Egypt: Land Allocation In Egypt's New Investment Law

Last Updated: 9 March 2018
Article by Youssef Sallam and Mariam El Alaily

Investment Law No. 72 of 2017 ("Investment Law") came into effect on 1st June 2017. By repealing Law No. 8 of 1997, the newly promulgated law aims to promote foreign investments through the reduction of bureaucracy and the simplification and enhancement of processes in relation to the acquisition and allocation of properties by exploring the provisions of the Investment Law, as well as its Executive Regulations No. 2310 of 2017 ("Executive Regulations"). As part of the government's plan to increase revenue and exports, the land allocation provisions in the Investment Law and its Executive Regulations, which detail the process of acquisition and allocation of property by the government to investors serve as a way to optimise use of the properties under its jurisdiction and allow for far more investment opportunities than ever before.

With regards to the allocation of land, Article 55 of the Investment Law provides that the investor has the right to obtain the required properties for pursuing its activity, subject to the special laws that regulate properties located in certain geographical areas. Accordingly, the competent administrative authorities shall provide, through detailed maps, the availability of properties and the investment activities suitable for their nature, as provided by Article 56 of the Investment Law.

Types of Land Allocation and Partnerships

Pursuant to Article 58 of the Investment Law (and subject to the provisions of Article 37 of the same law) and further stipulated in Article 47 of its Executive Regulations, the properties required for investment projects shall be disposed of through one of the following means:

  • Sale;
  • Rent;
  • Rent to own; or
  • License to use, where the license to use or lease is only valid for a period that does not exceed 50 years.

Accordingly, Article 62 requires that the transfer of ownership, in case of sale or rent of properties, be conditional upon the full price payment. Moreover, pursuant to Article 58, the competent administrative authority which has jurisdiction may participate in the investment projects conducted, with the property being an in-kind share or through a partnership in the cases determined by a decree issued by the Cabinet of Ministers. Consequently, Article 48 of the Executive Regulations details that this participation could take the form of either:

  • a Public-Private Partnership (PPP);
  • a Long-Term Partnership;
  • a Build, Operate, Transfer ("BOT");
  • a Build, Own, Operate, Transfer ("BOOT"); or
  • a Revenue Sharing Partnership.

Pursuant to the Investment Law and Articles 45 and 46 of its Executive Regulations, a database shall be created (and updated every 6 months) in order to comprise a list of these properties, their sizes, established heights as well as estimated price, and the method of disposal thereof. The allocation of land is conditional upon the approval of the Cabinet of Ministers and the President of the Republic issuing a decree transferring the title and jurisdiction of the property from the administrative body which has jurisdiction, to the General Authority of Free Zones and Investment (GAFI), in order to execute the investment plan and dispose of said property according to the provisions of the Investment Law.

It is noteworthy that the provisions of the Investment Law currently allow for a dual route to obtaining property from the government. One way is to obtain property directly from the competent administrative authorities and the other is to deal with GAFI, whereby the property would initially be transferred to GAFI and then onto the investor. This serves to allow more flexibility to the investor in terms of deciding which path would be more convenient. This was not present under previous iterations of such provisions. The only path for the investor is to seek land allocation through the competent authorities, which may lead to several bureaucratic obstacles that arise from dealing with several authorities and their respective requirements. Such a system also ensures that GAFI, a national body for investments, allocate disposition of land and property according to a wider vision for the economy.

Requirements and Conditions

In cases where the investor requires a privately state-owned property, Article 59 of the Investment Law requires the investor to indicate such requirements in its application, by specifying the purpose, size and location of the desired property. Moreover, for purposes of development, Article 60 of the same Law allows for the free disposal of privately state-owned properties to investors in areas determined by a decree issued by the President of Republic, where the investment projects meet technical and financial criteria, determined by a decree issued by the Cabinet of Ministers. This free disposal of properties is conditional upon the investor providing a cash guarantee not exceeding 5% of the overall value of the investment project's cost.

