Egypt's investment law has run its full legislative course with the president signing off on it last week. Although in theory this means the law is now in effect, practically its full implementation awaits executive regulations. Last week, a cabinet committee was tasked with completing the final draft of executive regulations before the first week of August. The new law, in the making for two years, offers investors rebates on investment costs of up to 50 per cent for projects in the least developed regions, rebates on the cost of land if factories begin production within two years of acquiring a licence and a variety of incentives for labour-intensive projects, small and medium-sized enterprises and projects utilising or producing renewable energy. A modified investment law was issued on the eve of Egypt's Economic Development Conference in March 2015 but it was criticised for falling short on a number of main investment requirements. Since then several drafts of a totally new law have been circulated, till the final version was passed by parliament in May. Now that the law is out, not everyone is happy with it. The law exempts private sector free zone areas from taxes and customs, a provision that raised a lot of reservations because of the government's dire need for these revenues. Also, the law gives companies established under its umbrella the right to employ up to 40 per cent of foreign labour, an incentive that would deny thousands of unemployed Egyptians job opportunities. Moreover, according to critics, the law does not resolve the overlapping authority over land allocation. Nonetheless, for what it is worth, the law is a milestone towards a better investment climate. The idea of establishing a company online, which will be possible thanks to the law, will do wonders to investors' perception of doing business in Egypt. On the World Bank's Doing Business report, Egypt ranked 122 among 190 in 2017. The report measures regulations affecting 10 areas of the life of a business, including: starting the business, dealing with construction permits, getting access to electricity, enforcing contracts and resolving insolvency. It remains to be seen the extent to which the executive regulations will bring out the best of the law, leaving no place for possible squabbling between authorities as was the case while the law was still in parliament. Otherwise there would have been no point in issuing a new law. Still, the new law alone is not enough to rank Egypt among the top investment-friendly destinations. Egypt floated its currency last November after a dollar crunch crippled the economy, spurred a forex black market and drove investors — who were not able to repatriate their monies back to their home countries — away. This came after it signed a bailout $12 billion deal with the IMF. However, it is still in dire need of bolstering its foreign currency reserves, key to which is foreign investments, to strengthen the local currency that lost almost half its value since November. FDI the country received during the first half of the 2016/2017 jumped 39 per cent compared to the same period of the previous year, reaching $4.3 billion. Investors are looking for a complete set of regulations, not just an investment law. Investors are concerned about bureaucracy in their day-to-day transactions, not just at the outset when they establish their company. They want a stable, transparent regulatory environment on which to base projections for their project. In fact, there are a handful of laws to be reviewed soon by parliament and that would, when passed, supplement the new investment law. These include amendments to the Capital Markets Act, which would see changes to the regulations governing private placements and investments in Islamic bonds known as sukuk. Other bills include the Consumer Protection Act, the new Mineral Resources Act, amendments to the 1941 Commercial Fraud Law as well as a long-anticipated law on bankruptcy. The government has targeted a growth rate of 5.5 per cent of GDP by 2018-19. Growth came in at 3.8 per cent in the second quarter of the current fiscal year, a drop from four per cent for the same period last year.
