Suez Canal Special Economic Zone
The past few months have witnessed significant legislative developments regulating special economic zones. Four days after the inauguration of a major extension of the Suez Canal, the President issued Decree No. 330 for the Year 2015[1] establishing the Suez Canal Economic Zone. This Decree was preceded by an amendment to the Special Economic Zones Law in June,[2] which was issued in anticipation of the new extension of the Suez Canal and the establishment of the surrounding special economic zone.
Special Economic Zones ("
SEZs") are areas specified by a Presidential decree for the purpose of establishing agricultural, industrial and service projects, which enjoy different types of benefits. For each zone, a general authority is founded by a Prime Minister’s decree to oversee the application of the provisions of the law, the management and development of the zone as well as to attract investments
[3].
It is worth mentioning that considering the Suez Canal as a special economic zone will grant any investor, whether Egyptian, Arab or foreign, usufruct rights on plots of lands within the designated zones, instead of owning or leasing them, as is the case in other investment areas. On the other hand, investors will be relieved from many restrictions imposed on the procurement of land, determination of their prices and establishment of companies as well as relieving all machinery and equipment used from taxes and tariffs.
Less than two months prior to the Suez Canal SEZ decision, the President issued Decree No. 27/2015 amending some provisions of the Special Economic Zones Law, which was reviewed in the August Issue of
Egypt Legal Update. Most importantly, the amendments included: 1) elimination of some tax benefits that previously differentiated the special economic zones and replacing them with non-tax benefits; 2) granting administrative authorities over these zones many powers that will enable them to manage these zones efficiently, including granting licenses to foreigners (which previously fell under the jurisdiction of the Ministry of Interior or the Ministry of Manpower and Immigration); 3) granting the right to establish economic zones within urban areas after it was limited to outskirts; and 4) finally, despite approving and granting many powers and privileges, the Law (as amended) stresses the need to adhere to national security considerations due to the sensitive nature of those areas.
| “Less than two months prior to the Suez Canal SEZ decision, the President issued Decree No. 27/2015 amending some provisions of the Special Economic Zones Law” |
The Decree has also determined the borders of the new Suez Canal special economic zone. With 460.60 square kilometer span, the borders of the economic zone will be Port Said's western and eastern ports, the industrial zone of eastern Port Said, the Technology valley, the industrial zone of western Qantara, Al Adabeya port, Ain Sukhna, Ain Sukhna port, Al-Arish port and Al-Tor port. The area allocated for the economic zone is to respect existing properties, as well as lands owned by the armed forces. Article (2) stipulates that the special economic zone will encompass the following maritime and logistical facilities: Port Said's western and eastern ports, Al Adabeya, Ain Sukhna, Al-Arish and Al-Tor.
After less than two weeks of the establishment of the Suez Canal special economic zone, Prime Minister's Decree No. 2282/2015
[4] was issued for the establishment of the General Authority for Suez Canal Economic Zone, determining its rights, obligations, terms of reference and the conditions to be met by members of its Board of Directors. It is expected that other decrees will be issued in the upcoming period concerning the composition of the Board of Directors and the appointment of its president and vice president.
Conclusion
The recent Decree that created a special economic zone surrounding the Suez Canal is considered a positive and quick move that reflects the interest in developing the Suez Canal area and attracting more investments in light of the privileges granted by the SEZs Law to investors. Furthermore, this Decree defines the legal framework guiding the relationship between government and investors and determines the rights and obligations of each.
[1] Presidential Decree No. 330/2015 on the establishment of the Suez Canal Economic Zone, Official Gazette, Issue No. 32 (bis) (c), 10 August 2015.
[2] Presidential Decree No. 27/2015 amending some provisions of the Special Economic Zones Law, Official Gazette, Issue No. 25 (bis) (d), 23 June 2015.
[3] Presidential Decree-Law No. 83/2002 issuing the Special Economic Zones Law, Official Gazette, Issue No. 22 (bis) (a), 5 June 2002.
[4] Prime Minister’s Decree No. 2282/2015 establishing the General Authority for Suez Canal Economic Zone, Official Gazette, Issue No. 33 (bis) (d), 19 August 2015.
