Egypt to attract investments through lenient business laws

In order to attract investments, Egypt's parliament has recently abolished prison sentences that were previously imposed on financial wrongdoers.

al-monitor A general view of Egypt's parliament in Cairo, Egypt, Feb. 16, 2017.  Photo by REUTERS/Atef Hussein.

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egyptian parliament, central bank of iran, investors, imprisonment, violations, businessmen, cairo

Mar 6, 2020

CAIRO — Parliament Speaker Ali Abdel Aal said Feb. 18 he will no longer allow the imprisonment of businessmen who commit economic violations, as this affects investment in the country. He said deterrent fines based on parliament’s new approach, which is to abolish prison sentences for financial wrongdoers, should replace such a sentence.

This came during parliament’s discussion of amendments to customs, restructuring, bankruptcy and social security laws.

Observers believe the Egyptian parliament’s decision to abolish prison sentences for financial wrongdoers comes as a continuation of the economic reforms that have been carried out. They believe that not only is this the right step toward encouraging investment and increasing job opportunities but also a message of reassurance to businessmen and investors both at home and abroad.

Mohamed al-Badrawi, a member of parliament’s economic commission, said such decisions raise Egypt’s competitiveness index, positively affect the national economy, attract more foreign investments and encourage local industry.

He pointed out that the approved amendments are in line with international laws and legislations, and parliament is seeking to actively implement amendments in order to achieve the desired goals, the most important of which is to increase production and attract investment.

Badrawi believes the state is serious about creating an appropriate climate for investment in Egypt, overcoming obstacles and providing all incentives to investors and businessmen in order to increase production and job opportunities and improve the standard of living for citizens.

Rashad Abdo, head of the Egyptian Forum for Economic and Strategic Studies, told Al-Monitor this is a good decision and a step in the right direction to support foreign and domestic investment, which will greatly benefit the national economy, but financial sanctions should be respected.

Abdo pointed out that this trend adopted by the Egyptian parliament falls within the framework of the political leadership’s desire to eliminate sanctions imposed on investors and businessmen.

He said the Egyptian parliament has conveyed a message of reassurance to investors and businessmen in order to attract investments and benefit from this positive environment.

Abdo said the state is serious about supporting investment, and parliament’s direction comes in continuation of the Central Bank’s initiative to abolish sanctions imposed on troubled producers and manufacturers.

The government and the Central Bank of Egypt launched Dec. 12 an initiative ending in late 2020 to exonerate companies with a debt not exceeding 10 million Egyptian pounds from arrears of interests in a bid to stimulate the economic sectors, boost production and subsequently improve the gross national product.

Under the initiative, defaulting clients who settle 50% of the debt principal before the end of December 2020 would have their names removed from the blacklists of both the bank and the Egyptian Credit Bureau I-Score.

Mohamed el-Morshedy, chairman of the chamber of textile industries in the Federation of Egyptian Industries, told Al-Monitor parliament is rectifying previous wrongs because it is unacceptable to imprison businessmen and investors for administrative violations. He said replacing those sanctions with fines is a positive step in the right direction.

According to Morshedy, the decision to make the Ministry of Investment affiliated with the prime minister on Dec. 22 as part of a limited ministerial reshuffle shows the state seriously desires to increase investment and remove obstacles facing businessmen and investors.

At the Investment for Africa Forum, President Abdel Fattah al-Sisi admitted Nov. 23 that the government failed to convince investors to stay in Egypt. 

“We have been trying for years to convince global companies to invest with us in industries such as the automotive industry or in products that we might work on, in vain. This is despite the fact we said we will be providing everything,” he said.

Morshedy said the environment has become more favorable than ever for investments and businesses due to the state’s efforts to overcome barriers and hurdles facing investors and businessmen, and this will significantly improve the national economy and create more jobs.

Faraj Amer, chairman of the Egyptian parliament's Industry Committee, said the previous environment pushed away investors and businessmen. The wrongs are currently being corrected and steps are being taken in favor of the national economy, he added. 

Amer indicated he had repeatedly called for replacing freedom-depriving punishments with fines because they do not exist in any other country in the world. This is what actually happened and this right decision will reap good fruits in the future, he added.

He said the state is determined to ensure a favorable environment for foreign and domestic investments in order to reap the benefits of economic reforms and create more jobs.

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