On 5 June 2023, the Egyptian Prime Minister Mostafa Madbouly issued Decree No. 2140 of 2023 (the “Decree”) amending the Executive Regulations of Investment Law No. 72 of 2017 (the “Executive Regulations”), in particular regarding the Private Free Zones regime, including the incorporation of a provision permitting the Cabinet to approve the establishment of any projects in the Private Free Zone, upon a proposal from the competent minister after the General Authority for Investment and Free Zones (“GAFI”) conducts an assessment of the project, subject to various conditions: (i) the legal entity of the project is a joint-stock company or limited liability company; (ii) the local component is not less than 30 percent within three years from the date of starting the project; (iii) the percentage of exports abroad is not less than 80 percent, with the exception of some strategic projects of special importance; (iv) the projects of the Special Free Zones comply with the conditions of industrial security, civil defense and fire according to the Egyptian Code in this regard, or pursuant to the Decrees issued by the Minister in charge of Industry Affairs concerning the industrial establishments and secure their establishments and boundaries with watchtowers and surveillance cameras and personnel of GAFI, Security and Ports Security at the expense of the project; and (v) GAFI shall supervise the activities of the Projects of the Special Free Zones in a way ensuring the proper performance of it work and assuring the integrity of the procedures of practicing the activities, provided that the Competent Zone’s Management shall present periodical reports to its Board of Directors to assess whether the project shall continue in business under the system of Special Free Zones.
The Decree lifted some of the requirements for establishing projects in the Private Free Zones including: (i) the requirement to check initially whether there is a location in the Public Free Zone that would accommodate the project; (ii) the minimum capital requirement of USD 10 million, and the investment costs thereof not being less than USD 20 million or its equivalent in the free currency; (iii) the minimum area requirement for the project being 20,000 square meters; and (iv) a minimum requirement of 500 employees.
The Decree also added a provision to the Executive Regulations concerning the establishment of a Private Free Zone for the Services Industry. As an exception to the requirements and conditions stipulated in the Executive Regulations, based on the proposal of the competent minister, and after the study and evaluation of GAFI, the Cabinet may approve the establishment of a Private Free Zone for the Services Industry consisting of a major service project based on establishing, developing, managing, and providing a space for some sub-service projects that carry out similar activities that fall under any of the sectors mentioned in the Executive Regulations, in the Private Free Zones system, in accordance with the following requirements and conditions: (i) the legal entity of the project shall be a joint-stock company or limited liability company; (ii) the main project shall comply with the conditions of industrial security, civil defense and fire according to the Egyptian Code in this regard; and (iii) upon a proposal from the competent Minister, the Board of Directors of GAFI shall issue a decision approved by the Cabinet of Ministers regarding the procedures and requirements for establishing sub-service projects within the Private Free Zone.
The Board of Directors of the Public Free Zone in which the Private Free Zone for the Services Industry is located, maintains the authority to approve the establishment of projects within the Private Free Zone for the Services Industry, as well as to cancel them. The Chairman of the Board of Directors of the Public Free Zone shall be competent to license these projects to carry out its activities and consider the renewal or amendment of the licenses. The license shall include a statement of the objectives of the project, its validity period and limits, and the value of the financial guarantee presented to meet the obligations that may be due on the project.