- No entity or authority has the right of interfering in the pricing of the products or defining its profit margins.
- No entity or authority has the right of canceling or pending the estate- license granted previously to the project, unless it breaks any of the license's conditions.
Management of Investment Zone
- A regulatory board is formed for each investment zone including representatives from the main zone developers, as well as representative from Ministry of Finance and from the governorate, which the zone is located in. Besides, it includes also representatives from GAFI, and the other entities relevant to the licensed activities. Moreover, It's possible for any board to manage more than one investment zone.
- The board is fully authorized for defining the norms, rules, regulations and conditions for operation in this zone, as well as for giving approvals & issuing licenses.
- The board has an administrative office for GAFI's staff to deal directly with the investors and to follow up with the Board decrees, besides it's authorized for issuing licenses, giving decisions regarding inward & outward goods transaction.
Procedures of establishment
- The entity asking for establishing the zone gets first an establishment form from the concerned dept. in GAFI premises in the embassies zone, Nasr City or from any pubic free zone located nearby, or even from GAFI's one stop shop and investment offices in the governorates to be filled in and presented combined with these required documents:
- General information about the desired location attached with a documented layout (Map) of the location and all necessary possession documents.
- Available existing Infrastructure & Utilities and, these, which still needs to be implemented.
- Suggested master plan of the project (number of projects, capitals, investment costs, areas of utilities…
- Information about the developer
- Time plan required for implementation
- Suggested form for contracting with the investors operating in the zone.
- Approval from concerned entities in the zone.
- Terms of restitutions in case of no implementation occurred.
- The unit of investment zone presents the establishment requests to the formed committee for verifying the establishment requests.
- GAFI, in coordination with the formed committee and the owner of the project, takes the responsibility of acquiring the necessary licenses from any other entity concerned with the type of the project.
- The committee present to GAFI's board of directors the requests for the approval. GAFI, in turn, present it to the prime minister in order to get the final decree of establishing the investment zone. GAFI's Board besides passes the decree of forming board of directors of the zone.
- The approved party establishes then a company to develop, promote and manage these investment zones.
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