Egypt: The Selection Standards Between Investors To Obtain Lands In Egypt's Free Zones.

Last Updated: 22 October 2019
Article by Muhamad Rabie
Most Read Contributor in Egypt, October 2019

The investor usually seeks to get preferential treatment encouraging him to invest in a country, therefore he always looking for the best legal systems which offer a suitable environment for investing.

The selection of the activity site is one of the main challenges that facing the investor in Egypt and the investor desiring to find a suitable place to establish his project and practice his activity.

The free zones are always attracting investors since the free zones have their own legal system which distinguishes it from other areas.

There are many free zones in Egypt, therefore, GAFI always receiving dozen of daily applications in order to allocate lands for establishing different projects in those areas.

Considering the limitation of the offered lands, it was necessary to determine 1- the selection requirements between the applicants to obtain lands in those free zones, 2- the assignment requirements between the projects on the buildings and constructions thereof.

Therefore, GAFI Executive Chairman issued the resolution no. (359/-) of the year 2019.

The first article of the mentioned resolution states the applicable requirements in the free zones from two aspects:

The first aspect: The selection requirements between the applicants to obtain the available (Lands/buildings) in the general free zones.

The second aspect: The assignment requirements between the projects on the buildings and constructions thereof.

The resolution set a number of requirements and a determined number of points thereto. In case of fulfilling such requirements, the project shall obtain the points identified in the resolution, hence the total number of points shall be calculated and the evaluation shall be based thereon.

First: The selection requirements between the applicants to obtain the available (Lands/buildings) in the general free zones.

The selection shall be made between the projects, in order to obtain (a plot of land/building) in the general free zones, as per the following evaluation elements:

Evaluation elements

Number of Points

The Legal Form

Limited companies

3

A Branch of a Foreign Company

2

A Branch of a Local Company/Establishment/ Partnership

1

Capital

Per million dollars

1

Investment Costs

Per million dollars

2

The technology used for the project

Standard

1

Non-Standard

2

Targeted employment

Per 100 workers

3

Export

100%

3

The project activity

Artificial

3

Service / storage

1

Expansion

Non-adjacent expansion to the project

1

An adjacent expansion to the project

2

The memorandum note, which will be presented to the permanent technical committee of the free zones, shall include the projects which have been subjected to the selection process and the evaluation points for each of them.

Taking into account the following:

  • The project shall not change the information, on which the selection was made, stated in the application of establishing or expanding the project for the first two years starting from the date of the allocation approval, however, GAFI may consider those changes based on the cases determined by GAFI and the project justifications.
  • The free zones' departments shall communicate with all projects in the waiting list under a registered letter and any other means of communications mentioned in the investor's application in order to update the list provided that the letter shall state that in case of failing to reply to the free zones within a period of 15 days starting from the date of notification, the project application shall be deleted from the waiting list, taking into consideration that the waiting list shall be updated periodically (yearly) in January of each year.
  • The free zones departments shall coordinate with the Free Zone Affairs Sector periodically (monthly) regarding the available areas for investing and the projects in the waiting list as per the selection mechanism referred to.
  • If there are any available areas fit with the projects' applications in the waiting list (whether a vacant land or an evaluated land with the buildings and constructions thereon), then it shall be communicated under a registered letter and giving a period of 15 days starting from the date of notification in order to check with the free zone department. In case of failing to reply to the letter, the application shall be deleted from the waiting list and at the meantime, an announcement for those areas and investment opportunities shall be made and it shall be published on the electronic website and the investors' associations.
  • The new projects or the ones wishing to expand shall submit a detailed study about the way of exploiting the area provided that it shall include: a determined timeline program to use this area and carry on the business thereon- the economic returns regarding (the expected investments- targeted labors- export volume- financing resources- contracting .............) and the free zone area shall clarify the development of the company's activity, which wishing to expand, during the last 3 years.

Second: The assignment requirements between the projects on the buildings and constructions thereof.

- The assignee shall submit all data and documents proving the seriousness of the project which mentioned in the general principal whether in the new projects or the expanding projects.

- The assignee shall not assign the site and the buildings and constructions thereon except after practicing the licensed activity for a period not less than two years, however, the assignment may be considered based on the cases determined by the authority and in the light of the justifications provided by the project.

- Vacant land shall not be assigned.

Article 2

In all cases, the boards of directors of the free zones and the executive chairman of the authority are entitled to exclude some special cases from the requirements stated in the first article of the resolution based on the provided justifications in this regard, and after presenting those justifications to the permanent technical committee of the free zones affairs.

Article 3

The competent employees shall execute this resolution as per their respective areas of jurisdiction.

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.

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