EGYPT: Egypt FDI to be permitted in Sinai peninsula

Friday August 31 2012

It has been reported that Egypt`s Cabinet agreed at its Wednesday meeting to allow Egypt Foreign Direct Investment (FDI) to invest in the Sinai Peninsula.

Foreign investors, however, will only be allowed to hold a maximum 45 per cent stake in any Sinai-based venture. And while foreigners still can’t fully own assets in Sinai, they can obtain concession contracts from the government.

The Egyptian government has historically prohibited foreigners to invest directly in Sinai for security reasons. Even for local investors, land ownership in Sinai has been tightly controlled so as to prevent foreign elements from surreptitiously acquiring land in the strategic border region. Egyptian investors with a non-Egyptian parent, for example, can only obtain concessions contracts in Sinai – but they can`t own land.

Early next year, the government plans to launch a new state authority, `the National Authority for the Development of Sinai Peninsula,` to be affiliated with the prime minister`s office. The new authority, dedicated exclusively to the development of the region, has been given an LE1 billion budget ($50 million of which was granted by the US government).

All decisions adopted by the new authority, however, must be approved by the interior and defence ministries, along with Egypt`s intelligence apparatus.

This information will be updated as further details become available.