In June 2023, the Prime Minister issued decree no. 2140 of 2023 (“Decree”) amending Article 76 of Executive Regulations of the Investment Law No. 72 of 2017 and adding new article “76 bis” (“Amendments”). The amendments aim to enhance the investment climate in Egypt and attract more foreign investment by reducing obstacles and simplifying procedures.
- The key changes introduced by the decree discuss the conditions required to establish a Private Free Zone:
- The project shall be in the form of a joint stock or a limited liability company,
- With the possibility of exempting some special strategic projects, exports shall not be less than 80%
- The local component (products) ratio shall not be less than (30%) within a maximum period of three years from the start of operation.
- The special free zone projects must adhere to the conditions of industrial safety, civil defense, and fire pursuant to the Egyptian code or the decree issued by the component minister for industrial affairs addressing industrial facilities. The projects must also commit to secure their facilities and limits with guard towers, surveillance cameras, and the presence of authority security and port security officers, all at their own expense.
- The authority (GAFI) is committed to monitor the activities of projects in special free zones to ensure their proper conduct and to verify the safety of the procedures used to carry out the activity, in accordance with the mechanisms established by the authority's board of directors which are approved by the cabinet.
- The key changes introduced by the decree adds an exception in Article 76 bis of the Executive Regulation:
1- Industrial Sector (i.e., Execution management works for industrial projects and service projects, Production equipment and production lines)
2- Commerce Sector (i.e., Projects that invest in the field of developing internal trade)
Private Service Free Zones are subject to an additional condition: the board of directors of the general free zone in which the private service free zone is located has the authority to approve the establishment of projects within the private service free zone. The chairman of the board of directors of the abovementioned general free zone is responsible for licensing these projects to carry out their activities, considering their license renewal and modification. The license must include a statement of the project's purposes, its duration, boundaries, and the amount of the financial guarantee provided to meet the project's obligations.
We recommend that companies operating or planning to invest in Egypt review the new provisions to ensure compliance with the updated regulations. The decree is expected to boost Egypt's economy and increase investment opportunities in various sectors.