Entrepreneurship-Oriented Technolog

On 5 February 2019, two Prime Ministerial Decrees were issued in relation to the investment zone operating in Maadi, Cairo, under the auspices of the Ministry of Communications and Information Technology (“MCIT”): Prime Ministerial Decree No. 243 of 2019 (“Decree 243/2019”)[1] which repeals a previous Prime Ministerial decree that established the investment zone in 2008, effectively cancelling the zone; and Prime Ministerial Decree No. 244 of 2019 (“Decree 244/2019”)[2] which licenses the establishment of a technological zone in Maadi in lieu of the cancelled one, with a particular focus on Information and Communications Technology (“ICT”) manufacturing services, outsourcing services, and interestingly, ICT entrepreneurship. This follows the government’s continued attention to entrepreneurship and SMEs.

Background

The new Investment Law No. 72 of 2017 (the “Law”), passed in May 2017, distinguishes among different forms of zones, namely free zones (both public and private), investment zones, technological zones, and special economic zones (which remain separately regulated under Law No. 83 of 2002). In particular, investment zones are geographical areas of specific boundaries that are allocated for the establishment of one or more specific investment activities and their complementary activities. Similarly, technological zones are geographically bounded areas established by virtue of a Prime Ministerial Decree. However, in contrast to investment zones, they are more sector-specific, being allocated to activities related to the ICT industry and its related activities, such as the manufacturing of electronics, software development, and outsourcing activities. The Executive Regulations of the Law provides a more extensive list of what falls under ICT industries that also encompasses entrepreneurship and technological incubators, research training centres, IT transfer centres, scientific research projects aimed at development, and projects supporting space sciences and remote sensing. In addition, unlike investment zones, all tools, equipment, and machines required to carry out the licensed activities of projects in all technological zones are exempt from taxes and customs duties. Projects in technological zones are also entitled to the special incentives given to that sector. The table below contrasts investment and technological zones in the Law. Table 1: Investment and Technological Zones Under the Investment Law

The New Technological Zone

On its website, GAFI lists a set of 13 investment zones that are already operating in Egypt: five of these undertake manufacturing activities; two are small and medium enterprises (SMEs); four undertake higher education and scientific research; one undertakes commercial and service activities; and finally, one is in the ICT.[3] The latter is the zone in question for the two Prime Ministerial Decrees 243/2019 and 244/2019, which is located in Maadi. Despite its name, “Maadi Technology Park,” the Maadi zone was in fact an investment zone that was established more than ten years ago under the previous Investment Law No. 8 of 1997.[4] Thus, following GAFI’s increased activities with the stated aims of enhancing the investment environment in the country and increasing job opportunities, particularly GAFI’s Board of Directors discussions of establishing new free zones and investment zones and possibly issuing new internal regulations for investment zones, Decrees 243/2019 and 244/2019 change the Maadi zone from an investment zone to a technological one, based on recommendations from both GAFI and the MCIT.[5] Decree 244/2019, in particular, licenses the MCIT to establish a technological zone in which ICT activities are to be undertaken. The zone is to include companies providing ICT services, outsourcing services (including IT outsourcing centres, business process outsourcing centres, knowledge process outsourcing centres, and call centres), and entrepreneurship companies and institutions working in ICT (including governmental and nongovernmental institutions working in entrepreneurship, SMEs working in ICT, technological incubators, specialized technology labs, and marketing, training, and management companies specialized in entrepreneurship, among other types of companies and institutions). MCIT has until 2025 to entirely finish establishing and operating the technological zone, unless the Prime Minister extends the period with the approval of GAFI’s Board.   [1] Prime Ministerial Decree No. 243/2019 repealing Prime Ministerial Decree No. 650/2008 establishing an investment zone for the Ministry of Communications and Information Technology in Maadi in Cairo Governorate specialized in activities related to the ICT industry, Official gazette, Issue No. 5 (bis) (b), 5 February 2019. [2] Prime Ministerial Decree No. 244/2019 licensing the establishment of a technological zone in Maadi in Cairo Governorate, Official gazette, Issue No. 5 (bis) (b), 5 February 2019. [3] General Authority for Investment and Free Zones, “Investment Regimes”, available through this link. [4] Ministry of Communications and Information technology, “Maadi Technology Park”, available through this link. [5] General Authority for Investment and Free Zones, “The Board of Directors of the General Authority for Investment and Free Zones discusses the procedures of establishing 19 new free zones that will contribute to the provision of 220 thousand jobs”, dated 26 December 2018, available through this link (in Arabic).