The main purpose of the article is to determine and analyze the essence and role of contemporary investment legislation in Egypt within the process of active “authoritarian modernisation”. The latter has been evolving in the Egyptian political and economic institutional structure in the latter half of 2010s, after the failure of the previous reforms and their driving political forces connected to and supporting the “Arab spring” of 2011-2013.
The attention is concentrated on the recent legislative regulating instruments, designed to stimulate the investment activities of both local and foreign businesses, especially with the aim to direct their financial, managerial, technological and other resources, starting with the hard currency inflows, to the execution of new projects selected by the state due to their strategic importance for modern Egyptian economy. Most importance in this context is the analysis of the Investment Law No. 72 of 2017 and the Law No. 72 of 2017 Promulgating the Investment Law. The study reveals that those documents, less than a year after their coming into force, have already proved ample potential to accelerate economic development of the Arab country under review, i.e. serving as a means to increase the attraction of incoming foreign direct investments (FDI).
The new laws should compliment other economic reforms, which have been recently implemented, including: 1) the shift from the previous sales tax regime to a comprehensive value added tax (VAT) system; 2) the liberalisation of the foreign exchange system; 3) the adoption of a flexible exchange rate regime; and 4) the gradual reduction of energy subsidies. The author admits that it is rather difficult to separate the effects of each one of the mentioned reforms, the more so that some of the results are not devoid of contradictions. Yet there is hardly any doubt as to their positive synergetic influence improving the overall investment climate in the Arab Republic of Egypt (ARE).
The analyses supported by the latest consolidated statistics of the IMF reveal that the growth in ARE accelerated for four consecutive quarters, reaching 5.2% in July-September 2017, compared to 3.4% in the same quarter of the previous year, unemployment has declined, inflation continued to go down from the peaks reached following the pound floatation and energy price reforms, and the external position strengthened, while inflows exceeded original program expectations. Positive market sentiment reflects growing credibility of the economic management.
To unlock Egypt’s growth potential, raise export competitiveness and create more private sector jobs, the authorities are enhancing the modern broad-based strategy of market-friendly reforms. In 2017, apart from the mentioned new investment law, the Egyptian parliament passed an industrial land and licensing law. Access to industrial land has become more readily available as nearly 17 mln sqm of land was provided in 2016/17 compared to 9.5 mln for the whole period of 2007-15. Key reforms in the pipeline include a new bankruptcy law and a single proprietor company law that aims to encourage small and medium sized enterprises (SMEs).
With improved overall confidence and growing credibility of the governmental program, the private sector entrepreneurship become more visible, and there is a growing interest by foreign investors, including in the newly established industrial free zones. Thus Egypt has been highlighted as the fastest growing location for start-ups with growth of over 100 percent in the previous year, reaching over 500 registered startups, and with very promising prospects for rapid growth.
External financial resources, institutional infrastructure, means of guiding investments, legislative reforms and innovations, taxing systems, special economic zones
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