Amendment of the Law on State Owned

Law No. 83 of 2016 amending certain provisions of Law No. 7 of 1991 on State Owned Special Lands (the “Law”)[1] was issued to grant the Industrial Development Authority (“IDA”) control over lands allocated to industrial development projects. Previously, the law granted such control to other authorities over the lands falling within their scope without granting IDA the same.

Background

Law No. 7 of 1991 was adopted to regulate the management, use and disposal of state owned special lands. It provides in its Article 2 that the President of the Republic shall issue a decree upon the recommendation of the Minister of Defence and the approval of the Cabinet of Ministers determining strategic desert areas of military importance that may not be appropriated. Law No. 7 of 1991 further provided in Article 2(b) – before amendment – that apart from those aforementioned strategic areas, the President of the Republic shall issue a decree upon the recommendation of the competent minister, as the case may be, and the approval of the Cabinet of Ministers, determining the areas that fall within the government’s development plan of agriculture, new urban communities or tourism. As mentioned in the above introduction, the present amendment of Law No. 7 of 1991 aims at granting IDA control over the areas allocated for industrial development projects. It is worth mentioning that IDA was formed pursuant to Presidential Decree No. 350 of 2005 establishing the Industrial Development Authority[2] as an economic public authority with a public legal personality and falling under the authority of the minister responsible for international trade and industry. It granted the authority to enforce the industrial policy and to put in place the industrial land development policy and offering such lands to investors. In 2001 a number of presidential decrees were issued to regulate the management and use of state owned lands: Presidential Decree No. 152 of 2001 on Strategic Desert Lands of Military Importance;[3] Presidential Decree No. 153 of 2001 establishing the National Centre for State Lands Utilization;[4] and Presidential Decree No. 154 of 2001 determining the Use of State Owned Lands until 2017.[5] Industrial projects therefore fell under the scope of these decrees as far as the lands allocated to them were concerned.

The Amendments

The Law was issued to add IDA to the list of authorities that have control over the lands allocated to the projects falling within their scope. The Law amended the first and third paragraph of Article 2(b) by adding the phrase “industrial development areas” to the list of land areas that are determined pursuant to a presidential decree. The Law further added to the third paragraph of Article 2(b) that IDA shall manage, use and dispose of the lands allocated to industrial development projects to allow IDA to have direct authority over lands allocated to such projects. The Law has further amended Article 7 of the law regulating the allocation of funds arising from the management, usage and disposal of the lands subject to the Law. Article 7 now provides that such funds are public funds and are among the resources of the relevant authority (compared to such funds being public funds kept at the Central Bank of Egypt for the account of each authority according to the provision of Article 7 before amendment). The channels for expenses and the limits and procedures of the use of such funds are determined pursuant to a decree issued by the Cabinet of Ministers based on the recommendation of the competent minister. The balance of the funds is allocated annually to the State Treasury.

Conclusion

The amendments introduced by the Law aim at granting IDA more authorities and independence. IDA now has direct control over lands allocated to industrial development projects and the funds received by the authorities subject to Law No. 7 of 1991 are among the resources of each such authority ensuring financial independence of the authorities subject to the Law including IDA. The present amendment is among the reform measures aiming at developing the industrial sector to attract investments.   [1] Law No. 83/2016 amending certain provisions of Law No. 7/1991 on State Owned Special Lands, Official Gazette, Issue No. 45 (cont.) (h), 16 November 2016. [2] Presidential Decree No. 350/2005 establishing the Industrial Development Authority, Official Gazette, Issue No. 42 (cont.), 22 October 2005. [3] Presidential Decree No. 152/2001 on Strategic Desert Lands of Military Importance, Official Gazette, Issue No. 22, 31 May 2001. [4] Presidential Decree No. 153/2001 establishing the National Centre for State Lands Utilization, Official Gazette, Issue No. 22, 31 May 2001. [5] Presidential Decree No. 154/2001 determining the Use of State Owned Lands until 2017, Official Gazette, Issue No. 22, 31 May 2001.