The past few months have witnessed significant legislative developments regulating special economic zones. Four days after the inauguration of a major extension of the Suez Canal, the President issued Decree No. 330 for the Year 2015[1] establishing the Suez Canal Economic Zone. This Decree was preceded by an amendment to the Special Economic Zones Law in June,[2] which was issued in anticipation of the new extension of the Suez Canal and the establishment of the surrounding special economic zone.
Special Economic Zones ("
SEZs") are areas specified by a Presidential decree for the purpose of establishing agricultural, industrial and service projects, which enjoy different types of benefits. For each zone, a general authority is founded by a Prime Minister’s decree to oversee the application of the provisions of the law, the management and development of the zone as well as to attract investments
[3].
It is worth mentioning that considering the Suez Canal as a special economic zone will grant any investor, whether Egyptian, Arab or foreign, usufruct rights on plots of lands within the designated zones, instead of owning or leasing them, as is the case in other investment areas. On the other hand, investors will be relieved from many restrictions imposed on the procurement of land, determination of their prices and establishment of companies as well as relieving all machinery and equipment used from taxes and tariffs.
Less than two months prior to the Suez Canal SEZ decision, the President issued Decree No. 27/2015 amending some provisions of the Special Economic Zones Law, which was reviewed in the August Issue of
Egypt Legal Update. Most importantly, the amendments included: 1) elimination of some tax benefits that previously differentiated the special economic zones and replacing them with non-tax benefits; 2) granting administrative authorities over these zones many powers that will enable them to manage these zones efficiently, including granting licenses to foreigners (which previously fell under the jurisdiction of the Ministry of Interior or the Ministry of Manpower and Immigration); 3) granting the right to establish economic zones within urban areas after it was limited to outskirts; and 4) finally, despite approving and granting many powers and privileges, the Law (as amended) stresses the need to adhere to national security considerations due to the sensitive nature of those areas.
| “Less than two months prior to the Suez Canal SEZ decision, the President issued Decree No. 27/2015 amending some provisions of the Special Economic Zones Law” |
The Decree has also determined the borders of the new Suez Canal special economic zone. With 460.60 square kilometer span, the borders of the economic zone will be Port Said's western and eastern ports, the industrial zone of eastern Port Said, the Technology valley, the industrial zone of western Qantara, Al Adabeya port, Ain Sukhna, Ain Sukhna port, Al-Arish port and Al-Tor port. The area allocated for the economic zone is to respect existing properties, as well as lands owned by the armed forces. Article (2) stipulates that the special economic zone will encompass the following maritime and logistical facilities: Port Said's western and eastern ports, Al Adabeya, Ain Sukhna, Al-Arish and Al-Tor.
After less than two weeks of the establishment of the Suez Canal special economic zone, Prime Minister's Decree No. 2282/2015
[4] was issued for the establishment of the General Authority for Suez Canal Economic Zone, determining its rights, obligations, terms of reference and the conditions to be met by members of its Board of Directors. It is expected that other decrees will be issued in the upcoming period concerning the composition of the Board of Directors and the appointment of its president and vice president.
Conclusion
The recent Decree that created a special economic zone surrounding the Suez Canal is considered a positive and quick move that reflects the interest in developing the Suez Canal area and attracting more investments in light of the privileges granted by the SEZs Law to investors. Furthermore, this Decree defines the legal framework guiding the relationship between government and investors and determines the rights and obligations of each.
[1] Presidential Decree No. 330/2015 on the establishment of the Suez Canal Economic Zone, Official Gazette, Issue No. 32 (bis) (c), 10 August 2015.
[2] Presidential Decree No. 27/2015 amending some provisions of the Special Economic Zones Law, Official Gazette, Issue No. 25 (bis) (d), 23 June 2015.
[3] Presidential Decree-Law No. 83/2002 issuing the Special Economic Zones Law, Official Gazette, Issue No. 22 (bis) (a), 5 June 2002.
[4] Prime Minister’s Decree No. 2282/2015 establishing the General Authority for Suez Canal Economic Zone, Official Gazette, Issue No. 33 (bis) (d), 19 August 2015.