New Executive Regulations for Touri

The New Regulations

The Minister of Tourism issued in the middle of last April Decree Number 209 of 2009 (published in the Egyptian Gazette on April 13th, 2009) with the Executive Regulations of Law Number 38 of 1977 for the Organization of Tourist Companies. The new Regulations are not merely an amendment of existing ones, but a full replacement of the previous regulations.

Main Features of the Regulations

• Companies continue to be divided into categories A, B and C as stated in the Law.
• Conditions for licensing a tourism company are that it must be a joint-stock company, only work in tourism, have an Egyptian manager, and a minimum capital of two million Egyptian Pounds (excluding the value of transport vehicles), pay an insurance to the Ministry of Tourism (between one hundred and fifty thousand and two hundred thousand Pounds depending on classification), fulfill certain conditions in its premises and not have more than one branch in each Governorate, and have prior experience if it wishes to have a branch on one of the tourist governorates (minimum fifteen million Pounds of turnover during the previous two years).

• In addition to company conditions, the Regulations stated the conditions required in its manager, namely that he/she has an experience of between ten and twenty years depending on educational qualification.
• As for foreign companies, conditions for operation in Egypt are that their original country of origin allows Egyptian companies to operate, a minimum three million Pounds operating capital in Egypt, registration in the commercial registry and to have an Egyptian manager.

• The Regulations further provide the conditions for transferring – provided the transferee is eligible - and amending a license. As for transport vehicles, the Regulations provide detailed conditions and specifications to ensure that the vehicles are new (no more than previous year’s model and not used extensively). One of the immediate implications of the new requirements is to close a loophole in the rules whereby previously it was possible to license four-wheel drive cars as tourism buses - to avoid customs - even through they were clearly for private use.

• The Regulations also determine conditions for maritime transport (capacity of no less than one hundred passengers) and for air transport (no less than two planes).
• Companies must notify the Ministry of Tourism at least two weeks before they execute any program, and the Ministry may object and request changes.
• New fast track procedures for considering complaints by companies are in place.
• Finally, the Regulations state that a company’s outbound tourism should not exceed 20% of its annual activity.

Conclusion

Whereas the new Regulations are a positive development in terms of clarifying and streamlining regulations, however in terms of content, they conflict with principles of freedom of commercial decision, especially with respect to the requirement to appoint an Egyptian manager (most economic activities in Egypt do not have this requirement including the management of a bank!) as well as determining a maximum percentage of outbound tourism, and requiring prior experience in an manner that could form a barrier to entry and therefore hamper competition.