Land Allocation according to the New Investment Law in Egypt

user YOUSSRY SALEH calender 1 Jun 2018 views 2288 Views

The new investment law in Egypt laid down the basic conditions for the allocation of lands to investors with obliging the concerned authorities (concerned ministries) to provide lands for investment and to notify the General Authority for Investment to include these lands in the investment map.

The investment map shall involve the specification of the nature, system and conditions of the investment, as well as its geographic regions and sectors. It shall also specify the real state-owned properties or other public legal persons designated for investment, and the system and manner of disposition thereof according to the type of investment system.

The Investment Map:

Article 56 of the Investment Law No. 72 of 2017 stipulates that the administrative bodies with competent jurisdiction (the concerned ministries) shall co-ordinate with all the competent authorities and the National Center for Planning of State Land Uses to furnish the General Authority for Investment and Free Zones detailed maps specifying all  real properties available for investment and falling within the jurisdiction of  such administrative bodies to be added to a complete database that includes the location, area, specified heights, estimated price, and investment activities appropriate to their nature and the manner of disposition thereof. Such administrative bodies shall regularly update these data every six (6) months or whenever requested by GAFI.

Mechanism of disposal of Real Estate:

The investor’s request to provide real estate for the establishment of projects thereon:
     In cases where the investor requires the provision of property from the State’s private property for the establishment of an investment project, he must indicate in his application the purpose, the area and the place where he wishes to establish the project. The Authority shall present the real estate properties available at it or at the other administrative bodies that are suitable for the investment activity of the investor and to indicate the nature of the property and the requirements related to it, and to indicate whether it is equipped with facilities and the manner of disposition and other conditions and statements.

Disposition of The State’s Real Estate Property Free of Charge:

Article (60) of the Investment Law (72) of 2017 stipulates the following:

“For the sole purpose of development, and pursuant to the Investment Map, the State’s

Private-domain real property, in the areas to be listed under a decree issued by the President of the Republic upon the approval of the Council of Ministers, may be disposed of free of charge in favor of Investors satisfying the technical conditions to be specified under a resolution of the Council of Ministers. This shall apply to the acts of disposition stipulated in Article (58) of this Law. In all cases where disposition of real property is made free of charge, Investor shall place with the body in  charge  of such disposition a cash collateral, or the equivalent thereof, not  exceeding five percent  (5%)  of  the  value  of project investment  costs within fifteen business days from the date of notifying Investor with a mail registered with return receipt of fulfilling the financial conditions required, according to the following regulations:

-The manufacturing activities shall submit a collateral letter, or the equivalent thereof, of one percent (1%) of the value of the project Investment Costs.

– The Services Projects shall submit a collateral letter, or the equivalent thereof, of three percent (3%) of the value of the project Investment Costs.

– The Storing Projects shall submit a collateral letter, or the equivalent thereof, of five percent (5%) of the value the Project Investment Costs.

Such collateral is redeemed after three (3) years from the date on which actual production starts, or from the date of engagement in activity, provided investor complies with the terms and conditions of the disposition.

The Disposition of state owned real property by way of usufruct in exchange for a consideration:

However, in cases where disposition of real property is made by way of usufruct licensing in exchange for a consideration, a license may be granted for a period not exceeding fifty (50) years that may be renewed, under the conditions agreed upon, as long as the project continues to be engaged in activity thereof; this shall be without prejudice to the right of the body of competent jurisdiction to modify the consideration for usufruct upon renewal.

License shall be granted to Investors satisfying the technical and financial conditions specified by GAFI in coordination with the administrative body of competent jurisdiction.

Administrative bodies of competent jurisdiction may participate in the real properties investment projects as a right in rem to the company’s capital, such bodies may also participate in the real property subject of the project through one of the following means:

  • Private Public Partnership (PPP)
  • Build Operate Transfer (BOT)
  • Build Own Operate Transfer (BOOT)
  • Partnership with a percentage of the project’s revenues.

The transfer of real property ownership to the investor:

In cases where disposition of real property is made by sale, each investor may, for the purpose of setting up or expanding Investment Project, apply for entry into a contract on such real property; and the ownership of real property may be transferred to investor, only after the full payment of the price of such real property, and upon the commencement of the activity and the actual production.

Investor shall comply with the timeline submitted by him for the implementation of the investment project and adopted by the competent authority, as long as such authority has fulfilled its obligation towards the investor, also investor shall not insert any modifications unless the competent authority has provided written approval on such modification whether directly or through its representative at the Investors Service Center.

The regulatory procedures of investors’ applications:

In case  investors’ applications for acquiring the real property required to set up Investment Projects, whether by sale, lease, lease-to-own or usufruct licensing, are competing, then the order of preference between the investors, fulfilling the technical and financial requirements necessary for the investment, shall be based on a system of points according to the bases agreed upon with the bodies of competent jurisdiction on real properties, and such bases are as follows:

  • The technical specifications of the project especially the used technology and the extent of its modernity.
  • The previous experience or the worldwide fame.
  • The project’s capability of provide foreign cash whether through exporting its products abroad, or through offering an alternative to the product imported from abroad.
  • The project’s estimated investment costs.
  • The financial proposal’s value and its payment method.

If the order of preference in respect of Investors cannot be made based on the point system, then it may be conducted based on the highest bid offered from among Investors. And in all cases, the announcement shall include a statement with the bases on which the order of preference between the competes is based.