President Abdel Fattah al-Sisi issued a decree on Tuesday designating the Suez Canal area, which includes surrounding governorates, a “special economic zone,” in a bid to attract more investment.
Sisi and a number of other officials have been publicizing the new economic zone as one of the most important projects associated with the new Suez Canal bypass, which was inaugurated with a grand celebration last Thursday.
Sisi asserted that the economic zone would increase commerce between Egypt and other countries during his speech at the ceremony.
Trade and business in the special zone will differ from the rest of the country, with tax exemptions and special customs regulations, with the aim of creating job opportunities and encouraging investment.
In 2002, the government passed a law regulating the establishing of “Economic Zones of a Special Nature.”
The new decree designates an area of 460.60 square kilometres around the canal as a Special Economic Zone. It also allows for additional benefits not previously adopted.
An independent authority will be established, made up of representatives from different ministries, including the defense ministry, as well as other entities, who are empowered to issue permits for investors, without having to go through the usual red tape, thus creating a single-window authority that is meant to avoid the bureaucratic obstacles investors currently face.
At the economic summit in Sharm el-Sheikh in March, Minister of Investment Ashraf Salman said that the development of the Suez Canal sector aims to create an international economic zone along the canal that will account for 30 to 35 percent of Egypt’s economic activity in 10 years.
This vague figure, which hasn’t been directly linked to trade, revenue or GDP, has been repeated since by several state officials and experts, including Hani Sarie Eldin — founder and managing partner of Sarie-Eldin & Partners, the law firm that is part of the alliance establishing a general plan for the Suez Canal Axis Development project.
Mohamed Abou Basha, an economic researcher at EFG-Hermes told Mada Masr that the “30 percent statistic” given by state officials is difficult to interpret. He thinks the location and promises of facilitating trade in the Suez Canal area are likely to attract investment, but says the extent of this will depend on the specific benefits offered to investors, the infrastructure in place and the timing it will take to be implemented.