Legal landscape and international business
1. What are the opportunities/benefits for foreign investors provided for in the legislation to facilitate market entry/company presence in the country?
Foreign investors can enter the Egyptian market easily, similar to Egyptian citizens, after passing the security clearances imposed by law. Foreign investors can enter the Egyptian market in many ways either by establishing new companies or getting engaged in partnerships with Egyptian companies, starting a branch for a foreign company or a representative office. The Egyptian government has issued many decisions to allow for residency by investment in order to allow for partners and their families to enjoy the Egyptian residency and to facilitate their entry to Egypt. Moreover, there had been many decisions to allow for employing foreign workers under certain conditions to allow for foreign companies to use the expertise of the foreign workers as well.
2. Are there legal restrictions for foreign investors to operate in the country? For example, what is a foreign company not entitled to do? What activities require local representatives?
Foreign companies can operate in Egypt in one of two ways: either by establishing a branch that can act on their behalf and conduct business inside the country, or by establishing a commercial representative office that allows for market discovery and preparing commercial reports about the market.
Foreign companies can mainly operate in all sectors, but under certain conditions tailored to each sector.
For example, a foreign company needs security clearances to work in certain geographical areas in Egypt like Sinai and border cities, in addition to this, foreign companies can’t work in areas like guarding and weapon trade, also foreign companies can’t establish banks without the registration and confirmation of the Egyptian central bank and other competent authorities.
3. How friendly is the legal environment in the country in general for foreign business? Are there legal mechanisms in place to protect investments and foreign business? What are these mechanisms and guarantees?
The legal environment is not very friendly to foreign business yet. The courts are not yet fully capable of understanding the need to encourage foreign investors to come. Residency systems are very complicated, and a lawyer cannot provide much assistance in this area, as the applicant must appear in person. Family laws are also not designed to address civil marriages and their implications.
Protection mechanisms include bilateral investment protection agreements between Egypt and the investor's home country. Arbitration clauses also provide significant protection by avoiding the domestic court system.
4. In your opinion, what legal specifics should foreign companies take into account when planning to enter the market of your country? And private investors?
Foreign companies and private investors should thoroughly study the market and invest time and resources to obtain accurate consultations about the market and sectors they plan to enter. Investors are highly advised to employ local legal advisors who are aware of the culture and peculiarities of the market. Investors are also advised to put into account high inflation rates as well as dramatic changes of the price of the local currency.
5. Currently, there is a trend in the world to relocate business from a number of countries in order to reduce costs/develop new markets/protect business under sanctions pressure. What opportunities are there in the country for transferring business from other foreign jurisdictions (redomiciling), what organizational and legal forms exist for business transfer and company organization? What is more favorable for an investor in terms of legal protection: opening a representative office/joint venture/branch of a company or other?
Egypt is a perfect destination for relocating businesses due to cheap workforce, the economic need for foreign currency, and flexibility shown by high-level institutions towards welcoming foreign investments.
The best approaches for relocation are establishing a joint venture or forming an Egyptian company with foreign shareholders, which saves significant time and money while providing flexibility and legal protection.
6. What specific features of the work of public authorities should foreign investors take into account when entering the market? What should be taken into account when building interaction with public authorities? What should be paid special attention to when organizing a business?
Foreign investors should spend time studying the market and relevant public authorities in their target sector; no additional specific tips are necessary beyond thorough preparation. Also foreign investors should understand that entering into partnerships with public authorities means that the partnership’s wealth will be considered as a public fund which means that it will be protected under certain laws that are designed for protecting the public funds. Also investors have to be enjoying high flexibility as bureaucracy is one of the biggest features when dealing with public authorities, there is no definite times for anything.
7. How would you characterize the situation with the regulatory development in the country? How do the state authorities react to the needs of business? How easy/difficult is it to adopt new legislative initiatives?
The Egyptian regulatory bodies are highly effective in responding to business needs. There has also been notable improvement in dialogue and interaction with business communities and associations. The Egyptian government and regulatory bodies are highly demanding foreign investors to enter the Egyptian market. Thick investments that bring big amounts of foreign currency and employ thousands of local workers as well as transfer of technologies and techniques are the ones with high priority to the regulatory body, thus the regulatory body is highly responsive to the needs of these kinds of investment.
8. In which branches of law/economy is the regulation the most rigid?
Investments in defence and security sectors face rigid regulatory policies due to their nature. Investments in border areas also require extensive confirmations and clearances. For example, investing in CCTV cameras or highly sensitive equipment like weapons, drones, etc., will be very difficult for a foreign company to enter , or work in importing or trading in these things.
9. Which branches of law/economy are most prone to turbulence, where are the most frequent legislative changes and how do they affect business?
There is minimal legislative turbulence; frequent changes that significantly affect business are not common.
10. What global legislative changes have occurred recently and how have they affected the business climate in the country?
Post-COVID policies, U.S. tariffs under President Trump have significantly affected businesses in Egypt, Russian-Ukranian war, the war in Gaza and the recent war against Iran have affected the business climate not only in Egypt, but all over the world. Egypt was highly affected by the Red Sea crisis as the Suez canal was negatively under a big pressure. Inflation effects have been highly crushing the economy as well.
11. What legislative changes are planned in the short term? What impact will the changes have on the situation of foreign businesses? How positive/negative will these changes be for foreign business?
The Egyptian government is planning to introduce a new taxation policy that eases relations between the taxation authority and companies (positive for foreign businesses). The taxation authority is working on simplifying the taxation processes and registrations so that it could allow for more individuals and companies to voluntarily engage and register. Also the government is planning to get out of the market by privatization of more public sectors entities and allowing for private investors ; locals or foreigners to acquire these public entities and operate them.
12. How is the payment system of the state organized? What opportunities do foreign businesses have in organizing financial flows? What restrictions are imposed on foreign businesses when organizing payments?
The payment system in Egypt is very effective. Banks, Mastercard, Visa, and digital wallets function well. Foreign investors can bring money into the country easily, provided it complies with the Central Bank's rules and regulations. Previously, there were difficulties repatriating funds due to a foreign currency crisis, but the government has resolved most of these issues by adopting policies that tend to decrease the loss of foreign currency, for example by prioritizing the import policy and by encouraging exporters to deposit their foreign currency in banks and allowing for both individuals and companies to deposit their cash foreign currency in banks with less rigid policies regarding to the investigation of the source of money.