Introduction
Industrial investment is one of the key drivers of any national economy. It generates direct and indirect job opportunities, boosts exports, reduces reliance on imports, and enhances sustainable growth. For any country to succeed in attracting industrial real estate investment, it must establish clear and transparent laws that protect investors and provide them with suitable incentives, especially in the industrial sector where demand for modern industrial facilities and distribution centers continues to rise.
In Egypt, the primary reference for regulating industrial investment is Investment Law No. 72 of 2017, which serves as the backbone of investment legislation. Important amendments have followed, such as Law No. 160 of 2023, which introduced cash incentives for industrial projects, along with supporting laws like Law No. 2 of 2024, which targeted renewable energy and green hydrogen initiatives. For investors, making the right investment decision in commercial real estate, whether in office space or investing in industrial real estate, requires careful consideration of factors like vacancy rates and the long term benefits of strategic industrial growth.
Part I: Investment Law No. 72 of 2017 and Its Impact on the Industrial Sector
This law is the cornerstone of industrial investment in Egypt. It regulates:
The establishment and operation of industrial projects.
Rights and obligations of industrial investors.
Mechanisms for acquiring industrial land and licenses.
Incentives for projects in industrial zones and free zones.
Core Principles
Equal treatment of domestic and foreign industrial investors.
Protection of property from expropriation except for public interest and with fair compensation.
No confiscation or seizure of projects except by a final judicial ruling.
The right to repatriate profits and capital in foreign currency.
Access to arbitration or dispute settlement committees.
Part II: Investment Incentives for Industry
General Incentives
Tax deduction of up to 50% of investment costs for projects in certain areas.
Refund of part of the value of industrial land if production starts within two years.
Customs exemptions on machinery and equipment used in production.
Special Incentives
Tax reductions of up to 80% of paid-in capital for strategic industrial projects.
Benefits available for a maximum of seven years.
Additional incentives for projects focused on exports and industrial innovation.
Additional Incentives
Dedicated customs offices for large industrial projects.
State contribution to infrastructure costs.
Exemption from land use fees for up to ten years.
Part III: Recent Amendments Supporting Industry
Law No. 160 of 2023
Introduced a cash incentive ranging from 35% to 55% of corporate income tax paid for new industrial projects.
Targeted priority industrial sectors such as engineering, chemicals, and electronics.
Requires part of the financing to be in foreign currency.
Law No. 2 of 2024
Focused on supporting renewable energy projects linked to industry, particularly green hydrogen production.
Provided VAT exemptions for certain industrial production inputs.
Reduced port fees and property use costs for industrial projects in this field.
Part IV: Rights of Industrial Investors
The right to own industrial land required for projects.
The right to employ up to 20% foreign labor if needed.
Guaranteed licensing within a defined timeframe.
Protection from retroactive legislative changes.
Equal rights and obligations for foreign and domestic industrial investors.
Part V: Geographic Distribution of Industrial Incentives
The law divides Egypt into geographic sectors:
Zone A: Includes underdeveloped areas, where industrial investors receive the highest tax benefits.
Zone B: Covers other regions with lower levels of incentives.
This approach encourages industrial investment in less developed areas, promoting balanced development across the country.
Part VI: Challenges Facing Industrial Investment
Despite strong incentives, industrial investors face several challenges, including:
Bureaucracy and complex administrative procedures.
Insufficient infrastructure in some regions.
High financing costs and foreign currency shortages.
Frequent changes in economic and tax policies.
Part VII: Opportunities in the Industrial Sector
A large domestic market of over 105 million consumers.
Strategic geographic location connecting Africa, Europe, and Asia.
Free trade agreements with major global markets.
Clear government strategies to support industrialization.
Growth in sectors such as engineering, pharmaceuticals, and chemicals.
Part VIII: The Role of Industrial Investment Advisors
Advisors play a crucial role in:
Helping investors choose the optimal legal structure for industrial projects.
Maximizing benefits from tax and customs incentives.
Preparing compliance and tax documentation.
Representing investors before government authorities and reducing administrative barriers.
Frequently Asked Questions
1. What is the primary law governing industrial investment?
Investment Law No. 72 of 2017.
2. What are the latest amendments related to industry?
Law No. 160 of 2023 introduced cash incentives for industrial projects.
3. Do foreign industrial investors enjoy the same rights as locals?
Yes, they are granted equal rights and obligations.
4. What is the maximum duration of industrial incentives?
Seven years from the start of operations.
5. Which industrial sectors currently benefit most from incentives?
Engineering, electronics, chemicals, and renewable energy.
References
General Authority for Investment and Free Zones (GAFI).
Investment Law No. 72 of 2017.
Law No. 160 of 2023 on industrial investment incentives.
Law No. 2 of 2024 on renewable energy and hydrogen.
PwC and Deloitte reports on industrial investment.
World Bank reports on Egypt’s investment environment.