In particular, according to Article 49 of the Executive Regulations, where it concerns an activity involving production, the investor shall provide a cash guarantee representing 1% of the overall value of the investment project's cost. Where the activity concerned involves services, the investor shall provide a cash guarantee representing 3% of the overall value of the investment project's cost. Finally, where the activity concerned involves storage, the investor shall provide a cash guarantee representing 5% of the overall value of the investment project's cost. This guarantee shall be refunded after three years from the actual commencement date of production of projects of a productive nature or the commencement of any of the other aforementioned activities, provided that the investor complies with the conditions of disposal. In the event that this contract is not completed for reasons attributed to the investor, the said guarantee is returned after the deduction of any administrative expenses incurred by GAFI or the concerned administrative body without the need for any judicial proceedings.

Pricing and Selection Criteria

Article 63 of the Investment Law stipulates that investors or investment projects are chosen according to a points-based system, ranking projects based on preference principles according to technical or financial specifications, or based on the value of the bid. In particular, Article 51 of the Executive Regulations stipulates that these points be calculated according to:

  1. The investor's previous experience;
  2. The investor's international standing;
  3. The project's ability to generate foreign currency, either by exporting its products abroad or by providing a local substitute for a product imported from abroad;
  4. Projected investment costs;
  5. The value of the bid and payment method.

In case the competition, i.e. the points, prove to be close, the value of the bid takes precedence during the decision-making process. Furthermore, Article 64 of the Investment Law requires that any price estimation for the value of the properties, be it for sale, rent, or for other uses, such estimation of value shall be conducted by the General Authority for Governmental Services for the Higher Committee of State Land Pricing in the Ministry of Agriculture, the New Urban Communities Authority, The General Authority for Tourism Development, or the General Authority for Industrial Development. The enumeration of such standards in pricing and decision-making raises confidence in the transparency of the process and prevents potential legal battles concerning misallocation, bribery or profiteering. When the process is fair and transparent, investors are more confident and willing to enter a bid knowing that there won't be any foul play.

The involvement of the abovementioned authorities shall vary according to the nature of the project. Following the decision of the relevant authority's Executive Officer, in addition to the approval of the competent Minister, Article 65 of the Investment Law and Articles 54 and 55 of the Executive Regulations, condition the creation of one or more committees in order to include technical, financial, and legal teams whose positions and expertise correspond with the significance and nature of the projects, to decide on the applications for disposal of the properties as submitted by investors. In the application of the provisions of Article 66 of the Investment Law, and as per Article 57 of the Executive Regulations, the investor shall be bound by the initial purpose for which the property was disposed of. The investor may not change the purpose stipulated in the contract unless after the receipt of a written approval from the relevant Administrative Authority. A change in purpose may ensue after one year from the date of commencement of production or any other activity following the consent of all concerned parties, provided that the investor pays at least 50% of the difference between the value of the property when obtained and the market value at the date of submission of the application. This applies to properties disposed of by public legal persons and to privately state-owned properties.

Finally, as per Article 67 of the Investment Law and Articles 58 and 59 of the Executive Regulations, the competent administrative authority may terminate the contract (based on follow-up reports submitted by employees of the administrative authority) of sale, lease, lease-to-own, or license to use, and recover the property. This termination is subject to the investor's failure to:

  1. Receive the property for 90 days from the date of receiving a notification of receipt;
  2. Start the implementation of the project within 90 days of receipt of the property;
  3. Comply with the terms of payment of financial dues;
  4. Comply with the initial agreed upon purposes of the use of the property;
  5. Comply with the terms of the contract or license to use at any stage of the project.

 

Conclusion

The new land allocation provisions allow for more partnerships between the government and investors and to establish a framework under which such partnerships may be concluded under fair, transparent, and expedited conditions. Moreover, it allows all transactions to be centralised through GAFI, which in turn enhances the ability of the government to ensure that its resources are being utilised efficiently and according to the wider investment vision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions