Doing Business in Egypt 2014

Comparing Business Regulations for Domestic Firms in 15 Locations and 5 Ports with 188 other Economies

Understanding Regulations for Small and Medium-Size Enterprises

Comparing Business Regulations for Domestic Firms in 15 Locations and 5 Ports with 188 other Economies © 2013 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org

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Doing Business in Egypt 2014 is a new subnational report of the Doing Business series. It measures business regulations and their enforcement across 4 indicators in 15 Egyptian locations and governorates: Alexandria (Alexandria), Assuit (Assuit), 1 Executive summary Aswan (Aswan), Cairo (Cairo), Damietta (Damietta), Fay- oum (Fayoum), Giza (Giza), Ismailia (Ismailia), Kharga (New 8 About Doing Business and Valley), Mansoura (Dakahlia), Port Said (Port Said), Sohag Doing Business in Egypt 2014 (Sohag), Suez (Suez), Tanta (Gharbia), and Zagazig (Sharqia) and the indicator trading across borders in 5 ports: Alexandria 16 Starting a business (Alexandria), Damietta (Damietta), Port Said East (Port Said), Port Said West (Port Said), and Sokhna (Suez). The locations 23 Dealing with construction permits were selected in collaboration with the General Authority for Investment and Free Zones (GAFI) of the Ministry of In- 30 Registering property vestment and the Ministry of State for Local Development. They can be compared against each other, and with other 188 35 Enforcing contracts economies worldwide. 40 Trading across borders

Comparisons with other economies are based on the indicators in Doing Business 2014, Understanding Regulations for 46 Data notes Small and Medium-Size Enterprises, the eleventh in a series of annual reports published by the World Bank and the Interna- 57 City tables tional Finance Corporation. The indicators in Doing Business in 60 Indicator tables Egypt 2014 are also comparable with 355 cities from 55 economies benchmarked in other subnational Doing Business stud- 62 List of procedures ies. All data and reports are available at www.doingbusiness. 63 Starting a business org/subnational. 81 Dealing with construction permits Doing Business investigates the regulations that enhance 100 Registering property business activity and those that constrain it. Regulations af- 109 Indicator details fecting 5 stages of the life of a business are measured at the subnational level in Egypt: starting a business, dealing with 112 Acknowledgments construction permits, registering property, trading across borders and enforcing contracts. These indicators were selected 116 Annex: Trade Facilitation in Egypt and the because they cover areas of local jurisdiction or practice. The Development of the Suez Canal Corridor Project indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. The data in Doing Business in Egypt 2014 are current as of June 1st, 2013.

This project is the result of collaboration between the Global Indicators Group, Development Economics and the IFC In- vestment Climate Advisory Services MENA. It was produced with the assistance of the General Authority for Investment and Free Zones (GAFI) of the Ministry of Investment and the Ministry of State for Local Development. THE DOING BUSINESS WEBSITE Doing Business in Egypt 2014 report Download reports http://www.doingbusiness.org/egypt Access to Doing Business reports as well as Current features subnational and regional reports, reform case News on the Doing Business project studies and customized economy and regional http://www.doingbusiness.org proﬁles http://www.doingbusiness.org/Reports Doing Business reforms Short reform summaries Subnational and regional projects http://www.doingbusiness.org/Reforms Differences in business regulations at the subnational and regional level Methodology and research http://www.doingbusiness.org/Subnational- The methodology and research papers Reports underlying Doing Business http://www.doingbusiness.org/Methodology Law library http://www.doingbusiness.org/Research Online collection of laws and regulations relating to business and gender issues http://www.doingbusiness.org/Law-library http://wbl.worldbank.org Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Executive summary

Since the January 25th revolution in 2011, consider the licenses and permits neces- the Arab Republic of Egypt has been sary for formal operation to be a major undergoing a major political and social constraint.1 Similarly, in a 2012 study car- transition. At the same time, substantial ried out by the Alexandria Business As- economic disruptions have adversely af- sociation in 5 governorates, 46% of ﬁrms fected tourism, retail, trade and banking. say the requirements to obtain a business More than two years after the revolution, license and operate formally are too com- many Egyptians—especially young peo- plex. One of two entrepreneurs perceives ple, women and the population living in them as too time-consuming and be- lagging and underserved geographical lieves that formalization will mostly result areas—are still waiting to gain broader in more taxes and inspections. 2 access to the economic opportunities of a new era, with its promise of inclusive Moreover, there is a general lack of gov- growth and employment. ernance and trust. According to Rapid Egypt still faces structural challenges that Assessment surveys conducted by the impede private sector activity. A history World Bank Group in 2011 and 2012, of government intervention traditionally business managers rank informal gifts created limited opportunities for entre- or payments, anticompetitive practices preneurship. According to the World and regulatory policy uncertainty high on Bank Investment Climate Rapid Survey their list of constraints.3 At the same time, conducted in 2011, over one-fourth (27%) public officials perceive the private sector of the ﬁrms operating in Lower Egypt as untrustworthy.4

FIGURE 1.1 Greater access to regulatory information is associated with greater trust in regulatory quality

Regulatory quality High 1.5

High access 1.0

0.5

No access 0

-0.5

Low -1.0 Economies by accessibility of regulatory information

Note: The 176 economies in the sample are divided into 5 groups based on the accessibility of information index, and averages are taken for the economies in each group on the Regulatory Quality Index ranking of the Worldwide Governance Indicators for 2009. The Regulatory Quality Index, ranging from -2.5 (weak) to 2.5 (strong), measures public perception of government’s ability to formulate and implement sound policies. Relationships are signiﬁcant at the 5% level after controlling for income per capita. Source: World Bank, Worldwide Governance Indicators; Doing Business database. 2 DOING BUSINESS IN EGYPT 2014

While there have been efforts to reform sector—predominately in micro, small is thus perhaps even more urgent than in the business environment for local en- and medium-size enterprises—employed other countries. trepreneurs in the past, their impact has almost three-quarters of the labor force, been diluted by a lack of sustained com- accounting for 63% of the country’s GDP.5 Cairo does not tell the whole story. Egypt mitment to substantive changes and an is characterized by wide disparities be- unwillingness to risk upsetting the estab- Cairo represents Egypt in the annual Do- tween the prosperous north (“Lower lished order. For example, a common per- ing Business report, which compares regu- Egypt”) and the less developed south ception is that only connected entrepre- latory practices in 189 economies around (“Upper Egypt”).7 Living standards, ac- neurs are successful, suggesting a dual the world (figure 1.2). Of the 5 indicators cess to education, and quality of life set of rules with preferential treatment for covered in this subnational report, Egypt differ considerably.8 In the northern gov- the privileged. This suggests a need for outperforms the average rank for the ernorates of Suez and Damietta, poor the government to invest in governance Middle East and North Africa on starting people represent 3% of the population, structures and improve transparency, in- a business and trading across borders. while in the southern governorates of cluding access to basic regulatory infor- In Cairo, starting a business takes only Aswan, Sohag, and Assuit they account 9 mation such as fee schedules (box 1.1). 7 procedures and 8 days while costing for 54, 59 and 69% respectively. The Providing greater access to information 9.7% of income per capita with no paid- evolution of unemployment also shows can increase entrepreneurs’ confidence in minimum capital requirement. Trading noticeable geographical disparity. There in services provided by the government are unemployment differentials between across borders requires 8 documents, 12 and is associated with more public trust governorates, even if they are in close days and US$625 for exports and 10 doc- in government (figure 1.1). proximity and face a comparable setting; uments, 15 days and US$790 for imports. these include Luxor, with a 22% unem- Meanwhile, in the average Middle East- A strong private sector requires good ployment rate, and Quena, with an 11% ern and North African economy, starting rules—rules that increase the predictabil- rate.10 a business takes 8 procedures and 19.9 ity of economic interactions and provide days with a cost of 28.9% of income per contractual partners with certainty and As this study shows, Egyptian entrepre- capita and a paid-in minimum capital re- protection against abuse, rules that es- neurs face different local practices de- tablish and clarify property rights and requirement of 45.4% of income per capita. pending on where they establish their duce the cost of resolving disputes. These Exports require 6 documents, 20 days business. In order to give a more complete rules must be efficient, clear and acces- and US$1,127 and imports require 8 doc- representation of the business and reg- sible to all. uments, 24 days and US$1,360. ulatory environment within the country, this study expands the benchmarking of However, with an aggregate ease of do- 4 Doing Business topics—starting a busi- ing business ranking of 128, there is much ness, dealing with construction permits, WHAT DOES DOING BUSINESS IN room for making the lives of local busi- registering property and enforcing con- EGYPT 2014 MEASURE? nesses easier through clearer and more tracts—to 14 additional cities and gover- Doing Business measures business regu- transparent rules applied more consis- norates chosen because they cover areas lations that affect small and medium-size tently. Such rules would facilitate rather of local jurisdiction or practice. The proj- limited liability companies. Small busi- than impede private sector activity in an ect also analyzes the challenges of trad- nesses are especially important in Egypt, economy where the state has tradition- ing across borders through the 5 strategic where 98% of businesses have fewer ally had an outsized presence and where ports of Alexandria, Damietta, Port Said than 10 employees.5 In 2011 the private the need to encourage entrepreneurship East, Port Said West and Sokhna (Suez).

FIGURE 1.2 Egypt's Doing Business 2014 ranking

NEW HONG KONG MALAYSIA, NEW UNITED ARAB SINGAPORE ZEALAND SAR, CHINA ICELAND GEORGIA UNITED KINGDOM ZEALAND EMIRATES SINGAPORE LUXEMBOURG JAPAN EASIEST (1) 50 64 77 83 93 86 107 108 105 MENA* 113 89 118 105 105 Egypt, 112 Arab Rep. 128 133 147 146 MOST 149 148 156 DIFFICULT (189) Ease of Starting a Dealing with Getting Registering Getting Protecting Paying Trading Enforcing Resolving doing business business construction electricity property credit investors taxes across borders contracts insolvency permits *MENA is the Middle East and North Africa regional average. Note: Egypt and other economies are represented by their largest business city and their rankings are based on Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises. Source: Doing Business database. EXECUTIVE SUMMARY 3

Second, large urban centers deal with a higher volume of business services, BOX 1.1 To what extent is basic regulatory information easily accessible to the public? which can lead to delays and more-expensive professional services because A closer look at the construction permitting process in Egypt of the increased demand. On the other hand, these cities should also benefit Easy public access to information strengthens governance, fosters accountability from economies of scale and have more and improves transparency. There is evidence that the ready availability of basic resources at their disposable to invest in regulatory information, such as fee schedules on public billboards or in brochures, is associated with lower costs, better regulatory quality and greater overall regu- administrative modernization than their latory efficiency.a smaller neighbors. Alexandria, for exam- It is often difficult for an entrepreneur to find out precisely what is needed to ple, lags behind other cities on dealing obtain, say, a construction permit, or how much it will cost. The Executive Reg- with construction permits and enforcing ulations of the Egyptian Building Law do include useful sample forms—such as contracts, but is doing well on register- a model “site validity” certificate or the building permit application—as well as ing property and starting a business. The inspection sheets. However, entrepreneurs across Egypt must also comply with one-stop shop for business start-up in the specific requirements of the location in which they wish to build. In 7 out of 15 Cairo proves that high demand for busi- benchmarked cities, up-to-date application guidelines are not publicly available, ness services can be dealt with efficiently while in 10 cities fee schedules must be personally requested from the govern- not only for entrepreneurs in the capital, ment official in charge of the requirement. In Alexandria, Assuit, Aswan, Dami- but also for neighboring Giza. etta, Fayoum, Mansoura, and Sohag, neither the application guidelines nor the fee schedules are publicly available. Entrepreneurs have to establish personal con- Third, there are specific factors driv- tacts with public officials to request such information. ing each indicator ranking. In starting Other cities make an effort to provide easier access. In Kharga and Tanta, both a business, the one-stop shop (or the application guidelines and fee schedules are publicly displayed on the premises of proximity to a city with one) is the driv- the district engineering department. In Giza, Ismailia and Suez, the list of permit ing force behind the ranking. In dealing requirements and the associated fee schedules are available online. In Port Said with construction permits, the number of and Zagazig, the requirements are online but the website does not include fee approvals necessary prior to the start of schedules. In Ismailia, although it is theoretically possible to submit the building construction marks the difference. In reg- permit application online, this feature seems not to be operational. istering property and enforcing contracts, Ease of access to information and fee schedules across 15 cities the efficiency of local real estate registries Cities where it is easy Cities where it is not easy and courts determines how long it takes to enforce a contract or register property. Application requirements

Fee schedules COMPARING REGULATIONS IN Available in print Available Available only 15 CITIES AND 5 PORTS at agency ofﬁce online upon request Starting a business a. Geginat, Carolin, Adrian Gonzalez and Valentina Saltane. 2012. Transparency and Access to Informa- tion in Business Regulation. Washington, DC: World Bank Group. Until 2004, entrepreneurs from governorates across Egypt had to travel to the The summary results of the ranked indi- indicators—no other city or governorate national capital to register and start a 11 business. Today there are one-stop shops cators are presented in table 1.1. does equally well in all 4 areas. In Dami- in Alexandria, Assuit, Cairo and Ismailia. etta, for example, enforcing contracts is Across Egypt, it is easier to start a busi- Now the major determining factor for the easier than elsewhere, but starting a business in Alexandria, Cairo, and Giza, deal amount of time and money it takes for an with construction permits in Suez, reg- ness and registering property are ranked entrepreneur to open a business is the dis- ister property in Port Said, and enforce a below most other cities. Fayoum ranks tance he or she lives from the nearest one- contract in Damietta. It is most burden- near the top on registering property and stop shop. That is why in Cairo, Alexandria some to start a business in Aswan, en- enforcing contracts, but performs poorly and Giza it takes just 8 days to register a force a contract in Cairo, register property when it comes to dealing with construc- business, while in Aswan, Kharga and Port in Damietta and deal with construction Said it takes 11 days. The cost varies from tion permits. These results can guide pol- permits in Alexandria. 9.7% of income per capita in Alexandria, icy makers to areas where improvements Assuit, Cairo, Giza and Ismailia to 10.5% Some observations should be made. are possible without major legislative in Aswan. This is because investors in cit- First, with the exception of Ismailia— changes. Cities can share their experi- ies without a one-stop shop have to factor which ranks in the top third for all 4 ences and learn from each other. in travel costs.12 4 DOING BUSINESS IN EGYPT 2014

TABLE 1.1 Doing Business in Egypt—where is it easier? differences mainly stem from the building plan approval fees and utility connection Ease of starting a Ease of dealing with Ease of registering Ease of enforcing costs. City, Governorate business construction permits property contracts Alexandria, Alexandria 115411 Assuit, Assuit 4 7 10 14 Registering property Aswan, Aswan 15 14 12 7 The basic registration requirements are Cairo, Cairo 1121315identical across the 15 cities. However, an additional inspection by the Egyptian Damietta, Damietta 10 5 15 1 Surveying Authority is required in Assuit, Fayoum, Fayoum 61333Aswan, Cairo, Damietta, and Suez. It is Giza, Giza 11174easiest to register property in Port Said Ismailia, Ismailia 4352and most difficult in Damietta. Kharga, New Valley 14 4 8 10 The time necessary to register property Mansoura, Dakahlia 62211varies considerably. In Sohag, firms can Port Said, Port Said 12 10 1 7 transfer property in 18 days, whereas in Sohag, Sohag 12 9 6 6 Damietta the process takes more than 4 months. Although paper-based records Suez, Suez 10 1 8 9 slow processing times across all cities, Tanta, Gharbia 8 6 14 5 some variations can be explained by the Zagazig, Sharqia 8 7 11 13 volume of applications. In Damietta, Is- mailia, Tanta and Zagazig, longer process- Source: Doing Business database. ing times are caused by a shortage of professional staff at the Real Estate Registry. Thanks to years of reform, registering a clearances required before the construc- The inspection of the Egyptian Surveying business now takes just 7-8 procedures tion engineer can apply for the building Authority—aimed at assessing and doc- across Egypt, depending on whether the permit at the Municipality. In Suez no umenting property dimensions and fea- one-stop shops include their own bank clearance is required. The building plans tures—adds between 11 and 25 days to branch, so all fees can be paid centrally. are approved directly by the Municipality the overall time to register property. This is the case in Cairo and Alexandria that issues the building permit. On the (also serving Damietta, Fayoum, Giza, other hand, in Alexandria 5 different au- Egypt is among the 25 economies glob- Mansoura, Tanta and Zagazig). However, thorities must approve the building plans ally where property registration is least in Assuit, Aswan, Ismailia, Kharga, Port before they are submitted to the Munici- expensive.13 The registration fee is capped Said, Sohag and Suez it takes one more pality. The number of inspections during at EGP2,000 (US$317) nationwide for procedure because the one-stop shops construction also varies—from just 1 in properties over 300 square meters.14 The that cover these cities—located in Assuit Mansoura, Suez and Zagazig to as many Lawyers’ Syndicate charges a fee to cer- and Ismailia—do not have a bank branch as 7 in Cairo, Damietta, Giza and Ismailia. tify that the lawyer who drafted the sale on their premises. For investors using the contracts is a member of the syndicate. Cairo and Alexandria one-stop shops, the It takes less than 4 months to deal with This fee amounts to 0.5% of the prop- process of registration is complete once construction permits in Ismailia, but more erty value (with a cap of EGP5,000 or they obtain the Notification of Incorpo- than 7 months in Alexandria, Assuit and US$793) and is the largest component of ration. But for investors in Assuit and Aswan. Obtaining preliminary clearances the total cost. Ismailia, the process only ends once they creates additional delays. For instance, make an additional stop at the Commer- acquiring a clearance from the Civil Avi- cial Registry office in the one-stop shop ation Authority takes almost 2 months in Enforcing contracts to register their notifications of incorpora- Alexandria, Aswan and Kharga. In Aswan Although the legal rules and procedures tion and pay the associated fees. and Cairo, the Civil Defense and Fire are similar across the country, their ad- Fighting Authority takes a month or more ministration by the 15 individual courts to grant clearance. The time to issue the varies because it is the prerogative of the Dealing with construction permits building permit also varies across cities. head of each court. This is why the 42 Dealing with the formalities required to While the Building Law sets a time limit steps it takes to enforce a contract across build a warehouse and connect it to util- of 30 days for permit issuance, this legal Egypt take more or less time and carry ities is easier in Suez and Mansoura and timeframe is respected only in half of the different costs, depending on which of the more difficult in Alexandria and Aswan. benchmarked cities. courts is being measured. The rankings are driven by differences in requirements and the time it takes There are large variations in costs across Enforcing a contract is less difficult in to complete them. For instance, there cities—from 58.9% of income per ca- Damietta, where it takes a little over 2 are notable variations in the number of pita in Suez to 222.3% in Aswan. The years (810 days) and costs 18.2% of the EXECUTIVE SUMMARY 5

TABLE 1.2 How would good practices found outside Cairo impact Egypt’s global ranking? Egyptian best practices Egypt’s performance Doing Business compared internationally in Doing Business 2014* indicator Best practices within Egypt (global rank) (global rank)

Number of procedures to 13 procedures (Suez) comply with formalities to build a warehouse Dealing with Days to comply with 109 days (Ismailia) construction formalities to build a ware- 39 149 permits house Cost to comply with formal- 58.9% of income per capita (Suez) ities to build a warehouse Number of procedures to 7 procedures (Alexandria, Fayoum, register property Giza, Ismailia, Kharga, Mansoura, Port Said, Sohag, Tanta, Zagazig) Registering Days to register property 18 days (Sohag) 56 105 property Cost to register property 0.7% of property value (Alexandria, Assuit, Aswan, Cairo, Damietta, Fayoum, Giza, Ismailia, Mansoura, Port Said, Suez) Number of procedures to 42 procedures (all cities) enforce a contract Enforcing Days to enforce a contract 706 days (Ismailia) 103 156 contracts Cost to enforce a contract 18.2% of claim value (Damietta, Fayoum) Ease of doing business 104 128

* Represented by Cairo. Note: Cairo, the city that represents Egypt in Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises, already combines all best practices for starting a business found across Egypt. Because of this, there is no difference between the current ranking of Egypt in starting a business (50) and a hypothetical ranking incorporating all best practices found for the aforesaid indicator. Source: Doing Business database. claim value. It is most difficult in Cairo, Egypt’s court fees, at 1.3% of the claim customs purposes. As a result, dealing where it takes almost 7 months longer value, are among the lowest in the world. with paperwork represents two-thirds of (1,010 days) and costs almost 45% more. Both court and enforcement fees are the total time it takes traders to export regulated nationally. Attorney fees rep- and half of the time needed to import. High caseloads—coupled with frequent resent the largest cost component, av- eraging 64.7% of the cost to enforce a adjournments, over-booked experts and The time requirements for export and im- contract, and explain the variations in port vary from port to port. Exporting a an insufficient number of judges—con- cost across cities. 20-foot container takes 10 days in Dami- tribute to delays that vary from 706 days etta but 12 days in Sokhna; importing a (in Ismailia) to 1,105 days (in Zagazig). container takes 14 days in Alexandria, Yet some cities are ﬁnding ways to cope Trading across borders Damietta and Port Said West but 16 days more efficiently with the caseload burden. Dealing with paperwork is the biggest in Sokhna. These differences are partly In Tanta, one of the cities with the highest hurdle for Egyptian businesses planning due to the customs clearance process in number of commercial cases, an efficient, to export their products abroad or im- each port. As a result of increased unrest computerized system allows judges and port from other countries. They need to during the past two years, port author- court registrars to access case informa- submit 8 documents to export and 10 to ities have heightened safety measures, tion—including trial dates, adjournments, import—as opposed to France, for exam- but some port authorities are stricter ple, where only 2 documents are needed than others. In the case of Sokhna, all the reasons for adjournment and ﬁnal both for imports and exports.14 Even the containers now go through X-ray scanner judgments—and plan their work accord- regional average is lower at 6 documents checks, which take time. Another source ingly. As a result, the time needed for the for exports and 8 for imports. In Egypt, of variation is related to port and termi- judge to conduct the trial and issue the traders must submit multiple forms to nal handling. Some terminals carry out judgment is among the lowest registered the same agency; for instance, importers inspections in the import yard, whereas in the country (560 days). need to submit 3 different documents for others move the container to a separate 6 DOING BUSINESS IN EGYPT 2014

inspection yard, which is aligned to inter- and—together with Alexandria and land-use authorizations electronically. national standards but adds delays. Giza—leads the way on reducing the pro- Soon Colima set up a similar system on cedures, time and money required to start its own website. Trading across borders in Egypt is inex- a business thanks to the most advanced pensive by international standards, but one-stop shop in the country. Good prac- Although there is no blueprint for how to again there are significant differences tices in other areas can be found outside grow and prosper, one common factor is between ports. Export costs vary from Cairo (table 1.2). creating an investment climate conducive US$532 to US$694, and import costs to starting and running a business, where vary from US$780 to US$1,047 depend- If the policy makers of a hypotheti- complying with regulations brings more ing on the port. One of the differences is cal Egyptian city were to combine the benefits than costs. In a time of tight bud- related to port and terminal handling fees. streamlined inspections and approval gets and high unemployment, reforms Publicly operated ports charge lower fees processes as well as lower costs in Suez making it easier to do business make than privately operated ports do. This is (13 procedures, 58.9% of income per more sense than ever. They help create because they must adhere to terminal capita) with the speed of Ismailia (109 jobs and boost growth at relatively little and handling fees set by ministerial de- days), the city would rank 39th out of cost to governments. cree, including, for example, a 50% dis- 189 economies in terms of dealing with count for Egyptian-made exports. Inland construction permits—ahead of France. Egypt’s current political and social transi- transportation costs also vary depending Similarly, with regard to registering prop- tion represents a unique opportunity for on the port, which seems to be linked to erty, reducing the requirements to 7 as is policy makers to address, substantively the competition in the trucking industry the case in 10 of the 15 cities,16 the time to and sustainably, many of the obstacles servicing each area. 18 days as in Sohag, and the cost to 0.7% in the way of today’s Egyptian entre- of property value as in 11 cities17 would preneurs. Moving to a system of more allow this hypothetical city to rank 56th transparent and sensible rules—rules globally—ahead of Germany and Kuwait. that respond to the needs of the busi- LEARNING FROM EACH OTHER Finally, if this city were to adopt the speed ness community while narrowing the gap Publishing comparable data on the rel- to enforce a contract of Ismalia (706 between the law as written and the law ative ease of doing business in different days) and the low cost of Damietta and as practiced—will go a long way toward economies inspires governments to act. Fayoum (18.2% of claim value), it would creating the conditions for more equitable They uncover bottlenecks and identify climb 53 positions to rank 103 globally. As economic growth and a faster pace of job where policy makers can look for good a result, a hypothetical city combining all creation, not only in Cairo but across the practices. Comparisons between cities in the good practices found in Egypt would country. the same country are even stronger driv- rank 104 out of 189 economies—24 posi- ers for reform, because it is more difficult tions ahead of Egypt’s ranking according for local governments and policy makers to Doing Business 2014. to justify why doing business in their city NOTES or region is more burdensome than in The good news is that there is no need 1. Stone, Andrew, Lina Badawy, Hooman neighboring locations. to reinvent the wheel: tangible improve- Dabidian. June 2013. “Arab Republic of ments can be achieved by introducing Egypt Investment Climate Update: Private In Egypt, most of the business of govern- measures already successfully imple- Enterprises in the Aftermath of the Revo- ment has traditionally been conducted mented in other cities across Egypt. Shar- lution.” MENA Knowledge and Learning: by the central government. Sectoral min- ing the same national legal and regulatory Quick Notes Series 73009. Washington, DC: istries have local offices, but are mainly framework facilitates the replication of World Bank Group. accountable to their superiors in Cairo. good local practices. Peer-to-peer events 2. The governorates covered by the study are Alexandria, Gharbia, Monofeya, Behera Although the governors oversee the local can facilitate knowledge sharing and al- and Kafr Elshiekh. Alexandria Business administrations, they have limited direct low local authorities to bring their con- Association, Microenterprise Reform Index, influence. Redefining institutional roles cerns to the attention of the national gov- Alexandria, 2012. and processes while coordinating across ernment, thus pushing the reform agenda 3. Stone, Andrew, Lina Badawy, Hooman sectors and institutions can make gov- for the country as a whole. Dabidian. June 2013. “Arab Republic of ernments more responsive to local needs. Egypt Investment Climate Update: Private One possible alternative is to delegate In Mexico, the Federal Commission for Enterprises in the Aftermath of the Revo- more power from administrative units in Regulatory Improvement organizes a reg- lution.” MENA Knowledge and Learning: the national capital to administrative units ulatory conference twice a year where Quick Notes Series 73009. Washington, DC: of the same ministry in the governorate every state shares its experience with World Bank Group. 4. World Bank. 2009. From Privilege to Competi- capital. This streamlines policy implemen- regulatory improvements. Peer learning tion: Unlocking Private-Led Growth in the Mid- also takes place when local policy mak- tation and enhances accountability. dle East and North Africa. Washington, DC. ers visit neighboring states and cities. 5. “Growing Micro and Small Enterprises: As this study shows, cities and gover- For example, policy makers of the state Tackling Financing Obstacles in the MENA norates can learn from each other. Cairo of Colima recently paid a visit to Sina- Region.” Presentation by the MENA-OECD represents Egypt in Doing Business 2014 loa, where they learned about issuing Working Group on SME Policy. Casablanca, EXECUTIVE SUMMARY 7

22 February 2011. Available at http://www. oecd.org/mena/investment/47246111.pdf 6. African Development Bank, Economic Quar- terly Review–Volume 1, April 2013. 7. World Food Programme. May 2013. The Status of Poverty and Food Security in Egypt, Analysis and Policy Recommendations: Prelim- inary Summary Report. Cairo, Egypt: World Food Programme, Country Office. 8. United Nations Development Programme. Egypt Human Development Report 2010. New York, NY: United Nations Development Programme. 9. Central Authority for Public Mobilization and Statistics (2012). 10. Data tracked from 2001 to 2010. World Bank. June 2012. Arab Republic of Egypt: Re- shaping Egypt’s Economic Geography: Domestic Integration as a Development Platform – Vol- ume 1. Washington, DC: World Bank Group. 11. No ranking was constructed for the category of trading across borders. A detailed analysis, together with reform recommendations, is available in Chapter 7. 12. Travel costs have been calculated assuming one round trip train ticket to the nearest (or most frequently used) one-stop shop. Where a train is not available (for example, from Kharga to Assuit), the cost of a roundtrip bus ticket was considered. All costs for train tickets are from the national rail service website: https://enr.gov.eg/ticketing/public/ smartSearch.jsf. All costs for bus tickets are based on cost estimates from private sector respondents. 13. In July 2013 the Egyptian government announced a new property tax law, the effects of which are not yet captured in the data. 14. As per Law 83 of 2006, the registration fee is based on the size of the property, with a maximum fee of EGP2,000. The fee schedule is as follows: a. Up to and including 100 square meters: EGP500; b. Above this, up to and including 200 square meters: EGP1,000; c. Above this, up to and including 300 square meters: EGP1,500; d. More than 300 square meters: EGP2,000. 15. France requires 2 documents to export (bill of landing and customs export declaration) and 2 documents to import (bill of landing and customs import declaration). 16. Alexandria, Fayoum, Giza, Ismailia, Kharga, Mansoura, Port Said, Sohag, Tanta and Zagazig. 17. Alexandria, Assuit, Aswan, Cairo, Damietta, Fayoum, Giza, Ismailia, Mansoura, Port Said, and Suez. About Doing Business and Doing Business in Egypt 2014

Sound business regulations are important through firm-level surveys can better for a thriving private sector—and a thriv- measure actual experiences. Over the ing private sector is important for overall years the choice of indicators for Doing development. In the developing world the Business has therefore been guided by private sector is the largest employer, pro- economic research and firm-level data, viding an estimated 90% of jobs.1 Having in particular from the World Bank En- the right business regulations and related terprise Surveys. These surveys provide institutions is therefore essential for the data highlighting the main obstacles to health of an economy.2 business activity as reported by entrepreneurs in more than 120 economies. This year the 11th Doing Business report Among the factors that the surveys have was published. Before the first report was identified as important to businesses produced, in 2003, few measures of busi- have been access to finance and elec- ness regulations existed, and even fewer tricity—inspiring the design of the Doing that were globally comparable. Earlier ef- Business indicators on getting credit and forts from the 1980s and 1990s drew on getting electricity. perceptions data. These expert or business surveys focused on broad aspects The design of the Doing Business indi- of the business environment and often cators has also drawn on theoretical in- captured the experiences of businesses. sights gleaned from extensive research These surveys often lacked the specific- literature. One early inspiration was a ity and cross-country comparability that background paper for the World Bank’s Doing Business provides—by focusing World Development Report 2002: Building on well-defined transactions, laws and Institutions for Markets, which created an institutions rather than generic, percep- index measuring the efficiency of judicial tions-based questions on the business systems.3 This paper contributed to a environment. new stream of research literature in law and economics. The background papers Doing Business measures business regula- developing the methodology for each of tions for local firms. The project focuses the Doing Business indicator sets are part on small and medium-size companies of this research stream.4 These papers es- operating in the largest business city of tablished the importance of the rules and an economy. Based on standardized case regulations that Doing Business measures studies, it presents quantitative indica- for such economic outcomes as trade tors on the regulations that apply to firms volumes, foreign direct investment, mar- at different stages of their life cycle. The ket capitalization in stock exchanges and results for each economy can be bench- private credit as a percentage of GDP. marked to those for 188 other economies and over time. Rules and regulations are under the direct control of policy makers—and policy De jure rules, such as those that are the makers intending to change the set of focus of Doing Business, can be measured incentives under which businesses op- in a standardized way and are directly erate will often start by changing rules amenable to policy reforms. But these and regulations that have an impact on measures may not reflect the de facto firm behavior. Doing Business goes beyond experiences of firms. Data collected identifying an existing problem in the ABOUT DOING BUSINESS AND DOING BUSINESS IN EGYPT 2014 9 regulatory framework and points to specific regulations or regulatory procedures that may lend themselves to regulatory BOX 2.1 Comparing regulations at the local level: Subnational reform. And its quantitative measures of Doing Business business regulations enable research on how specific regulations affect firm be- Subnational Doing Business expands the Doing Business analysis beyond the largest havior and economic outcomes. business city of an economy. It captures differences in regulations or in the implementation of national laws across locations within an economy (as in India) The first Doing Business report covered 5 or a region (as in South East Europe). Projects are undertaken at the request of topics and 133 economies. This year’s re- governments. port covers 11 topics and 189 economies. Subnational Doing Business produces disaggregated data on business regulations Ten topics are included in both the aggre- in locations where information has been nonexistent or where national data are in- gate ranking on the ease of doing business sufficient to fully assess the regulatory environment. But it is more than a data col- 5 and the distance to frontier measure. lection exercise. Subnational Doing Business has proved to be a strong motivator for The Doing Business methodology makes it regulatory reform: possible to update the indicators in a relatively inexpensive and replicable way. ĖŤ Subnational Doing Business involves multiple interactions with government partners at national, regional and municipal levels, resulting in local ownership and The project has benefited from feedback capacity building. from governments, academics, practition- ĖŤ The data produced are comparable across locations within the economy and ers and independent reviewers—most re- internationally, enabling locations to benchmark their results both locally and cently an independent panel appointed by globally. Comparisons of locations that are within the same economy and the president of the World Bank Group. therefore share the same legal and regulatory framework can be revealing: local The panel’s recommendations came too officials find it hard to explain why doing business is more difficult in their juris- late for significant changes to this year’s diction than in a neighboring one. report, but the project will explore op- ĖŤ Pointing out good practices that exist in some locations but not others in an tions for improvement in coming editions. economy helps policy makers recognize the potential for achieving a regula- To this end, operational oversight for the tory performance far better than that suggested by the ranking captured in the project will be moved to the Development global Doing Business report. This can prompt discussions of regulatory reform Economics Vice Presidency of the World across different levels ofgovernment, providing opportunities for local govern- Bank Group, to strengthen synergies be- ments and agencies to learn from one another. tween Doing Business and other World ĖŤ Subnational Doing Business indicators are actionable, because most of the areas Bank Group flagship reports. The initial measured are within governments’ mandate. In addition, the reports provide goal remains: to provide an objective ba- policy recommendations and examples of good practice that are easy to repli- sis for understanding and improving the cate because of the shared legal traditions and institutions. regulatory environment for business. Since 2005 subnational reports have covered 355 cities in 55 economies, including Brazil, China, India, Kenya, Morocco, Pakistan and the Philippines.a In 2013 subnational studies were completed in Colombia and Italy, and a report covering one WHAT DOING BUSINESS IN data set was produced for Hargeisa (Somaliland). Studies are ongoing in 31 states EGYPT 2014 COVERS and the Federal District in Mexico and in 36 states and the Federal Capital Territory Doing Business in Egypt 2014 is a Subna- in Nigeria. In addition, 2 regional reports were published this year: tional Doing Business report (box 2.1) and ĖŤ Doing Business in the g7+, comparing business regulations in economies of the as such captures several important di- g7+ group—Afghanistan, Burundi, the Central African Republic, Chad, the Co- mensions of the regulatory environment moros, the Democratic Republic of Congo, Côte d’Ivoire, Guinea, Guinea-Bis- as it applies to local firms in 15 cities and sau, Haiti, Liberia, Papua New Guinea, Sierra Leone, the Solomon Islands, South 5 ports in Egypt. It provides quantitative Sudan, Timor-Leste and Togo.b The g7+ group is a country-owned and coun- measures of regulations for 5 Doing Busi- try-led global mechanism established in April 2010 to monitor, report and draw ness indicators: starting a business, deal- attention to the unique challenges faced by fragile states. ing with construction permits, registering ĖŤ Doing Business in the East African Community, covering Burundi, Kenya, Rwanda, property, enforcing contracts, and trading Tanzania and Uganda. across borders (table 2.1). a. Subnational reports are available on the Doing Business website at http://www.doingbusiness.org/ subnational. An emphasis on smart regulations b. Doing Business does not collect data for Somalia, also a member of the g7+ group. Doing Business is not about eliminating the role of the state from private sector development. On the contrary, Doing 10 DOING BUSINESS IN EGYPT 2014

Business recognizes that the state has competitiveness. The economies per- a fundamental role in private sector forming best in the Doing Business rank- FIGURE 2.1 How does Doing Business development. A key premise of Doing ings therefore are not those with no regu- define SMART business Business is that vital economic activity lation but those whose governments have regulations? requires good rules. These include rules managed to create rules that facilitate that establish and clarify property rights, interactions in the marketplace without STREAMLINED—regulations that accomplish the desired outcome in the reduce the cost of resolving disputes, needlessly hindering the development of S most efficient way increase the predictability of economic the private sector. Ultimately, Doing Busi- interactions and provide contractual ness is about smart regulations, and these MEANINGFUL—regulations that have a measurable positive impact in facilitating partners with core protections against can be provided only by a well-function- interactions in the marketplace abuse. The objective is to have regula- ing state (figure 2.1). M tions designed to be efficient, accessible ADAPTABLE—regulations that to all who use them and simple in their adapt to changes in the environment implementation. Two types of data A In constructing the indicators the Doing RELEVANT—regulations that are Accordingly, some Doing Business in- Business project uses 2 types of data. The proportionate to the problem they are designed to solve dicators give a higher score for better first come from readings of laws and reg- R and more developed regulation, as the ulations in each economy. The Doing Busi- TRANSPARENT—regulations that are clear protecting investors indicators (not in- ness team, in collaboration with local ex- and accessible to anyone who needs to use cluded in the Doing Business in Egypt pert respondents, examines the company T them 2014 report) do for stricter disclosure law to find, for example, requirements for requirements for related-party transac- company incorporation. It reads the civil tions. Other indicators, such as those law to find the number of procedures nec- in the 1980s to show the obstacles to set- on dealing with construction permits, essary to resolve a commercial sale dis- ting up a garment factory on the outskirts automatically assign the lowest score to pute through local courts. And it plumbs of Lima.7 economies that have no regulations in other legal instruments for other key the area measured or do not apply their pieces of data used in the indicators, sev- regulations (considered “no practice” eral of which have a large legal dimension. In developing the data of this second type, economies), penalizing them for lack- Indeed, about three-quarters of the data the Doing Business team conducts several ing appropriate regulation. Still others used in Doing Business are of this type and rounds of interaction with the expert re- give a higher score for a simplified way are easily verifiable against the law. The spondents—through conference calls, of applying regulation with lower com- local expert respondents play a vital role written correspondence and visits by the pliance costs for firms—as the starting in corroborating the Doing Business team’s team—until there is convergence on the a business indicators do, for example, if understanding and interpretation of rules final answer. For data of the first type, be- firms can comply with business start-up and laws. cause they are based on the law, there is formalities in a one-stop shop or through less need for convergence and for a larger a single online filing portal. And finally, Data of the second type serve as inputs sample of experts to ensure accuracy. some indicators recognize economies into indicators on the complexity and that apply a risk-based approach to reg- cost of regulatory processes. These indi- ulation as a way to address environmen- cators measure the efficiency in achiev- WHAT DOING BUSINESS IN tal and social concerns—that is, by im- ing a regulatory goal, such as the number EGYPT 2014 DOES NOT COVER posing greater regulatory requirements of procedures to obtain a building permit on activities that pose a higher risk to the or the time taken to grant legal identity The Doing Business in Egypt 2014 data population and lesser regulatory require- to a business. In this group of indicators have key limitations that should be kept ments on lower-risk activities. cost estimates are recorded from official in mind by those who use them. fee schedules where applicable. Time Among the 30 economies ranking high- estimates often involve an element of Limited in scope est on the ease of doing business, a judgment by respondents who routinely substantial number—Canada, Denmark, administer the relevant regulations or The Doing Business in Egypt 2014 indica- Germany, Japan, the Republic of Korea, undertake the relevant transactions.6 To tors are limited in scope. In particular: New Zealand, Norway, Sweden—come construct the time indicators, a regula- from a tradition of the government having tory process such as starting a business ĖŤ Doing Business in Egypt 2014 does not quite a prominent presence in the econ- is broken down into clearly defined steps measure all 11 indicators covered in omy, including through setting out rules and procedures (for more details, see the the global Doing Business report. The to regulate different aspects of private discussion on methodology in this chap- report covers only 5 areas of business sector activity. Yet all these economies ter). In constructing the starting a busi- regulation that are either the prov- perform well not only on the Doing Busi- ness indicator, Doing Business builds on enance of the local governments or ness indicators but also in other interna- Hernando de Soto’s pioneering work in where local differences exist—start- tional data sets capturing dimensions of applying the time-and-motion approach ing a business, dealing with construc- ABOUT DOING BUSINESS AND DOING BUSINESS IN EGYPT 2014 11

compliance altogether—by not register- TABLE 2.1 Doing Business in Egypt 2014—benchmarking 5 areas of business regulation ing for social security, for example. Where Starting a business Procedures, time, cost and paid-in minimum capital requirement regulation is particularly onerous, levels of informality tend to be higher.8 Compared Dealing with construction permits Procedures, time and cost with their formal sector counterparts, Registering property Procedures, time and cost firms in the informal sector typically grow Enforcing contracts Procedures, time and cost to resolve a commercial dispute more slowly, have poorer access to credit Trading across borders Documents, time and cost and employ fewer workers—and these workers remain outside the protections of labor law.9 Firms in the informal sector are tion permits, registering property, Limited to standardized case also less likely to pay taxes. trading across borders, and enforcing scenarios contracts (table 2.1). A key consideration for the Doing Business Doing Business measures one set of factors ĖŤ Doing Business in Egypt 2014 does not indicators is that they should ensure com- that help explain the occurrence of infor- measure the full range of factors, pol- parability of the data across a global set of mality and give policy makers insights into icies and institutions that affect the economies. The indicators are therefore potential areas of regulatory reform. Gain- quality of the business environment developed around standardized case sce- ing a fuller understanding of the broader in an economy or its national com- narios with specific assumptions. Doing business environment, and a broader petitiveness. It does not, for exam- Business recognizes the limitations of the perspective on policy challenges, requires ple, capture aspects of security, the standardized case scenarios and assump- combining insights from Doing Business prevalence of bribery and corruption, tions. But while such assumptions come with data from other sources, such as the market size, macroeconomic stability at the expense of generality, they also World Bank Enterprise Surveys.10 (including whether the government help ensure the comparability of data. For manages its public finances in a sus- this reason it is common to see limiting tainable way), the state of the finan- assumptions of this kind in economic WHY THIS FOCUS? cial system, the state of the rental or indicators. Inflation statistics, for exam- resale property market or the level of ple, are often based on prices of a set of Why does Doing Business focus on the training and skills of the labor force. consumer goods in a few urban areas, regulatory environment for small and me- ĖŤ Even within the relatively small set of since collecting nationally representative dium-size enterprises? These enterprises indicators included in Doing Business price data at high frequencies would be are key drivers of competition, growth in Egypt 2014, the focus is deliberately prohibitively costly in many countries. and job creation, particularly in develop- narrow. The starting a business indi- Some Doing Business topics include coming economies. But in these economies cator, for example, does not cover all plex areas, and so it is important that the up to 65% of output is produced in the aspects of commercial legislation. It standardized cases are carefully defined. informal sector, often because of exces- sive bureaucracy and regulation—and in only focuses on the legislation reg- For example, the standardized case sce- the informal sector firms lack access to ulating registration of one type of nario usually involves a limited liability company or its legal equivalent. The con- the opportunities and protections that small to medium size firms. Through siderations in defining this assumption the law provides. Even firms operating these indicators Doing Business thus are twofold. First, private limited liability in the formal sector might not all have provides a narrow perspective on the companies are, empirically, the most equal access to these opportunities and range of infrastructure challenges that prevalent business form for firms with protections. firms face, particularly in the develop- more than one owner in many economies ing world.. around the world. Second, this choice re- Where regulation is burdensome and ĖŤ Doing Business does not attempt to flects the focus of Doing Business on ex- competition limited, success tends to measure all costs and benefits of a panding opportunities for entrepreneur- depend on whom one knows. But where particular law or regulation to so- ship: investors are encouraged to venture regulation is transparent, efficient and ciety as a whole. The indicators do into business when potential losses are implemented in a simple way, it becomes not measure, nor are they intended limited to their capital participation. easier for aspiring entrepreneurs to com- to measure, the benefits of the so- pete on an equal footing and to innovate cial and economic programs funded and expand. In this sense Doing Business through tax revenues. Measuring Limited to the formal sector values good rules as a key to social inclu- business laws and regulations pro- The Doing Business indicators assume sion. Enabling growth—and ensuring that vides one input into the debate on that entrepreneurs have knowledge of all people, regardless of income level, can the regulatory burden associated and comply with applicable regulations. participate in its benefits—requires an with achieving regulatory objectives. In practice, entrepreneurs may not know environment where new entrants with Those objectives can differ across what needs to be done or how to comply, drive and good ideas can get started in economies. Doing Business provides a and may lose considerable time in trying business and where good firms can invest starting point for this discussion. to find out. Or they may deliberately avoid and grow, thereby creating more jobs. 12 DOING BUSINESS IN EGYPT 2014

Reviewing the Doing Business rankings in FIGURE 2.2 A strong correlation between Doing Business rankings and World Economic isolation may reveal unexpected results. Forum rankings on global competitiveness Some cities may rank unexpectedly high on some topics. And some cities that 140 have had rapid growth or attracted a great 120 deal of investment may rank lower than 100 others that appear to be less dynamic. 80 For reform-minded governments, how 60 much the regulatory environment for lo- 40 cal entrepreneurs improves in an absolute

Competitiveness Index 20 sense matters far more than their econo- 2013/14 ranking on Global 0 my’s ranking relative to other economies. 0 20 40 60 80 100 120 140 160 180 As cities develop, they tend to streamline DB2014 ranking on the ease of doing business existing regulations and prune outdated ones. One finding of Doing Business is that Note: Relationships are significant at the 1% level after controlling for income per capita. dynamic and growing economies contin- Source: Doing Business database; WEF 2013. ually reform and update their business regulations and the implementation of Doing Business functions as a barometer 39 countries that are covered, several of those regulations, while many poor econ- of the regulatory environment for domes- them large emerging markets—are cor- omies still work with regulatory systems tic businesses. To use a medical analogy, related with the Doing Business rankings dating to the late 1800s. Doing Business is similar to a cholesterol (the correlation here is 0.53). test. A cholesterol test does not tell us everything about our health. But our cho- There is a high correlation (0.83) be- lesterol level is easier to measure than tween the Doing Business rankings and the HOW GOVERNMENTS USE our overall health, and the test provides rankings on the World Economic Forum’s DOING BUSINESS us with important information, warning Global Competitiveness Index, a much Doing Business offers policy makers a us when we need to adjust our behavior. broader measure capturing such factors benchmarking tool useful in stimulating Similarly, Doing Business does not tell us as macroeconomic stability, aspects of policy debate, both by exposing potential everything we need to know about the human capital, the soundness of public challenges and by identifying good prac- regulatory environment for domestic institutions and the sophistication of the tices and lessons learned. Despite the businesses. But its indicators cover as- business community (figure 2.2).12 For narrow focus of the indicators, the initial pects that are more easily measured than several of these factors the Global Com- debate in an economy on the results they the entire regulatory environment, and petitiveness Index uses data collected by highlight typically turns into a deeper dis- they provide important information about other organizations. For others it uses pri- cussion on their relevance to the economy where change is needed. mary data, collected through surveys of and on areas where business regulatory the business community’s perceptions of reform is needed, including areas well be- To test whether Doing Business serves as the business environment.13 Self-reported yond those measured by Doing Business. a proxy for the broader business environ- experiences with business regulations, ment and for competitiveness, one ap- such as those captured by the Global proach is to look at correlations between Competitiveness Index, often vary much Part of a broad approach to policy the Doing Business rankings and other more within economies (across respon- reform major economic benchmarks. Closest dents in the same economy) than across Many of the Doing Business indicators can to Doing Business in what it measures is economies, suggesting that different be considered “actionable.” For example, the set of indicators on product market firms experience the same regulatory en- governments have direct control over the regulation compiled by the Organisation vironment in very differentways. 14 minimum capital requirement for new for Economic Co-operation and Develop- firms. They can invest in company and ment (OECD). These indicators are de- property registries to increase the effi- signed to help assess the extent to which DOING BUSINESS AS A ciency of these public agencies. And they the regulatory environment promotes or BENCHMARKING EXERCISE can undertake court reforms to shorten inhibits competition. They include mea- delays in the enforcement of contracts. sures of the extent of price controls, the By capturing key dimensions of regula- Many of these indicators are actionable licensing and permit system, the degree tory regimes, Doing Business in Egypt 2014 at different levels ofgovernment. For in- of simplification of rules and procedures, provides a rich opportunity for bench- stance, while building codes are set at a the administrative burdens and legal and marking. Such a benchmarking exercise national level, it is often municipal build- regulatory barriers, the prevalence of dis- is necessarily incomplete, just as the Do- ing authorities that are in charge of local criminatory procedures and the degree ing Business data are limited in scope. It implementation and undertake enforce- of government control over business is useful when it aids judgment, but not ment. Depending on the economy, per- enterprises.11 These indicators—for the when it supplants judgment. formance in the some areas measured by ABOUT DOING BUSINESS AND DOING BUSINESS IN EGYPT 2014 13

Doing Business can be influenced by local a case where the binding constraint to, the Doing Business project began. But Do- government implementation of national say, contract enforcement was the fever- ing Business made it easier by creating a laws, and the design of their own local ish pace of reforms in other policy areas. common language comparing business regulation, in areas such as commercial Increasingly, the opposite seems to be regulations around the world. licensing, local taxation and building per- the case, with governments recognizing mitting. But some Doing Business indica- the synergies of multifaceted reforms Over the past decade governments tors capture procedures, time and costs across a broad range of areas. Moreover, worldwide have been actively improving that involve private sector participants, because the areas measured by Doing the regulatory environment for domes- such as lawyers, notaries, architects or Business indicators encompass many gov- tic companies. Most reforms relating to freight forwarders. Governments may ernment departments—typically includ- Doing Business topics have been nested have little influence in the short run over ing the ministries of justice, commerce, in broader reform programs aimed at industry, finance, trade, energy, and local the fees these professions charge, though enhancing economic competitiveness, much can be achieved by strengthening governments, to name just a few—the as in Colombia, Kenya, Liberia and the professional licensing regimes and pre- administrative burden of regulatory re- Russian Federation. In structuring reform venting anticompetitive behavior. And forms is more equitably shared. programs for the business environment, governments have no control over the governments use multiple data sources geographic location of their city, a factor Another factor has also helped sustain and indicators. This recognizes the reality that can adversely affect businesses. the interest of policy makers in the Do- ing Business data. Implementing coherent that the Doing Business data on their own While Doing Business indicators are ac- economic policies in the face of a rapidly provide an incomplete roadmap for suc- 15 tionable, this does not necessarily mean changing global economy and an uncer- cessful business regulatory reforms. It that they are all “action-worthy” in a par- tain economic outlook is a great chal- also reflects the need to respond to many ticular context. Business regulatory re- lenge. Many of the factors shaping the stakeholders who bring important issues forms are one element of a strategy aimed environment in which economic policies and concerns to the reform debate. at improving competitiveness and estab- are formulated lie well outside the control lishing a solid foundation for sustainable of most policy makers, especially those in When the World Bank Group engages economic growth. There are many other the developing world. But the rules and with governments on the subject of im- important goals to pursue—such as ef- regulations that governments put in place proving the investment climate, the dia- fective management of public finances, to underpin private sector activity are logue aims to encourage the critical use adequate attention to education and largely homemade. Whether these rules of the Doing Business data—to sharpen training, adoption of the latest technolo- are sensible or excessively burdensome, judgment and promote broad-based re- gies to boost economic productivity and whether they create perverse incentives forms that enhance the investment cli- the quality of public services, and appro- or help establish a level playing field, mate rather than a narrow focus on im- priate regard for air and water quality to whether they safeguard transparency and proving the Doing Business rankings. The safeguard people’s health. Governments encourage adequate competition—all World Bank Group uses a vast range of have to decide what set of priorities best this is largely within the control of gov- indicators and analytics in this policy di- fits the needs they face. To say that governments. alogue, including its Global Poverty Mon- ernments should work toward a sensible itoring Indicators, World Development set of rules for private sector activity (as Indicators, Logistics Performance Indi- embodied, for example, in the Doing Busi- Insights into good practices cators and many others. The open data ness indicators) does not suggest that As governments over the past decade initiative has made data for many such doing so should come at the expense of have increasingly understood the impor- indicators conveniently available to the other worthy policy goals. tance of business regulation as a driv- public at http://data.worldbank.org. ing force of competitiveness, they have There is no evidence that Doing Business turned to Doing Business as a repository reforms are crowding out reforms in other of actionable, objective data providing areas, such as in fiscal policy or in health unique insights into good practices METHODOLOGY AND DATA and education. Indeed, governments are worldwide. Reform-minded governments The Doing Business in Egypt 2014 covers increasingly recognizing that improving seeking success stories in business reg- competitiveness and creating a better ulation find examples in Doing Business 15 cities and 5 ports. The data are based climate for private sector activity requires (box 2.2). Saudi Arabia, for example, used on domestic laws and regulations as well actions across a broad front, addressing the company law of France as a model for as administrative requirements (For a de- factors and policies that extend well be- revising its own law. Many African gov- tailed explanation of the Doing Business yond those captured by the Doing Busi- ernments may look to Mauritius—the methodology, see the data notes.). The ness indicators. region’s strongest performer on Doing report uses several sources of informa- Business indicators—as a source of good tion: Doing Business in Egypt 2014 respon- Over several years of engaging with au- practices to inspire regulatory reforms in dents, the relevant laws and regulations, thorities in a large number of economies, their own countries. Governments shared and government and public agencies op- the Doing Business team has never seen knowledge of business regulations before erating at the central and/or local level. 14 DOING BUSINESS IN EGYPT 2014

Business questionnaires mostly gather le- BOX 2.2 How economies have used Doing Business in regulatory gal information, which firms are unlikely reform programs to be fully familiar with. For example, few firms will know about all the many legal procedures involved in resolving a com- To ensure the coordination of efforts across agencies, such economies as Brunei mercial dispute through the courts, even Darussalam, Colombia and Rwanda have formed regulatory reform committees, if they have gone through the process reporting directly to the president. These committees use the Doing Business in- themselves. But a litigation lawyer would dicators as one input to inform their programs for improving the business envi- have no difficulty in identifying all the ronment. More than 45 other economies have formed such committees at the necessary steps. interministerial level. In East and South Asia they include the Republic of Korea; Malaysia; the Philippines; Taiwan, China; and Vietnam. In the Middle East and Relevant laws and regulations North Africa: Morocco, Saudi Arabia and the United Arab Emirates. In Europe and Central Asia: Croatia, Georgia, Kazakhstan, Kosovo, the Kyrgyz Republic, the for- Doing Business in Egypt 2014 indicators mer Yugoslav Republic of Macedonia, Moldova, Montenegro, Poland, the Russian are based on laws, regulations and local Federation, Tajikistan, Ukraine and Uzbekistan. In Sub-Saharan Africa: Botswana, practices. Doing Business in Egypt 2014 Burundi, the Central African Republic, the Comoros, the Democratic Republic of respondents both filled out written ques- Congo, the Republic of Congo, Côte d’Ivoire, Guinea, Kenya, Liberia, Malawi, Mali, tionnaires and provided references to the Nigeria, Sierra Leone, Togo and Zambia. And in Latin America: Chile, Costa Rica, relevant laws, regulations and fee sched- the Dominican Republic, Guatemala, Mexico, Panama and Peru. ules, which were collected and analyzed by the Subnational Doing Business team. Since 2003 governments have reported more than 530 regulatory reforms that have been informed by Doing Business.a Within a single country or region, Subna- tional Doing Business reports have motivated over 350 reforms in 142 cities across Central and local level 17 economies. Many economies share knowledge on the regulatory reform process governments related to the areas measured by Doing Business. Among the most common venues for this knowledge sharing are peer-to-peer learning events—workshops where of- After the analysis of laws and regulations ficials from different governments across a region or even across the globe meet to and after conducting follow-up interviews discuss the challenges of regulatory reform and to share their experiences. In recent with Doing Business in Egypt 2014 respon- years such events have taken place in Panama and Colombia (for Latin America and dents, the Subnational Doing Business the Caribbean), in South Africa (for Sub-Saharan Africa), in Georgia (for Europe and team shared the preliminary findings of Central Asia), in Malaysia (for East Asia and the Pacific) and in Morocco (for the the report with governments and public Middle East and North Africa). agencies operating both at the central and local level. Through this process gov- a. These are reforms for which Doing Business is aware that information provided by the Doing Business ernment authorities had the opportunity report was used in shaping the reform agenda. to comment on the preliminary data, both through meetings with World Bank Group Doing Business in Egypt 2014 questionnaires related to trading across staff and in writing. respondents borders and construction permits. In Doing Business in Egypt 2014 draws on the some cases, public officials (such as mu- Improvements to the methodology nicipal officers working on the issuance of inputs of over 100 private sector profes- The methodology has undergone con- building permits) also provided populated sionals in 15 Egyptian cities and 5 ports. tinual improvement over the years. For surveys that were incorporated into the The Subnational Doing Business website enforcing contracts, for example, the indicators. and the acknowledgment section of this amount of the disputed claim in the case report list the names and credentials of study was increased from 50% of in- Doing Business does not survey firms for respondents for each city. Respondents come per capita to 200% after the first 2 main reasons. The first relates to the are professionals who routinely admin- year of data collection, as it became clear ister or advise on the legal and regula- frequency with which firms engage in the that smaller claims were unlikely to go to tory requirements covered in each Doing transactions captured by the indicators, court. Another change related to starting Business topic measured in this report. which is generally low. For example, a firm a business. The minimum capital require- They were selected on the basis of their goes through the start-up process once ment can be an obstacle for potential expertise in the specific areas covered by in its existence, while an incorporation entrepreneurs. Doing Business measured Doing Business in Egypt 2014. Because of lawyer may carry out several dozen such the required minimum capital regardless the focus on legal and regulatory arrange- transactions in a year. The incorporation of whether it had to be paid up front or ments, most of the respondents were le- lawyers and other experts providing in- not. In many economies only part of the gal professionals, such as incorporation formation to Doing Business are there- minimum capital has to be paid up front. or litigation lawyers. Freight forwarders, fore better able to assess the process of To reflect the relevant barrier to entry, the custom brokers, architects, engineers starting a business than are individual paid-in minimum capital has been used and other professionals answered the firms. The second reason is that the Doing rather than the required minimum capital. ABOUT DOING BUSINESS AND DOING BUSINESS IN EGYPT 2014 15

This year’s report includes an update in (2008); Djankov, Freund and Pham (2010); components accounting for 64% of the indi- the methodology for the trading across Djankov and others (2003); Djankov, Hart cators captured in the index. By contrast, the borders indicator. Documents that are re- and others (2008); Botero and others Doing Business indicators are based entirely (2004); and Djankov, Ganser and others on primary data. quired purely for purposes of preferential (2010). 14. Hallward-Driemeier, Khun-Jush and Pritchett treatment are no longer included in the 5. For more details on how the aggregate (2010), analyzing data from World Bank list of documents (for example, a certifi- ranking is created, see Doing Business 2014: Enterprise Surveys for Sub-Saharan Africa, cate of origin if the use is only to qualify Understanding Regulations for Small and show that de jure measures such as Doing for a preferential tariff rate under trade Medium-Size Enterprises. Business indicators are virtually uncorrelated agreements). 6. Questionnaires are administered annually to with ex post firm-level responses, providing local experts in 189 economies to collect and evidence that deals rather than rules prevail In addition, the rule establishing that each update the data. The local experts for each in Africa. The authors find that the gap procedure must take at least 1 day was economy are listed on the Doing Business between de jure and de facto conditions removed for procedures that can be fully website (http://www.doingbusiness.org) grows with the formal regulatory burden. and in the acknowledgments at the end of The evidence also shows that more burden- completed online in just a few hours. this report. some processes open up more space for 7. De Soto 2000. making deals and that firms may not incur When the indicators were first developed 8. Kaplan, Piedra and Seira 2007; Cuñat and the official costs of compliance but still pay in 2002, online procedures were not Melitz 2007; Micco and Pagés 2006; Card- to avoid them. widespread globally. In the ensuing years enas and Rozo 2009; Dulleck, Frijters and 15. One recent study using Doing Business there has been an impressive acceleration Winter-Ebmer 2006; Ciccone and Papaio- indicators illustrates the difficulties in using in the adoption by governments and the annou 2007; Klapper, Lewin and Quesada highly disaggregated indicators to identify private sector of the latest information Delgado 2009; Branstetter and others 2010; reform priorities (Kraay and Tawara 2013). and communication technologies for the Bruhn 2011, 2012; Sharma 2009. 16. For getting electricity the rule that each provision of various services. While at the 9. Schneider 2005; La Porta and Shleifer 2008. procedure must take a minimum of 1 day 10. http://www.enterprisesurveys.org. still applies because in practice there are no time Doing Business did not see the need 11. OECD, “Indicators of Product Market Regu- cases in which procedures can be fully com- to create a separate rule to account for lation,” http://www.oecd.org/. The measures pleted online in less than a day. For example, online procedures, the widespread use are aggregated into 3 broad families that even though in some cases it is possible to of the new technologies today suggests capture state control, barriers to entrepre- apply for an electricity connection online, ad- that such distinction is now justified and neurship and barriers to international trade ditional requirements mean that the process the Doing Business methodology was and investment. The 39 countries included cannot be completed in less than 1 day. changed this year to reflect the practice. in the OECD market regulation indicators are This change affects the time indicator Australia, Austria, Belgium, Brazil, Canada, for starting a business, dealing with con- Chile, China, the Czech Republic, Denmark, struction permits, getting electricity and Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Israel, registering property16. For procedures that Italy, Japan, Korea, Luxembourg, Mexico, can be fully completed online, the dura- the Netherlands, New Zealand, Norway, tion is now set at half a day rather than Poland, Portugal, Russia, the Slovak Republic, a full day. Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. 12. The World Economic Forum’s Global Compet- NOTES itiveness Report uses Doing Business data sets on starting a business, employing workers, 1. World Bank 2005; Stampini and others 2011. protecting investors and getting credit (legal 2. See, for example, Alesina and others (2005); rights), representing 7 of a total of 113 differ- Perotti and Volpin (2005); Fisman and Sar- ent indicators (or 6.19%). ria-Allende (2010); Antunes and Cavalcanti 13. The World Economic Forum constructs (2007); Barseghyan (2008); Klapper, Lewin much of the Global Competitiveness Index and Quesada Delgado (2009); Freund and mainly from secondary data. For example, Bolaky (2008); Chang, Kaltani and Loayza it uses macroeconomic data from the Inter- (2009); Helpman, Melitz and Rubinstein national Monetary Fund’s World Economic (2008); Klapper, Laeven and Rajan (2006); Outlook database, penetration rates for World Bank (2005); and Ardagna and various technologies from the Interna- Lusardi (2010). tional Telecommunication Union, school 3. Djankov, Simeon, Rafael La Porta, Florencio enrollment rates and public health indicators López-de-Silanes and Andrei Shleifer. 2001. from the World Bank’s World Development “Legal Structure and Judicial Efficiency: The Indicators database and indicators from Lex Mundi Project.” Harvard University, other such sources, including Doing Business. Cambridge, MA. It also supplements the secondary data by 4. These papers include Djankov and others some primary data, collected from relatively (2002); Djankov, McLiesh and Shleifer small-sample opinion surveys of enterprise (2007); Djankov, La Porta and others managers (Executive Opinion Surveys), for Starting a business

Rising unemployment is at the fore- Small and medium-size enterprises are front of Egypt’s economic and social the backbone of the Egyptian economy.6 challenges. Overall unemployment now A recent Central Bank census found that stands at 13% and the rates for youth more than 50% of small and medium-size and women are almost twice that.1 In a firms are concentrated in just 5 gover- scenario where two-thirds of the popu- norates in the north of the country, while lation is younger than 30, the pressure all the southern governorates combined 7 to create good-quality formal jobs and account for less than 20% (figure 3.1). support formal businesses is rising fast. Regulatory reforms in the area of business start-up can contribute to a larger Yet unemployment statistics only tell jobs agenda. A growing body of empirical part of the story because they ignore research is exploring the links between the informal sector, which is estimated business-entry regulation and social and to be 30-40% of GDP.2 Workers in the economic outcomes. Using data collected informal sector cannot claim pension from company registries in 100 econo- benefits or protections provided by the mies over 8 years, a recent study found law. Informal businesses do not have that simple business start-up is critical access to services and institutions (such for fostering formal entrepreneurship.8 as courts, bank credit and markets) that Conversely, cumbersome regulations and can aid them in both expansion and in- administrative procedures for starting novation. Moreover, government cannot a business were found to be associated collect much-needed revenue through with a smaller number of registered firms, taxation. greater informality, a smaller tax base and more opportunities for corruption. A high level of informality also makes the playing field more uneven. Enter- Although business start-up reforms can prise survey data from Egypt show help, they are not likely to lead to a sus- that 61.7% of 1,530 formal firms sur- tained increase in formalization unless veyed identified practices of informal they fundamentally alter the cost-benefit competitors as a major constraint to calculation of formalization. Business en- doing business.3 On the other end of try reforms have a greater impact when the spectrum, a recent survey of infor- combined with other reforms tackling is- mal employers and employees in the sues such as labor market flexibility, taxation and access to finance. For example, low-income neighborhood of Manshi- a 2008 study found that following entry yet Nasser found that 29% of employ- reforms, Indian states with more flexible ers felt that complex and costly gov- labor regulations had real output gains ernment processes were a deterrent to 17.8% larger than those in states with 4 formalization. Half of the informal em- less flexible labor regulations.9 Limited ployers surveyed said that the govern- access to finance is another factor that ment would need to act more transpar- can hinder formalization. Research sug- ently and simplify the regulatory and gests that improving legal and financial administrative process for registration institutions helps all firms grow and has to incentivize them to formalize their an even greater impact on small and me- businesses.5 dium-size firms.10 STARTING A BUSINESS 17

FIGURE 3.1 More than half of small and medium-size enterprises (SMEs) are concentrated in 5 northern governorates

SHARE OF LOCATION SMEs (%) DAMIETTA SHARQIA 16.0 PORT CAIRO 15.0 KAFR EL SHEIKH SAID GHARBIA 9.2 NORTH DAKAHLIA ALEXANDRIA 6.1 CAIRO SINAI BEHEIRA GHARBIA MATROUH* ALEXANDRIA SHARQIA DAKAHLIA 6.1 SOUTH MINIA 6.0 SINAI MENOUFIA QALYUBIA ISMAILIA QALYUBIA 5.0 GIZA MINIA GIZA 4.7 GIZA CAIRO SUEZ ASSUIT 4.5 ASSUIT MATROUH 6TH OF OCTOBER HELWAN BEHEIRA 3.5 SOHAG MENOUFIA 3.3 QENA* 6TH OF OCTOBER 2.5 LUXOR* FAYOUM HELWAN 2.4 ISMAILIA 2.1 NEW VALLEY* RED SEA* BENI SUEF BENI SUEF 1.9 KAFR EL SHEIKH 1.8 ASWAN* FAYOUM 1.8 SOHAG 1.7 DAMIETTA 1.4 PORT SAID 1.3 * OTHER 3.7 Sources: Central Bank of Egypt; Egyptian Banking Institute, Small and Medium Enterprise Census data.

them more freedom to innovate because Whereas 15% of new companies regis- their personal assets are not put at risk. tered at the one-stop shop were limited WHY DOES STARTING A liability companies in 2005, they now BUSINESS MATTER? Evidence from Egypt suggests that mak- represent 33% nationwide. In Cairo lim- Formal incorporation has many benefits. ing business incorporation easier has ited liability companies have overtaken Legal entities outlive their founders. Re- helped increase the number of busi- sole proprietorships and joint stock com- sources are pooled as shareholders join nesses registered, including limited lia- panies as the most popular company type forces. The legal form under which a com- bility companies. In 2005 the General (figure 3.2). One reason for this shift is pany is registered also matters. Limited li- Authority for Investment and Free Zones the reduction and eventual elimination ability companies—the type of company (GAFI) registered 5,807 new companies. of the minimum capital requirement. In that Doing Business covers—cap the finan- In 2012 the number of new businesses 2007 the requirement was reduced from cial liability of company owners, giving registered rose to 7,832—a 35% increase. EGP50,000 (US$8,865; 694.7% of income per capita) to EGP1,000 (US$177.3; 12.9% of income per capita). In 2009 it FIGURE 3.2 Years of consecutive reforms have led to more company registrations with was eliminated altogether.11 limited liability companies making up a higher percentage of new companies

Percent of new companies registered that are LLCs 40 WHAT DOES STARTING A Cairo BUSINESS MEASURE? NATIONWIDE Doing Business records all procedures that 30 Alexandria are required to start up and formally operate an industrial or commercial small or medium-size business. These include 20 obtaining necessary licenses and permits Ismailia and filing required notifications, verifica- 10 tions and registrations for the company and its employees with the relevant au- Assuit thorities (figure 3.3). 0 2005 2006 2007 2008 2009 2010 2011 2012 To make the data comparable across 189 economies, Doing Business uses a hypo- Source: Doing Business database. thetical, standardized business that is 18 DOING BUSINESS IN EGYPT 2014

December 2004, and moved into perma- FIGURE 3.3 What are the time, cost, paid-in minimum capital and number of procedures nent headquarters in January 2005. The to get a local limited liability company up and running? one-stop shops in Alexandria, Assuit and Ismailia followed later that year.18 GAFI Cost (% of income per capita) added a fifth one-stop shop in Tenth of Formal Ramadan City in 2013 to primarily serve operation the Sharqia governorate.19 Currently, the one-stop shop in Cairo is the central hub Paid-in that serves the entire country (including $ Number of minimum procedures Dakahlia, Damietta, Fayoum, Giza, Ghar- capital bia and Sharqia), and therefore has the highest volume of registrations. Like in Cairo, the one-stop shop in Alexandria has its own building that services inves- Entrepreneur Time tors in the city and the northern coastal Preregistration Registration, Postregistration (days) governorates. Meanwhile, the one-stop incorporation shop in Assuit occupies a single floor in the governorate building and covers the 100% domestically owned, has a start-up set out by Law 8 of 1997; the Companies southern governorates (including Aswan, capital equivalent to 10 times income per Authority continued to service all other Sohag and the New Valley). Finally, Is- capita, engages in general industrial or companies. And finally, GAFI neither had mailia deals with the canal governorates commercial activities and employs be- the “know-how” to manage the 349 in- (Port Said and Suez). tween 10 and 50 nationals. vestor-related services under its domain nor the authority over the 78 government With guidance from an inter-ministe- agencies and 22 ministries involved in the rial committee, GAFI took leadership of various investment-related processes.16 the start-up reform efforts in Egypt. It HOW DOES STARTING A streamlined procedures, cut costs, elim- BUSINESS WORK IN EGYPT? This all changed when Law 14 of 2004 inated the minimum capital requirement In the late 1990s labyrinthine bureau- effectively replaced the maze of busi- and re-organized the one-stop shops cracies, corruption and mismanagement ness registration regulations with a sin- several times to make the process of were the hallmark of business registra- gle system and agency. GAFI became incorporation faster, cheaper and eas- tion and licensing across the country.12 the one government agency with the ier. Reforms included integrating more The first steps towards change came mandate to regulate companies set up agencies, such as the tax authority, into from the bustling Nile Delta governorate under both Law 159 of 1981 and Law 8 of the one-stop shop; introducing a flat fee of Dakahlia. 1997.17 This law gave GAFI the mandate structure; and eliminating the bar asso- to undertake the serious work of stream- ciation fees. Spurred by repeated complaints from lining processes, thereby changing the the business community, the Governor way government and the private sector In 2004, registering a business in Cairo of Dakahlia helped launch the first li- did business. took 13 procedures and 37 days and cost censing one-stop shop in Mansoura in 65.6% of income per capita. In addition, 1999.13 Although this one-stop shop suf- Between 2004 and 2005, GAFI began entrepreneurs were subject to a minimum fered many setbacks, it signaled a critical setting up one-stop shops in Cairo, Al- capital requirement equivalent to 855.4% re-orientation of government agencies exandria, Assuit and Ismailia. The Cairo of income per capita—one of the highest towards a more streamlined customer- one-stop shops began operating in late in the world. Today, to set up a business service approach to promoting private sector investment.14 A few years later, FIGURE 3.4 The GAFI one-stop shop in Cairo—designed for smooth progression between this targeted local solution was elevated floors and agencies to the national level when Presidential GAFI ONE-STOP SHOP Decree 79/2002 established a one-stop shop under GAFI to provide “all invest- Commercial Social Investment tax 7 2nd floor ment related services.” registry office insurance 2 6 This first iteration of the GAFI one-stop Investor Investment Incorporation 1st floor shop faced several challenges. Leader- Investor services 4 notarization 5 department office ship and responsibility for GAFI and the 3 one-stop shop moved around between various ministries.15 In addition, GAFI had Bank branch Lower level the authority to service only those companies applying for investment incentives Source: Doing Business database. STARTING A BUSINESS 19

in Cairo, there is no minimum capital re- Once the fees are paid, the Investment TABLE 3.1 The ease of starting a business quirement, there are 7 procedures requir- Notarization office notarizes the docu- across 15 Egyptian locations ing 8 days to complete, and it costs the ments. After their review, the Incorpora- RANK City RANK City tion Department issues the Notification equivalent of 9.7% of income per capita. 1 Alexandria 8 Tanta The one-stop shop in Cairo is designed to of Incorporation within 24 hours. The 1 Cairo 8 Zagazig enable a smooth progression from floor to company assumes legal responsibility floor and between agencies (figure 3.4). and judicial “personality” from the date 1 Giza 10 Damietta However, because much of the system of registration. However, prior to becom- 4 Assuit 10 Suez is still manual, the investor continues to ing fully operational, the company must 4 Ismailia 12 Port Said shuttle back and forth between the vari- obtain a tax ID from the Investment Tax 6 Fayoum 12 Sohag ous departments and agencies. office located in the one-stop shop. Fi- 6 Mansoura 14 Kharga nally, the company representative regis- 15 Aswan In all one-stop shops, the first point of ters all employees with the National Au- Note: Rankings are based on the average city percentile contact is the Incorporation Department, thority for Social Insurance (NASI). The rankings on the procedures, time, cost and paid-in minimum which checks the legality of the proposed one-stop shops in Cairo and Alexandria capital to start a business. See Data notes for details. Source: Doing Business database. company name. Once cleared, the entre- include a NASI office. Investors in other preneur goes to the Commercial Regis- governorates have to visit the local NASI try office to pay the fees and reserve the office to register their employees, which Registry office in the one-stop shop to company name. This procedure can be sometimes results in longer delays. In register the Notification of Incorporation almost all cities registering employees done on the spot in Cairo, but the other and pay the commercial registry fee. one-stop shops do not have direct access takes 2 days. However, in Tanta, Port Said and Zagazig, the process takes an aver- to the central database. They must send GAFI recently launched an e-registra- age of 3 days. a fax to the central Commercial Registry tion system to complete part of the reg- office in Cairo and wait several hours to Unlike in Cairo and Alexandria, the one- istration process online, but the system receive a response. stop shops in Assuit and Ismailia do not has several inefficiencies. First, investors house a bank branch. Here investors pay must still visit the one-stop shop to re- The Internal Trade Development Au- the agencies directly. First, investors pay thority’s Administrative Decree 25 of serve the company name and obtain a the fees to reserve the company name 2013 introduced a new fee of EGP25 bank certificate, because neither of these at the Commercial Registry. Then they (US$3.57) to reserve a company name processes is online. Second, registration pay the registration fees, commercial (known as the certificate of “non-con- fees cannot be paid online and processed syndicate fees, gazette publication fees, fusion”). Prior to the introduction of this on the same day because the e-signature chamber of commerce fees and operation decree, there was no fee and the name laws are underdeveloped. Third, the sys- certificate fees at the Incorporation De- reservation was handled as part of the partment. Third, investors pay the notari- tem does not allow users to register for company incorporation process. The ad- zation fees to the Investment Notarization taxes or social insurance. As a result of dition of this fee effectively resulted in office. Fourth, investors must complete these hindrances, the e-registration sys- an additional procedure because now a an extra procedure at the Commercial tem is not widely used.21 separate payment has to be made to the Commercial Registry. FIGURE 3.5 Starting a business across Egyptian cities—as fast as OECD High Income After reserving the company name, the economies investor obtains a bank certificate and 19.9 MENA* opens a bank account.20 Then the entrepreneur submits all required documents to the Department of Companies and obtains an invoice to pay the accrued fees at the bank. In Cairo and Alexandria there ASWAN, KHARGA 11.1 OECD High Income Range PORT SAID 11 11 TUNISIA is a bank branch located within the one- in 10 10 IRELAND Egypt ALEXANDRIA, stop shop premises. In accordance with CAIRO, GIZA 8 8 UNITED ARAB EMIRATES international good practice, investors in 6 TURKEY these two cities can make one lump-sum payment covering all the fees associated 2.5 SINGAPORE with registration and notarization directly 0.5 NEW ZEALAND at the bank branch. This minimizes the (TOP PERFORMER) opportunities for informal payments or Time (days) gifts and allows GAFI to have better over- Source: Doing Business database. sight of the funds it receives. 20 DOING BUSINESS IN EGYPT 2014

The reforms initiated in the one-stop in cities that do not have a one-stop shop. Almost half of the economies measured shop in Cairo spread to the other one- Entrepreneurs have to factor in the cost by Doing Business do not require the in- stop shops in Alexandria, Assuit and Is- of transportation to the nearest city with volvement of a notary to incorporate a mailia with positive results. Today, the a one-stop shop. Because public trans- limited liability company. With online governorates of Alexandria, Cairo and portation by bus or train is relatively registration and digital signature, the Giza have the best combination of low cheap, the cost difference between cities need to verify personal identification professional costs and fast response is small.22 In practice, however, costs and becomes obsolete. Singapore’s registrar, times (table 3.1). delays add up—especially if an entre- for example, simply assumes that busi- preneur must make multiple trips to the nesses do not aim to go through fraud- In the 15 Egyptian cities benchmarked, one-stop shop because of bureaucratic ulent registration. In the few cases where starting a business requires 7 or 8 pro- hurdles such as missing documentation. people are listed as company founders cedures that take from 8 to 11 days (fig- without their consent, the registry of- ure 3.5). The distance from a city to the fice uses post-registration verification nearest one-stop shop and the time to and informs them that a company has register employees with social security WHAT TO REFORM? been created with their names listed as are the main sources of variation across a founder. In this way registry officials cities. For example, because traveling Enable on-the-spot name focus their time and attention on the mi- from Aswan to Assuit by train takes up reservation nority of fraudulent cases instead of veri- to 8 hours, entrepreneurs from Aswan fying every application. must factor in 2 additional days of travel According to a 2011 World Bank survey of 34 company registries around the world time for a roundtrip. As a result, it takes The cost of starting a business would drop that implemented technology solutions entrepreneurs in Aswan a total of 11 days if standardized articles of association (26 in low or middle income countries to register their businesses, whereas in were sufficiently flexible to accommodate Assuit it takes only 9 days. In addition to and 8 in high income economies), nearly the majority of simple businesses, thus the time it takes to travel to the nearest all systems allowed for online name allowing entrepreneurs to draft and file one-stop shop, 3 cities have additional search and back-office processing of reg- deeds of incorporation directly. delays resulting from the registration with istration applications.23 the local NASI office. In Tanta, Zagazig and Port Said, entrepreneurs must factor Efforts to link and automate the Com- Review whether certain in 3 rather than 2 days to complete this mercial Registry to enable instantaneous requirements are necessary for process. name reservation across the country have small and medium-size businesses been ongoing for several years, albeit or consider lowering the Starting a business is relatively expensive without success. Currently, a representa- associated fees in Egypt. Costs across locations are more tive at the local one-stop shop provision- Currently an entrepreneur setting up a than twice the OECD High Income aver- ally reserves a name, but needs to send a small or medium-size company in Egypt age and more than 30 times higher than fax to the head office in Cairo for approval. must comply with certain requirements global top-performers like Ireland, New Connecting the one-stop shops via unified no longer mandatory in other countries. Zealand and South Africa. The administra- and automated commercial registry would These include, for example, the registra- tive costs to start a business are the same improve legal certainty, while speeding up tion of the company with the commercial across the country. Investors in all cities the process of reserving a company name. syndicate, the publication of a notice of must pay EGP25 (US$4) to reserve the The next step then would be to allow in- company creation in the official gazette company name; approximately EGP400 vestors to reserve the company name di- and the registration of the firm with the (US$63) to obtain a bank certificate and rectly on the GAFI online portal without chamber of commerce. All together, re- open a bank account; EGP473 (US$75) having to pay a personal visit to the near- moving these requirements would save to notarize the articles of association and est one-stop shop. investors almost EGP600 (US$95.20) other documents; EGP189 (US$30) to and reduce the total cost from an average register the company with GAFI; EGP125 of 9.8% of income per capita to approxi- (US$20) to register with the commercial Merge notarization with the mately 6.5%. syndicate, EGP150 (US$24) to publish registration process or make notaries notice of the company registration in optional for simple start-ups the official gazette; EGP378 (US$60) to Set up new one-stop shops in register with the Chamber of Commerce; After submitting the company docu- other cities EGP56 (US$9) to register the Certificate ments to the Department of Companies, The experience of establishing one- of Incorporation with the Commercial investors must pay a separate visit to the stop shops has shown that the author- Registry and EGP29 (US$5) to obtain an Investment Notarization Office to nota- ity to process business registration can Operation Certificate. rize the articles of association and other be successfully delegated to gover- documents as needed. Instead GAFI norates outside Cairo. Now the ques- However, there are logistical costs that could consider having documents nota- tion arises whether Egypt should follow make starting a business more expensive rized at the moment of submitting them. STARTING A BUSINESS 21 the examples of other countries such as Implementing an e-registration system paid-up capital shall not be less than 50.000 Mexico and Colombia and open one- would require the amendment of existing L.E. and shall not exceed 1 Million. L.E. and in stop shops in additional locations. In legislation and/or enactment of new laws which the number of employees shall not be Colombia, for example, the first one-stop to allow for secure same-day processing more than 50 employees.” The full text can be found at http://www. shops for business registration (known as of e-payments. The Electronic Signatures sfdegypt.org/law.asp CAEs) were opened in 2001. Currently, Law 15 of 2004 introduced the concepts 7. El-Said, Hala, Mahmoud Al-Said, Mahmoud CAEs operate across Colombia. After the of electronic transactions, electronic and Chahir Zaki, Chahir. 2012. “Small and introduction of CAEs in 6 cities, new firm documents and digital signatures. Under Medium Enterprises in Egypt: New Facts registration increased by 5.2% over the the law, a secure electronic signature at- from a New Dataset”, The Egyptian Banking projected historic trend.24 tached to an electronic document may Institute, available on http://www.sme- comply with statutory signature, writing, egypt.org/Pages/smedb.aspx Building and operating one-stop shops is and evidentiary admissibility require- 8. Klapper, Leora, Anat Lewin and Juan Manuel expensive.25 GAFI planned to open one- ments. While the law is an important step Quesada Delgado. 2009. The Impact of the stop shops in the governorates of Da- forward, it does not address the security Business Environment on the Business Creation Process.Policy Research Working Paper4937. kahlia and Sixth of October but desisted of e-payment systems. Developing better Washington, DC: World Bank Group. due to budgetary constraints. On the e-signature and e-payment capabilities is 9. Aghion, Philippe, Robin Burgess, Stephen J. other hand, setting up one-stop shops in one of the strategic pillars of the National Redding and Fabrizio Zilibotti. 2008. “The more governorates could help further the Information and Communications Tech- Unequal Effects of Liberalization: Evidence decentralization of government services nology Strategy for 2012-2017 and GAFI from Dismantling the License Raj in India.” over the medium term. could use this national objective to propel American Economic Review 98 (4): 1397–412. this reform forward. 10. Beck, Thorsten and Asli Demirguc-Kunt. 2006. “Small and Medium-Size Enterprises: Automate one-stop shops and Access to Finance as a Growth Constraint.” improve the existing e-registration Journal of Banking & Finance 30 (2006) system NOTES 2931–43. 11. World Bank. 2007. Doing Business 2008. GAFI could increasingly apply information 1. Central Authority for Public Mobilization and Washington, DC: World Bank Group. and communication solutions to mini- Statistics. 2013. “First Quarter 2013 Report.” 12. Fahmy, Salama and James Brown. 2006. mize the number of physical interactions http://www.capmas.gov.eg/pdf/elctronicnews/ One-Stop Shop: A Case Study. Washington, between entrepreneurs and the various april2013.pdf. DC: World Bank, Private Sector Develop- offices in the one-stop shop. One way to 2. Estimates vary depending on the methods ment Forum. http://rru.worldbank.org/ do this is to introduce an automated work- used for calculations. See: Abd El-Fattah, Documents/PSDForum/2006/background/ flow management system to enhance the Mohamed. 2012. A survey-based Exploration oss_case_study.pdf. This case study de- communication channels between the of Satisfaction and Profitability in Egypt’s In- scribes the licensing situation in the late 90s formal Sector, Egyptian Center for Economic as follows: “Companies wanting to obtain various offices within the one-stop shop Studies, Working Paper 169; Schneider, a business license in Egypt can expect to system and encourage speedier process- Friedrich and Andreas Buehn. 2009. Cor- wait up to one year while wading through a ing and transmission of documents. ruption and the Shadow Economy: A Structural mountain of paperwork. Entire files are often Equation Model Approach, Institute for the lost and companies have to make special Another approach involves enhancing Study of Labor (IZA) Discussion Paper 4182; arrangements including under the table the e-registration system so that most Schneider, Friedrich and Robert Klinglmair. payments of up to EGP5,000 to obtain a procedures can be completed online. To- 2004. Shadow Economies Around the World: license.” day 110 economies use information and What Do We Know?, Center for Research 13. Ibid. communication technology for services in Economics Management and the Arts, 14. Ibid. ranging from name search to full online Department of Economics, Johannes Kepler 15. Sometimes GAFI and the one-stop shops University, Working Paper 0403. reported to the prime minister or the presi- business registration. More than 40 offer 3. World Bank Group. 2008. Enterprise Survey. dency and at other times to the Ministry of electronic registration services.26 In line http://www.enterprisesurveys.org/Data/Ex- Economy. In 2004 the Ministry of Economy with these global trends, Egyptian entre- ploreEconomies/2008/egypt#informality was eliminated and a new Ministry of Invest- preneurs could save time and money by 4. Abd El-Fattah, Mohamed. 2012. A sur- ment took over a broader range of functions completing pre- and post-incorporation vey-based Exploration of Satisfaction and that included GAFI and the one-stop shops. procedures online without personally Profitability in Egypt’s Informal Sector, Egyp- 16. Stone, Andrew. 2006. “Establishing a visiting the one-stop shop to obtain doc- tian Center for Economic Studies, Working Successful One Stop Shop: The case of uments or pay fees. An online registration Paper 169. Egypt.” Paper presented at IMF/AMF High- system might also result in cost-savings 5. Ibid. Level Seminar on Institutions and Economic for government. After Slovenia intro- 6. The definition of an SME in Egypt according Growth in the Arab Countries, Abu Dhabi to the Law on Development of Small Enter- (December 19–20, 2006). duced its e-Vem automated system, prises is as follows: “Article I: In the context 17. Ibid. Law 159 of 1981 is the non-incentive administrative costs fell by 71.3%. The of application of the provisions hereof, by company law. Law 8 of 1997 is intended to savings amount to €10.2 million a year, a small enterprise shall be meant every encourage domestic and foreign invest- according to Slovenia’s Ministry of Public company or sole proprietorship practicing an ment in targeted economic sectors and to Administration.27 economic activity, whether productive, ser- promote decentralization of industry from vice-rendering or commercial in which the the Nile Valley area. The law, together with 22 DOING BUSINESS IN EGYPT 2014

its executive regulations and amendments, provides over 20 investment incentives. Companies (foreign or domestic) established under this law benefit from tax holidays, reduced custom duties, guarantees against expropriation and sequestration, and guarantees regarding foreign exchange and repatriation of capital and profit. It also regulates the regime of the Free Zones (public and private). 18. Ibid. 19. The one-stop shop in Tenth of Ramadan registered its first company on April 7, 2013. As of June 19, 2013, the one-stop shop had registered 51 new companies. Fahmy, Has- san. Personal interview with Dana Omran. Cairo, June 20, 2013. 20. Although this procedure can be completed at any authorized bank, investors in Cairo will likely use the Bank of Alexandria branch that is located in the one-stop shop. 21. Doing Business does not consider the e-registration system for starting a business in its calculations because of low usage rates. 22. Most entrepreneurs would take a car to the city where they will register their business. For the sake of comparability, however, Doing Business considers the cost of a round trip train or bus ticket as part of the travel costs to and from the one-stop shop. 23. Wille, John, Karim Ouled Belayachi, Numa De Magalhaes and Frederic Meunier. 2011. “Leveraging Technology to Support Business Registration Reform,” Investment Climate In Practice, Note 17, Investment Climate Advisory Services. Washington, DC: World Bank Group. 24. Cardenas, Mauricio and Sandra Rozo. 2007. “La informalidad empresarial y sus consecuencias: ¿Son los CAE una solución?,” Working Paper 38. Bogota, Colombia: Fedesarrollo. 25. According to estimates by GAFI chairman, Hassan Fahmy, building costs are approximately EGP50,000,000 (US$7,933,703) and operating costs approximately EGP100,000 (US$15,867). Fahmy, Hassan. Personal interview with Dana Omran. Cairo, June 20, 2013. 26. World Bank. 2013. Doing Business 2014: Understanding Regulations for Small and Medi- um-Size Enterprises. Washington, DC: World Bank Group. 27. World Bank. 2011. Doing Business 2012: Doing Business in a More Transparent World. Wash- ington, DC: World Bank Group. Dealing with construction permits

The world’s population is expected to and discretionary building procedures are reach 9 billion in 2050. The construction associated with higher levels of informal- industry, which already provides 112 mil- ity.5 In developing countries, informality lion jobs, is forecasted to increase by 70% in construction ranges between 60 and to US$12 trillion by 2020.1 In Egypt, the 80%.6 Not only does this mean a loss of events of the past 2 years have negatively revenues for governments, but it jeopar- impacted the growth of the construction dizes the safety of the public and con- sector. However, given that Egypt’s pop- strains the use of real estate as collateral ulation has grown at an average rate of for access to finance. 1.7% over the last 8 years,2 the construction sector should eventually pick up to Research shows that construction permit- accommodate the increasing demand for ting is a regulatory area particularly prone urban development. Building and plan- to corruption.7 Where the construction ning authorities will need to make com- permitting process is less cumbersome, plex decisions to ensure that urban areas the level of corruption drops (figure 4.1). expand in accordance with construction Small and medium-size businesses with and safety regulations. no power or influence are more vulner- able. In Algeria, 57% of firms consider On January 16, 2013, an 8-floor build- that regulations are skewed in favor of ing collapsed in Alexandria, causing 28 the interests of elite and incumbent firms. deaths.3 Authorities reported that the This rate is 60% in Morocco and 66% in property had been built 5 years before, Lebanon.8 In Egypt, 85% of firms identify without a legal building permit. Only a corruption as a serious problem.9 few days later a building in Cairo caved in, killing 3 people. Episodes like these FIGURE 4.1 Less cumbersome have become more frequent all over the requirements in dealing with country. Reducing such occurrences construction permits are will require both efficient regulation and associated with lower levels of proper enforcement. Denmark, Georgia, corruption New Zealand and Thailand are examples Share of firms that expect to give gifts in exchange of countries that manage to regulate the for construction permits (%) construction permitting process with rel- 30 atively few requirements, yet their regulations are considered prudent and buildings safe.4 20

WHY DOES DEALING WITH 0 CONSTRUCTION PERMITS Least Most MATTER? difficult difficult Economies ranked by ease of dealing It is not easy to find the right balance be- with construction permits, quintiles tween safety and efficiency in construc- Note: Relationships are significant at the 1% level and tion regulations. They need to be both remain significant when controlling for income per capita. clear and adaptable to economic and Source: Doing Business database; World Bank Enterprise Survey database. technological change. Complex, costly 24 DOING BUSINESS IN EGYPT 2014

Doing Business on the ease of dealing with FIGURE 4.2 What are the time, cost and number of procedures to comply with formalities construction permits—ahead of Morocco to build a warehouse? (83) and Tunisia (122), but behind Saudi Arabia (17). Egypt, as currently repre- Cost (% of income per capita) sented by Cairo, ranks 149.

Completed The Unified Building Law (Law 119 of warehouse 2008) and its Executive Regulations (2009) comprise the regulatory and legal Number of procedures framework of the construction-permitting process across Egypt. Typically, the process includes obtaining the Site Va- A business in the lidity Certificate and the building permit construction from the municipal authority, obtaining industry Time the “Execution Supervision Certificate” Preconstruction Construction Postconstruction and utilities (days) from the Syndicate of Engineers stating that the supervising engineer is licensed, informing the municipal authority of the Reforms making it easier to deal with of income per capita (EGP20,683). This start of construction works, passing in- construction permits help the growth of is significantly cheaper than the aver- spections during construction, submitting the construction industry. Consequently, age of the Middle East and North Af- the Construction Conformity Certificate more construction workers are employed, rica (283.3% of income per capita), but and passing the final inspection, regis- construction-related materials and ser- slightly slower and more burdensome tering the building with the Real Estate vices are purchased from local suppliers, (figure 4.3). In Hong Kong SAR, China, Registry, and connecting the building to and local jobs are created. For every 10 the best-performing economy in the Do- utilities (figure 4.4). jobs directly related to a construction ing Business 2014 global ranking, dealing project, 8 other jobs may be created in with construction permits requires just There are significant local differences the local economy.10 6 procedures that last 71 days and cost in the implementation of construction 15.4% of income per capita. regulations across Egyptian cities. The number of procedures varies from 13 It is easier to comply with the formali- in Suez to 23 in Fayoum (figure 4.5). In WHAT DOES DEALING WITH ties to build a warehouse and connect Assuit, Damietta, Giza, Ismailia, Suez CONSTRUCTION PERMITS it to utilities in Suez, Mansoura and Is- and Tanta, for example, the Site Validity MEASURE? mailia and more difficult in Alexandria Certificate is the only approval required Doing Business records the procedures, and Aswan (table 4.1). Suez, Egypt’s best before applying for the construction per- time and cost required for a small to performing city, requires 13 procedures, mit. In Alexandria and Aswan, where the medium-size business to obtain all the 144 days, and 58.9% of income per ca- process is most burdensome, a developer necessary approvals to build a simple pita. Compared globally, Suez would rank must first obtain separate clearances commercial warehouse and connect it 62 among 189 economies measured by from the Civil Aviation Authority, the to water, sewerage and a fixed telephone line (figure 4.2). The case study includes FIGURE 4.3 Dealing with construction permits in Egypt compared globally all types of inspections and certificates needed before, during and after construc- FAYOUM 23 283.3 MENA* ALEXANDRIA 220 tion of the warehouse. To make the data 255.6 TUNISIA Range comparable across 189 economies, the in 15-city 19 TUNISIA ASWAN 222.3 average 18 218.2 MOROCCO case study assumes that the warehouse Egypt 16 MENA* 163.5 191.3 KENYA is located in the periurban area of the 15 MOROCCO 145.7 MENA* largest business city, is not in a special SUEZ 13 125 KENYA 12 SAUDI 102 SAUDI ARABIA economic or industrial zone and will be ARABIA ISMALIA 109 97 MOROCCO 9 GEORGIA, 94 TUNISIA 109.4 used for general storage activities. KENYA 73.5 GEORGIA 71 HONG KONG 6 HONG KONG SAR,CHINA SAR,CHINA SUEZ 58.9 24.5 SAUDI ARABIA 15.4 HONG KONG HOW DOES CONSTRUCTION SAR,CHINA PERMITTING WORK IN EGYPT? Procedures Time Cost 14.9 GEORGIA (number) (days) (% of income Across Egypt, dealing with construction per capita) permits requires on average 18 procedures that take 163.5 days at a cost of 109.4% *MENA is the Middle East and North Africa regional average. Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 25

TABLE 4.1 The ease of dealing with The 2008 Building Law does not set the According to the Building Law, the Syn- construction permits across 15 number of inspections during construc- dicate of Engineers must certify with a Egyptian locations tion. Their frequency remains under the stamp that the appointed engineer is duly RANK City RANK City discretion of municipal engineering de- licensed and not supervising too many 1 Suez 9 Sohag partments. Anecdotal evidence suggests projects. In Cairo, Fayoum, and Giza, the syndicate also approves the Construc- 2 Mansoura 10 Port Said these building inspections continue to be tion Conformity Certificate—a document 3 Ismailia 11 Giza a source of informal income for oversee- stating that the building has been con- 11 4 Kharga 12 Cairo ing officials. In Assuit, Aswan and Port structed in accordance with relevant reg- 5 Damietta 13 Fayoum Said, the building site is inspected at spe- ulations—before it can be submitted to 6 Tanta 14 Aswan cific critical stages of construction, such the municipal authority. 7 Assuit 15 Alexandria as after the building foundation and the The utility companies have to receive 7 Zagazig laying of each additional floor. However, in Cairo, Damietta, Giza and Ismailia as “utility letters” from the municipal author- Note: Rankings are based on the average city percentile rankings on the procedures, time, and cost to deal with many as 7 inspections are conducted for ity before they can provide utility connec- construction permits. See Data notes for details. the same type of building. The number of tions. These letters state that the build- Source: Doing Business database. ing is compliant with legal and technical inspections in these cities is determined requirements. In Assuit, Cairo, Damietta, by how long the construction takes (e.g. Giza, Kharga and Sohag, the letters are Electricity Company and the Agriculture one inspection per month) rather than by sent directly to utility companies by the Department. In addition, in Alexandria, a the critical construction stages. Across municipal authorities. Elsewhere, the ap- clearance from the Antiquities Authority Egypt buildings with a value higher than plicant has to obtain the letters from the and the Improvements Department is EGP1 million (US$158,730) must obtain municipal authority first and then personally submit them to the utility companies. mandatory, while in Aswan an additional a third-party review from the Egyptian Constructions Liability Insurance Pool The water and sewerage utilities are man- clearance from the Civil Defense and Fire (ECLIP). This mandatory requirement aged by a single entity in the majority of Fighting Authority is necessary before constitutes an additional charge and can the cities. But in Assuit, Ismailia, Port Said and Suez, applicants must deal with 2 submitting the building permit applica- take significant amounts of time. The end separate entities when applying for water tion to the municipal authority. Each one result is significant variability from city to and sewerage connections. of these requirements involves a personal city in both requirements and time (figure visit to the respective agency. 4.5 and figure 4.6). Dealing with construction permits is fastest in Ismailia (109 days), which is FIGURE 4.4 Main stages of the construction permitting process in Egypt significantly below the average of 145.7 days reported for the Middle East and Preconstruction procedures North Africa. In Alexandria, Assuit and Obtain Site Validity Certificate from the municipal authority Aswan it takes more than 3 months longer than in Ismailia (figure 4.6). Precon- struction clearances are the main cause Obtain building permit from the municipal authority of delay. Obtaining the project clearance from the Civil Aviation Authority takes Obtain approval of the Execution Supervision Certificate form the Syndicate of Engineers more than a month and a half in Alex- andria, Aswan and Kharga. In Aswan, it Inform the municipal authority before starting constructions takes more than 1 month to obtain project clearance from the Civil Defense and During construction procedures Fire Fighting Authority. Receive on-site inspections from the municipal authority The long wait for the preconstruction ap- Postconstruction procedures provals delays the release of building per- Submit Construction Conformity Certificate mits. Municipalities do not start counting the 30-day statutory limit to issue a building permit until all preconstruction ap- Receive final inspection from the municipal authority provals are obtained. Moreover, although the Building Law establishes a silence-is- Register the building with the Real Estate Registry consent rule—once the legal time limit of 30 days has expired, the permit is to be Obtain connection to utilities considered approved—this principle is not applied uniformly. In 8 of the surveyed Source: Doing Business database. cities building permits are issued within 26 DOING BUSINESS IN EGYPT 2014

issuing a formal clearance. In Ismailia and FIGURE 4.5 Preconstruction approvals and inspections during construction are the main Tanta the inspection is conducted within drivers of variation in the number of procedures 1 day, while in Cairo and Giza it can take as long as 15 days. Fayoum, Port Said and Suez 631313 Total number of procedures Suez are exceptions. The Civil Defense Mansoura 741214 and Fire Fighting Authorities are not involved in low-risk building projects. Assuit 633 3 15 Port Said 733316 A Construction Conformity Certificate Zagazig 1012 4 17 and a final on-site inspection are required Tanta 744217 in all cities, but the time to go through the process varies from only 4 days in Ismailia Sohag 734317 to 50 days in Port Said depending on the Kharga 834217 efficiency of the municipalities or the lo- Damietta 637218 cal branches of the Civil Defense and Fire Giza 647219 Fighting Authority. Finally, registering the property with the Real Estate Registry of Aswan 1032 4 19 the Ministry of Justice takes 2 months. Alexandria 1122 4 19 Obtaining a telephone connection varies Ismailia 647320 from 7 days in Fayoum and Suez to 20 Cairo 847221 days in Aswan. Water and sewerage connections take from 21 days in Fayoum to 2 Fayoum 1252 4 23 months in Cairo and Giza. Preconstruction Inspections Utility during connections construction Postconstruction Law 83 of 2006 on real estate tax intro- Source: Doing Business database. duced a flat fee of EGP2,000 (US$317) to register a property with the Real Estate Registry. This reform significantly cut total the statutory time limit (figure 4.7). Mu- for simple projects such as a warehouse. costs.13 As a result, in Egypt the permitting nicipal authorities in Ismailia and Kharga In 8 cities,12 the approval is a formal clear- process is relatively cheap compared to are particularly efficient, issuing building ance, which can take up to 3 weeks to other economies in the Middle East and permits well ahead of the legal limit in 21 be issued (as in Assuit). In 4 cities, the North Africa. However, there are con- and 25 days, respectively. In 7 cities the Civil Defense and Fire Fighting Authority siderable variations from city to city. In statutory time limit is not enforced and conducts an on-site inspection without Suez, Kharga and Ismailia dealing with the process takes from 40 (Port Said) to 60 days (Assuit and Aswan). FIGURE 4.6 Preconstruction approvals are a major source of delays The fluidity of communication between Time (days) municipal engineering departments and Ismailia 33 109 Total time (days) building permit applicants can also have Mansoura a significant impact on the permitting 38 120 process. For instance, tracking num- Damietta 38 123 bers help authorities organize applica- Tanta 47 129 tion records and respond to follow-up Suez 71 144 inquiries more quickly. Twelve of the 15 Giza 49 148 Egyptian cities either issue or include tracking numbers in their permit appli- Sohag 52 153 cation forms (figure 4.7). But only 5 cit- Fayoum 85 163 ies—Alexandria, Aswan, Cairo, Port Said Kharga 83 169 and Tanta—inform applicants once they Zagazig 79 170 reach a decision on a building permit request. In the other cities, applicants have Cairo 80 179 to personally interact with public officials Port Said 78 193 in order to find out whether their permit Aswan 132 213 application has been approved. Assuit 91 218 In 12 of the surveyed cities, postconstruc- Alexandria 126 220 tion approvals by the Civil Defense and Preconstruction approvals Fire Fighting Authority are required, even Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 27

of the construction cost. In Assuit the of sectorial ministries are not aware that FIGURE 4.7 Statutory time limits for Syndicate of Engineers charges EGP1,910 rules have changed in Cairo. building permit issuance are (US$303) for approving the architectural not enforced across Egypt drawings and the Standard Guarantee Sectorial ministries that require precon- Cities that issue a tracking number Certificate before these documents are struction clearances should provide clear for permit applications submitted to the municipal authority. In guidelines to Governorates and their local 12 3 Alexandria obtaining a preconstruction branches. In some cases, such communi- clearance from the Improvements De- cation has already started. The Ministry partment costs EGP9,290 (US$1,474) of Aviation, for example, has provided de- Cities that inform applicant of and in Fayoum the clearance from the the building permit decision tailed aviation maps and rules to all Gov- Agriculture Department costs EGP7,432 ernorates. The Governorates should fol- 5 10 (US$1,179). low suit by passing the same information to municipal authorities. At the moment, Cities that enforce legal time limits for permit issuance private sector practitioners and municipal WHAT TO REFORM? officials claim that maps can be viewed 8 7 The Unified Building Law of 2008 has only in central offices in Cairo. If the same maps and guidelines were available in the DO DO NOT not been evenly implemented across the country, and the transition to the local offices, the need to visit the Minis- Source: Doing Business database. new system has not yet been completed try of Aviation offices in Cairo would be in many cities. When the Building Law eliminated. was enacted, the Ministry of Housing construction permits costs about 60% of and Urban Development allowed the income per capita, significantly less than Governorates 2 years to submit specific Adopt a risk-based approach to in Aswan or Alexandria where it costs regulations to the Central Committee preconstruction clearances 222.3% and 200.3%, respectively. The for Planning. This is yet to happen. The In many Egyptian cities, preconstruction variation stems mainly from the connec- Ministry together with the Governorates clearances are required indiscriminately tions to water and sewage systems: these could conduct a joint awareness-raising for all construction projects. The local cost EGP4,432 (US$703) in Assuit, but campaign regarding the new law aimed branches of the Electricity Company, the EGP15,000 (US$2,381) in Alexandria, at private sector practitioners and pub- Aswan, Cairo, Giza, Sohag and Tanta. On lic officials from municipal engineering Civil Defense and Fire Fighting Authority average, obtaining water and sewage con- departments. Communicating reforms and the Agriculture Authority do not feel nections constitutes 53% of the total cost effectively to implementing agencies, comfortable lifting their clearances for (figure 4.8). business and legal communities, and low-risk construction projects. Author- the general public would ensure that ities should develop a risk classification Fees associated with building approvals changes are accepted and put in prac- of buildings and adopt risk-based rules also vary from city to city. In some cit- tice consistently. At the same time, for each building category. Complex and ies applicants are subject to charges not strengthening monitoring and control risky structures should be subject to required by national law. In Tanta, for capacity through the Agency for Techni- stricter standards than simpler construc- example, applying for a building permit cal Inspection of Buildings (ATIB) would tion projects. Simplifying clearances for includes paying to the Syndicate of En- further help to ensure compliance with low-risk buildings would allow the clear- gineers an additional fee equal to 0.45% the new regulations. The following rec- ing agencies to liberate resources and ommendations could help Egyptian au- focus them on projects that have higher thorities align building regulations and FIGURE 4.8 Utility connections account for levels of risk, such as high rises and pro- their implementation across all levels of 53% of total cost to deal with duction facilities. government. construction permits Worldwide, 87 economies have adopted Real Estate Registry Promote inter-agency coordination this practice, 18 in the past 8 years. Col- and information sharing ombia, Singapore and the United King- 10% Building For simple and low-risk construction dom are among the countries that have permit improved risk-based approvals, eliminat- 16% projects, clearances from the Electric- ity Company, Civil Aviation, Agriculture ing the need for preconstruction approv- 53% Department, and Civil Defense and Fire als by multiple agencies. In 2006 the 21% Fighting Authority are not required by Republic of Korea introduced a fast track law. However, in many cities they are still for small construction projects. Between Utility Other required indiscriminately for all construc- 2004 and 2009 applications for build- costs connections tion projects. Often this happens because ing permits in Seoul jumped from 1,521 Source: Doing Business database. municipal officials and local employees to 3,895. 28 DOING BUSINESS IN EGYPT 2014

Establish one-stop shops for Ensure compliance with time limits In the long run, municipal inspections building approvals stipulated in the Building Law could be replaced with inspections con- In the medium term, preconstruction According to the Building Law, municipal ducted by private engineers. These engi- clearances together with the building per- engineering departments should commu- neers would take legal liability and would mit approval can be consolidated into a nicate their decision regarding a building report to the municipal authority on each one-stop shop. One-stop shops improve permit within 30 days from the receipt phase of the construction. The 2008 the organization of the review process— of the application. The time limit is re- Building Law already provides the legis- not by reducing the number of checks spected in more than half of the surveyed lative base for developing this practice. needed, but by better coordinating the cities. In cities where no response is pro- In fact, it establishes that the supervising efforts among different authorities. The vided in time, the silence-is-consent rule engineer can submit a quarterly report to Governorates, the municipal authorities could be cautiously applied—especially the municipal authority on the status of and the Ministry of Housing and Urban for low risk constructions—as stipulated construction works. Encouraging the use Development can find inspiration from by the Building Law. At the moment, this of quarterly reports for low-risk construc- the existing one-stop shops for business rule is not enforced in practice. In addi- tions would allow municipalities to in- start-ups. The single-window principle tion, granting discounts to applicants that spect only problem cases. The inspectors would be especially effective in Egypt for do not receive the building approval noti- would still be able to inspect the site and tackling complex systems of approvals. fication on time may encourage governing review the entire building documentation agencies to speed up the process to avoid during the final inspection, which takes Some cities are already moving in this di- giving up valuable revenues. Spain, for ex- place upon completion of the project. rection. For instance, a smart center was ample, introduced innovative discounts in Many economies with well-developed established in Alexandria in 2007 with the area of property registration: the reg- the goal of providing an efficient one- istry’s fees are cut by 30% if registration construction industries allow some level stop shop for business-related licenses. takes more than the legal time limit of 15 of collaboration with licensed private In 2008, Governor Decree 386 added days and the registry cannot provide an building professionals to reduce public building permits to the list of services objective reason for the delay. Lastly, in controls. Austria and Germany use qual- of the center. In January 2013, Governor most economies time limits must be ac- ified professionals for plan reviews and Decree 35 provided the legal basis to fully companied by broader changes such as inspections. Austria, Australia, Canada, incorporate building-related permit ap- computerization and reorganization. Germany, Japan, New Zealand, Singapore provals into the center’s service offering. and the United Kingdom allow private While the one-stop shop concept is still professionals to conduct inspections. to be fully implemented, these are good Introduce a risk-based inspection first steps. system Initially, cities where inspections are fre- Make the permitting process more To be effective, one-stop shops must quent and usually based on time intervals, transparent have access under one roof to technical know-how and informational tools, such could replicate good practices from other Municipal administrations that make as master urban plans, zoning maps and cities where inspections are conducted at clear and complete information easily ministerial guidelines. If it is difficult to critical phases of the construction pro- accessible online help professionals and have a permanent representative of each cess. Moving forward, switching to a risk- entrepreneurs to avoid delays when deal- relevant agency in the one-stop shop, a based inspection system would reduce ing with construction permits. Although part-time system where representatives or eliminate frequent and unannounced the 2008 Building Law includes detailed inspections for low-risk projects. At the from the different agencies come to the application forms and inspection fill-in same time, it would allow municipalities one-stop during certain hours or days of sheets, such information is not sufficient to use their human resources more effi- the week can be a viable alternative. for the public to understand how the ciently by allocating more inspectors to building permitting process works. Of- Globally, 36 economies have some type riskier projects. fering developers municipal guides with of one-stop shop for construction permit- procedural steps, documentation require- ting. Most recently, Mauritania and Tai- In order to set up a risk-based inspec- ments, fee schedules, and relevant legis- wan, China, introduced one-stop shops tion system, a building-risk categoriza- while Morocco made improvements to tion should be elaborated. The classifi- lation would help improve the adminis- the one created in 2006. One telling ex- cation and assessment of buildings are tration of permit applications. In addition, ample is Hong Kong SAR (China), where important steps when determining the publicly displaying these guidelines and in 2009 the government merged 8 pro- frequency of inspections. Because not fee schedules within municipal premises cedures involving 6 agencies and 2 pri- all buildings are similar in terms of risk or on the internet would make the pro- vate utilities into a one-stop shop. Today levels, the ability to understand the risks cess more transparent for the public. only 6 procedures are needed to obtain a associated with different types of build- construction permit. ings is essential. DEALING WITH CONSTRUCTION PERMITS 29

NOTES

1. World Bank. Investment Climate Depart- ment. 2013. Good Practices for Construction Regulation and Enforcement Reform: Guidelines for Reformers. Washington, DC: World Bank Group. 2. World Bank Data. Accessed September 2013. http://data.worldbank.org. 3. Maqbool, Aleem. 2013. “Egypt’s illegal construction time bomb.” January 25. BBC News. http://www.bbc.co.uk/news/world-middle- east-21192988. 4. Moullier, Thomas. 2009. Reforming Building Permits: Why Is It Important and What Can IFC Really Do? Washington, DC: International Finance Corporation. 5. Garcia-Bolivar, Omar. 2006. Informal Econ- omy: Is It a Problem, a Solution or Both? The Perspective of the Informal Business. Berkeley, CA: The Berkeley Electronic Press. 6. Moullier, Thomas. 2009. Reforming Building Permits: Why Is It Important and What Can IFC Really Do? Washington, DC: International Finance Corporation. 7. Kenny, Charles. 2007. Construction, Cor- ruption, and Developing Countries. World Bank Policy Research Working Paper 4271. Washington, DC: World Bank Group. 8. World Bank, Investment Climate Depart- ment. 2013. Good Practices for Construction Regulation and Enforcement Reform Guidelines for Reformers. Washington, DC: World Bank Group. 9. Stone, Andrew with Badawy, Lina and Dabidian, Hooman. 2012. Egyptian Private enterprises in the Aftermath of the Revolution: An Investment Climate Update. The Middle East and North Africa Knowledge and Learning: Quick Notes Series. Washington, DC: World Bank Group. 10. PricewaterhouseCoopers. 2005. Economic Impact of Accelerating Permit Processes on Local Development and Government Revenues. Washington, DC: American Institute of Architects. 11. Moullier, Thomas. 2009. Reforming Building Permits: Why Is It Important and What Can IFC Really Do? Washington, DC: International Finance Corporation. 12. Alexandria, Assiut, Aswan, Damietta, Kharga, Mansoura, Sohag, and Zagazig. 13. Haidar, Jamal Ibrahim. 2008. “How to Raise Revenues by Lowering Fees.” In Celebrating Reforms 2008. Washington, DC: World Bank Group. Registering property

In Egypt, the 5% of land that is arable sup- Good governance in land administration ports 99% of the population. As far back systems is vital to ensuring sustainable as 3000 BC, Ancient Egyptians were al- development gains for an economy. ready aware of the importance of land Timely public service delivery, along with administration as a basis for prosperity.1 other efficiency measures, are critical There is evidence, registered on papyrus components of well-governed land administration systems and can translate to and etched on tomb walls, of certificates better customer service and higher cus- of title identifying the landowner and de- tomer satisfaction among citizens.6 scribing the land and its attributes. Ad- ditionally, land surveys and documented Governments also benefit from efficient property details enabled Ancient Egyp- land registration systems because they tians to assess ownership and collect collect greater tax revenues. With up-to- taxes. Even property transfers were docu- date land information, governments can mented on papyrus, signed by witnesses map out the varying requirements of their and made official by placing a seal at the cities and strategically plan the provision end of each document so nothing could of services and infrastructure where they be added. This system gave inhabitants are most needed.7 the confidence and security to use and cultivate their land. Today, given Egypt’s growing population, the same principle is WHAT DOES REGISTERING even more important.2 PROPERTY MEASURE? Doing Business records the procedures necessary for a business to purchase a WHY DOES PROPERTY property from another business and to REGISTRATION MATTER? transfer the property title to the buyer’s name (figure 5.1). The process starts with Formal property rights are necessary obtaining the necessary documents— to support investment, productivity such as a copy of the seller’s title—and and growth.3 Evidence from economies conducting due diligence, if required. The around the world suggests that property transaction is considered complete when owners with registered titles are more it is opposable to third parties and when likely to invest. Formal land titles allow the buyer can use the property as collat- entrepreneurs to use land as collateral, eral for a bank loan or resell it. thus increasing their access to credit.4 Cadastres, together with land registries, are tools used globally to map, prove HOW DOES REGISTERING and secure property rights. These insti- PROPERTY WORK IN EGYPT? tutions are part of the land information Property registration is governed by na- system of an economy. With land and tional laws. The first of two registration buildings accounting for between half laws, Law 114 of 1946, established a and three-quarters of the wealth in most deed system (nitham al sijil al shakhsy) as economies, having an up-to-date land in- Egypt’s main land administration system; formation system clearly matters.5 this is still applied mainly in urban areas. REGISTERING PROPERTY 31

FIGURE 5.1 What are the time, cost and number of procedures required to transfer TABLE 5.1 The ease of registering property across 15 Egyptian locations property between 2 local companies? RANK City RANK City Cost 1 Port Said 8 Suez (% of property value) 2 Mansoura 10 Assuit Buyer can use 3 Fayoum 11 Zagazig the property, resell it or use 4 Alexandria 12 Aswan it as collateral Number of 5 Ismailia 13 Cairo procedures 6 Sohag 14 Tanta Land & 2-story 7 Giza 15 Damietta warehouse 8 Kharga Seller with property registered and no Note: Rankings are based on the average city percentile title disputes Time rankings on the procedures, time and cost to register property. See Data notes for details. Preregistration Registration Postregistration (days) Source: Doing Business database.

In 1964, Law 142 called for conversion to proves that the property has undergone when the buyer obtains a registration a title system (nitham al sijil al ainy).8 To a tax assessment and is registered for number together with a copy of the reg- date, the new system has been applied fiscal purposes. Second, the buyer pays istered contract. In Assuit, Aswan, Cairo, mainly in rural areas.9 Registration fees the registration fee at the Real Estate Damietta and Suez, authorities require an are also set at the national level and were Registry and submits a registration re- inspection of the property by the Egyp- capped at EGP2,000 by Law 83 of 2006. quest. The Real Estate Registry carries tian Surveying Authority before the Real In spite of the cap making property reg- out the necessary due diligence and the Estate Registry can issue the preliminary istration less expensive, many property buyer (3) obtains a preliminary approval approval (maqbul lilshahr), adding 1 pro- transactions are completed privately and (maqbul lilshahr), together with a green cedure to the overall count. remain unregistered because the registra- form that will subsequently be used by tion process is viewed as too complicated the parties to draft the sales contract. Registering property in Egypt is a slow and time-consuming (box 5.1). When the contract is ready, it is (4) ver- but inexpensive process. Entrepreneurs ified by the Lawyer’s Syndicate, (5) ap- operating in the cities measured in this The national agencies administrating the proved for registration by the local Real report must go through at least 5 more registration process have local branches Estate Registry (saleh lilshahr), and (6) procedures than their counterparts in in each city (figure 5.2). Property regis- authenticated by the Authentication Of- Bahrain, Oman or the United Arab Emir- tration requires at least 7 different steps. fice. Once authenticated, the contract is ates, where property registration takes First, the seller obtains a property tax (7) submitted to the main branch of the just 2 steps. In Norway, one of the ten certificate from the local branch of the Real Estate Registry for final approval best performers for the ease of register- Property Tax Authority. The certificate (naqil liltakleef). The process is complete ing property globally, registration requires just 1 procedure. At 52 days on average, property registration in Egypt takes more than 8 times longer than in the United BOX 5.1 Ourfi contracts: The widespread use of unregistered sale Arab Emirates, where it takes just 6 days, agreements as an alternative to public registration in Egypt and 58% longer than the regional average of 33 days (figure 5.3). In spite of the high number of procedures and the long wait- When registration is too burdensome, some owners use alternative methods to ing times, property registration in Egypt— secure property rights. “Ourfi” contracts—unregistered written sale agreements— amounting to an average of 0.7% of prop- are one widespread method in Egypt. To increase their security, some opt to have erty value—is 8 times less expensive than witnesses to the signing of the agreement, while others turn to the courts to au- in other countries in the Middle East and thenticate the signatures in a short court proceeding. North Africa, where it costs on average However, despite court backing, registries in Egypt do not consider ourfi con- 5.9% of property value, and 6 times less tracts valid. Though binding buyer and seller, ourfi contracts are not opposable expensive than the OECD High Income against third parties. Those wanting to publicly register their property and ensure average of 4.4% of property value. title security must fill out a new contract at the registry and must authenticate the signatures of both buyer and seller using in-house notaries.a Registering property is easier in Port Said and more difficult in Damietta (table a. Gaynor, Richard. 2005. The Legal Framework for Property Registration in Egypt. Technical Report No.5. 5.1). In Port Said, transferring a property Washington, DC: USAID. title requires 7 procedures and 24 days while costing 0.7% of property value. 32 DOING BUSINESS IN EGYPT 2014

average time needed to transfer a prop- FIGURE 5.2 The property registration process involves local branches of 3 agencies, each erty has been cut in half, from 64 days to reporting to different ministries, and the Lawyers’ Syndicate 32, over the past 5 years. Going electronic Ministry also makes it easier to identify errors and Ministry NATIONAL Ministry of Irrigation and overlapping titles, improving title security. of Finance of Justice Water Resources Denmark has slashed the time needed to transfer a property from 42 days to 4 days Property Tax Real Estate Egyptian Surveying Lawyers’ over the past 5 years thanks to electronic LOCAL Authority Registry Authority Syndicate BRANCH processes. Assesses and collects Processes and records Generates and stores Verifies draft property taxes property rights cadastral information sales contract Variations in the time necessary to regis- Source: Doing Business database. ter property in one city as compared to another stem from differences in application In Damietta the cost is the same but 15 cities measured—Alexandria, Fayoum, volumes as well as the capacity and effi- the process requires 8 procedures and Giza, Ismailia, Kharga, Mansoura, Port ciency of the local branches of the agen- 130 days. If Port Said were to represent Said, Sohag, Tanta, and Zagazig—leaving cies involved. Agencies in the larger cities Egypt on the ease of registering property companies operating in the remaining generally face higher application volumes. as measured by Doing Business, it would cities with an additional requirement to Understaffing is often an issue, even in rank 63 globally— ahead of Tunisia (72) comply with. smaller cities. In Damietta, Ismailia, Tanta, and Germany (81). and Zagazig public officials report short- The time needed to register property var- ages in essential staff at the Real Estate The variation in the number of proce- ies greatly across Egyptian cities. In Sohag, Registry, especially technical personnel dures depends currently on the degree of firms need only about 18 days to transfer capable of accepting and processing ap- implementation across locations of Tech- a property. By contrast, in Damietta reg- plications in a timely manner. As a result, nical Decree 1 of 22 January 2013 issued istration takes 130 days—7 times longer. work piles up, leading to backlogs and by the Ministry of Justice. The decree delays. The inspection by the Egyptian lifts the requirement for an inspection by Delays have a number of causes. The lack of Surveying Authority—required in Assuit, the Egyptian Surveying Authority when automation in local Real Estate Registries, Aswan, Cairo, Damietta, and Suez—adds a property is already registered with the where Egyptians spend on average 80% between 11 and 25 days to the overall time needed to register property. Real Estate Agency, it has a valid deed of of the time required to register property, ownership, and its dimensions or specifi- accounts for one (figure 5.4). Using paper Variation in the cost of registering property cations have not changed since the deed instead of digital records slows down pro- among Egyptian cities is minimal. Most was registered. As of June 2013, the de- cessing of approvals. In the 45 economies fees are set at national level. The Lawyers’ cree had been implemented in 10 of the that have computerized procedures, the Syndicate fee of 0.5% of property value (with a cap of EGP5,000 or US$793), is FIGURE 5.3 Registering property across Egypt is less expensive but more burdensome and the largest component of the total cost, time consuming than the regional average comprising 70% of the total cost of registering property across cities. The registra- 13 NIGERIA DAMIETTA 130 20.8 NIGERIA tion fee is capped at EGP2,000 (US$317) for properties over 300 square meters.10 Additional costs—such as court, authentication and registry fees—are mainly set 9 KENYA 6.1 TUNISIA at the local level but their impact on the 5 CITIES 8 5.9 MENA*, MOROCCO overall cost is negligible. Range 77 NIGERIA 5.7 GERMANY 10 CITIES 7 in Egypt 73 KENYA 6 MENA*, TURKEY 60 MOROCCO 4.3 KENYA GERMANY, 4.0 TURKEY 5 SAUDI ARABIA 40 GERMANY WHAT TO REFORM? 4 TUNISIA 39 TUNISIA 2.7 BAHRAIN 33 MENA* 31 BAHRAIN BAHRAIN, UNITED Implement the termination of 2 ARAB EMIRATES SOHAG 18 8 SAUDI ARABIA KHARGA 0.8 the inspection requirement for 1 GEORGIA UNITED ARAB 6 TURKEY, UNITED 14 CITIES 0.7 0.4 EMIRATES ARAB EMIRATES previously registered properties in 0 GEORGIA, 2 GEORGIA SAUDI ARABIA all cities Procedures Time Cost (number) (days) (% of income The Ministry of Justice should pursue the per capita) full implementation of Technical Decree 1 of January 22, 2013, in Assuit, Aswan, *MENA is the Middle East and North Africa regional average. Cairo, Damietta, and Suez. The decree Source: Doing Business database. cancels the inspection requirement for REGISTERING PROPERTY 33

their tasks, and can give entrepreneurs FIGURE 5.4 On average, delays at the Real Estate Registry make up 80% of the total time guidance in terms of how long they may required to register property expect to wait; but they are only useful Sohag 18 Total time (days) when enforced. Port Said 24 Law 114 of 1946 and its amendments do Kharga 28 not set any time limit for the provision of Mansoura 29 registry services. Because of this, there Fayoum 35 are no incentives for agencies to deliver Alexandria 50 services in a timely manner. Egyptian entrepreneurs report that applications may Suez 51 get delayed unless they personally follow Assuit 52 up with the Real Estate Registry. Intro- Ismailia 52 ducing expedited or fast-track procedures Zagazig 56 that speed up processing times for an Tanta 58 extra fee would ensure faster delivery for users who demand it. Georgia, Lithuania Aswan 62 and the Slovak Republic offer these types Cairo 63 of expedited services, while Portugal has Giza 65 introduced effective time limits for prop- Damietta 130 erty registration.11 Spain ensures compliance with the time limit by mandating a Property Tax Real Estate Registry Lawyers' Egyptian Surveying Authority Syndicate Authority 30% cut in fees if registration takes more than 15 days and there is no objective ex- Source: Doing Business database. planation for the delay.

Time limits and fast-track processes place. But why stop here? The Ministry of previously registered properties with a work only when the agency involved has valid ownership deed and no changes to Justice could ask lawyers to prove their the capacity to enforce them. This can be property dimensions or specifications. professional accreditation directly to the achieved by assessing human resource Effectively communicating this reform Real Estate Registry as they submit the capacities at local real estate offices and across governorates will enhance aware- draft sales contract. ensuring that enough well-trained staff is ness and encourage implementation. At available to meet the demand. Including the same time, strict monitoring of im- Eliminating Syndicate clearance would service delivery times in employee per- plementation at the local level is equally save entrepreneurs a fee totaling 0.5% formance standards can provide the right important to achieve full compliance. of property value, the largest component of registration costs. Because Syndicate incentives for employees to meet time verification is required only for properties targets. Provide Lawyers’ Syndicate with a value of EGP20,000 (US$3,173) clearance within registries or or above, some entrepreneurs understate Digitize registry records consider alternatives to Syndicate the value of their property in order to avoid clearance Syndicate clearance. Replacing the Syndi- Digital records have an advantage over Currently, the local Lawyers’ Syndicate cate clearance and its associated fee with paper records: they take less space, and office must clear the sales contract be- an alternative verification method at no backup copies ensure property records fore it can be submitted to the Real Estate cost would eliminate the incentive for en- will not be compromised in the event of Registry for approval. The Syndicate does trepreneurs to undervalue their properties. natural disasters or political strife. Com- not review the contract’s contents; it only puterized records also offer more security checks that the lawyer who drafted the to title holders since they are more dif- contract is authorized to do so. A recent Set service delivery targets and ficult to misplace and alter. Worldwide, memorandum of understanding between introduce systems to assess and 60% of economies have electronic files the Ministry of Justice and the Lawyers’ monitor performance across for their property registries.12 Countries Syndicate allows Syndicate represen- agencies that fully transfer property records from tatives to be physically present at the Introducing systems to measure and paper to electronic form often see shorter Real Estate Registry in order to speed up monitor agency performance against set processing times. For example, in 2006 the process. This is an encouraging first service delivery targets is an effective way Tunisia computerized its land registry, step towards a more efficient property to improve customer service across agen- reducing the time it takes to check for en- registration process where clearances cies. Time limits can set a maximum time cumbrances from up to 10 days in 2006 and approvals are obtained in the same horizon for public agencies to complete to just 1 day in 2010. 34 DOING BUSINESS IN EGYPT 2014

Cities across Egypt rely mostly on paper land that are useful for urban planning and records to record transfers. Registries development. could consider digitizing their records to 8. Under a deed system, determining owner- streamline the registration process and ship involves studying the chain of registered deeds; under a title system, the registry speed up transactions. Once comput- records the property owner’s name directly. erized, the various departments holding 9. Pilot projects have been carried out in two land records (such as the Real Estate areas of Cairo: Sheikh Zayed City and Shuroq Registry and the Egyptian Surveying Au- City. thority) could electronically link systems 10. Law 83 of 2006, which amended Law 70 of to increase information sharing and co- 1964 governing registration costs, capped ordination. the registration cost at EGP2,000. In early 2013, Egypt’s Central Auditing Organization Implementing an electronic land registry issued new directives on registration fees can be a slow and costly process. Given for property transfers involving multiple individuals. These directives require Real the challenge of going electronic, many Estate Registries to charge a registration fee economies take a gradual approach to for each owner, instead of a single fee based implementation—first moving from pa- on the property itself. Because this specific per-based to electronic records and com- type of transaction is not covered by Doing puterization, then introducing electronic Business, which focuses on the transfer of registration. This was the approach used property between limited liability companies, in Denmark, New Zealand and Norway, all the data do not reflect the new fees. currently ranked among the top perform- 11. World Bank. 2012. Doing Business 2013: ers on the ease of registering property. Smarter Regulations for Small and Medium- Size Enterprises. Washington, DC: World Bank Group. 12. Doing Business database. NOTES

1. Salmon, Ingrid. 2003. Surveying in Ancient Egypt. School of Surveying and Spatial Information Systems, University of New South Wales. http://www.gmat.unsw.edu.au/currentstu- dents/ug/projects/salmon/salmon.html 2. Pluimers, Yvette. 2000. “Land Tenure and Cadastral Issues in Egypt: 2000 B.C. to the 21st Century.” Department of Spatial Information Science and Engineering, Uni- versity of Maine. http://www.spatial.maine. edu/~onsrud/Landtenure/CountryReport/ Egypt.html 3. Deininger, Klaus. 2003. Land Policies for Growth and Poverty Reduction. World Bank Policy Research Report. New York: Oxford University Press. 4. Galiani, Sebastian, and Ernesto Schar- grodsky. 2009. “Property Rights for the Poor: Effects of Land Titling.” Working Paper 7 (revised). St. Louis, MO: Ronald Coase Institute. 5. World Bank. 1989. World Development Report 1989. New York: Oxford University Press. 6. Burns, Anthony and Kate Dalrymple. 2008. Conceptual Framework for Governance in Land Administration. Australia: International Feder- ation of Surveyors. 7. Property information held in cadastres and land registries is part of the land information available to governments. Land information also includes other geographic, environmental and socioeconomic data related to Enforcing contracts

A lawyer who frequently litigates in the to enforce a contract is lower, particularly Aswan court of first instance noted that when the economy where the investment judges are so overwhelmed with their was made is more indebted.2 caseloads that it is not rare for a judge to have several hundred cases listed on his docket on any given day. And since judges hear cases only 3 days per week, WHAT DOES ENFORCING spending the other 2 writing judgments, CONTRACTS MEASURE? their caseloads keep growing. Doing Business measures the time, cost and procedural complexity of resolving The situation is not unique to Aswan. The backlog of cases and lack of judges to a commercial lawsuit between 2 domes- hear them is a serious issue that needs to tic businesses. The dispute involves the be addressed across Egypt. breach of a sales contract worth twice the income per capita of the economy. The case study assumes that the court WHY DOES COMMERCIAL hears arguments on the merits and DISPUTE RESOLUTION MATTER? that an expert provides an opinion on the quality of the goods in dispute. This The effective resolution of commercial distinguishes the case from simple debt disputes has many benefits. Courts are essential for entrepreneurs because they enforcement. The time, cost and proce- interpret the rules of the market and pro- dures involved are measured from the tect property rights. Efficient and trans- perspective of the seller (the plaintiff) parent courts encourage new business pursuing the standardized case through relationships because firms know they local courts (figure 6.1). can rely on the courts if a new customer fails to pay or comply with contractual FIGURE 6.1 What are the time, cost and obligations. Speedy trials are especially number of procedures to important for small enterprises that may resolve a commercial dispute lack the resources to stay in business through the courts? while awaiting the outcome of a long court dispute. Court

Efficiency matters. A study in Eastern Eu- Time rope found that in countries with slower Cost courts, ﬁrms have less bank ﬁnancing for Number of new investment. The study shows that procedures reforms in other areas, such as creditors’ rights, increase bank lending only if con- Company A Company B Commercial tracts can be enforced before the courts.1 (seller (buyer & plaintiff) dispute & defendant) Another recent study, this one analyzing 98 developing economies, suggests that Filing of court Trial & Enforcement foreign direct investment tends to be case judgment greater where the cost of debt collection 36 DOING BUSINESS IN EGYPT 2014

FIGURE 6.2 It is fastest to enforce a contract in Ismailia and Aswan HOW DOES IT WORK IN EGYPT? Egypt 15-city Egypt’s system of civil law is based on a MENA* average legal code derived largely from the Na- Ismailia 11 535 160 706 Total time (days) poleonic Code. Jurisdiction is determined Aswan 20 535 190 745 on the basis of the claim value. Cases up to and including EGP40,000 (US$5,700) Damietta 15 600 195 810 are heard by the lower division of the Giza 20 565 225 810 courts of ﬁrst instance (mahakim juziya), Fayoum 20 630 180 830 and those above EGP40,000 are heard Tanta 20 560 250 830 by the upper division (mahakim ibtidaiya). Suez 10 685 150 845 The Civil and Commercial Procedural Sohag 20 625 270 915 Code of 1968 (Qanoon Al-Murafa’at Alexandria 20 678 225 923 Al-Madaniyawal Tijaria) regulates both Kharga 11 660 275 946 civil and commercial law in all courts of Port Said 14 740 210 964 ﬁrst instance. Although laws, regulations and procedures are the same across cit- Assuit 20 675 270 965 ies, court administration varies from one Cairo 20 720 270 1,010 local court to another as it is the preroga- Mansoura 20 760 270 1,050 tive of the head of each court. Zagazig 25 730 350 1,105

Enforcing a contract in the 15 cities mea- Filing and service Trial and judgment Enforcement sured takes on average 897 days (2.5 years) at a cost of 23.6% of the claim *MENA is the Middle East and North Africa regional average. Source: Doing Business database. value. The cost is slightly lower than the average cost in the region (24.6%), but it takes more time than in all other countries Enforcing a contract takes from 706 days A second bottleneck is related to the of the Middle East and North Africa (ex- in Ismailia to 1,105 days in Zagazig (figure submission of the expert opinion.5 Egyp- cept Djibouti, where it takes 1,225 days).3 6.2). Both cities have approximately the tian law mandates that experts testifying On the other hand, with 42 procedures, same population. In some cities, case- in trials be licensed by the Ministry of enforcing a contract in Egypt involves loads are dealt with in a more efficient Justice. As a result, most are actually gov- fewer steps than the regional average of fashion than in others. For example, in ernment employees. Private experts exist 44. Across the cities benchmarked, en- 2012 approximately 1,500 cases were but judges are hesitant to use them be- forcing a contract is easiest in Damietta, heard at the Tanta first instance court cause they fear that any potential mistake where it takes approximately 2 years and alone—this amounts to approximately could reflect badly on their own reputa- 6 3 months and costs 18.2% of the claim 4 cases per 1,000 inhabitants. To im- tions. Public sector experts remain the value (table 6.1). It is most difficult in prove efficiency, the court in Tanta im- most commonly used in court, but they are often overbooked. As a result, experts Cairo, where it takes nearly 7 months lon- plemented a computerized system that 4 easily take between 2 to 6 months to sub- ger and costs almost 45% more. gives judges and court registrars online mit their opinions. In Port Said, lawyers access to case information such as trial interviewed noted that it is not unheard TABLE 6.1 The ease of enforcing contracts dates, adjournments, reasons for ad- across 15 Egyptian locations of for a case to sit with an expert for up journment and final judgments. RANK City RANK City to a year. 1 Damietta 9 Suez Other common delays that occur during A third bottleneck results from a com- 2 Ismailia 10 Kharga the trial stage derive from bottlenecks bination of few judges, low technical 3 Fayoum 11 Alexandria that are shared by courts across the qualifications and high caseloads. Lower 4 Giza 11 Mansoura country. The first common bottleneck is divisions of courts of first instance across caused by adjournments between hear- 5 Tanta 13 Zagazig Egypt have only one judge hearing cases. ings. Often lawyers request adjourn- In addition, governorates like Aswan have 6 Sohag 14 Assuit ments alleging that they need more seen a notable drop in the overall number 7 Aswan 15 Cairo time to gather and present the evidence; of judges (by nearly two-thirds) over the 7 Port Said this allows them to charge higher fees. past few years. According to one source, Note: Rankings are based on the average of city percentile Judges, overwhelmed with their case- in 2007–08 there were approximately 84 rankings on the procedures, time and cost required to loads, can be quite lenient in granting ad- resolve a commercial dispute through the courts. See the judges divided between the 3 courts of data notes for details. journments, thus delaying each hearing first instance in the governorate. In 2009 Source: Doing Business database. from 1 to 3 months on average. there were 76. Today there are only 33.7 ENFORCING CONTRACTS 37

Furthermore, most judges do not hold more than an undergraduate degree in FIGURE 6.3 Egyptian court fees are significantly lower than in other economies in the region law. During 2009, only 16.7% of total judicial staff across first instance courts (% of total cost to enforce a contract) in Egypt held a higher qualifying degree Court fees 5.6% such as a PhD, masters or a certified di- Court fees 18.4% ploma. Damietta, the most efficient first instance court according to Doing Busi- ness data, had the second-highest percentage of judges with a master’s degree Enforcement Enforcement at 11.8% as of 2009.8 Higher levels of ed- fees 29.7 Attorney fees fees 18.0 ucation provide better training for judges, Attorney fees 64.7 who are then better able to judge difficult 63.6 cases efficiently.

One way to reduce caseload is alternative Egypt Middle East and dispute resolution (ADR). Since 2009, North Africa average the International Finance Corporation (IFC) has supported an ADR project by Source: Doing Business database. providing professional training and certi- fication for mediators, conducting awareness-raising workshops, and assisting of Correctional Services Act, provincial Al-Qada’iya)—and therefore identical with the drafting of Egypt’s first mediation bailiffs provide primary transportation across cities. Egypt’s court fees, at 1.3% law, which will regulate both private and of prisoners between correctional facili- of the claim value, are among the lowest judicial mediation. These efforts have al- ties and have the powers of police con- in the world. Together, the court and en- ready started to produce positive results. stables while doing so. Provincial bailiffs forcement fees constitute 35.3% of the There is a now steady referral of cases are armed with expandable batons and total cost, with court fees accounting for to mediation at the three IFC-supported pepper sprays and operate under the only 5.6%, compared with 18.4% of the jurisdiction of the provincial Ministry of institutions—the Economic Courts, the total cost in the Middle East and North Community Safety and Correctional Ser- General Authority for Investment and Africa (figure 6.3). Court fees such as Free Zones, and the Cairo Regional Cen- vices. Duties normally associated with the fee to file a case are fixed, while the tre for International Commercial Arbitra- bailiffs in other jurisdictions, such as enforcement fees are largely based on a tion—and the average number of days residential evictions, seizures, and other percentage of the claim value. required for case resolution through me- processes ordered by the court, are per- diation is 28.6 days.9 formed by sheriffs under the office of the Attorney General of Ontario, not by the Legal fees are the largest cost compo- The enforcement process is also lengthy Royal Canadian Mounted Police. In Egypt, nent, constituting 64.7% of the total cost when compared to the global average of by contrast, it is sometimes not easy for to enforce a contract. Attorneys can set 184 days. After the judgment has been enforcement officers to find a police offi- their own price—Advocates Law 17 of issued in favor of the seller (as assumed cer to accompany them to seize the de- 1983 does not stipulate a fee schedule for by the case study), the seller undergoes a fendant’s assets. And since enforcement them. Legal fees in larger cities, such as process to attach the assets of the buyer officers cannot conduct the attachment in Cairo and Alexandria, tend to be more and sell them through a public auction in themselves, the process can be signifi- expensive than in smaller cities. The cost order to retrieve his money. This process cantly delayed. According to interviews of living is higher in Cairo and Alexandria can take anywhere from 5 months in Suez conducted with judges, the Ministry of and there is a greater demand for legal Justice is currently working on a new reg- to almost a year in Zagazig. The delay professionals in larger business cities. in Zagazig is mainly due to the fact that ulation that would put both enforcement multiple auctions are usually necessary officers and police within the court’s juris- because it is difficult to attract enough diction and set a time limit of 30 days for buyers to the first auction. enforcement. WHAT TO REFORM Despite the progress Egypt has made over In Egypt enforcement is carried out by The average cost to enforce a contract in the past years, there remains ample room separate divisions within the courts and the Egyptian cities measured is 23.6% of overseen by enforcement judges. One the claim value, significantly lower than for improvement. Many of the issues af- of the main bottlenecks is that enforce- the global average of 35.1% and below fect all Egyptian courts and the solutions ment officers do not have their own po- the regional average of 24.6%. Court and are not always “quick fixes.” Rather they lice, so they must rely on the national enforcement fees are regulated nationally entail comprehensive reforms that re- police. This differs from other systems. by the Ministry of Justice as set by the quire time, effort and above all, financial In Ontario, Canada, under the Ministry Law on Court Fees (Qanoon Al-Rusoom and human resources. 38 DOING BUSINESS IN EGYPT 2014

Improve incentives and provide remedy would be for the Ministry of Expand and improve computerized training for well-qualified judges Justice to actively monitor the caseload case management systems A key bottleneck across Egyptian courts of each judge in each first instance court Computerized case management sys- of first instance is the case backlog—and, and ensure that no one judge is hearing tems can help courts predict trends as many heads of court have noted, the significantly more cases than any other. and allocate resources strategically. In shortage of qualified judges. One rea- Malaysia could be an example of how 2009 Jordan upgraded its computerized son could be that an increasing number to tackle the problem. Starting in 2008, case-management system (Mizan II) in of qualified Egyptian judges are moving Malaysia addressed its huge backlog of both the conciliation courts and courts of to other Arab countries, particularly in cases by introducing a “tracking system” first instance. The new system automates the Gulf, where the financial benefits are to facilitate the closure of older cases. case assignments, generates real-time greater.10 By increasing their compensa- This system involved the separation of hearing minutes, and allows online access tion and professional career prospects, cases that could be resolved on the basis to court records by authorized persons. more judges would have a greater incen- of affidavits (the A Track) from those that Since its implementation, the time to re- tive to remain in Egypt. solve a commercial dispute at Amman’s required full trials (the T Track). Judges conciliation court has been reduced by were assigned to one or the other track The quality of the judges also matters. nearly 4 months. and given weekly case quotas by the There are no objective qualification criteria for judges. Holders of an under- Managing Judge Unit. As a result of this In Egypt some courts of first instance graduate law degree, such as a bachelor system, the total number of cases filed in have implemented computerization and of laws, can become attorneys without 2009 or earlier still being processed in the case management. Tanta’s court is one. going through additional formal training. High, Sessions and Magistrates Courts Through a computerized system, judges Nor are they required to have much ex- (country-wide) dropped from 192,569 in and court registrars can access informa- perience before being nominated to serve December 2009 to 15,497 in May 2011. tion on cases—including dates of trial, ad- as judges.11 However, it is beneficial for at- As of the latter date, among the country’s journments, reasons for adjournment and torneys to have at least one year’s training 429 sessions and magistrates’ courts, final judgments—and can plan their work before being appointed as judges.12 120 were completely current—processing accordingly. The courts of first instance in only cases filed in 2010 and 2011.14 Alexandria and Mansoura are also com- Training opportunities and qualifying puterized. Court decisions are typed up courses for judges could help. Until re- on computers and electronically archived cently in Ethiopia, although the country’s Set fixed maximum time limits on a secure network, thus saving the Procedure Code allowed the option of between adjournments and employees the time that was previously fast-track procedures for simpler cases, monitor judges’ performance spent in preparing several copies of the the procedures were not widely used, same document.15 Other Egyptian courts Even though the Civil and Commercial and some judges were not even aware of should follow suit. them. In 2009 Ethiopian judges were all Procedural Code (Qanoon Al-Murafa’at retrained, with the fast-track procedures Al-Madaniyawal Tijaria) sets out a proce- included as part of the program. As a re- dural timetable with time limits for par- Promote specialized commercial sult, the time needed to undergo the trial ties to respond, it is rarely adhered to in divisions within the courts of first and obtain a judgment decreased from practice. There are various tactics that the instance 330 to 290 days. parties can use to deliberately slow down Creating specialized commercial courts litigation proceedings, most notably re- can result in faster and cheaper contract questing adjournments. In 2010, the Pal- enforcement. Studies have found that Re-distribute the caseload estinian Judiciary limited adjournments specialized courts tend to improve effi- 16 Egyptian courts are suffering from an to 30 days instead of 45-60 days. As a ciency. In fact, analysis of Doing Business uneven caseload distribution among result, the total time to resolve a commer- data shows that in the Middle East and North Africa commercial disputes are judges and/or among the different dis- cial dispute in the Ramallah Magistrates resolved almost 4 months faster, on aver- tricts of each court. In 2007 the Ministry Court decreased by 60 days. of Justice developed the “case difficulty age, in economies with specialized com- coefficient” (CDC) to ensure a fair dis- mercial courts or sections than in those Egyptian courts could also benefit from tribution of caseload among judges. The without them.17 monitoring judges’ performance to incen- coefficient, based on a fairly complicated tivize them to abide by the time limits. calculation,13 tried to take into account To reduce the backlog in the courts of first the complexity of a case to determine the In 2008 Mozambique introduced a per- instance, Law 120 of 2008 established number of judges necessary for a certain formance measurement of judges after a 8 separate economic courts (mahakim caseload. series of judicial inspections. Along with iktisadia). With respect to economic civil other reforms, this decreased the time disputes, courts are divided into 3 levels: Yet despite this measure, uneven case- needed to enforce a contract from 1,010 a preparation panel for an initial hearing load remains a problem. One short-term to 730 days. and offering of settlement, first instance circuit to hear cases involving EGP5 mil- 9. Please note that these cases do not refer to Rights lion (US$715,000) or less, and appellate the standardized case study assessed by – Law on Central Bank Doing Business. circuits that hear cases above EGP5 mil- – Law on Companies Operating in the Field lion as well as cases of undefined value. 10. Elbialy and García-Rubio, “Assessing Judicial of Investing Funds Efficiency of Egyptian First Instance Courts: Overall, the economic courts are admin- – Trade Law concerning the Transfer of A DEA Analysis.” istered more efficiently than the regular Technology, Commercial Agency, Banking 11. Ibid. courts18 and they only hear disputes that Transactions, Bankruptcy and Composi- 12. Aleslambuly, E. 2009. “One Single Law for tion arise in connection with a defined set of all Judicial Employees: Does This Provide 19 – Law on Protecting the National Economy laws. more Judicial Independence?” In Elshahed, from the Effects of Prejudicial Practices of H. 2009. The Conciseness of Justice: A Plan International Trade The authorities in Egypt could consider to Promote Judicial Independence in Egypt. – Law on Protection of Competition and assigning commercial cases in the courts Foundation for the Future, Egypt. Prohibition of Monopolistic Practices of first instance to judges who would 13. The CDC is calculated by assigning a weight – Law on Regulating Telecommunications to each type of case according to the aver- hear solely commercial cases. This type – Law on Regulating Electronic Signatures age time spent to settle the case. After the of specialization would improve perfor- and Establishing the Information Technol- CDC is calculated, the number of available mance through experience and knowl- ogy Industry Development Authority. cases (weighted by their corresponding edge accumulation. After establishing 6 For economic criminal cases, these laws are CDC) is divided by the available number of as follows: commercial courts in 2005, Ghana saw judges as a basis for deciding the number of – Insolvency crimes stated in the Penal its time to enforce a contract decrease judges required to hear a certain caseload. Code from 552 days to 487 days. The Ministry of Justice then determines a predefined “warm zone” with a maximum, – Law of Monitoring and Supervising Insur- ance minimum and an average caseload per judge and expects all first instance courts to oper- – Law of Joint Stock Companies, Part- nerships Limited by Shares and Limited ate within this zone. Elbialy and García-Ru- NOTES Liability Companies bio, “Assessing Judicial Efficiency of Egyptian 1. Safavian, Mehnaz, and Siddharth Sharma. First Instance Courts: a DEA analysis.” – Law on Capital Markets 2007. “When Do Creditor Rights Work?” 14. World Bank, Poverty Reduction and Eco- – Law on Investment Guarantees and Journal of Comparative Economics 35 (3): nomic Management Sector Unit, East Asia Incentives 484–508. and Pacific Region. 2011. Malaysia: Court – Law on Leasing Finance 2. Ahlquist, John S., and Aseem Prakash. 2010. Backlog and Delay Reduction Program – A – Law on Central Deposit and Registration “FDI and the Costs of Contract Enforcement Progress Report. Washington, DC: World of Stocks in Developing Countries.” Policy Sciences 43 Bank Group. – Law on Real Estate Finance (2): 181–200. 15. United States Agency for International 3. According to Doing Business, in the Islamic – Law on Protection of Intellectual Property Development (USAID), “Modernization Rights Republic of Iran and Malta enforcing a con- Raises Court’s Efficiency”, http://www. – Law on Central Bank tract takes 505 days, in Morocco 510, Iraq usaid.gov/sites/default/files/success/files/ 520, United Arab Emirates 524, West Bank ba_egy_court.pdf. – Law on Companies Operating in the Field and Gaza 540, Tunisia 565, Kuwait 566, 16. Botero, Juan Carlos, Rafael La Porta, Floren- of Investing Funds Yemen, Rep. 645, Qatar 570, Oman 598, cio López-de-Silanes, Andrei Shleifer and – Trade Law concerning the Composition of Algeria 630, Bahrain and Saudi Arabia 635, Alexander Volokh. 2003. “Judicial Reform.” Bankruptcy Offences Jordan 689, Lebanon 721 and Syrian Arab World Bank Research Observer 18 (1): 67–88. – Law on Protecting the National Economy Republic 872. 17. Differences are statistically significant at from the Effects of Prejudicial Practices of 4. There is no correlation between the popula- the 99% level after controlling for income International Trade tion size of a city and its ranking on the ease per capita. Ninety of the 189 economies – Law on Protection of Competition and of enforcing contracts. covered by Doing Business have a specialized Prohibition of Monopolistic Practices 5. The Doing Business case study assumes that commercial court, a specialized section or – Law on Consumer Protection the judge hears arguments on the merits specialized judges that solely hear commer- – Law on Regulating Telecommunications of the case and that an expert provides cial cases within a general civil court. an opinion on the quality of the goods in – Law on Regulating Electronic Signatures 18. Mahmood, “Alternative Dispute Resolution and Establishing the Information Technol- dispute. is Gaining a Foothold in Egypt.” ogy Industry Development Authority. 6. Mahmood, Rashad. 2010. “Alternative 19. Law 120 of 2008. For economic disputes, Dispute Resolution is Gaining a Foothold in – The commercial dispute measured by these laws are as follows: Doing Business is not governed by any of Egypt.” Business Monthly, October 2010. these laws and therefore is heard in the 7. Based on interviews conducted with the – Law of Joint Stock Companies, Part- courts of first instance. heads of courts of first instance across nerships Limited by Shares and Limited Egypt. March 2013. Liability Companies 8. Elbialy, Nora and Miguel A. García-Rubio. – Law on Capital Markets 2011. “Assessing Judicial Efficiency of Egyp- – Law on Investment Guarantees and tian First Instance Courts: A DEA Analysis.” Incentives Joint Discussion Paper Series in Economics – Law on Leasing Finance by the Universities of Aachen, Gießen, Göttingen, Kassel, Marburg and Siegen, No. – Law on Real Estate Finance 19-2011. – Law on Protection of Intellectual Property Trading across borders

Maritime transport is central to Egypt’s strikes and labor protests repeatedly forc- international trade. In recent years mari- ing ports to close. Meanwhile, port au- time flows have accounted for 85 to 95% thorities have increased safety measures, of the country’s external trade by volume.1 sometimes adding to delays. Representing about 16% of the Arab World’s container port traffic, Egypt has a strong competitive advantage over its WHY DOES TRADING ACROSS neighbors thanks to its strategic location BORDERS MATTER? on the European-East Asian trade routes and control of the Suez Canal.2 International trade plays an important role in the development of economies.5 Over the past decade, Egypt has made Research shows that the time and cost great strides in opening its economy to required to import and export have a international trade: integration levels significant impact on a country’s trade jumped from 40% of GDP in 2000 to flows.6 A 2011 cross-country study of 146 67% in 2009.3 The government invested countries found that a 1-day reduction in in infrastructure, reduced tariffs, simpli- inland transportation time leads to a 7% fied clearance procedures and increased increase in exports, equivalent to a 1.5 private sector participation, making it eas- percentage point reduction in all import- ier to trade across borders. In the Logistics ing-country tariffs.7 Conversely, longer Performance Index 2012 published by the times reduce trade; a recent study shows World Bank, Egypt ranks 5th out of the 37 that each additional day that a product is lower-middle-income economies mea- delayed prior to being shipped reduces sured, having steadily improved its scores trade by more than 1%.8 The speed, on all the dimensions studied.4 During the cost-effectiveness, reliability and diver- past two years, however, Egyptian ports sity of maritime transport services are have suffered from increased unrest, with critical for promoting trade.

FIGURE 7.1 What are the time, cost and documents associated with exporting and importing a 20-foot container by sea transport

Time Time

To export Cost Cost To import Documents Documents Full, 20-foot container

Import

Export

Port and terminal Customs and Inland handling border agencies transport TRADING ACROSS BORDERS 41

FIGURE 7.2 Ports and maritime trade governance system WHAT DOES TRADING ACROSS BORDERS MEASURE? Ministry Ministry Ministry of Trade Doing Business measures the time and cost of Finance of Transport and Industry (excluding tariffs) associated with exporting and importing by sea transport and the number of documents necessary to General complete the transaction (figure 7.1).9 The Customs Organization Alexandria Port Said Red Sea Damietta Authority for Export and Port Authority Port Authority Port Authority Port Authority indicators cover documentation require- ImportControl ments and procedures at customs and other regulatory agencies as well as at the Source: Doing Business database. port. They also cover logistical aspects, including the time and cost of inland transport between the company warehouse (GOEIC), affiliated with the Ministry of thanks to better infrastructure. On the and the import/export ports. Doing Busi- Trade and Industry, is responsible for the other hand, the port of Damietta has seen ness in Egypt 2014 measures 5 major ports: inspection of imports and exports, certif- a sharp decline in traffic due to its shal- Alexandria, Damietta, Port Said East, Port icates of origin and trade registers. The low depth and inability to accommodate 17 Said West and Sokhna (Suez). four port authorities are under the Minis- modern vessels. The number of vessels try of Transport; they have administrative calling during 2012 was 15% lower than and regulatory control over entities oper- in the previous year.18 ating inside the port and are responsible HOW DOES TRADING ACROSS for planning and infrastructure develop- The five ports measured perform sim- BORDERS WORK IN EGYPT? ment.13 But there is no independent port ilarly on the trading across borders in- Until the 1980s Egypt’s maritime sector regulatory authority to oversee matters dicators (table 7.1). Document require- was fully owned and controlled by the regarding private operators and potential ments are set at the national level and public sector. During the past two decades, conflicts of interest with port authorities.14 are therefore the same for all ports. The however, the government has issued laws time necessary to import and export allowing private sector participation in The distribution of trade by port differs through the five ports is similar. Larger maritime transport activities, ports man- by type of product and destination. Alex- variations are found in costs because of agement and cargo handling.10 Since then andria and Sokhna serve as gateways for different terminal handling and inland the participation of public-private partner- goods imported or exported to and from transportation fees. ships in the development of infrastructure Egypt. On the other hand, 60 to 94% projects has increased. In 2002 the gov- of the containers handled in Damietta, The General Organization for Export ernment adopted a “landlord port” model. Port Said East and Port Said West are for and Import Control, customs authori- Under this model the public sector devel- transshipment.15 The traffic going through ties, and shipping lines determine what ops and maintains the port’s major infra- these ports has evolved significantly dur- documents are required as well as their structure and regulates maritime safety ing the past decade. The ports of Sokhna cost. Egyptian traders need to prepare 8 and security—while private operators, and Port Said East were built in 2002 and separate documents to export and 10 to through concession or lease, develop and 2004 and quickly became major ports— import through the ports measured (fig- operate the port superstructures and pro- in 2011 they handled 50 thousand and ure 7.3). The average number of docu- vide cargo handling services.11 Some of the 269 thousand TEUs16 respectively—partly ments required for a 20-foot container in port operators are public companies, as in the Middle East and North Africa is 6 to Damietta and Port Said West. Port Said East and Sokhna are operated by private Table 7.1 Time, cost and documents required to export and import through 5 Egyptian companies under “build-operate-transfer” major ports concessions.12 The port of Alexandria has Exports Imports two terminals, one with majority private Cost Cost ownership and the other one with majority Documents Time (US$ per Documents Time (US$ per public ownership. (number) (days) container) (number) (days) container) Damietta 8 10 585 10 14 857 There are many institutions governing maritime trade in Egypt, including three Alexandria 8 11 615 10 14 780 ministries and four port authorities (fig- Port Said East 8 11 694 10 15 884 ure 7.2). The Egyptian Customs Au- thority, under the Ministry of Finance, Port Said West 8 11 532 10 14 831 is in charge of customs procedures and regulation for all ports. The General Or- Sokhna (Suez) 8 12 667 10 16 1,047 ganization for Export and Import Control Source: Doing Business database. 42 DOING BUSINESS IN EGYPT 2014

FIGURE 7.3 More documents are required to import and export in Egypt than the average in the Middle East and North Africa

Documents to export Documents to import

Panama, Singapore United Arab Emirates, United States MENA* Panama, Singapore MENA* 6 8 United Arab Emirates Tunisia United States Tunisia Jordan, Morocco, Saudi Arabia Jordan, Morocco Saudi Arabia Turkey Turkey 8 Egypt Algeria

Algeria Egypt 10

Iraq Iraq

Documents required to export in Egypt: Documents required to import in Egypt: Q Bill of lading Q Certificate of origin Q Commercial invoice Q Customs export QBill of lading Q Certificate of inspection Q Certificate of origin Q Commercial declaration Q Customs procedural certificate Q Export statistical form invoice Q Customs import declaration Q Customs procedural certificate Q Delivery Q Packing list Q Technical standard certificate order Q Form of Annex 4 (imports for trading or production purposes) Q Packing list Q Customs payment application and receipt *MENA is the Middle East and North Africa regional average. Source: Doing Business database.

export and 8 to import. The OECD High day in all ports, but for imports it varies container to a separate inspection yard, Income average is 4 documents for both across ports. For example, in Sokhna it can which is aligned to international standards exports and imports. take up to 2 days more than in Alexandria but adds delays. because of stricter inspections. After the Traders have to submit multiple forms revolution, the Red Sea Port Authority Trading across borders in Egypt is inex- to the same agency. For example, trad- stepped up inspections and X-ray scan- pensive compared by international stan- ers submit 3 separate documents to the ners now check every single container. dards. Export costs vary from US$532 Egyptian Customs Authority (the cus- There are also differences in the time to US$694, and import costs vary from toms import declaration, the customs required for port and terminal handling, US$780 to US$1,047 (figure 7.5). This procedural certificate and the customs which are related to each port’s layout and is well below the average in the Middle payment application and receipt) in- handling procedures. For example, pub- East and North Africa region (US$1,127 to stead of unifying it in a single form. The lic terminals carry out inspections in the export and US$1,360 to import) and also high number of documents results in long import yard. Private terminals move the preparation time. Dealing with document requirements constitutes half of the time needed to import and two-thirds of the FIGURE 7.4 Exporters spend most time on paperwork time required to export (figure 7.4). Days to export a 20-foot container United States 22116 OECD High Income MENA* average 20 Nevertheless, trading across borders 11 is relatively fast compared globally. Ex- Singapore 21126 porting a 20-foot container takes from United Arab Emirates 41117 10 days in Damietta to 12 days in Sokhna. Panama 511310 Importing a container takes from 14 days in Alexandria, Damietta and Port Said Morocco 621211 West, to 16 days in Sokhna. Trading Egypt 721111 across borders in Egypt is faster than the (average 5 ports) average in the Middle East and North Af- Turkey 632213 rica (20 days to export and 24 days to Tunisia 821213 import), but slower than the average in OECD High Income economies (11 days Saudi Arabia 641213 to export and 10 days to import). Lebanon 1134 4 22

Time variations across Egyptian ports are Document Customs Terminal Inland preparation handling transportation due to various delays in customs clearance and port and terminal handling. Customs *MENA is the Middle East and North Africa regional average. clearance for exports is obtained within 1 Source: Doing Business database. TRADING ACROSS BORDERS 43

law, which would mandate the use of FIGURE 7.5 Cost variations across Egyptian ports are driven by terminal handling and pre-shipment releases for all types of inland transportation fees products, establish risk-based inspections, create a special account for large Cost to import 1,047 US$ per container traders, and improve counterfeit and bor- 884 Inland der protection measures. 831 857 295 transportation 780 284 205 275 Reduce and streamline 220 documentation requirements Terminal 452 handling Egyptian traders spend too much time 250 326 272 300 complying with burdensome paperwork. Authorities should share information 100 90 100 90 90 Customs amongst themselves instead of requesting it from traders—something made Document 210 210 210 210 210 preparation easier by the Electronic Data Interchange system that has been in place since 2009. Alexandria Port Said Damietta Port Said Sokhna West East This particularly applies to internal data; for example, instead of requesting that Source: Doing Business database. traders submit specific documents for statistical purposes, the General Orga- lower than costs in the OECD (US$1,070 transportation services to Sokhna, result- nization for Export and Import Control to export and US$1,090 to import). ing in more expensive transportation fees. could extract the relevant information from the customs declaration. There are some variations across the 5 ports related to port and terminal han- WHAT TO REFORM? An additional burden for trade not re- dling fees and inland transportation costs. flected in the data is the legalization Publicly operated ports charge lower fees During the past 5 years, Doing Business requirement. Foreign exporters must than privately operated ports (Sokhna recorded 133 trade facilitation reforms and Port Said East), up to 26% less. This around the world. The Middle East and “legalize” trade documents such as the is because port and terminal handling North Africa was among the regions that commercial invoice and certificate of fees in publicly operated ports are set by reformed most: 67% of economies in the origin in the Egyptian Consulate at their ministerial decree.19 Public terminal oper- region implemented at least one trade fa- country for goods imported into Egypt, ators are also mandated by law to grant a cilitation reform.23 incurring in additional costs and time. 50% discount from the loading charge to Legalization is very common in Middle Egyptian manufactured exports.20 Ship- Egypt has been part of this trend. In 2010 Eastern economies, but uncommon else- ping lines set their own fees to exporters the government implemented a compre- where in the world. and importers based on the fee schedules hensive plan to reorganize customs ad- set by the port operators, which explains ministration to meet international stan- The “Single Administrative Document” additional variability. It must be noted dards. Modern customs centers were has allowed some countries to consoli- that only some port operators, such as established in the major ports, and new Damietta and Alexandria, make the fee information technology systems were date all information needed into a single schedules available to the general public, implemented. Known as data ware- document with a few supporting docu- whereas others share them only with the houses, these systems facilitate commu- ments. Another good practice is to have shipping lines. nication between customs, inspection a risk-based system. Egypt could look to agencies, port authorities, shipping lines France, where only 2 documents are re- Another source of variation is the cost and freight forwarders.24 The General Or- quired: the bill of lading and the customs of transporting the containers from the ganization for Export and Import Control export declaration. French customs will warehouse to the ports. The freight unified inspections from different author- not require any additional document for transport sector in Egypt is fragmented, ities such as customs, sanitary and agri- the majority of cargo—unless the goods and most of the shipping is handled by cultural control agencies. The Egyptian are suspect, in which case they will re- small operators.21 Port Said East and Customs Authority introduced the op- quest further documents. The Republic of Sokhna ports are farther away from the tion of “pre-shipment release,” allowing main neighboring city, which drives the traders to obtain customs pre-approval South Korea requires only 3 documents prices up.22 According to anecdotal evi- before the arrival of the ship, and enabled (the bill of lading, the customs export/ dence there are fewer trucking providing e-payment of customs fees. There is an import declaration, the packing list/deliv- ongoing initiative to reform the customs ery order) and so does Panama (the bill of 44 DOING BUSINESS IN EGYPT 2014

lading, the customs export/import decla- paper-based system to an electronic sys- had difficulties with their maintenance, ration and the commercial invoice). tem requires behavioral changes among so they are currently not being used. The users, in turn requiring training and out- use of scanners will be helpful only if it is reach programs to ease this transition. combined with a risk-based system and Integrate the Electronic Data if the proper equipment and maintenance Interchange system and expand is in place. to all the relevant agencies and Apply risk-based inspections private sector operators Inspections are often necessary. How Electronic systems for filing, transferring, these inspections are carried out, includ- processing, and exchanging customs in- ing how cargo is selected for inspection, NOTES formation have become an important tool varies across economies. Burdensome 1. Togan, Subidey. 2009. Liberalization of Trans- for managing flows of information, now inspections can be a serious obstacle to port Services in Egypt, Jordan and Morocco. widely used in complex trading systems. efficient and predictable trade. Over the Policy Research Report. Cairo: Economic years customs administrations around Research Forum, p.13. The newest web-based systems allow the world have developed risk profiles 2. World Bank Data accessible at: http://data. traders to submit their documents from that allow them to selectively apply phys- worldbank.org/indicator/IS.SHP.GOOD.TU. anywhere and pay duties online. The key 3. World Trade Indicators. World Bank Insti- ical inspections in proportion to the po- tute. Trade integration is measured as the to success is the ability of an economy to tential risk of a consignment. Risk-based accommodate its regulatory framework sum of exports and imports in goods and inspections are the norm in OECD High services expressed as a percent of GDP in to the new information technologies. If Income economies and are becoming current U.S. dollars. Available at: http://info. implemented effectively, such a system increasingly common in the Middle East worldbank.org/etools/wti/2a1.asp# saves precious time and money. It also and North Africa. In 2011, about 50% of 4. World Bank Group. 2012. Logistics Perfor- reduces interactions with officials, which goods were inspected in Tunisia, 10 to15% mance Index. Washington, DC. The index means fewer opportunities for unofficial in Bahrain and only 3% in the United Arab measures 6 areas: clearance process effi- payments. Introducing an electronic sys- Emirates, the economy where it is easiest ciency; quality of trade and transport related infrastructure; ease of arranging shipments; tem often requires governments to enact to trade across borders in the region.25 competence and quality of logistics services; legislation on electronic signatures and ability to track and trace consignments; and Egypt had introduced several measures to transactions. timeliness of shipments. reduce the rate of containers subject to in- 5. Freund, Caroline and Bineswaree Bolaky. The Electronic Data Interchange system spection. Among other things, the General 2008. “Trade, Regulations, and Income.” Organization for Export and Import Con- in Egypt connects customs, the General Journal of Development Economics, Elsevier, trol created a “white list” so that registered vol. 87(2), 309–321. Organization for Export and Import Con- exporters were exempt from certain docu- 6. Subramanian, Uma. 2012. “Trade Logis- trol and other agencies involved in the ment requirements and had to go through tics Reforms: Linking Business to Global import/export process. However, there fewer inspections. Recently, however, port Markets.” ViewPoint. Note Number 335. are several Electronic Data Interchange authorities have increased security mea- Washington, DC: World Bank Group. 7. Freund, Caroline, and Nadia Rocha. 2011. initiatives to apply automation in trade sures. Currently all containers go through “What Constrains Africa’s Exports?” World transactions. Trading stakeholders could at least a visual inspection. Reestablishing Bank Economic Review, vol. 25 (3): 361–86. benefit from the unification of all available risk-based inspections will be important 8. Djankov, Simeon, Caroline Freund and Cong information and data exchange systems to streamline trading procedures. S. Pham. 2010. “Trading on Time.” The Review under one umbrella. This would require a of Economics and Statistics 92 (1): 166–73. high level of coordination between exist- Investing in equipment can also help 9. To ensure comparability across countries, ing initiatives and a regulatory framework expedite the processing of cargo. Many the Doing Business methodology assumes that supports the development of a single economies, including Albania, Camer- trade by sea transport, which accounted for 80% of the volume of global trade in 2012. data exchange platform. oon, Nigeria and the Philippines, are using scanners to reduce the need to physically (UNCTAD). 10. Ghoneim, Ahmed F., and Omneia A. Helmy. open containers. Jordan introduced risk- Some ports are more advanced than oth- 2007. Maritime Transport and Related Logistics based inspections and X-ray scanners ers in the use of technology. In Sokhna, Services in Egypt. Issue Paper, ICTSD Program for exports in July 2010, and Mauritania for example, the port operator communi- on Trade in Services and Sustainable Devel- did so in 2012. Some Egyptian ports have cates with traders via SMS to notify them opment. The main laws that liberalized the introduced scanners for inspections, but maritime sector in Egypt were Law 1/1996 about an inspection appointment, to in- it has not gone smoothly. In Sokhna the and Law 1/1998. form them about any issues with an appli- use of scanners has caused further delays 11. Other systems are (a) the “tool ports” cation, and even to let them know that a because customs agents scan all con- model, where the port authority owns both shipment has arrived. Still, all documents tainers irrespective of their risk profile. infrastructure and superstructure, and have to be submitted in paper form. The The port of Damietta also started using services are licensed to private firms; and (b) the “service ports” model, in which the port Electronic Data Interchange system could scanners, but they are not adjustable to authority owns assets and is in charge of be further improved by allowing traders to larger containers—which are becoming overall port operations. submit documents online. Moving from a more common—and the port operator TRADING ACROSS BORDERS 45

12. “Build-operate-transfer” (BOT) is a form of project financing in which a private company receives a concession from the private or public sector to finance, design, build and operate a facility stated in the concession contract. Sokhna port started operating in 2002 as the first fully private port in Egypt. 13. The four port authorities are Alexandria Port Authority (Alexandria Port and El-Dekheila Port), Port Said Port Authority (El-Arish Port and the new East Port Said Port), Red Sea Port Authority (Suez, El Adabeya, Safaga, Nuweiba, Sharm El Sheikh, Hurghada and North El Sokhna) and Damietta Port Authority. 14. Bench, Reynaldo and Robin Carruthers. 2012. Review of Egypt’s Port Sector. Middle East and North Africa Region, Sustainable Develop- ment Department. Washington, DC: World Bank Group. 15. September 2011. Maritime Transport Sector statistics. http://www.mts.gov.eg.. 16. Container port traffic is measured in twenty- foot equivalent units (TEUs). October 2011. Maritime Transport Sector statistics. http:// www.mts.gov.eg 17. Bichou, Khalid and Sara El Zarka. 2011. “As- sessment of freight transport and logistics within the Egypt transport system.” Forth- coming. European Commission. Brussels, Belgium. 18. Damietta Port Authority statistics. 19. Ghoneim and Helmy, Maritime Transport and Related Logistics Services in Egypt. 20. Ministerial Decree 63/1982. 21. Felkner, John, Aaron Wilson, and Brian Blankespoor. “Accessibility and Transport Costs in Egypt: An Empirical Analysis”. National Opinion Research Center (NORC) and World Bank. January 26, 2012. 22. The methodology was adjusted for this report so that the inland transportation is measured from each of the 5 ports to the nearest city. See Data notes. 23. Doing Business 2014: Understanding Regula- tions for Small and Medium-Size Enterprises. 2013. Washington, DC: World Bank Group. 24. Doing Business in the Arab World 2012. 2011. Washington, DC: World Bank Group. 25. Doing Business in the Arab World 2012. 2011. Washington, DC: World Bank Group. Data notes

The indicators presented and analyzed subjected to numerous rounds of verifica- in Doing Business in Egypt 2014 measure tion, leading to revisions or expansions of business regulation and the protection of the information collected. property rights—and their effect on businesses, especially small and medium-size The Doing Business methodology offers domestic firms. The indicators document several advantages. It is transparent, us- the complexity of regulation, such as the ing factual information about what laws number of procedures to start a business and regulations say and allowing multi- or to register and transfer commercial ple interactions with local respondents property. They also gauge the time and to clarify potential misinterpretations of cost of achieving a regulatory goal or com- questions. Having representative sam- plying with regulation, such as the time ples of respondents is not an issue; Doing and cost to enforce a contract, go through Business is not a statistical survey, and the bankruptcy or trade across borders. texts of the relevant laws and regulations are collected and answers checked for In this report, Doing Business indicators accuracy. The methodology is inexpen- have been created for 15 cities and 5 ports sive and easily replicable, so data can be in Egypt. The data for all sets of indica- collected in a large sample of economies. tors in Doing Business in Egypt 2014 as well Because standard assumptions are used as for Doing Business 2014: Understanding in the data collection, comparisons and Regulations for Small and Medium-Size En- benchmarks are valid across economies. terprisesare current as of June 2013. Finally, the data not only highlight the extent of specific regulatory obstacles to business but also identify their source and METHODOLOGY point to what might be reformed. The Doing Business in Egypt 2014 data were collected in a standardized way. To LIMITS TO WHAT IS MEASURED start, the Doing Business team, with aca- demic advisers, designs a questionnaire. The Doing Business methodology has 4 The questionnaire uses a simple business limitations that should be considered case to ensure comparability across econ- when interpreting the data. First, the data omies and over time—with assumptions often focus on a specific business form— about the legal form of the business, its generally a limited liability company (or size, its location and the nature of its op- its legal equivalent) of a specified size— erations. Questionnaires are administered and may not be representative of the reg- to local experts, including lawyers, busi- ulation on other businesses, for example, ness consultants, architects, engineers, sole proprietorships. Second, transactions freight forwarders, government officials described in a standardized case scenario and other professionals routinely admin- refer to a specific set of issues and may istering or advising on legal and regulatory not represent the full set of issues a busi- requirements. These experts have sev- ness encounters. Third, the measures of eral rounds of interaction with the Doing time involve an element of judgment by Business team, involving conference calls, the expert respondents. When sources written correspondence and visits by the indicate different estimates, the time team. The data from questionnaires are indicators reported in Doing Business DATA NOTES 47 represent the median values of several responses given under the assumptions of ECONOMY CHARACTERISTICS the standardized case. Gross national income per capita Finally, the methodology assumes that a business has full information on what is Doing Business in Egypt 2014 reports 2012 income per capita as published in the required and does not waste time when World Bank’s World Development Indicators 2013. Income is calculated using the completing procedures. In practice, com- Atlas method (current U.S. dollars). For cost indicators expressed as a percentage pleting a procedure may take longer if the of income per capita, 2012 gross national income (GNI) in U.S. dollars is used as business lacks information or is unable the denominator. Egypt’s GNI per capita in 2012 = US$ 3,000 (EGP 18,907). to follow up promptly. Alternatively, the business may choose to disregard some Region and income group burdensome procedures. For both rea- Doing Business uses the World Bank regional and income group classifications, sons the time delays reported in Doing available at http://data.worldbank.org/about/country-classifications. The World Business 2014 would differ from the rec- Bank does not assign regional classifications to high-income economies. For the ollection of entrepreneurs reported in the purpose of the Doing Business report, high-income OECD economies are assigned World Bank Enterprise Surveys or other the “regional” classification OECD High Income. Figures and tables presenting re- perception surveys. gional averages include economies from all income groups (low, lower middle, upper middle and high income).

CHANGES IN WHAT IS Exchange rate MEASURED The exchange rate used in this report is: 1 US$ = 6.3 EGP (Egyptian Pound). The methodology for some indicators was updated this year for the global Doing Business report and consequently for this authorities. The ranking on the ease of one type of limited liability company in report. For trading across borders, docu- starting a business is the simple average the economy, the limited liability form ments that are required purely for pur- of the percentile rankings on its compo- most popular among domestic firms is poses of preferential treatment are no lon- nent indicators (figure 8.2). chosen. Information on the most pop- ger included in the list of documents (for ular form is obtained from incorpora- After a study of laws, regulations and example, a certificate of origin if the use is tion lawyers or the statistical office. publicly available information on business only to qualify for a preferential tariff rate entry, a detailed list of procedures is de- ĖŤ Operates in the selected city under trade agreements). veloped, along with the time and cost to ĖŤ Is 100% domestically owned and has 5 comply with each procedure under normal owners, none of whom is a legal entity. The rule establishing that each procedure circumstances and the paid-in minimum must take at least 1 day was removed for ĖŤ Has start-up capital of 10 times in- procedures that can be fully completed on- capital requirement. Subsequently, local income per capita, paid in cash. corporation lawyers, notaries and govern- line in just a few hours. This change affects ĖŤ Performs general industrial or comment officials complete and verify the data. the time indicator for starting a business, mercial activities, such as the produc- dealing with construction permits and reg- Information is also collected on the se- tion or sale to the public of products istering property. For procedures that can quence in which procedures are to be or services. The business does not be fully completed online, the duration is completed and whether procedures may perform foreign trade activities and now set at half a day rather than a full day. be carried out simultaneously. It is as- does not handle products subject to a sumed that any required information is special tax regime, for example, liquor readily available and that the entrepre- or tobacco. It is not using heavily pol- STARTING A BUSINESS neur will pay no bribes. If answers by local luting production processes. experts differ, inquiries continue until the Doing Business records all procedures of- ĖŤ Leases the commercial plant or offices data are reconciled. ficially required, or commonly done in and is not a proprietor of real estate. practice, for an entrepreneur to start up To make the data comparable across ĖŤ Does not qualify for investment in- and formally operate an industrial or com- economies, several assumptions about centives or any special benefits. mercial business, as well as the time and the business and the procedures are used. ĖŤ Has at least 10 and up to 50 employ- cost to complete these procedures and ees 1 month after the commencement the paid-in minimum capital requirement of operations, all of them domestic (figure 8.1). These procedures include ob- Assumptions about the business nationals. taining all necessary licenses and permits The business: and completing any required notifica- ĖŤ Has a turnover of at least 100 times tions, verifications or inscriptions for the ĖŤ Is a limited liability company (or its income per capita. company and employees with relevant legal equivalent). If there is more than ĖŤ Has a company deed 10 pages long. 48 DOING BUSINESS IN EGYPT 2014

FIGURE 8.1 What are the time, cost, paid-in minimum capital and number of procedures to FIGURE 8.2 Starting a business: getting a get a local limited liability company up and running? local limited liability company up and running Cost (% of income per capita) Rankings are based on 4 indicators Formal operation Preregistration, As % of income registration and per capita, no postregistration bribes included Paid-in $ Number of (in calendar days) minimum procedures capital 25% 25% Time Cost 25% 25% Entrepreneur Procedures Paid-in Time minimum Preregistration Registration, Postregistration (days) capital incorporation Procedures are Funds deposited in a completed when bank or with a notary final document before registration, as % Procedures or value added tax, this transaction is is received of income per capita included as a procedure. Shortcuts are A procedure is defined as any interaction of counted only if they fulfill 4 criteria: they the company founders with external par- are legal, they are available to the gen- tax number. If a procedure can be accel- ties (for example, government agencies, eral public, they are used by the majority erated for an additional cost, the fastest lawyers, auditors or notaries). Interactions of companies, and avoiding them causes procedure is chosen if that option is more between company founders or company beneficial to the economy’s ranking. It is officers and employees are not counted as substantial delays. assumed that the entrepreneur does not procedures. Procedures that must be com- waste time and commits to completing pleted in the same building but in different Only procedures required of all busi- each remaining procedure without delay. offices or at different counters are counted nesses are covered. Industry-specific The time that the entrepreneur spends on separately. If founders have to visit the procedures are excluded. For example, gathering information is ignored. It is as- same office several times for different procedures to comply with environmental sumed that the entrepreneur is aware of sequential procedures, each is counted regulations are included only when they all entry requirements and their sequence separately. The founders are assumed to apply to all businesses conducting gen- from the beginning but has had no prior complete all procedures themselves, with- eral commercial or industrial activities. contact with any of the officials. out middlemen, facilitators, accountants Procedures that the company undergoes or lawyers, unless the use of such a third to connect to electricity, water, gas and waste disposal services are not included. party is mandated by law or solicited by Cost the majority of entrepreneurs. If the ser- Cost is recorded as a percentage of the vices of professionals are required, pro- Time cedures conducted by such professionals economy’s income per capita. It includes on behalf of the company are counted Time is recorded in calendar days. The all official fees and fees for legal orpro- separately. Each electronic procedure is measure captures the median duration fessional services if such services are counted separately. If 2 procedures can be that incorporation lawyers indicate is nec- required by law. Fees for purchasing and completed through the same website but essary in practice to complete a proce- legalizing company books are included require separate filings, they are counted dure with minimum follow-up with gov- if these transactions are required by law. as 2 separate procedures. ernment agencies and no extra payments. Although value added tax registration can It is assumed that the minimum time be counted as a separate procedure, value Both pre- and postincorporation proce- required for each procedure is 1 day, ex- added tax is not part of the incorporation dures that are officially required for an en- cept for procedures that can be fully com- cost. The company law, the commercial trepreneur to formally operate a business pleted online, for which the time required code and specific regulations and fee are recorded (table 8.1). is recorded as half a day. Although pro- schedules are used as sources for calcu- cedures may take place simultaneously, lating costs. In the absence of fee sched- Procedures required for official correspon- they cannot start on the same day (that ules, a government officer’s estimate is dence or transactions with public agencies is, simultaneous procedures start on con- taken as an official source. In the absence are also included. For example, if a com- secutive days), again with the exception of a government officer’s estimate, esti- pany seal or stamp is required on official of procedures that can be fully completed mates of incorporation lawyers are used. documents, such as tax declarations, online. A procedure is considered com- If several incorporation lawyers provide obtaining the seal or stamp is counted. pleted once the company has received different estimates, the median reported Similarly, if a company must open a bank the final incorporation document, such value is applied. In all cases the cost ex- account before registering for sales tax as the company registration certificate or cludes bribes. DATA NOTES 49

The data details on starting a business can ĖŤ Is 100% domestically and privately TABLE 8.1 What do the starting a be found for each economy at http://www owned. business indicators measure? .doingbusiness.org by selecting the economy ĖŤ Has 5 owners, none of whom is a legal Procedures to legally start and operate a in the drop-down list. This methodology was entity. company (number) developed by Djankov and others (2002) ĖŤ Is fully licensed and insured to carry and is adopted here with minor changes. out construction projects, such as Preregistration (for example, name verification or reservation, notarization) building warehouses. ĖŤ Has 60 builders and other employees, Registration in the selected city all of them nationals with the techni- DEALING WITH CONSTRUCTION cal expertise and professional experi- Postregistration (for example, social security PERMITS registration, company seal) ence necessary to obtain construction Doing Business records all procedures re- permits and approvals. Time required to complete each procedure quired for a business in the construction ĖŤ Has at least 1 employee who is a li- (calendar days) industry to build a warehouse (figure 8.3). censed architect or engineer and reg- Does not include time spent gathering These procedures include obtaining and istered with the local association of information submitting all relevant project-specific architects or engineers. Each procedure starts on a separate day (2 documents (for example, building plans, ĖŤ Has paid all taxes and taken out all procedures cannot start on the same day). site maps and certificates of urbanism) to necessary insurance applicable to its Procedures that can be fully completed online are an exception to this rule. the authorities; hiring external third-party general business activity (for example, supervisors, engineers or inspectors (if accidental insurance for construction Procedure considered completed once final necessary); obtaining all necessary clear- workers and third-person liability). incorporation document is received ances, licenses, permits and certificates; ĖŤ Owns the land on which the ware- No prior contact with officials submitting all required notifications; and house is built. requesting and receiving all necessary in- Cost required to complete each procedure spections (unless completed by a private, (% of income per capita) third-party inspector). Doing Business also Assumptions about the warehouse Official costs only, no bribes records procedures for obtaining con- The warehouse: nections for water, sewerage and a fixed No professional fees unless services required landline. Procedures necessary to register ĖŤ Will be used for general storage ac- by law the property so that it can be used as col- tivities, such as storage of books or stationery. The warehouse will not be Paid-in minimum capital (% of income per lateral or transferred to another entity are capita) also counted. The questionnaire divides used for any goods requiring special the process of building a warehouse into conditions, such as food, chemicals or Funds deposited in a bank or with a notary before registration (or within 3 months) distinct procedures and solicits data for pharmaceuticals. calculating the time and cost to complete ĖŤ Has 2 stories, both above ground, with each procedure. The ranking on the ease a total surface of 1,300.6 square me- Paid-in minimum capital of dealing with construction permits is the ters (14,000 square feet). Each floor is 3 meters (9 feet, 10 inches) high. The paid-in minimum capital requirement simple average of the percentile rankings ĖŤ Has road access and is located in the reflects the amount that the entrepreneur on its component indicators (figure 8.4). periurban area of the selected city needs to deposit in a bank or with a notary Information is collected from experts in (that is, on the fringes of the city but before registration and up to 3 months fol- construction licensing, including archi- still within its official limits). lowing incorporation and is recorded as a tects, civil engineers, construction law- ĖŤ Is not located in a special economic percentage of the economy’s income per yers, construction firms, utility service or industrial zone. The zoning re- capita. The amount is typically specified providers and public officials who deal quirements for warehouses are met in the commercial code or the company with building regulations, including ap- by building in an area where similar law. Many economies require minimum provals, permit issuance and inspections. warehouses can be found. capital but allow businesses to pay only To make the data comparable across ĖŤ Is located on a land plot of 929 square a part of it before registration, with the economies, several assumptions about meters (10,000 square feet) that is rest to be paid after the first year of oper- the business, the warehouse project and 100% owned by BuildCo and is accu- ation. In Turkey in June 2013, for example, the utility connections are used. rately registered in the cadastre and the minimum capital requirement was land registry. 10,000 Turkish liras, of which one-fourth ĖŤ Is a new construction (there was no needed to be paid before registration. The Assumptions about the previous construction on the land). paid-in minimum capital recorded for construction company ĖŤ Has complete architectural and tech- Turkey is therefore 2,500 Turkish liras, or The business (BuildCo): nical plans prepared by a licensed ar- 14.35% of income per capita. chitect. ĖŤ Is a limited liability company. ĖŤ Will include all technical equipment ĖŤ Operates in the selected city. required to make the warehouse fully 50 DOING BUSINESS IN EGYPT 2014

FIGURE 8.3 What are the time, cost and number of procedures to comply with formalities to FIGURE 8.4 Dealing with construction build a warehouse? permits: building a warehouse Rankings are based on Cost 3 indicators (% of income per capita) Days to build As % of income Completed a warehouse per capita, no warehouse in main city bribes included Number of procedures 33.3% 33.3% Time Cost

A business in the 33.3% construction Procedures industry Time Preconstruction Construction Postconstruction and utilities (days)

Procedures are completed when final document is operational. any party acting on behalf of the com- received; construction permits, inspections and utility connections included ĖŤ Will take 30 weeks to construct (ex- pany, with external parties, including cluding all delays due to administra- government agencies, notaries, the land tive and regulatory requirements). registry, the cadastre, utility companies can be accelerated legally for an addi- and public inspectors—or the hiring of tional cost and the accelerated procedure private inspectors and technical experts is used by the majority of companies, the Assumptions about the utility apart from in-house architects and en- fastest procedure is chosen. It is assumed connections gineers. Interactions between company that BuildCo does not waste time and employees, such as development of the The water and sewerage connection: commits to completing each remaining warehouse plans and inspections con- procedure without delay. The time that Is 10 meters (32 feet, 10 inches) from ducted by employees, are not counted as ĖŤ BuildCo spends on gathering information the existing water source and sewer tap. procedures. But interactions necessary to is ignored. It is assumed that BuildCo is ĖŤ Does not require water for fire pro- obtain any plans, drawings or other doc- aware of all building requirements and tection reasons; a fire extinguishing uments from external parties, or to have their sequence from the beginning. system (dry system) will be used such documents approved or stamped instead. If a wet fire protection system by external parties, are counted as procedures. Procedures that the company is required by law, it is assumed that Cost the water demand specified below undergoes to connect to water, sewerage also covers the water needed for fire and telephone services are included. All Cost is recorded as a percentage of the protection. procedures that are legally required, or economy’s income per capita. Only of- ĖŤ Has an average water use of 662 liters that are done in practice by the majority ficial costs are recorded. All the fees as- (175 gallons) a day and an average of companies, to build a warehouse are sociated with completing the procedures wastewater flow of 568 liters (150 counted, even if they may be avoided in to legally build a warehouse are recorded, gallons) a day. exceptional cases (table 8.2). including those associated with obtaining ĖŤ Has a peak water use of 1,325 liters (350 land use approvals and preconstruction gallons) a day and a peak wastewater Time design clearances; receiving inspections flow of 1,136 liters (300 gallons) a day. before, during and after construction; ĖŤ Will have a constant level of water de- Time is recorded in calendar days. The obtaining utility connections; and regis- measure captures the median duration mand and wastewater flow through- tering the warehouse property. Nonrecur- that local experts indicate is necessary to out the year. ring taxes required for the completion of complete a procedure in practice. It is as- the warehouse project are also recorded. The telephone connection: sumed that the minimum time required for Sales taxes (such as value added tax) or each procedure is 1 day, except for proce- capital gains taxes are not recorded. Nor ĖŤ Is 10 meters (32 feet, 10 inches) from dures that can be fully completed online, are deposits that must be paid up front the main telephone network. for which the time required is recorded as and are later refunded. The building code, ĖŤ Is a fixed landline. half a day. Although procedures may take place simultaneously, they cannot start on information from local experts and spe- the same day (that is, simultaneous pro- cific regulations and fee schedules are Procedures cedures start on consecutive days), again used as sources for costs. If several local A procedure is any interaction of the with the exception of procedures that can partners provide different estimates, the company’s employees or managers, or be fully completed online. If a procedure median reported value is used. DATA NOTES 51

8.5). The ranking on the ease of register- TABLE 8.2 What do the dealing with ing property is the simple average of the TABLE 8.3 What do the registering construction permits percentile rankings on its component in- property indicators measure? indicators measure? dicators (figure 8.6). Procedures to legally transfer title on Procedures to legally build a warehouse immovable property (number) (number) Every procedure required by law or necessary in practice is included, whether it is Preregistration procedures (for example, checking Submitting all relevant documents and obtaining the responsibility of the seller or the buyer for liens, notarizing sales agreement, paying all necessary clearances, licenses, permits and property transfer taxes) certificates or must be completed by a third party on their behalf. Local property lawyers, Registration procedures in the selected city Submitting all required notifications and receiving all necessary inspections notaries and property registries provide information on procedures as well as the Postregistration procedures (for example, filing title with municipality) Obtaining utility connections for water, sewerage time and cost to complete each of them. and a land telephone line The registering property indicators do Time required to complete each procedure not measure the accessibility of property (calendar days) Registering the warehouse after its completion registration systems, the legal security Does not include time spent gathering (if required for use as collateral or for transfer of information the warehouse) offered by formal registration, the use of informal property registration systems or Each procedure starts on a separate day. Time required to complete each procedure the equity of land policies. Procedures that can be fully completed online (calendar days) are an exception to this rule.

Does not include time spent gathering To make the data comparable across Procedure considered completed once final information economies, several assumptions about document is received Each procedure starts on a separate day. the parties to the transaction, the prop- No prior contact with officials Procedures that can be fully completed online erty and the procedures are used. are an exception to this rule. Cost required to complete each procedure (% of property value) Procedure considered completed once final document is received Assumptions about the parties Official costs only, no bribes

The parties (buyer and seller): No value added or capital gains taxes included No prior contact with ofﬁcials

Cost required to complete each procedure ĖŤ Are limited liability companies. (% of income per capita) ĖŤ Are located in the periurban area of good condition and complies with all the selected city. safety standards, building codes and Official costs only, no bribes ĖŤ Are 100% domestically and privately other legal requirements. It has no owned. heating system. The property of land The data details on dealing with construction ĖŤ Have 50 employees each, all of whom and building will be transferred in its permits can be found for each economy at are nationals. entirety. http://www.doingbusiness.org by selecting ĖŤ Perform general commercial activities. ĖŤ Will not be subject to renovations or the economy in the drop-down list. additional building following the purchase. Assumptions about the property ĖŤ Has no trees, natural water sources, The property: natural reserves or historical monu- REGISTERING PROPERTY ments of any kind. Doing Business records the full sequence ĖŤ Has a value of 50 times income per ĖŤ Will not be used for special purposes, of procedures necessary for a business capita. The sale price equals the value. and no special permits, such as for (buyer) to purchase a property from an- ĖŤ Is fully owned by the seller. residential use, industrial plants, other business (seller) and to transfer ĖŤ Has no mortgages attached and has waste storage or certain types of agri- the property title to the buyer’s name so been under the same ownership for cultural activities, are required. that the buyer can use the property for the past 10 years. ĖŤ Has no occupants, and no other party expanding its business, use the prop- ĖŤ Is registered in the land registry or holds a legal interest in it. erty as collateral in taking new loans or, cadastre, or both, and is free of title if necessary, sell the property to another disputes. business. The process starts with obtain- ĖŤ Is located in a periurban commercial Procedures ing the necessary documents, such as a zone, and no rezoning is required. A procedure is defined as any interaction copy of the seller’s title if necessary, and ĖŤ Consists of land and a building. The of the buyer or the seller, their agents (if conducting due diligence if required. The land area is 557.4 square meters an agent is legally or in practice required) transaction is considered complete when (6,000 square feet). A 2-story ware- or the property with external parties, in- it is opposable to third parties and when house of 929 square meters (10,000 cluding government agencies, inspectors, the buyer can use the property, use it as square feet) is located on the land. notaries and lawyers. Interactions be- collateral for a bank loan or resell it (figure The warehouse is 10 years old, is in tween company officers and employees 52 DOING BUSINESS IN EGYPT 2014

FIGURE 8.5 What are the time, cost and number of procedures required to transfer property FIGURE 8.6 Registering property: transfer between 2 local companies? of property between 2 local companies Cost Rankings are based on (% of property value) 3 indicators Buyer can use Days to transfer As % of property the property, property in value, no bribes resell it or use main city included it as collateral Number of procedures Land & 2-story 33.3% 33.3% warehouse Time Cost Seller with property registered and no 33.3% Procedures title disputes Time Preregistration Registration Postregistration (days)

Steps to check encumbrances, obtain clearance are not considered. All procedures that and their sequence from the beginning. certificates, prepare deed and transfer title so that the property can be occupied, are legally or in practice required for reg- Time spent on gathering information is sold or used as collateral istering property are recorded, even if not considered. they may be avoided in exceptional cases (table 8.3). It is assumed that the buyer percentile rankings on its component in- follows the fastest legal option available Cost dicators (figure 8.8). and used by the majority of property Cost is recorded as a percentage of the owners. Although the buyer may use property value, assumed to be equivalent The name of the relevant court in each lawyers or other professionals where to 50 times income per capita. Only of- economy—the court in the selected necessary in the registration process, it is ficial costs required by law are recorded, city with jurisdiction over commer- assumed that the buyer does not employ including fees, transfer taxes, stamp du- cial cases worth 200% of income per an outside facilitator in the registration ties and any other payment to the prop- capita—is published at http://www process unless legally or in practice re- erty registry, notaries, public agencies .doingbusiness.org/data/exploretopics/ quired to do so. or lawyers. Other taxes, such as capital enforcing-contracts. gains tax or value added tax, are excluded from the cost measure. Both costs borne Assumptions about the case Time by the buyer and those borne by the Time is recorded in calendar days. The seller are included. If cost estimates dif- ĖŤ The value of the claim equals 200% measure captures the median dura- fer among sources, the median reported of the economy’s income per capita. tion that property lawyers, notaries or value is used. ĖŤ The dispute concerns a lawful trans- registry officials indicate is necessary action between 2 businesses (Seller to complete a procedure. It is assumed The data details on registering property can and Buyer), located in the selected that the minimum time required for each be found for each economy at http://www city. Seller sells goods worth 200% procedure is 1 day, except for procedures .doingbusiness.org by selecting the economy of the economy’s income per capita that can be fully completed online, for in the drop-down list. to Buyer. After Seller delivers the which the time required is recorded as goods to Buyer, Buyer refuses to pay half a day. Although procedures may for the goods on the grounds that the take place simultaneously, they cannot delivered goods were not of adequate start on the same day, again with the ENFORCING CONTRACTS quality. exception of procedures that can be Indicators on enforcing contracts mea- ĖŤ Seller (the plaintiff) sues Buyer (the fully completed online. It is assumed sure the efficiency of the judicial system defendant) to recover the amount that the buyer does not waste time and in resolving a commercial dispute. The under the sales agreement (that is, commits to completing each remaining data are built by following the step-by- 200% of the economy’s income per procedure without delay. If a procedure step evolution of a commercial sale dis- capita). Buyer opposes Seller’s claim, can be accelerated for an additional cost, pute before local courts. The data are col- saying that the quality of the goods is the fastest legal procedure available and lected through study of the codes of civil not adequate. The claim is disputed used by the majority of property owners procedure and other court regulations as on the merits. The court cannot de- is chosen. If procedures can be under- well as questionnaires completed by local cide the case on the basis of docu- taken simultaneously, it is assumed that litigation lawyers and by judges (figure mentary evidence or legal title alone. they are. It is assumed that the parties 8.7). The ranking on the ease of enforc- ĖŤ A court in the selected city with juris- involved are aware of all requirements ing contracts is the simple average of the diction over commercial cases worth DATA NOTES 53

FIGURE 8.7 What are the time, cost and FIGURE 8.8 Enforcing contracts: resolving TABLE 8.4 What do the enforcing number of procedures to a commercial dispute through contracts indicators measure? resolve a commercial dispute the courts through the courts? Rankings are based on Procedures to enforce a contract through the 3 indicators courts (number) Court Days to resolve Attorney, court and Steps to ﬁle and serve the case commercial sale dispute enforcement costs as Time through the courts % of claim value Steps for trial and judgment Cost Steps to enforce the judgment Number of procedures 33.3% 33.3% Time required to complete procedures Time Cost (calendar days)

Company A Company B Time to file and serve the case (seller Commercial (buyer dispute 33.3% & plaintiff) & defendant) Procedures Time for trial and obtaining judgment Filing of court Trial & Enforcement Time to enforce the judgment case judgment Cost required to complete procedures (% of Steps to file claim, obtain judgment claim) and enforce it Average attorney fees 200% of income per capita decides used in practice, between the parties or Court costs the dispute. between them and the judge or court Seller attaches Buyer’s movable assets Enforcement costs ĖŤ officer. Other procedural steps, internal (for example, office equipment and to the court or between the parties and vehicles) before obtaining a judgment their counsel, may be counted as well. because Seller fears that Buyer may Cost Procedural steps include steps to file and become insolvent. serve the case, steps to assign the case to Cost is recorded as a percentage of An expert opinion is given on the qual- ĖŤ a judge, steps for trial and judgment and the claim, assumed to be equivalent to ity of the delivered goods. If it is stan- steps necessary to enforce the judgment 200% of income per capita. No bribes dard practice in the economy for each (table 8.4). are recorded. Three types of costs are party to call its own expert witness, the recorded: court costs, enforcement costs parties each call one expert witness. To indicate overall efficiency, 1 proce- and average attorney fees. If it is standard practice for the judge dure is subtracted from the total num- to appoint an independent expert, the ber for economies that have specialized Court costs include all court costs that judge does so. In this case the judge commercial courts, and 1 procedure for Seller (plaintiff) must advance to the does not allow opposing expert testi- economies that allow electronic filing of court, regardless of the final cost to mony. the initial complaint in court cases. Some Seller. Enforcement costs are all costs The judgment is 100% in favor of ĖŤ procedural steps that are part of others that Seller (plaintiff) must advance to Seller: the judge decides that the are not counted in the total number of enforce the judgment through a public goods are of adequate quality and procedures. sale of Buyer’s movable assets, regard- that Buyer must pay the agreed price. less of the final cost to Seller. Average ĖŤ Buyer does not appeal the judgment. attorney fees are the fees that Seller Seller decides to start enforcing the Time (plaintiff) must advance to a local attor- judgment as soon as the time allo- Time is recorded in calendar days, ney to represent Seller in the standard- cated by law for appeal expires. counted from the moment the plaintiff ized case. ĖŤ Seller takes all required steps for decides to file the lawsuit in court until prompt enforcement of the judgment. payment. This includes both the days The data details on enforcing contracts can The money is successfully collected when actions take place and the waiting be found for each economy at http://www through a public sale of Buyer’s mov- periods between. The average duration .doingbusiness.org by selecting the economy able assets (for example, office equip- of different stages of dispute resolution in the drop-down list. This methodology was ment and vehicles). is recorded: the completion of service of developed by Djankov and others (2003) process (time to file and serve the case), and is adopted here with minor changes. Procedures the issuance of judgment (time for the trial and obtaining the judgment) and the The list of procedural steps compiled for moment of payment (time for enforce- each economy traces the chronology of ment of the judgment). a commercial dispute before the relevant court. A procedure is defined as any interaction, required by law or commonly 54 DOING BUSINESS IN EGYPT 2014

FIGURE 8.9 How much time, how many documents and what cost to export and import TRADING ACROSS BORDERS by sea transport? Doing Business measures the time and cost (excluding tariffs) associated with exporting and importing a standardized cargo of goods by sea transport. The time Time Time and cost necessary to complete every To export Cost Cost To import official procedure for exporting and im- Documents Documents Full, 20-foot container porting the goods are recorded; however, the time and cost for sea transport are Import not included. All documents needed by the trader to export or import the goods across the border are also recorded. For Export exporting goods, procedures range from packing the goods into the container at Port and terminal Customs and Inland the warehouse to their departure from handling border agencies transport the port of exit. For importing goods, procedures range from the vessel’s arrival at the port of entry to the cargo’s delivery at the warehouse. For landlocked econ- ĖŤ Does not require refrigeration or any letter of credit are also taken into account. omies, these include procedures at the other special environment. Documents that are requested at the time inland border post, since the port is lo- ĖŤ Does not require any special phy- of clearance but that are valid for a year cated in the transit economy. Payment tosanitary or environmental safety or longer and do not require renewal per is made by letter of credit, and the time, standards other than accepted inter- shipment (for example, an annual tax cost and documents required for the is- national standards. clearance certificate) are not included. suance or advising of a letter of credit are ĖŤ Is one of the economy’s leading ex- Documents that are required purely for taken into account (figure 8.9). port or import products. purposes of preferential treatment are no longer included—for example, a certificate The ease of trading across borders in of origin if the use is only to qualify for a Doing Business in Egypt 2014 measures Assumptions about the business preferential tariff rate under trade agree- 5 Egyptian ports: Alexandria, Dami- The business: ments. It is assumed that the exporter will etta, Port Said East, Port Said West, and always obtain a certificate of origin for its Sokhna. Inland transportation is mea- ĖŤ Has at least 60 employees. trade partner, however, and the time and sured from each of the ports to the near- ĖŤ Is located in the selected city. cost associated with obtaining it are in- est city. For example, in the case of the ĖŤ Is a private, limited liability company. cluded in the time and cost to export. port of Sokhna, inland transportation is ĖŤ Does not operate in an export process- measured between the port and a ware- ing zone or an industrial estate with house located in Suez. special export or import privileges. Time ĖŤ Is 100% domestically owned. The time for exporting and importing Local freight forwarders, shipping lines, ĖŤ Exports more than 10% of its sales. is recorded in calendar days. The time customs brokers, port officials and banks calculation for a procedure starts from provide information on required docu- the moment it is initiated and runs un- ments and cost as well as the time to Documents til it is completed. If a procedure can be complete each procedure. To make the All documents required per shipment to accelerated for an additional cost and is data comparable across economies, sev- export and import the goods are recorded available to all trading companies, the eral assumptions about the business and (table 8.5). It is assumed that a new con- fastest legal procedure is chosen. Fast- the traded goods are used. tract is drafted per shipment and that the track procedures applying only to firms contract has already been agreed upon located in an export processing zone, or and executed by both parties. Documents only to certain accredited firms under Assumptions about the traded required for clearance by relevant agen- authorized economic operator programs, goods cies—including government ministries, are not taken into account because they The traded product travels in a dry- customs, port authorities and other con- are not available to all trading companies. cargo, 20-foot,1 full container load. It trol agencies—are taken into account. Sea transport time is not included. It is as- weighs 10 tons and is valued at $20,000. For landlocked economies, documents sumed that neither the exporter nor the The product: required by authorities in the transit econ- importer wastes time and that each com- omy are also included. Since payment is mits to completing each remaining proce- ĖŤ Is not hazardous nor does it include by letter of credit, all documents required dure without delay. Procedures that can military items. by banks for the issuance or securing of a be completed in parallel are measured DATA NOTES 55

The data details on trading across borders of economies. According to respondents TABLE 8.5 What do the trading across can be found for each economy at http:// questioned in each of the 189 economies borders indicators measure? www.doingbusiness.org by selecting the covered by Doing Business, 20-foot and economy in the drop-down list. This meth- 40-foot containers are equally common in Documents required to export and import 49% of the economies, 20-foot containers odology was developed by Djankov, Freund (number) are more common in 29%, and 40-foot and Pham (2010) and is adopted here with Bank documents containers are mostly relied on in only 10%. minor changes. For the remaining 12% of economies no Customs clearance documents data on the use of the 2 types of containers were available. The trading across borders Port and terminal handling documents indicators will continue to be based on 20- EASE OF DOING BUSINESS Transport documents foot containers because this size remains Doing Business in Egypt 2014 includes the most relevant for international trade Time required to export and import (days) rankings of the 15 cities measured on 4 across the globe. topics: starting a business, dealing with 2. The Trading across borders topic, measured Obtaining, filling out and submitting all the in 5 Egyptian ports, does not include a construction permits, registering prop- documents ranking. erty, and enforcing contracts.2 The rank- Inland transport and handling ing on each topic is the simple average of Customs clearance and inspections the percentile rankings on its component indicators. The ease of starting a business Port and terminal handling is a simple average of the city rankings on the number of procedures, and the Does not include sea transport time associated time and cost (% of income Cost required to export and import (US$ per per capita) and paid-in minimum capital container) required to start a business. The ease of dealing with construction permits is a All documentation simple average of the city rankings on the Inland transport and handling number of procedures, and the associated time and cost (% of income per capita) Customs clearance and inspections required to build a warehouse. The ease of registering property is a simple aver- Port and terminal handling age of the city rankings on the number of procedures, associated time and cost (% Official costs only, no bribes of the property value) required to register property. The ease of enforcing contracts is a simple average of the city percentile as simultaneous. But it is assumed that rankings on the procedures, time and cost document preparation, inland transport, (% of claim value) to resolve a commer- customs and other clearance, and port cial dispute through the courts. and terminal handling require a minimum time of 1 day each and cannot take place The ease of doing business index is lim- simultaneously. The waiting time be- ited in scope. It does not account for an tween procedures—for example, during economy’s proximity to large markets, unloading of the cargo—is included in the the quality of its infrastructure services measure. (other than services related to trading across borders and getting electricity), the strength of its financial system, the Cost security of property from theft and loot- Cost measures the fees levied on a 20- ing, macroeconomic conditions or the foot container in U.S. dollars. All the fees strength of underlying institutions. associated with completing the procedures to export or import the goods are taken into account. These include costs for documents, administrative fees for NOTES customs clearance and inspections, cus- 1. While different types of containers are used toms broker fees, port-related charges around the world, the 2 most important and inland transport costs. The cost does are 20-foot and 40-foot containers. Use not include customs tariffs and duties or of 40-foot containers is growing, but this costs related to sea transport. Only offi- year’s research confirms that 20-foot cial costs are recorded. containers are still common in the majority City and Indicator tables CITY TABLES 57

City tables Alexandria Alexandria Starting a business (rank) 1 Registering property (rank) 4 Procedures (number) 7 Procedures (number) 7 Time (days) 8 Time (days) 50 Cost (% of income per capita) 9.7 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 15 Enforcing contracts (rank) 11 Procedures (number) 19 Procedures (number) 42 Time (days) 220 Time (days) 923 Cost (% of income per capita) 200.3 Cost (% of claim) 26.2

Assuit Assuit

Starting a business (rank) 4 Registering property (rank) 10 Procedures (number) 8 Procedures (number) 8 Time (days) 9 Time (days) 52 Cost (% of income per capita) 9.7 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 7 Enforcing contracts (rank) 14 Procedures (number) 15 Procedures (number) 42 Time (days) 218 Time (days) 965 Cost (% of income per capita) 71.4 Cost (% of claim) 26.2

Aswan Aswan

Starting a business (rank) 15 Registering property (rank) 12 Procedures (number) 8 Procedures (number) 8 Time (days) 11 Time (days) 62 Cost (% of income per capita) 10.5 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 14 Enforcing contracts (rank) 7 Procedures (number) 19 Procedures (number) 42 Time (days) 213 Time (days) 745 Cost (% of income per capita) 222.3 Cost (% of claim) 26.1

Cairo Cairo

Starting a business (rank) 1 Registering property (rank) 13 Procedures (number) 7 Procedures (number) 8 Time (days) 8 Time (days) 63 Cost (% of income per capita) 9.7 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 12 Enforcing contracts (rank) 15 Procedures (number) 21 Procedures (number) 42 Time (days) 179 Time (days) 1,010 Cost (% of income per capita) 108 Cost (% of claim) 26.2

Damietta Damietta

Starting a business (rank) 10 Registering property (rank) 15 Procedures (number) 7 Procedures (number) 8 Time (days) 10 Time (days) 130 Cost (% of income per capita) 10 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 5 Enforcing contracts (rank) 1 Procedures (number) 18 Procedures (number) 42 Time (days) 123 Time (days) 810 Cost (% of income per capita) 81 Cost (% of claim) 18.2 58 DOING BUSINESS IN EGYPT 2014

Fayoum Fayoum

Starting a business (rank) 6 Registering property (rank) 3 Procedures (number) 7 Procedures (number) 7 Time (days) 9 Time (days) 35 Cost (% of income per capita) 9.9 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 13 Enforcing contracts (rank) 3 Procedures (number) 23 Procedures (number) 42 Time (days) 163 Time (days) 830 Cost (% of income per capita) 150.2 Cost (% of claim) 18.2

Giza Giza

Starting a business (rank) 1 Registering property (rank) 7 Procedures (number) 7 Procedures (number) 7 Time (days) 8 Time (days) 65 Cost (% of income per capita) 9.7 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 11 Enforcing contracts (rank) 4 Procedures (number) 19 Procedures (number) 42 Time (days) 148 Time (days) 810 Cost (% of income per capita) 108 Cost (% of claim) 25.7

Ismailia Ismailia

Starting a business (rank) 4 Registering property (rank) 5 Procedures (number) 8 Procedures (number) 7 Time (days) 9 Time (days) 52 Cost (% of income per capita) 9.7 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 3 Enforcing contracts (rank) 2 Procedures (number) 20 Procedures (number) 42 Time (days) 109 Time (days) 706 Cost (% of income per capita) 59.5 Cost (% of claim) 20.7

Kharga New Valley

Starting a business (rank) 14 Registering property (rank) 8 Procedures (number) 8 Procedures (number) 7 Time (days) 11 Time (days) 28 Cost (% of income per capita) 9.9 Cost (% of the property value) 0.8 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 4 Enforcing contracts (rank) 10 Procedures (number) 17 Procedures (number) 42 Time (days) 169 Time (days) 946 Cost (% of income per capita) 60.4 Cost (% of claim) 23.2

Mansoura Dakahlia

Starting a business (rank) 6 Registering property (rank) 2 Procedures (number) 7 Procedures (number) 7 Time (days) 9 Time (days) 29 Cost (% of income per capita) 9.9 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 2 Enforcing contracts (rank) 11 Procedures (number) 14 Procedures (number) 42 Time (days) 120 Time (days) 1,050 Cost (% of income per capita) 100.3 Cost (% of claim) 25.7 CITY TABLES 59

Port Said Port Said

Starting a business (rank) 12 Registering property (rank) 1 Procedures (number) 8 Procedures (number) 7 Time (days) 11 Time (days) 24 Cost (% of income per capita) 9.8 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 10 Enforcing contracts (rank) 7 Procedures (number) 16 Procedures (number) 42 Time (days) 193 Time (days) 964 Cost (% of income per capita) 107.4 Cost (% of claim) 19.5

Sohag Sohag

Starting a business (rank) 12 Registering property (rank) 6 Procedures (number) 8 Procedures (number) 7 Time (days) 10 Time (days) 18 Cost (% of income per capita) 9.9 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 9 Enforcing contracts (rank) 6 Procedures (number) 17 Procedures (number) 42 Time (days) 153 Time (days) 915 Cost (% of income per capita) 114.4 Cost (% of claim) 22.5

Suez Suez

Starting a business (rank) 10 Registering property (rank) 8 Procedures (number) 8 Procedures (number) 8 Time (days) 10 Time (days) 51 Cost (% of income per capita) 9.8 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 1 Enforcing contracts (rank) 9 Procedures (number) 13 Procedures (number) 42 Time (days) 144 Time (days) 845 Cost (% of income per capita) 58.9 Cost (% of claim) 25.7

Tanta Gharbia

Starting a business (rank) 8 Registering property (rank) 14 Procedures (number) 7 Procedures (number) 7 Time (days) 10 Time (days) 58 Cost (% of income per capita) 9.8 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 6 Enforcing contracts (rank) 5 Procedures (number) 17 Procedures (number) 42 Time (days) 129 Time (days) 830 Cost (% of income per capita) 106.2 Cost (% of claim) 24.6

Zagazig Sharqia

Starting a business (rank) 8 Registering property (rank) 11 Procedures (number) 7 Procedures (number) 7 Time (days) 10 Time (days) 56 Cost (% of income per capita) 9.8 Cost (% of the property value) 0.7 Minimum capital (% of income per capita) 0.0

Dealing with construction permits (rank) 7 Enforcing contracts (rank) 13 Procedures (number) 17 Procedures (number) 42 Time (days) 170 Time (days) 1,105 Cost (% of income per capita) 92.5 Cost (% of claim) 25.7 60 DOING BUSINESS IN EGYPT 2014

Indicator tables

Starting a business Dealing with construction permits

Paid-in Ease of minimum Ease of Cost dealing with Cost capital starting a (% of construction Procedures Time (% of income (% of income business Procedures Time income per permits (number) (days) per capita) per capita) (rank) (number) (days) capita) (rank)

Alexandria 7 8 9.7 0.0 1 19 220 200.3 15 Alexandria

Assuit 8 9 9.7 0.0 4 15 218 71.4 7 Assuit

Aswan 8 11 10.5 0.0 15 19 213 222.3 14 Aswan

Cairo 7 8 9.7 0.0 1 21 179 108.0 12 Cairo

Damietta 7 10 10.0 0.0 10 18 123 81.0 5 Damietta

Fayoum 7 9 9.9 0.0 6 23 163 150.2 13 Fayoum

Giza 7 8 9.7 0.0 1 19 148 108.0 11 Giza

Ismailia 8 9 9.7 0.0 4 20 109 59.5 3 Ismailia

Kharga 8 11 9.9 0.0 14 17 169 60.4 4 New Valley

Mansoura 7 9 9.9 0.0 6 14 120 100.3 2 Dakahlia

Port Said 8 11 9.8 0.0 12 16 193 107.4 10 Port Said

Sohag 8 10 9.9 0.0 12 17 153 114.4 9 Sohag

Suez 8 10 9.8 0.0 10 13 144 58.9 1 Suez

Tanta 7 10 9.8 0.0 8 17 129 106.2 6 Gharbia

Zagazig 7 10 9.8 0.0 8 17 170 92.5 7 Sharqia INDICATOR TABLES 61

Registering property Enforcing contracts

Cost Ease of Ease of (% of registering Cost enforcing Procedures Time property property Procedures Time (% claim contracts (number) (days) value) (rank) (number) (days) value) (rank)

Alexandria 7 50 0.7 4 42 923 26.2 11 Alexandria

Assuit 8 52 0.7 10 42 965 26.2 14 Assuit

Aswan 8 62 0.7 12 42 745 26.1 7 Aswan

Cairo 8 63 0.7 13 42 1,010 26.2 15 Cairo

Damietta 8 130 0.7 15 42 810 18.2 1 Damietta

Fayoum 7 35 0.7 3 42 830 18.2 3 Fayoum

Giza 7 65 0.7 7 42 810 25.7 4 Giza

Ismailia 7 52 0.7 5 42 706 20.7 2 Ismailia

Kharga 7 28 0.8 8 42 946 23.2 10 New Valley

Mansoura 7 29 0.7 2 42 1,050 25.7 11 Dakahlia

Port Said 7 24 0.7 1 42 964 19.5 7 Port Said

Sohag 7 18 0.7 6 42 915 22.5 6 Sohag

Suez 8 51 0.7 8 42 845 25.7 9 Suez Tanta 7 58 0.7 14 42 830 24.6 5 Gharbia Zagazig 7 56 0.7 11 42 1,105 25.7 13 Sharqia

Trading across borders Export Import

Documents Time Cost Documents Time Cost (number) (days) (US$ per container) (number) (days) (US$ per container)

Alexandria 8 11 615 10 14 780

Damietta 8 10 585 10 14 857

Port Said East 8 11 694 10 15 884

Port Said West 8 11 532 10 14 831

Sokhna (Suez) 8 12 667 10 16 1,047 List of procedures LIST OF PROCEDURES - STARTING A BUSINESS 63

for the company’s establishment which should be LIST OF PROCEDURES Procedure 5. Obtain the notification of paid at once in a single payment at the CIB bank incorporation from the Department of STARTING A BUSINESS branch in the one-stop shop. Companies in the GAFI one-stop shop in Decree No. 282 of 2007 allows corporations to Alexandria Alexandria determine in the constitutive contract the name of Standard company legal form: Sharikat that Mas- the chairman, the vice chairman and the CEO and Time: 1 day souliyyah Mahdoodah their responsibilities before incorporation enabling Cost: No cost the corporations to immediately withdraw cash Minimum capital requirement: EGP 0 (US$ 0) Comments: When the company contract has from the companies under incorporation account been submitted, the competent authority must Data as of: June 2013 at the bank after registering in the Commercial ratify the articles of incorporation and give the Procedure 1. Obtain a Certificate of Registry. applicant a certificate indicating that all the requi- Non-Confusion to reserve the company All the fees for company establishment are paid at red papers have been submitted. This certificate name at the Commercial Registry office this stage, including: allows for the registration of the company in the a. Notary public fee: 0.25% of start-up capital Commercial Registry. This certificate is issued in the General Authority for Investment within 24 hours following the submission of and Free Zones (GAFI) one-stop shop in (minimum of EGP 10 and a maximum of EGP 1,000); the notarized contract. The company assumes Alexandria legal responsibility and judicial personality from b. Establishment fees: 0.1% of start-up capital the date of registration. Where the competent Time: 1 day (minimum of EGP 100 and maximum of EGP authority has no objection, the Department of Cost: EGP 25 1,000 according to Article 17 (d) of the Compa- Companies is thereafter responsible for publishing nies Law); Comments: Investors must reserve a company the announcement of the company establishment name at the General Authority for Investment and c. Commercial Syndicate fee: EGP 125 (for start- in the Investment Gazette at the expense of the Free Zones (GAFI) one-stop shop. The Investment up capital less than or equal to EGP 500,000) company. Services Department of the GAFI one-stop shop or EGP 250 (for start-up capital more than EGP in Alexandria will first check the legality of the 500,000); Procedure 6. Register for taxes at the proposed company name. Once the name is d. Publication fee: EGP 150 (for a limited liability Investment Tax Office in the GAFI one- deemed to be legally admissible, the Investment company in Arabic) or EGP 300 (for a limited stop shop in Alexandria Services Department will send a fax to the liability company in Arabic and English); central Commercial Registry office in Cairo. The Time: 1 day e. Chamber of Commerce fee: 0.2% of capital Commercial Registry in Cairo will check that the (minimum of EGP 24 and maximum of EGP Cost: No cost desired company name is not in use and will issue 2,000); Comments: Tax registration (including obtaining the Certificate of Non-Confusion (shahadat adam f. Commercial registration fee: EGP 56; and the tax card) can be completed at the Investment al-iltibas) within a few hours and fax it back to the Tax Office at the GAFI one-stop shop in Alexan- one-stop shop in Alexandria. g. Operation certificate fee: EGP 29. dria once incorporation is completed. The Inves- There is a new fee of EGP25 for this procedure tment Tax Office issues a receipt/temporary ID according to the Internal Trade Development Procedure 4. Notarize the company with all the details on the same day, which allows Authority’s new Administrative Decree No. 25 of contract at the Investment Notarization the company to proceed with its operations. This 2013 (January 28, 2013). Office in the GAFI one-stop shop in temporary document is valid for 30 days. The Tax Alexandria officer in Assuit will submit the request the same Procedure 2. Obtain a certificate from Time: 1 day day as it is received to the Tax Authority office in an authorized bank and open a bank Cairo for printing (all printing is done centrally in Cost: No cost account Cairo). Once printed, the office in Cairo will mail Comments: The articles of association must be Time: 1 day the tax ID to Alexandria within a couple of days registered and certain documents deposited with via express mail. Cost: EGP 400 (EGP 250 for the bank certificate the Investment Notarization Office at the GAFI Upon obtaining the card, the company may + account opening fees ranging from EGP 100 to one-stop shop. The documents requiring notari- choose to register for sales tax, provided that they 200) zation include: have started production. Companies are obliged to Comments: The Commercial International Bank a. Original certificate of non-confusion of the register for sales tax only once they reach at least (CIB) branch at the GAFI one-stop shop issues company name; EGP 54,000 in sales for industrial activities and and delivers the certificate within 1-2 days. Inves- b. Original certificate from an authorized bank; EGP 150,000 in sales for commercial activities. tors can go to this bank branch or any authorized The required documents include the articles of bank to obtain the bank certificate and open a c. A copy of the powers of attorney from the founders to their representative; association and the powers of attorney, the bank bank account. Upon an agreement between GAFI signature authentication (to be issued to the d. A copy of the founders’ ID cards or passports; and the Central Bank, investors do not need to appropriate person by the manager having the submit the articles of association to the bank in e. Security clearances for foreign partners (if power to sign on behalf of the company), the order to obtain the bank certificate. relevant); tax card, an original extract from the company’s f. Original certificate indicating that the commercial register, and the original copy of the Procedure 3. Submit documents to the company’s auditor is listed at the Registry of company’s lease agreement for its premises. Department of Companies in the GAFI accountants and auditors; one-stop shop in Alexandria and obtain g. Application provided by GAFI; and Procedure 7. Open a company file and invoice h. Stamped articles of association. register employees with the National Time: 1 day No stamp duty is levied, according to the amend- Authority for Social Insurance at the Cost: EGP 1,400 (see comments) ments (published on July 1, 2006) to the Stamp GAFI one-stop shop in Alexandria Comments: The investor needs to submit the Duty Law (No. 111 of 1980). Time: 2 days approved company contract, along with the rest Cost: No cost of the required documentation, including the Comments: Social insurance provides com- Certificate of Non-Confusion (shahadat adam pensation for disability, retirement (pension), al-iltibas) issued by the Commercial Registry and unemployment, and work-related injuries. By law, the powers of attorney. The investor deposits the employers are required to subscribe to the social documents at the reception desk, where they are insurance system. Otherwise, they may be subject reviewed immediately by a lawyer. The employee to sanctions. of the division reviews the documents and issues an invoice detailing all the cost mentioned above

* This procedure can be completed simultaneously with previous procedures. 64 DOING BUSINESS IN EGYPT 2014

The employer must submit a fully completed, Procedure 2. Obtain a certificate from Procedure 4. Notarize the company authority-issued application (Form 1 and 2) and an authorized bank and open a bank contract at the Investment Notarization the following documents to the competent office: account Office in the GAFI one-stop shop in a. Company’s commercial registration; Time: 1 day Assuit and pay notary fees b. Company’s tax card; Cost: EGP 400 (EGP 250 for the bank certificate Time: 1 day c. Company’s articles of incorporation; + account opening fees ranging from EGP 100 to Cost: EGP 473 (Notary public fee: 0.25% of d. Deed or lease agreement for company premi- 200) capital with a minimum of EGP10 and a maximum ses; Comments: Unlike Cairo and Alexandria, there of EGP1,000) e. Employer to fill in Form No. 2; are no bank branches within the GAFI one-stop Comments: The articles of association must be f. Employer’s bank signature certificate; shop in Assuit so applicants can obtain the bank registered and certain documents deposited with g. Employer’s graduation certificate; certificate from any authorized bank. The cost to the Investment Notarization Office at the GAFI open a bank account and obtain a bank certificate h. Employees’ to fill in Form No. 1; one-stop shop. The documents that must be is between EGP 300-500. Upon an agreement notarized include: i. Employees’ copy of identification card; between GAFI and the Central Bank, investors do a. Original certificate of non-confusion of the j. Employee’s graduation certificate; and not need to submit the articles of association to company name; the bank in order to obtain the bank certificate. k. Employees’ birth certificate (copy) if they do b. Original certificate from an authorized bank; not have a social insurance number; or Form No. 6 for clearance/termination from emplo- Procedure 3. Submit documents to c. A copy of the powers of attorney from the yees’ previous jobs. the Department of Companies in the founders to their representative; The company premises are then subject to inspec- GAFI one-stop shop in Assuit and pay d. A copy of the founders’ ID cards or passports; tion by relevant authorities - such as the National registration fees e. Security clearances for foreign partners (if Authority for Social Insurance and GAFI. Inspec- Time: 1 day relevant); tion takes place in practice only if there is any Cost: EGP 871 (see comments) f. Original certificate indicating that the complaint filed against the company, or suspicion company’s auditor is listed at the Registry of that the company is an image organization that Comments: The investor needs to submit the accountants and auditors; approved company contract, along with the rest does not actually conduct business as claimed in g. Application provided by GAFI; and its submitted documents. Companies registering of the required documentation, including the h. Stamped articles of association. for sales tax will usually undergo inspection. Certificate of Non-Confusion (shahadat adam al-iltibas) issued by the Commercial Registry and No stamp duty is levied, according to the amend- STARTING A BUSINESS the powers of attorney. The investor deposits the ments (published on July 1, 2006) to the Stamp documents at the reception desk, where they are Duty Law (No. 111 of 1980). Assuit reviewed immediately by a lawyer. The employee Standard company legal form: Sharikat that Mas- of the division reviews the documents and issues Procedure 5. Obtain the notification of souliyyah Mahdoodah an invoice detailing all the cost mentioned above incorporation from the Department of Minimum capital requirement: EGP 0 (US$ 0) for the company’s establishment. Unlike Cairo, the Companies in the GAFI one-stop shop notarization fees and commercial registration fees Data as of: June 2013 in Assuit are not lumped into a single payment. Instead, Time: 1 day Procedure 1. Obtain a Certificate of the investor must pay each relevant authority Non-Confusion to reserve the company separately. Cost: No cost name at the Commercial Registry office Decree No. 282 of 2007 allows corporations to Comments: When the company contract has in the General Authority for Investment determine in the constitutive contract the name of been submitted, the competent authority must the chairman, the vice chairman and the CEO and ratify the articles of incorporation and give the and Free Zones (GAFI) one-stop shop their responsibilities before incorporation enabling applicant a certificate indicating that all the requi- in Assuit the corporations to immediately withdraw cash red papers have been submitted. This certificate Time: 1 day from the companies under incorporation account allows for the registration of the company in the Cost: EGP 25 at the bank after registering in the Commercial Commercial Registry. This certificate is issued Registry. within 24 hours following the submission of Comments: Investors must reserve a company the notarized contract. The company assumes name at the General Authority for Investment and The following fees for company establishment are legal responsibility and judicial personality from Free Zones (GAFI) one-stop shop in Assuit. The paid at this stage: the date of registration. Where the competent Investment Services Department will first check a. Establishment fees: 0.1% of start-up capital authority has no objection, the Department of the legality of the proposed company name. Once (minimum of EGP 100 and maximum of EGP Companies is thereafter responsible for publishing the name is deemed to be legally admissible, the 1,000 according to Article 17 (d) of the Compa- the announcement of the company establishment Investment Services Department will send a fax nies Law); in the Investment Gazette at the expense of the to the central Commercial Registry office in Cairo. b. Commercial Syndicate fee: EGP 125 (for start- company. The Commercial Registry in Cairo will check that up capital less than or equal to EGP 500,000) the desired company name is not in use and will or EGP 250 (for start-up capital more than EGP Procedure 6. Register the notification issue the Certificate of Non-Confusion (shahadat 500,000); adam al-iltibas) within a few hours and fax it back of incorporation at the Commercial c. Publication fee: EGP 150 (for a limited liability to the one-stop shop in Assuit. Registry office at the GAFI one-stop company in Arabic) or EGP 300 (for a limited shop in Assuit There is a new fee of EGP 25 for this procedure liability company in Arabic and English); according to the Internal Trade Development Time: 1 day d. Chamber of Commerce fee: 0.2% of capital Authority’s new Administrative Decree No. 25 of (minimum of EGP 24 and maximum of EGP Cost: EGP 56 (commercial registration fees) 2013 (January 28, 2013). 2,000); and Comments: All corporations under both Law e. Operation certificate fee: EGP 29. 8/1997 and Law 1159/1981 assume legal responsibility as soon as they are registered in the commercial registry unless GAFI decides otherwise; with exceptions for specific activities mentioned in the decree. Applicants must register the Notice of Incorporation at the Commercial Registry desk within the GAFI one-stop shop in Assuit and pay the associated fees. Unlike Cairo, which has a centralized system of payments that

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 65

renders this procedure unnecessary, the one-stop j. Employee’s graduation certificate; and Procedure 3. Submit documents to shops in Assuit and Ismailia require that fees be k. Employees’ birth certificate (copy) if they do the Department of Companies in the paid to each authority separately, resulting in this not have a social insurance number; or Form extra procedure. GAFI one-stop shop in Assuit and pay No. 6 for clearance/termination from emplo- registration fees yees’ previous jobs. Time: 3 days Procedure 7. Register for taxes at the The company premises are then subject to inspec- Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National Cost: EGP 1,031 (see comments) stop shop in Assuit Authority for Social Insurance and GAFI. Inspec- Comments: The investor needs to submit the Time: 1 day tion takes place in practice only if there is any approved company contract, along with the rest Cost: No cost complaint filed against the company, or suspicion of the required documentation, including the that the company is an image organization that Certificate of Non-Confusion (shahadat adam Comments: Tax registration (including obtaining does not actually conduct business as claimed in al-iltibas) issued by the Commercial Registry and the tax card) can be completed at the Investment its submitted documents. Companies registering the powers of attorney at the GAFI one-stop shop Tax Office at the GAFI one-stop shop in Assuit for sales tax will undergo inspection. in Assuit (the closest one-stop shop). Applicants once incorporation is completed. The Investment who wish to register their company must submit Tax Office issues a receipt/temporary ID with STARTING A BUSINESS an application at the nearest GAFI one-stop shop all the details on the same day, which allows the in Assuit. Time is calculated as 3 days including company to proceed with its operations. This Aswan 2 days of travel time to and from Assuit by train temporary document is valid for 30 days. The Tax Standard company legal form: Sharikat that Mas- (7-8 hours each way). officer in Assuit will submit the request the same day as it is received to the Tax Authority office in souliyyah Mahdoodah The investor deposits the documents at the recep- Cairo for printing (all printing is done centrally in Minimum capital requirement: EGP 0 (US$ 0) tion desk, where they are reviewed immediately Cairo). Once printed, the office in Cairo will mail Data as of: June 2013 by a lawyer. The employee of the division reviews the tax ID to Assuit within a couple of days via the documents and issues an invoice detailing express mail. Procedure 1. Obtain a Certificate of all the cost mentioned above for the company’s Non-Confusion to reserve the company establishment. Unlike Cairo, the investor cannot Upon obtaining the card, the company may make a single payment for the notarization fees choose to register for sales tax, provided that name at the Commercial Registry office in the General Authority for Investment and commercial registration fees because there they have started production. Companies are is no bank branch at the one-stop shop in Assuit. obliged to register for sales tax only once they and Free Zones (GAFI) one-stop shop in Instead, the investor must pay each relevant reach at least EGP 54,000 in sales for industrial Assuit and pay fees authority separately. activities and EGP150,000 in sales for commercial Time: 1 day activities. The required documents include the Decree No. 282 of 2007 allows corporations to articles of association and the powers of attorney, Cost: EGP 25 determine in the constitutive contract the name of the bank signature authentication (to be issued Comments: Investors must reserve a company the chairman, the vice chairman and the CEO and to the appropriate person by the manager having name at the General Authority for Investment and their responsibilities before incorporation enabling the power to sign on behalf of the company), the Free Zones (GAFI) one-stop shop in Assuit. The the corporations to immediately withdraw cash tax card, an original extract from the company’s Investment Services Department will first check from the companies under incorporation account commercial register, and the original copy of the the legality of the proposed company name. Once at the bank after registering in the Commercial company’s lease agreement for its premises. the name is deemed to be legally admissible, the Registry. Investment Services Department will send a fax The following fees for company establishment are Procedure 8. Open a company file and to the central Commercial Registry office in Cairo. paid at this stage: register employees with the National The Commercial Registry in Cairo will check that a. Establishment fees: 0.1% of start-up capital Authority for Social Insurance office in the desired company name is not in use and will (minimum of EGP 100 and maximum of EGP issue the Certificate of Non-Confusion (shahadat Assuit 1,000 according to Article 17 (d) of the Compa- adam al-iltibas) within a few hours and fax it back nies Law); Time: 2 days to the one-stop shop in Assuit. b. Commercial Syndicate fee: EGP 125 (for start- Cost: No cost There is a new fee of EGP 25 for this procedure up capital less than or equal to EGP 500,000) Comments: Social insurance provides com- according to the Internal Trade Development or EGP 250 (for start-up capital more than EGP pensation for disability, retirement (pension), Authority’s new Administrative Decree No. 25 of 500,000); 2013 (January 28, 2013). unemployment, and work-related injuries. By c. Publication fee: EGP 150 (for a limited liability law, employers are required to subscribe to the company in Arabic) or EGP 300 (for a limited social insurance system. Otherwise, they may be Procedure 2. Obtain a certificate from liability company in Arabic and English); subject to sanctions. Unlike the GAFI one-stop an authorized bank and open a bank d. Chamber of Commerce fee: 0.2% of start-up shop in Cairo, the one-stop shop in Assuit does account not include an office representing the National capital (minimum of EGP 24 and maximum of Time: 1 day Authority for Social Insurance. Companies must EGP 2,000); and register their employees at one of the National Cost: EGP 400 (EGP 250 for the bank certificate e. Operation certificate fee: EGP 29. Authority for Social Insurance offices available + account opening fees ranging from EGP 100 to The cost of a first class round trip train ticket from throughout the city. 200) Aswan to Assuit: EGP 159.92 The employer must submit a fully completed, Comments: Unlike Cairo and Alexandria, there authority-issued application (Form 1 and 2) and are no bank branches within the GAFI one-stop Procedure 4. Notarize the company the following documents to the competent office: shop in Assuit so applicants can obtain the bank contract at the Investment Notarization certificate from any authorized bank. The cost to a. Company’s commercial registration; Office in the GAFI one-stop shop in open a bank account and obtain a bank certificate b. Company’s tax card; is between EGP 300-500. Upon an agreement Assuit and pay notary fees c. Company’s articles of incorporation; between GAFI and the Central Bank, investors do Time: 1 day d. Deed or lease agreement for company premi- not need to submit the articles of association to Cost: EGP 473 (Notary public fee: 0.25% of capi- ses; the bank in order to obtain the bank certificate. tal with a minimum of EGP 10 and a maximum of e. Employer to fill in Form No. 2; EGP 1,000) f. Employer’s bank signature certificate; Comments: The articles of association must be registered and certain documents deposited with g. Employer’s graduation certificate; the Investment Notarization Office at the GAFI h. Employees’ to fill in Form No. 1; one-stop shop. The documents that must be i. Employees’ copy of identification card; notarized include:

* This procedure can be completed simultaneously with previous procedures. 66 DOING BUSINESS IN EGYPT 2014

a. Original certificate of non-confusion of the Procedure 7. Register for taxes at the The company premises are then subject to inspec- company name; Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National b. Original certificate from an authorized bank; Authority for Social Insurance and GAFI. Inspec- stop shop in Assuit tion takes place in practice only if there is any c. A copy of the powers of attorney from the Time: 1 day complaint filed against the company, or suspicion founders to their representative; Cost: No cost that the company is an image organization that d. A copy of the founders’ ID cards or passports; Comments: Tax registration (including obtaining does not actually conduct business as claimed in e. Security clearances for foreign partners (if the tax card) can be completed at the Investment its submitted documents. Companies registering relevant); Tax Office at the GAFI one-stop shop in Assuit for sales tax will undergo inspection. f. Original certificate indicating that the once incorporation is completed. The Investment company’s auditor is listed at the Registry of Tax Office issues a receipt/temporary ID with STARTING A BUSINESS accountants and auditors; all the details on the same day, which allows the Cairo g. Application provided by GAFI; and company to proceed with its operations. This Standard company legal form: Sharikat that Mas- h. Stamped articles of association. temporary document is valid for 30 days. The Tax officer in Assuit will submit the request the same souliyyah Mahdoodah Due to the absence of a bank branch in the Assuit day as it is received to the Tax Authority office in Minimum capital requirement: EGP 0 (US$ 0) one-stop shop, the notarization fees (0.25% of Cairo for printing (all printing is done centrally in capital) are paid directly at the Investment Notari- Data as of: June 2013 Cairo). Once printed, the office in Cairo will mail zation Office in the one-stop shop. No stamp duty the tax ID to Assuit within a couple of days via Procedure 1. Obtain a Certificate of is levied, according to the amendments (published express mail. on July 1, 2006) to the Stamp Duty Law (No. 111 Non-Confusion to reserve the company of 1980). The original copies of the articles of as- Upon obtaining the card, the company may name at the Commercial Registry office sociation and the powers of attorney are required. choose to register for sales tax, provided that they in the General Authority for Investment have started production. Companies are obliged to and Free Zones (GAFI) one-stop shop Procedure 5. Obtain the notification of register for sales tax only once they reach at least in Cairo incorporation from the Department of EGP 54,000 in sales for industrial activities and EGP 150,000 in sales for commercial activities. Time: 1 day Companies in the GAFI one-stop shop The required documents include the articles of Cost: EGP 25 in Assuit association and the powers of attorney, the bank Comments: Investors must reserve a company Time: 1 day signature authentication (to be issued to the name at the General Authority for Investment Cost: No cost appropriate person by the manager having the and Free Zones (GAFI) one-stop shop in Cairo. power to sign on behalf of the company), the Comments: When the company contract has The Investor Services Department will first check tax card, an original extract from the company’s been submitted, the competent authority must the legality of the proposed company name. If commercial register, and the original copy of the ratify the articles of incorporation and give the the name is deemed to be legally admissible, the company’s lease agreement for its premises. applicant a certificate indicating that all the requi- entrepreneur will then go upstairs to the Commer- red papers have been submitted. This certificate cial Registry office in the GAFI one-stop shop to allows for the registration of the company in the Procedure 8. Open a company file and pay the required fees and obtain the Certificate of Commercial Registry. This certificate is issued register employees with the National Non-Confusion (shahadat adam al-iltibas) bearing within 24 hours following the submission of Authority for Social Insurance office in the official government stamp (khetm el nesr). the notarized contract. The company assumes Aswan There is a new fee of EGP 25 for this procedure legal responsibility and judicial personality from Time: 2 days according to the Internal Trade Development the date of registration. Where the competent Authority’s new Administrative Decree No. 25 of Cost: No cost authority has no objection, the Department of 2013 (January 28, 2013). Companies is thereafter responsible for publishing Comments: Social insurance provides com- the announcement of the company establishment pensation for disability, retirement (pension), Procedure 2. Obtain a certificate from in the Investment Gazette at the expense of the unemployment, and work-related injuries. By law, an authorized bank and open a bank company. employers are required to subscribe to the social account insurance system. Otherwise, they may be subject Time: 1 day Procedure 6. Register the notification to sanctions. Unlike the GAFI one-stop shop in of incorporation at the Commercial Cairo, the one-stop shop in Assuit does not inclu- Cost: EGP 400 (EGP 250 for the bank certificate de an office representing the National Authority + account opening fees ranging from EGP 100 to Registry office at the GAFI one-stop for Social Insurance. Companies, must register 200) shop in Assuit their employees at one of the National Authority Comments: The Bank of Alexandria branch at the Time: 1 day for Social Insurance offices available throughout General Authority for Investment and Free Zones Cost: EGP 56 (commercial registration fees) the Aswan. (GAFI) one-stop shop in Cairo issues and delivers Comments: All corporations under both Law The employer must submit a fully completed, the certificate in 1–2 days. Investors can go to this 8/1997 and Law 1159/1981 assume legal authority-issued application (Form 1 and 2) and bank branch or any authorized bank to obtain the responsibility as soon as they are registered in the following documents to the competent office: bank certificate and open a bank account. Upon the commercial registry unless GAFI decides a. Company’s commercial registration; an agreement between GAFI and the Central Bank, investors do not need to submit the articles otherwise; with exceptions for specific activities b. Company’s tax card; mentioned in the decree. Applicants must register of association to the bank in order to obtain the c. Company’s articles of incorporation; the Notice of Incorporation at the Commercial bank certificate. Registry desk within the GAFI one-stop shop in d. Deed or lease agreement for company premi- Assuit and pay the associated fees. Unlike Cairo, ses; Procedure 3. Submit documents to which has a centralized system of payments that e. Employer to fill in Form No. 2; the Department of Companies in the renders this procedure unnecessary, the one-stop f. Employer’s bank signature certificate; GAFI one-stop shop in Cairo and obtain shops in Assuit and Ismailia require that fees be g. Employer’s graduation certificate; invoice paid to each authority separately, resulting in this Time: 1 day extra procedure. h. Employees’ to fill in Form No. 1; i. Employees’ copy of identification card; Cost: EGP 1,400 (see comments) j. Employee’s graduation certificate; and Comments: The investor needs to submit the k. Employees’ birth certificate (copy) if they do approved company contract, along with the rest not have a social insurance number; or Form of the required documentation, including the No. 6 for clearance/termination from emplo- Certificate of Non-Confusion (shahadat adam yees’ previous jobs. al-iltibas) issued by the Commercial Registry and

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 67

the powers of attorney. The investor deposits the Procedure 5. Obtain the notification of d. Deed or lease agreement for company premi- documents at the reception desk at the GAFI one- incorporation from the Department of ses; stop shop, where they are reviewed immediately e. Employer to fill in Form No. 2; by a lawyer. The employee of the division reviews Companies in the GAFI one-stop shop f. Employer’s bank signature certificate; the documents and issues an invoice detailing in Cairo all the cost mentioned above for the company’s Time: 1 day g. Employer’s graduation certificate; establishment which should be paid at once in a Cost: No cost h. Employees’ to fill in Form No. 1; single payment at the Bank of Alexandria branch Comments: When the company contract has i. Employees’ copy of identification card; in the one-stop shop. been submitted, the competent authority must j. Employee’s graduation certificate; and Decree No. 282 of 2007 allows corporations to ratify the articles of incorporation and give the k. Employees’ birth certificate (copy) if they do determine in the constitutive contract the name of applicant a certificate indicating that all the requi- not have a social insurance number; or Form the chairman, the vice chairman and the CEO and red papers have been submitted. This certificate No. 6 for clearance/termination from emplo- their responsibilities before incorporation enabling allows for the registration of the company in the yees’ previous jobs. the corporations to immediately withdraw cash Commercial Registry. This certificate is issued from the companies under incorporation account The company premises are then subject to inspec- within 24 hours following the submission of tion by relevant authorities - such as the National at the bank after registering in the Commercial the notarized contract. The company assumes Registry. Authority for Social Insurance and GAFI. Inspec- legal responsibility and judicial personality from tion takes place in practice only if there is any All the fees for company establishment are paid at the date of registration. Where the competent complaint filed against the company, or suspicion this stage, including: authority has no objection, the Department of that the company is an image organization that a. Notary public fee: 0.25% of start-up capital Companies is thereafter responsible for publishing does not actually conduct business as claimed in (minimum of EGP 10 and a maximum of EGP the announcement of the company establishment its submitted documents. Companies registering 1,000); in the Investment Gazette at the expense of the for sales tax will usually undergo inspection. company. b. Establishment fees: 0.1% of start-up capital (minimum of EGP 100 and maximum of EGP STARTING A BUSINESS Procedure 6. Register for taxes at the 1,000 according to Article 17 (d) of the Compa- Damietta nies Law); Investment Tax Office in the GAFI one- c. Commercial Syndicate fee: EGP 125 (for start- stop shop in Cairo Standard company legal form: Sharikat that Mas- up capital less than or equal to EGP 500,000) Time: 1 day souliyyah Mahdoodah or EGP 250 (for start-up capital more than EGP Cost: No cost Minimum capital requirement: EGP 0 (US$ 0) 500,000); Comments: Upon incorporation, the company can Data as of: June 2013 d. Publication fee: EGP 150 (for a limited liability complete tax registration and obtain the tax card company in Arabic) or EGP 300 (for a limited at the one-stop shop’s tax counter on the first Procedure 1. Obtain a Certificate of liability company in Arabic and English); floor. The tax cards are sent via courier to a central Non-Confusion to reserve the company e. Chamber of Commerce fee: 0.2% of start-up location in Cairo (located near the one-stop shop) name at the Commercial Registry office capital (minimum of EGP 24 and maximum of for printing. If the request for a tax card is submit- in the General Authority for Investment EGP 2,000); ted before noon, the tax card will be printed out and Free Zones (GAFI) one-stop shop f. Commercial registration fee: EGP 56; and and issued on the same day. Requests submitted in Cairo after noon will be processed on the following day. g. Operation certificate fee: EGP 29. Time: 1 day Upon obtaining the card, the company may choose to register for sales tax, provided that they Cost: EGP 25 Procedure 4. Notarize the company’s Comments: Investors must reserve a company contract at the Investment Notary have started production. Companies are obliged to register for sales tax only once they reach at least name at the General Authority for Investment Office in the GAFI one-stop shop in EGP 54,000 in sales for industrial activities and and Free Zones (GAFI) one-stop shop in Cairo. Cairo EGP 150,000 in sales for commercial activities. The Investor Services Department will first check Time: 1 day The required documents include the articles of the legality of the proposed company name. If the name is deemed to be legally admissible, the Cost: No cost association and the powers of attorney, the bank signature authentication (to be issued to the entrepreneur will then go upstairs to the Commer- Comments: The articles of association must be appropriate person by the manager having the cial Registry office in the GAFI one-stop shop to registered and certain documents deposited with power to sign on behalf of the company), the pay the required fees and obtain the Certificate of the Investment Notarization Office at the GAFI tax card, an original extract from the company’s Non-Confusion (shahadat adam al-iltibas) bearing one-stop shop. The documents requiring notari- commercial register, and the original copy of the the official government stamp (khetm el nesr). zation include: company’s lease agreement for its premises. There is a new fee of EGP 25 for this procedure a. Original certificate of non-confusion of the according to the Internal Trade Development company name; Procedure 7. Open a company file and Authority’s new Administrative Decree No. 25 of b. Original certificate from an authorized bank; register employees with the National 2013 (January 28, 2013). c. A copy of the powers of attorney from the Authority for Social Insurance at the founders to their representative; GAFI one-stop shop in Cairo Procedure 2. Obtain a certificate from an authorized bank and open a bank d. A copy of the founders’ ID cards or passports; Time: 2 days account e. Security clearances for foreign partners (if Cost: No cost relevant); Time: 1 day Comments: Social insurance provides com- f. Original certificate indicating that the pensation for disability, retirement (pension), Cost: EGP 400 (EGP 250 for the bank certificate company’s auditor is listed at the Registry of unemployment, and work-related injuries. By law, + account opening fees ranging from EGP 100 to accountants and auditors; employers are required to subscribe to the social 200) g. Application provided by GAFI; and insurance system. Otherwise, they may be subject Comments: The Bank of Alexandria branch at the h. Stamped articles of association. to sanctions. General Authority for Investment and Free Zones (GAFI) one-stop shop in Cairo issues and delivers No stamp duty is levied, according to the amend- The employer must submit a fully completed, the certificate in 1–2 days. Investors can go to this ments (published on July 1, 2006) to the Stamp authority-issued application (Form 1 and 2) and bank branch or any authorized bank to obtain the Duty Law (No. 111 of 1980). the following documents to the competent office: bank certificate and open a bank account. Upon a. Company’s commercial registration; an agreement between GAFI and the Central b. Company’s tax card; c. Company’s articles of incorporation;

* This procedure can be completed simultaneously with previous procedures. 68 DOING BUSINESS IN EGYPT 2014

Bank, investors do not need to submit the articles Procedure 4. Notarize the company Upon obtaining the card, the company may of association to the bank in order to obtain the contract at the Investment Notarization choose to register for sales tax, provided that they bank certificate. have started production. Companies are obliged to Office in the GAFI one-stop shop in register for sales tax only once they reach at least Procedure 3. Submit documents to Cairo EGP 54,000 in sales for industrial activities and the Department of Companies in the Time: 1 day EGP 150,000 in sales for commercial activities. GAFI one-stop shop in Cairo and obtain Cost: No cost The required documents include the articles of association and the powers of attorney, the bank invoice Comments: The articles of association must be signature authentication (to be issued to the registered and certain documents deposited with Time: 3 days appropriate person by the manager having the the Investment Notarization Office at the GAFI Cost: EGP 1,473 (see comments) power to sign on behalf of the company), the one-stop shop. The documents requiring notari- tax card, an original extract from the company’s Comments: The investor needs to submit the zation include: approved company contract, along with the rest commercial register, and the original copy of the a. Original certificate of non-confusion of the of the required documentation, including the company’s lease agreement for its premises. company name; Certificate of Non-Confusion (shahadat adam al-iltibas) issued by the Commercial Registry and b. Original certificate from an authorized bank; Procedure 7. Open a company file and the powers of attorney. The investor deposits c. A copy of the powers of attorney from the register employees with the National the documents at the reception desk at the GAFI founders to their representative; Authority for Social Insurance in one-stop shop in Cairo (the one-stop shop most d. A copy of the founders’ ID cards or passports; Damietta favored by investors in Damietta), where they are e. Security clearances for foreign partners (if Time: 2 days reviewed immediately by a lawyer. Applicants relevant); who wish to register their company must submit Cost: No cost an application at GAFI one-stop shop in Cairo or f. Original certificate indicating that the Comments: Social insurance provides com- Alexandria. Since most investors prefer to use the company’s auditor is listed at the Registry of pensation for disability, retirement (pension), one-stop shop in Cairo, that is the one considered accountants and auditors; unemployment, and work-related injuries. By law, for the purposes of this study. Time is calculated g. Application provided by GAFI; and employers are required to subscribe to the social as 3 days including 2 days of travel time to and h. Stamped articles of association. insurance system. Otherwise, they may be subject from Cairo by either car or train (approximately No stamp duty is levied, according to the amend- to sanctions. 4 hours each way). The employee of the division ments (published on July 1, 2006) to the Stamp The employer must submit a fully completed, reviews the documents and issues an invoice Duty Law (No. 111 of 1980). authority-issued application (Form 1 and 2) and detailing all the cost mentioned above for the the following documents to the competent office: company’s establishment which should be paid at Procedure 5. Obtain the notification of a. Company’s commercial registration; once in a single payment at the Bank of Alexandria branch in the one-stop shop. incorporation from the Department of b. Company’s tax card; Companies in the GAFI one-stop shop Decree No. 282 of 2007 allows corporations to c. Company’s articles of incorporation; determine in the constitutive contract the name of in Cairo d. Deed or lease agreement for company premi- the chairman, the vice chairman and the CEO and Time: 1 day ses; their responsibilities before incorporation enabling Cost: No cost e. Employer to fill in Form No. 2; the corporations to immediately withdraw cash Comments: When the company contract has f. Employer’s bank signature certificate; from the companies under incorporation account been submitted, the competent authority must g. Employer’s graduation certificate; at the bank after registering in the Commercial ratify the articles of incorporation and give the h. Employees’ to fill in Form No. 1; Registry. applicant a certificate indicating that all the requi- All the fees for company establishment are paid at red papers have been submitted. This certificate i. Employees’ copy of identification card; this stage, including: allows for the registration of the company in the j. Employee’s graduation certificate; and a. Notary public fee: 0.25% of start-up capital Commercial Registry. This certificate is issued k. Employees’ birth certificate (copy) if they do (minimum of EGP 10 and a maximum of EGP within 24 hours following the submission of not have a social insurance number; or Form 1,000); the notarized contract. The company assumes No. 6 for clearance/termination from emplo- b. Establishment fees: 0.1% of start-up capital legal responsibility and judicial personality from yees’ previous jobs. the date of registration. Where the competent (minimum of EGP 100 and maximum of EGP The company premises are then subject to inspec- authority has no objection, the Department of 1,000 according to Article 17 (d) of the Compa- tion by relevant authorities - such as the National Companies is thereafter responsible for publishing nies Law); Authority for Social Insurance and GAFI. Inspec- the announcement of the company establishment tion takes place in practice only if there is any c. Commercial Syndicate fee: EGP 125 (for start- in the Investment Gazette at the expense of the complaint filed against the company, or suspicion up capital less than or equal to EGP 500,000) company. or EGP 250 (for start-up capital more than EGP that the company is an image organization that does not actually conduct business as claimed in 500,000); Procedure 6. Register for taxes at the d. Publication fee: EGP 150 (for a limited liability its submitted documents. Companies registering Investment Tax Office in the GAFI one- for sales tax will usually undergo inspection. company in Arabic) or EGP 300 (for a limited stop shop in Cairo liability company in Arabic and English); Time: 1 day e. Chamber of Commerce fee: 0.2% of start-up capital (minimum of EGP 24 and maximum of Cost: No cost EGP 2,000); Comments: Upon incorporation, the company can f. Commercial registration fee: EGP 56; and complete tax registration and obtain the tax card at the one-stop shop’s tax counter on the first g. Operation certificate fee: EGP 29. floor. The tax cards are sent via courier to a central The cost of a first class round trip train ticket from location in Cairo (located near the one-stop shop) Damietta to Cairo is: EGP 72.8. for printing. If the request for a tax card is submitted before noon, the tax card will be printed out and issued on the same day. Requests submitted after noon will be processed on the following day.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 69

STARTING A BUSINESS the documents and issues an invoice detailing Procedure 5. Obtain the notification of all the cost mentioned above for the company’s incorporation from the Department of Fayoum establishment which should be paid at once in a Companies in the GAFI one-stop shop Standard company legal form: Sharikat that Mas- single payment at the Bank of Alexandria branch in the one-stop shop. in Cairo souliyyah Mahdoodah Decree No. 282 of 2007 allows corporations to Time: 1 day Minimum capital requirement: EGP 0 (US$ 0) determine in the constitutive contract the name of Cost: No cost Data as of: June 2013 the chairman, the vice chairman and the CEO and Comments: When the company contract has Procedure 1. Obtain a Certificate of their responsibilities before incorporation enabling been submitted, the competent authority must the corporations to immediately withdraw cash ratify the articles of incorporation and give the Non-Confusion to reserve the company from the companies under incorporation account name at the Commercial Registry office applicant a certificate indicating that all the requi- at the bank after registering in the Commercial red papers have been submitted. This certificate in the General Authority for Investment Registry. allows for the registration of the company in the and Free Zones (GAFI) one-stop shop All the fees for company establishment are paid at Commercial Registry. This certificate is issued in Cairo this stage, including: within 24 hours following the submission of Time: 1 day a. Notary public fee: 0.25% of start-up capital the notarized contract. The company assumes Cost: EGP 25 (minimum of EGP 10 and a maximum of EGP legal responsibility and judicial personality from 1,000); the date of registration. Where the competent Comments: Investors must reserve a company authority has no objection, the Department of b. Establishment fees: 0.1% of start-up capital name at the General Authority for Investment Companies is thereafter responsible for publishing (minimum of EGP 100 and maximum of EGP and Free Zones (GAFI) one-stop shop in Cairo. the announcement of the company establishment 1,000 according to Article 17 (d) of the Compa- The Investor Services Department will first check in the Investment Gazette at the expense of the nies Law); the legality of the proposed company name. If company. the name is deemed to be legally admissible, the c. Commercial Syndicate fee: EGP 125 (for start- entrepreneur will then go upstairs to the Commer- up capital less than or equal to EGP 500,000) Procedure 6. Register for taxes at the cial Registry office in the GAFI one-stop shop to or EGP 250 (for start-up capital more than EGP Investment Tax Office in the GAFI one- pay the required fees and obtain the Certificate of 500,000); stop shop in Cairo Non-Confusion (shahadat adam al-iltibas) bearing d. Publication fee: EGP 150 (for a limited liability the official government stamp (khetm el nesr). company in Arabic) or EGP 300 (for a limited Time: 1 day There is a new fee of EGP 25 for this procedure liability company in Arabic and English); Cost: No cost according to the Internal Trade Development e. Chamber of Commerce fee: 0.2% of start-up Comments: Upon incorporation, the company can Authority’s new Administrative Decree No. 25 of capital (minimum of EGP 24 and maximum of complete tax registration and obtain the tax card 2013 (January 28, 2013). EGP 2,000); at the one-stop shop’s tax counter on the first f. Commercial registration fee: EGP 56; and floor. The tax cards are sent via courier to a central Procedure 2. Obtain a certificate from location in Cairo (located near the one-stop shop) an authorized bank and open a bank g. Operation certificate fee: EGP 29. for printing. If the request for a tax card is submit- account The cost of a round trip ticket from Fayoum to ted before noon, the tax card will be printed out Cairo is approximately EGP 52. Time: 1 day and issued on the same day. Requests submitted after noon will be processed on the following day. Cost: EGP 400 (EGP 250 for the bank certificate Procedure 4. Notarize the company Upon obtaining the card, the company may + account opening fees ranging from EGP 100 to contract at the Investment Notarization 200) choose to register for sales tax, provided that they Office in the GAFI one-stop shop in have started production. Companies are obliged to Comments: The Bank of Alexandria branch at the Cairo register for sales tax only once they reach at least General Authority for Free Zones and Investment Time: 1 day EGP 54,000 in sales for industrial activities and (GAFI) one-stop shop in Cairo issues and delivers EGP 150,000 in sales for commercial activities. Cost: No cost the certificate in 1–2 days. Investors can go to this The required documents include the articles of bank branch or any authorized bank to obtain the Comments: The articles of association must be association and the powers of attorney, the bank bank certificate and open a bank account. Upon registered and certain documents deposited with signature authentication (to be issued to the an agreement between GAFI and the Central the Investment Notarization Office at the GAFI appropriate person by the manager having the Bank, investors do not need to submit the articles one-stop shop. The documents requiring notari- power to sign on behalf of the company), the of association to the bank in order to obtain the zation include: tax card, an original extract from the company’s bank certificate. a. Original certificate of non-confusion of the commercial register, and the original copy of the company name; company’s lease agreement for its premises. Procedure 3. Submit documents to b. Original certificate from an authorized bank; the Department of Companies in the Procedure 7. Open a company file and GAFI one-stop shop in Cairo and obtain c. A copy of the powers of attorney from the founders to their representative; register employees with the National invoice d. A copy of the founders’ ID cards or passports; Authority for Social Insurance in Time: 2 days Fayoum e. Security clearances for foreign partners (if Cost: EGP 1,452 (see comments) relevant); Time: 2 days Comments: The investor needs to submit the f. Original certificate indicating that the Cost: No cost approved company contract, along with the rest company’s auditor is listed at the Registry of Comments: Social insurance provides com- of the required documentation, including the accountants and auditors; pensation for disability, retirement (pension), Certificate of Non-Confusion (shahadat adam g. Application provided by GAFI; and unemployment, and work-related injuries. By law, al-iltibas) issued by the Commercial Registry and employers are required to subscribe to the social h. Stamped articles of association. the powers of attorney. The investor deposits insurance system. Otherwise, they may be subject the documents at the reception desk at the GAFI No stamp duty is levied, according to the amend- to sanctions. one-stop shop in Cairo (the closest one-stop ments (published on July 1, 2006) to the Stamp The employer must submit a fully completed, shop), where they are reviewed immediately by Duty Law (No. 111 of 1980). a lawyer. Applicants who wish to register their authority-issued application (Form 1 and 2) and company must submit an application at the the following documents to the competent office: nearest GAFI one-stop shop in Cairo. Time is a. Company’s commercial registration; calculated as 2 days including 1 day of travel time b. Company’s tax card; to and from Cairo by either car or train (2-3 hours c. Company’s articles of incorporation; each way). The employee of the division reviews

* This procedure can be completed simultaneously with previous procedures. 70 DOING BUSINESS IN EGYPT 2014

d. Deed or lease agreement for company premi- Bank, investors do not need to submit the articles c. A copy of the powers of attorney from the ses; of association to the bank in order to obtain the founders to their representative; e. Employer to fill in Form No. 2; bank certificate. d. A copy of the founders’ ID cards or passports; f. Employer’s bank signature certificate; e. Security clearances for foreign partners (if Procedure 3. Submit documents to relevant); g. Employer’s graduation certificate; the Department of Companies in the h. Employees’ to fill in Form No. 1; f. Original certificate indicating that the GAFI one-stop shop in Cairo and obtain company’s auditor is listed at the Registry of i. Employees’ copy of identification card; invoice accountants and auditors; j. Employee’s graduation certificate; and Time: 1 day g. Application provided by GAFI; and k. Employees’ birth certificate (copy) if they do Cost: EGP 1,400 (see comments) h. Stamped articles of association. not have a social insurance number; or Form Comments: The investor needs to submit the No. 6 for clearance/termination from emplo- No stamp duty is levied, according to the amend- approved company contract, along with the rest yees’ previous jobs. ments (published on July 1, 2006) to the Stamp of the required documentation, including the Duty Law (No. 111 of 1980). The company premises are then subject to inspec- Certificate of Non-Confusion (shahadat adam tion by relevant authorities - such as the National al-iltibas) issued by the Commercial Registry and Procedure 5. Obtain the notification of Authority for Social Insurance and GAFI. Inspec- the powers of attorney. The investor deposits tion takes place in practice only if there is any incorporation from the Department of the documents at the reception desk at the GAFI Companies in the GAFI one-stop shop complaint filed against the company, or suspicion one-stop shop in Cairo (the closest one-stop that the company is an image organization that shop), where they are reviewed immediately by in Cairo does not actually conduct business as claimed in a lawyer. The employee of the division reviews Time: 1 day its submitted documents. Companies registering the documents and issues an invoice detailing Cost: No cost for sales tax will usually undergo inspection. all the cost mentioned above for the company’s Comments: When the company contract has establishment which should be paid at once in a STARTING A BUSINESS been submitted, the competent authority must single payment at the Bank of Alexandria branch ratify the articles of incorporation and give the Giza in the one-stop shop. applicant a certificate indicating that all the requi- Decree No. 282 of 2007 allows corporations to Standard company legal form: Sharikat that Mas- red papers have been submitted. This certificate determine in the constitutive contract the name of allows for the registration of the company in the souliyyah Mahdoodah the chairman, the vice chairman and the CEO and Commercial Registry. This certificate is issued Minimum capital requirement: EGP 0 (US$ 0) their responsibilities before incorporation enabling within 24 hours following the submission of Data as of: June 2013 the corporations to immediately withdraw cash the notarized contract. The company assumes from the companies under incorporation account legal responsibility and judicial personality from Procedure 1. Obtain a Certificate of at the bank after registering in the Commercial the date of registration. Where the competent Non-Confusion to reserve the company Registry. authority has no objection, the Department of name at the Commercial Registry office All the fees for company establishment are paid at Companies is thereafter responsible for publishing in the General Authority for Investment this stage, including: the announcement of the company establishment and Free Zones (GAFI) one-stop shop a. Notary public fee: 0.25% of start-up capital in the Investment Gazette at the expense of the in Cairo (minimum of EGP 10 and a maximum of EGP company. 1,000); Time: 1 day Procedure 6. Register for taxes at the Cost: EGP 25 b. Establishment fees: 0.1% of start-up capital (minimum of EGP 100 and maximum of EGP Investment Tax Office in the GAFI one- Comments: Investors must reserve a company 1,000 according to Article 17 (d) of the Compa- stop shop in Cairo name at the General Authority for Investment nies Law); and Free Zones (GAFI) one-stop shop in Cairo. Time: 1 day The Investor Services Department will first check c. Commercial Syndicate fee: EGP 125 (for start- Cost: No cost the legality of the proposed company name. If up capital less than or equal to EGP 500,000) Comments: Upon incorporation, the company can the name is deemed to be legally admissible, the or EGP 250 (for start-up capital more than EGP complete tax registration and obtain the tax card entrepreneur will then go upstairs to the Commer- 500,000); at the one-stop shop’s tax counter on the first cial Registry office in the GAFI one-stop shop to d. Publication fee: EGP 150 (for a limited liability floor. The tax cards are sent via courier to a central pay the required fees and obtain the Certificate of company in Arabic) or EGP 300 (for a limited location in Cairo (located near the one-stop shop) Non-Confusion (shahadat adam al-iltibas) bearing liability company in Arabic and English); for printing. If the request for a tax card is submit- the official government stamp (khetm el nesr). e. Chamber of Commerce fee: 0.2% of start-up ted before noon, the tax card will be printed out There is a new fee of EGP 25 for this procedure capital (minimum of EGP 24 and maximum of and issued on the same day. Requests submitted according to the Internal Trade Development EGP 2,000); after noon will be processed on the following day. Authority’s new Administrative Decree No. 25 of f. Commercial registration fee: EGP 56; and Upon obtaining the card, the company may 2013 (January 28, 2013). g. Operation certificate fee: EGP 29. choose to register for sales tax, provided that they have started production. Companies are obliged to Procedure 2. Obtain a certificate from Procedure 4. Notarize the company register for sales tax only once they reach at least EGP 54,000 in sales for industrial activities and an authorized bank and open a bank contract at the Investment Notarization account EGP 150,000 in sales for commercial activities. Office in the GAFI one-stop shop in The required documents include the articles of Time: 1 day Cairo association and the powers of attorney, the bank Cost: EGP 400 (EGP 250 for the bank certificate Time: 1 day signature authentication (to be issued to the + account opening fees ranging from EGP 100 to Cost: No cost appropriate person by the manager having the 200) power to sign on behalf of the company), the Comments: The Bank of Alexandria branch at the Comments: The articles of association must be tax card, an original extract from the company’s General Authority for Investment and Free Zones registered and certain documents deposited with commercial register, and the original copy of the (GAFI) one-stop shop in Cairo issues and delivers the Investment Notarization Office at the GAFI company’s lease agreement for its premises. the certificate in 1–2 days. Investors can go to this one-stop shop. The documents requiring notari- bank branch or any authorized bank to obtain the zation include: bank certificate and open a bank account. Upon a. Original certificate of non-confusion of the an agreement between GAFI and the Central company name; b. Original certificate from an authorized bank;

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 71

Procedure 7. Open a company file and There is a new fee of EGP 25 for this procedure Procedure 4. Notarize the company register employees with the National according to the Internal Trade Development contract at the Investment Notarization Authority’s new Administrative Decree No. 25 of Authority for Social Insurance in Giza 2013 (January 28, 2013). Office in the GAFI one-stop shop in Time: 2 days Ismailia and pay notary fees Cost: No cost Procedure 2. Obtain a certificate from Time: 1 day Comments: Social insurance provides com- an authorized bank and open a bank Cost: EGP 473 (Notary public fee: 0.25% of capi- pensation for disability, retirement (pension), account tal with a minimum of EGP 10 and a maximum of unemployment, and work-related injuries. By law, Time: 1 day EGP 1,000) employers are required to subscribe to the social Cost: EGP 400 (EGP 250 for the bank certificate Comments: The articles of association must be insurance system. Otherwise, they may be subject + account opening fees ranging from EGP 100 to registered and certain documents deposited with to sanctions. 200) the Investment Notarization Office at the GAFI The employer must submit a fully completed, one-stop shop. The documents that must be Comments: Unlike Cairo and Alexandria, there authority-issued application (Form 1 and 2) and notarized include: are no bank branches within the GAFI one-stop the following documents to the competent office: shop in Ismailia so applicants can obtain the bank a. Original certificate of non-confusion of the a. Company’s commercial registration; certificate from any authorized bank. The cost to company name; b. Company’s tax card; open a bank account and obtain a bank certificate b. Original certificate from an authorized bank; c. Company’s articles of incorporation; is between EGP 300-500. Upon an agreement c. A copy of the powers of attorney from the between GAFI and the Central Bank, investors do d. Deed or lease agreement for company premi- founders to their representative; not need to submit the articles of association to ses; d. A copy of the founders’ ID cards or passports; the bank in order to obtain the bank certificate. e. Employer to fill in Form No. 2; e. Security clearances for foreign partners (if f. Employer’s bank signature certificate; Procedure 3. Submit documents to the relevant); g. Employer’s graduation certificate; Department of Companies in the GAFI f. Original certificate indicating that the One-stop shop in Ismailia and pay company’s auditor is listed at the Registry of h. Employees’ to fill in Form No. 1; accountants and auditors; registration fees i. Employees’ copy of identification card; g. Application provided by GAFI; and Time: 1 day j. Employee’s graduation certificate; and h. Stamped articles of association. Cost: EGP 871 (see comments) k. Employees’ birth certificate (copy) if they do Due to the absence of a bank branch in the Ismai- not have a social insurance number; or Form Comments: The investor needs to submit the lia one-stop shop, the notarization fees (0.25% of No. 6 for clearance/termination from emplo- approved company contract, along with the rest capital) are paid directly at the Investment Notari- yees’ previous jobs. of the required documentation, including the zation Office in the one-stop shop. No stamp duty The company premises are then subject to inspec- Certificate of Non-Confusion (shahadat adam is levied, according to the amendments (published tion by relevant authorities - such as the National al-iltibas) issued by the Commercial Registry and on July 1, 2006) to the Stamp Duty Law (No. 111 Authority for Social Insurance and GAFI. Inspec- the powers of attorney. The investor deposits the of 1980). The original copies of the articles of as- tion takes place in practice only if there is any documents at the reception desk, where they are sociation and the powers of attorney are required. complaint filed against the company, or suspicion reviewed immediately by a lawyer. The employee that the company is an image organization that of the division reviews the documents and issues Procedure 5. Obtain the notification of does not actually conduct business as claimed in an invoice detailing all the cost mentioned above incorporation from the Department of for the company’s establishment. Unlike Cairo, the its submitted documents. Companies registering Companies in the GAFI one-stop shop for sales tax will usually undergo inspection. notarization fees and commercial registration fees are not lumped into a single payment. Instead, in Ismailia STARTING A BUSINESS the investor must pay each relevant authority Time: 1 day separately. Ismailia Cost: No cost Decree No. 282 of 2007 allows corporations to Comments: When the company contract has Standard company legal form: Sharikat that Mas- determine in the constitutive contract the name of been submitted, the competent authority must souliyyah Mahdoodah the chairman, the vice chairman and the CEO and ratify the articles of incorporation and give the Minimum capital requirement: EGP 0 (US$ 0) their responsibilities before incorporation enabling applicant a certificate indicating that all the requi- the corporations to immediately withdraw cash Data as of: June 2013 red papers have been submitted. This certificate from the companies under incorporation account allows for the registration of the company in the Procedure 1. Obtain a Certificate of at the bank after registering in the Commercial Commercial Registry. This certificate is issued Non-Confusion to reserve the company Registry. within 24 hours following the submission of name at the Commercial Registry office The following fees for company establishment are the notarized contract. The company assumes in the General Authority for Investment paid at this stage: legal responsibility and judicial personality from and Free Zones (GAFI) one-stop shop in a. Establishment fees: 0.1% of start-up capital the date of registration. Where the competent authority has no objection, the Department of Ismailia and pay fees (minimum of EGP 100 and maximum of EGP 1,000 according to Article 17 (d) of the Compa- Companies is thereafter responsible for publishing Time: 1 day nies Law); the announcement of the company establishment Cost: EGP 25 b. Commercial Syndicate fee: EGP 125 (for start- in the Investment Gazette at the expense of the Comments: Investors must reserve a company up capital less than or equal to EGP 500,000) company. name at the General Authority for Investment and or EGP 250 (for start-up capital more than EGP Free Zones (GAFI) one-stop shop in Ismailia. The 500,000); Procedure 6. Register the Notification of Incorporation at the Commercial Investment Services Department will first check c. Publication fee: EGP 150 (for a limited liability the legality of the proposed company name. Once company in Arabic) or EGP 300 (for a limited Registry office at the GAFI One Stop the name is deemed to be legally admissible, the liability company in Arabic and English); Shop in Ismailia Investment Services Department will send a fax d. Chamber of Commerce fee: 0.2% of start-up Time: 1 day to the central Commercial Registry office in Cairo. capital (minimum of EGP 24 and maximum of The Commercial Registry in Cairo will check that Cost: EGP 56 (commercial registration fees) EGP 2,000); and the desired company name is not in use and will Comments: All corporations under both Law issue the Certificate of Non-Confusion (shahadat e. Operation certificate fee: EGP 29. 8/1997 and Law 1159/1981 assume legal adam al-iltibas) within a few hours and fax it back responsibility as soon as they are registered in to the one-stop shop in Ismailia. the commercial registry unless GAFI decides otherwise; with exceptions for specific activities

* This procedure can be completed simultaneously with previous procedures. 72 DOING BUSINESS IN EGYPT 2014

mentioned in the decree. Applicants must register f. Employer’s bank signature certificate; Procedure 3. Submit documents to the Notice of Incorporation at the Commercial g. Employer’s graduation certificate; the Department of Companies in the Registry desk within the GAFI one-stop shop in h. Employees’ to fill in Form No. 1; Ismailia and pay the associated fees. Unlike Cairo, GAFI One-stop shop in Assuit and pay which has a centralized system of payments that i. Employees’ copy of identification card; registration fees renders this procedure unnecessary, the one-stop j. Employee’s graduation certificate; and Time: 3 days shops in Assuit and Ismailia require that fees be k. Employees’ birth certificate (copy) if they do Cost: EGP 911 (see comments) paid to each authority separately, resulting in this not have a social insurance number; or Form Comments: The investor needs to submit the extra procedure. No. 6 for clearance/termination from emplo- approved company contract, along with the rest yees’ previous jobs. of the required documentation, including the Procedure 7. Register for taxes at the The company premises are then subject to inspec- Certificate of Non-Confusion (shahadat adam Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National al-iltibas) issued by the Commercial Registry and stop shop in Ismailia Authority for Social Insurance and GAFI. Inspec- the powers of attorney. The investor deposits the Time: 1 day tion takes place in practice only if there is any documents at the reception desk in the GAFI one- Cost: No cost complaint filed against the company, or suspicion stop shop in Assuit (the closest one-stop shop), that the company is an image organization that where they are reviewed immediately by a lawyer. Comments: Tax registration (including obtaining does not actually conduct business as claimed in Applicants who wish to register their company the tax card) can be completed at the Investment its submitted documents. Companies registering must submit an application at the nearest GAFI Tax Office at the GAFI one-stop shop in Ismailia for sales tax will undergo inspection. one-stop shop in Assuit. Time is calculated as 3 once incorporation is completed. The Investment days including 2 days of travel time to and from Tax Office issues a receipt/temporary ID with STARTING A BUSINESS Assuit by car or bus (4 hours each way). The all the details on the same day, which allows the Kharga employee of the division reviews the documents company to proceed with its operations. This and issues an invoice detailing all the cost men- temporary document is valid for 30 days. The Tax Standard company legal form: Sharikat that Mas- tioned above for the company’s establishment. officer in Ismailia will submit the request the same souliyyah Mahdoodah Unlike Cairo, the notarization fees and commercial day as it is received to the Tax Authority office in Minimum capital requirement: EGP 0 (US$ 0) registration fees are not lumped into a single pay- Cairo for printing (all printing is done centrally in ment. Instead, the investor must pay each relevant Data as of: June 2013 Cairo). Once printed, the office in Cairo will mail authority separately. the tax ID to Ismailia within a couple of days via express mail. Procedure 1. Obtain a Certificate of Decree No. 282 of 2007 allows corporations to determine in the constitutive contract the name of Upon obtaining the card, the company may Non-Confusion to reserve the company name at the Commercial Registry office the chairman, the vice chairman and the CEO and choose to register for sales tax, provided that they their responsibilities before incorporation enabling have started production. Companies are obliged to in the General Authority for Investment and Free Zones (GAFI) one-stop shop in the corporations to immediately withdraw cash register for sales tax only once they reach at least from the companies under incorporation account EGP 54,000 in sales for industrial activities and Assuit and pay fees at the bank after registering in the Commercial EGP 150,000 in sales for commercial activities. Time: 1 day Registry. The required documents include the articles of association and the powers of attorney, the bank Cost: EGP 25 The following fees for company establishment are signature authentication (to be issued to the Comments: Investors must reserve a company paid at this stage: appropriate person by the manager having the name at the General Authority for Investment and a. Establishment fees: 0.1% of start-up capital power to sign on behalf of the company), the Free Zones (GAFI) one-stop shop in Assuit. The (minimum of EGP 100 and maximum of EGP tax card, an original extract from the company’s Investment Services Department will first check 1,000 according to Article 17 (d) of the Compa- commercial register, and the original copy of the the legality of the proposed company name. Once nies Law); company’s lease agreement for its premises. the name is deemed to be legally admissible, the b. Commercial Syndicate fee: EGP 125 (for start- Investment Services Department will send a fax up capital less than or equal to EGP 500,000) Procedure 8. Open a company file and to the central Commercial Registry office in Cairo. or EGP 250 (for start-up capital more than EGP register employees with the National The Commercial Registry in Cairo will check that 500,000); the desired company name is not in use and will Authority for Social Insurance office in c. Publication fee: EGP 150 (for a limited liability issue the Certificate of Non-Confusion (shahadat company in Arabic) or EGP 300 (for a limited Ismailia adam al-iltibas) within a few hours and fax it back liability company in Arabic and English); Time: 2 days to the one-stop shop in Assuit. d. Chamber of Commerce fee: 0.2% of start-up Cost: No cost There is a new fee of EGP 25 for this procedure capital (minimum of EGP 24 and maximum of according to the Internal Trade Development Comments: Social insurance provides com- EGP 2,000); and pensation for disability, retirement (pension), Authority’s new Administrative Decree No. 25 of unemployment, and work-related injuries. By 2013 (January 28, 2013). e. Operation certificate fee: EGP 29. law, employers are required to subscribe to the Cost of travel from Kharga to Assuit (the closest social insurance system. Otherwise, they may be Procedure 2. Obtain a certificate from city with a GAFI one-stop shop) via bus: EGP 40. subject to sanctions. Unlike the GAFI one-stop an authorized bank and open a bank shop in Cairo, the one-stop shop in Ismailia does account Procedure 4. Notarize the company not include an office representing the National Time: 1 day contract at the Investment Notarization Authority for Social Insurance. Companies must Office in the GAFI one-stop shop in Cost: EGP 400 (EGP 250 for the bank certificate register their employees at one of the National Assuit and pay notary fees Authority for Social Insurance offices available + account opening fees ranging from EGP 100 to throughout the city. 200) Time: 1 day The employer must submit a fully completed, Comments: Unlike Cairo and Alexandria, there Cost: EGP 473 (Notary public fee: 0.25% of authority-issued application (Form 1 and 2) and are no bank branches within the GAFI one-stop capital with a minimum of EGP10 and a maximum the following documents to the competent office: shop in Assuit so applicants can obtain the bank of EGP1,000) certificate from any authorized bank. The cost to a. Company’s commercial registration; Comments: The articles of association must be open a bank account and obtain a bank certificate registered and certain documents deposited with b. Company’s tax card; is between EGP 300-500. Upon an agreement the Investment Notarization Office at the GAFI c. Company’s articles of incorporation; between GAFI and the Central Bank, investors do one-stop shop. The documents that must be d. Deed or lease agreement for company premi- not need to submit the articles of association to notarized include: ses; the bank in order to obtain the bank certificate. a. Original certificate of non-confusion of the e. Employer to fill in Form No. 2; company name;

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 73

b. Original certificate from an authorized bank; Procedure 7. Register for taxes at the The company premises are then subject to inspec- c. A copy of the powers of attorney from the Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National founders to their representative; Authority for Social Insurance and GAFI. Inspec- stop shop in Assuit tion takes place in practice only if there is any d. A copy of the founders’ ID cards or passports; Time: 1 day complaint filed against the company, or suspicion e. Security clearances for foreign partners (if Cost: No cost that the company is an image organization that relevant); Comments: Tax registration (including obtaining does not actually conduct business as claimed in f. Original certificate indicating that the the tax card) can be completed at the Investment its submitted documents. Companies registering company’s auditor is listed at the Registry of Tax Office at the GAFI one-stop shop in Assuit for sales tax will undergo inspection. accountants and auditors; once incorporation is completed. The Investment g. Application provided by GAFI; and Tax Office issues a receipt/temporary ID with STARTING A BUSINESS h. Stamped articles of association. all the details on the same day, which allows the Mansoura company to proceed with its operations. This Due to the absence of a bank branch in the Assuit Standard company legal form: Sharikat that Mas- one-stop shop, the notarization fees (0.25% of temporary document is valid for 30 days. The Tax souliyyah Mahdoodah capital) are paid directly at the Investment Notari- officer in Assuit will submit the request the same zation Office in the one-stop shop. No stamp duty day as it is received to the Tax Authority office in Minimum capital requirement: EGP 0 (US$ 0) is levied, according to the amendments (published Cairo for printing (all printing is done centrally in Data as of: June 2013 on July 1, 2006) to the Stamp Duty Law (No. 111 Cairo). Once printed, the office in Cairo will mail of 1980). The original copies of the articles of as- the tax ID to Assuit within a couple of days via Procedure 1. Obtain a Certificate of sociation and the powers of attorney are required. express mail. Non-Confusion to reserve the company Upon obtaining the card, the company may name at the Commercial Registry office Procedure 5. Obtain the notification of choose to register for sales tax, provided that they in the General Authority for Investment incorporation from the Department of have started production. Companies are obliged to and Free Zones (GAFI) one-stop shop Companies in the GAFI one-stop shop register for sales tax only once they reach at least in Cairo in Assuit EGP 54,000 in sales for industrial activities and EGP 150,000 in sales for commercial activities. Time: 1 day Time: 1 day The required documents include the articles of Cost: EGP 25 Cost: No cost association and the powers of attorney, the bank Comments: Investors must reserve a company Comments: When the company contract has signature authentication (to be issued to the name at the General Authority for Investment been submitted, the competent authority must appropriate person by the manager having the and Free Zones (GAFI) one-stop shop in Cairo. ratify the articles of incorporation and give the power to sign on behalf of the company), the The Investor Services Department will first check applicant a certificate indicating that all the requi- tax card, an original extract from the company’s the legality of the proposed company name. If red papers have been submitted. This certificate commercial register, and the original copy of the the name is deemed to be legally admissible, the allows for the registration of the company in the company’s lease agreement for its premises. entrepreneur will then go upstairs to the Commer- Commercial Registry. This certificate is issued cial Registry office in the GAFI one-stop shop to within 24 hours following the submission of Procedure 8. Open a company file and pay the required fees and obtain the Certificate of the notarized contract. The company assumes register employees with the National Non-Confusion (shahadat adam al-iltibas) bearing legal responsibility and judicial personality from Authority for Social Insurance office in the official government stamp (khetm el nesr). the date of registration. Where the competent Kharga There is a new fee of EGP 25 for this procedure authority has no objection, the Department of Time: 2 days according to the Internal Trade Development Companies is thereafter responsible for publishing Authority’s new Administrative Decree No. 25 of the announcement of the company establishment Cost: No cost 2013 (January 28, 2013). in the Investment Gazette at the expense of the Comments: Social insurance provides com- company. pensation for disability, retirement (pension), Procedure 2. Obtain a certificate from unemployment, and work-related injuries. By an authorized bank and open a bank Procedure 6. Register the Notification law, employers are required to subscribe to the account of Incorporation at the Commercial social insurance system. Otherwise, they may be Time: 1 day Registry office at the GAFI one-stop subject to sanctions. Unlike the GAFI one-stop shop in Assuit shop in Cairo, the one-stop shop in Assuit does Cost: EGP 400 (EGP 250 for the bank certificate not include an office representing the National + account opening fees ranging from EGP 100 to Time: 1 day Authority for Social Insurance. Companies must 200) Cost: EGP 56 (commercial registration fees) register their employees at one of the National Comments: The Bank of Alexandria branch at the Comments: All corporations under both Law Authority for Social Insurance offices available General Authority for Investment and Free Zones 8/1997 and Law 1159/1981 assume legal throughout Kharga. (GAFI) one-stop shop in Cairo issues and delivers responsibility as soon as they are registered in The employer must submit a fully completed, the certificate in 1–2 days. Investors can go to this the commercial registry unless GAFI decides authority-issued application (Form 1 and 2) and bank branch or any authorized bank to obtain the otherwise; with exceptions for specific activities the following documents to the competent office: bank certificate and open a bank account. Upon mentioned in the decree. Applicants must register a. Company’s commercial registration; an agreement between GAFI and the Central the Notice of Incorporation at the Commercial Bank, investors do not need to submit the articles b. Company’s tax card; Registry desk within the GAFI one-stop shop in of association to the bank in order to obtain the Assuit and pay the associated fees. Unlike Cairo, c. Company’s articles of incorporation; bank certificate. which has a centralized system of payments that d. Deed or lease agreement for company premi- renders this procedure unnecessary, the one-stop ses; Procedure 3. Submit documents to shops in Assuit and Ismailia require that fees be e. Employer to fill in Form No. 2; the Department of Companies in the paid to each authority separately, resulting in this f. Employer’s bank signature certificate; GAFI one-stop shop in Cairo and obtain extra procedure. g. Employer’s graduation certificate; invoice h. Employees’ to fill in Form No. 1; Time: 2 days i. Employees’ copy of identification card; Cost: EGP 1,452 (see comments) j. Employee’s graduation certificate; and Comments: The investor needs to submit the k. Employees’ birth certificate (copy) if they do approved company contract, along with the rest not have a social insurance number; or Form of the required documentation, including the No. 6 for clearance/termination from emplo- Certificate of Non-Confusion (shahadat adam yees’ previous jobs. al-iltibas) issued by the Commercial Registry and

* This procedure can be completed simultaneously with previous procedures. 74 DOING BUSINESS IN EGYPT 2014

the powers of attorney. The investor deposits h. Stamped articles of association. The employer must submit a fully completed, the documents at the reception desk at the GAFI No stamp duty is levied, according to the amend- authority-issued application (Form 1 and 2) and one-stop shop in Cairo (the closest one-stop ments (published on July 1, 2006) to the Stamp the following documents to the competent office: shop), where they are reviewed immediately by Duty Law (No. 111 of 1980). a. Company’s commercial registration; a lawyer. Applicants who wish to register their b. Company’s tax card; company must submit an application at the Procedure 5. Obtain the notification of c. Company’s articles of incorporation; nearest GAFI one-stop shop in Cairo. Time is incorporation from the Department of d. Deed or lease agreement for company premi- calculated as 2 days including 1 day of travel time Companies in the GAFI one-stop shop to and from Cairo by either car or train (2-3 hours ses; in Cairo each way). The employee of the division reviews e. Employer to fill in Form No. 2; Time: 1 day the documents and issues an invoice detailing f. Employer’s bank signature certificate; all the cost mentioned above for the company’s Cost: No cost g. Employer’s graduation certificate; establishment which should be paid at once in a Comments: When the company contract has h. Employees’ to fill in Form No. 1; single payment at the Bank of Alexandria branch been submitted, the competent authority must in the one-stop shop. ratify the articles of incorporation and give the i. Employees’ copy of identification card; Decree No. 282 of 2007 allows corporations to applicant a certificate indicating that all the requi- j. Employee’s graduation certificate; and determine in the constitutive contract the name of red papers have been submitted. This certificate k. Employees’ birth certificate (copy) if they do the chairman, the vice chairman and the CEO and allows for the registration of the company in the not have a social insurance number; or Form their responsibilities before incorporation enabling Commercial Registry. This certificate is issued No. 6 for clearance/termination from emplo- the corporations to immediately withdraw cash within 24 hours following the submission of yees’ previous jobs. from the companies under incorporation account the notarized contract. The company assumes The company premises are then subject to inspec- at the bank after registering in the Commercial legal responsibility and judicial personality from Registry. tion by relevant authorities - such as the National the date of registration. Where the competent Authority for Social Insurance and GAFI. Inspec- All the fees for company establishment are paid at authority has no objection, the Department of tion takes place in practice only if there is any this stage, including: Companies is thereafter responsible for publishing complaint filed against the company, or suspicion a. Notary public fee: 0.25% of start-up capital the announcement of the company establishment that the company is an image organization that (minimum of EGP 10 and a maximum of EGP in the Investment Gazette at the expense of the does not actually conduct business as claimed in 1,000); company. its submitted documents. Companies registering for sales tax will usually undergo inspection. b. Establishment fees: 0.1% of start-up capital Procedure 6. Register for taxes at the (minimum of EGP 100 and maximum of EGP 1,000 according to Article 17 (d) of the Compa- Investment Tax Office in the GAFI one- STARTING A BUSINESS stop shop in Cairo nies Law); Port Said c. Commercial Syndicate fee: EGP 125 (for start- Time: 1 day up capital less than or equal to EGP 500,000) Cost: No cost Standard company legal form: Sharikat that Mas- souliyyah Mahdoodah or EGP 250 (for start-up capital more than EGP Comments: Upon incorporation, the company can 500,000); complete tax registration and obtain the tax card Minimum capital requirement: EGP 0 (US$ 0) d. Publication fee: EGP 150 (for a limited liability at the one-stop shop’s tax counter on the first Data as of: June 2013 company in Arabic) or EGP 300 (for a limited floor. The tax cards are sent via courier to a central liability company in Arabic and English); location in Cairo (located near the one-stop shop) Procedure 1. Obtain a Certificate of e. Chamber of Commerce fee: 0.2% of start-up for printing. If the request for a tax card is submit- Non-Confusion to reserve the company capital (minimum of EGP 24 and maximum of ted before noon, the tax card will be printed out name at the Commercial Registry office EGP 2,000); and issued on the same day. Requests submitted in the General Authority for Investment f. Commercial registration fee: EGP 56; and after noon will be processed on the following day. and Free Zones (GAFI) one-stop shop in g. Operation certificate fee: EGP 29. Upon obtaining the card, the company may Ismailia and pay fees choose to register for sales tax, provided that they Time: 1 day The cost of a round trip ticket from Mansoura to have started production. Companies are obliged to Cairo is approximately EGP 52 register for sales tax only once they reach at least Cost: EGP 25 EGP 54,000 in sales for industrial activities and Comments: Investors must reserve a company Procedure 4. Notarize the company EGP 150,000 in sales for commercial activities. name at the General Authority for Investment and contract at the Investment Notarization The required documents include the articles of Free Zones (GAFI) one-stop shop in Ismailia. The Office in the GAFI one-stop shop in association and the powers of attorney, the bank Investment Services Department will first check Cairo signature authentication (to be issued to the the legality of the proposed company name. Once the name is deemed to be legally admissible, the Time: 1 day appropriate person by the manager having the power to sign on behalf of the company), the Investment Services Department will send a fax Cost: No cost tax card, an original extract from the company’s to the central Commercial Registry office in Cairo. Comments: The articles of association must be commercial register, and the original copy of the The Commercial Registry in Cairo will check that registered and certain documents deposited with company’s lease agreement for its premises. the desired company name is not in use and will the Investment Notarization Office at the GAFI issue the Certificate of Non-Confusion (shahadat one-stop shop. The documents requiring notari- Procedure 7. Open a company file and adam al-iltibas) within a few hours and fax it back zation include: register employees with the National to the one-stop shop in Ismailia. a. Original certificate of non-confusion of the Authority for Social Insurance office in There is a new fee of EGP 25 for this procedure company name; Mansoura according to the Internal Trade Development b. Original certificate from an authorized bank; Authority’s new Administrative Decree No. 25 of Time: 2 days 2013 (January 28, 2013). c. A copy of the powers of attorney from the Cost: No cost founders to their representative; Comments: Social insurance provides com- d. A copy of the founders’ ID cards or passports; pensation for disability, retirement (pension), e. Security clearances for foreign partners (if unemployment, and work-related injuries. By law, relevant); employers are required to subscribe to the social f. Original certificate indicating that the insurance system. Otherwise, they may be subject company’s auditor is listed at the Registry of to sanctions. accountants and auditors; g. Application provided by GAFI; and

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 75

Procedure 2. Obtain a certificate from The cost of a round trip bus ticket from Port Said Procedure 6. Register the Notification an authorized bank and open a bank to Ismailia is also included in this procedure: EGP of Incorporation at the Commercial 25. account Registry office at the GAFI One Stop Time: 1 day Procedure 4. Notarize the company Shop in Ismailia Cost: EGP 400 (EGP 250 for the bank certificate contract at the Investment Notarization Time: 1 day + account opening fees ranging from EGP 100 to Office in the GAFI one-stop shop in Cost: EGP 56 (commercial registration fees) 200) Ismailia and pay notary fees Comments: All corporations under both Law Comments: Unlike Cairo and Alexandria, there Time: 1 day 8/1997 and Law 1159/1981 assume legal are no bank branches within the GAFI one-stop responsibility as soon as they are registered in Cost: EGP 473 (Notary public fee: 0.25% of shop in Ismailia so applicants can obtain the bank the commercial registry unless GAFI decides capital with a minimum of EGP10 and a maximum certificate from any authorized bank. The cost to otherwise; with exceptions for specific activities of EGP1,000) open a bank account and obtain a bank certificate mentioned in the decree. Applicants must register is between EGP 300-500. Upon an agreement Comments: The articles of association must be the Notice of Incorporation at the Commercial between GAFI and the Central Bank, investors do registered and certain documents deposited with Registry desk within the GAFI one-stop shop in not need to submit the articles of association to the Investment Notarization Office at the GAFI Ismailia and pay the associated fees. Unlike Cairo, the bank in order to obtain the bank certificate. one-stop shop. The documents that must be which has a centralized system of payments that notarized include: renders this procedure unnecessary, the one-stop Procedure 3. Submit documents to the a. Original certificate of non-confusion of the shops in Assuit and Ismailia require that fees be Department of Companies in the GAFI company name; paid to each authority separately, resulting in this One-stop shop in Ismailia and pay b. Original certificate from an authorized bank; extra procedure. registration fees c. A copy of the powers of attorney from the Procedure 7. Register for taxes at the Time: 2 days founders to their representative; d. A copy of the founders’ ID cards or passports; Investment Tax Office in the GAFI one- Cost: EGP 896 (see comments) stop shop in Ismailia Comments: The investor needs to submit the e. Security clearances for foreign partners (if Time: 1 day approved company contract, along with the rest relevant); of the required documentation, including the f. Original certificate indicating that the Cost: No cost Certificate of Non-Confusion (shahadat adam company’s auditor is listed at the Registry of Comments: Tax registration (including obtaining al-iltibas) issued by the Commercial Registry and accountants and auditors; the tax card) can be completed at the Investment the powers of attorney. The investor deposits the g. Application provided by GAFI; and Tax Office at the GAFI one-stop shop in Ismailia documents at the reception desk in the one-stop h. Stamped articles of association. once incorporation is completed. The Investment shop in Ismailia (the closest one-stop shop), Tax Office issues a receipt/temporary ID with Due to the absence of a bank branch in the Ismai- where they are reviewed immediately by a lawyer. all the details on the same day, which allows the lia one-stop shop, the notarization fees (0.25% of Applicants who wish to register their company company to proceed with its operations. This capital) are paid directly at the Investment Notari- must submit an application at the nearest GAFI temporary document is valid for 30 days. The Tax zation Office in the one-stop shop. No stamp duty one-stop shop in Ismailia. Time is calculated as officer in Ismailia will submit the request the same is levied, according to the amendments (published 2 days including 1 day of travel time to and from day as it is received to the Tax Authority office in on July 1, 2006) to the Stamp Duty Law (No. 111 Ismailia by car or bus (1-2 hours each way). The Cairo for printing (all printing is done centrally in of 1980). The original copies of the articles of as- employee of the division reviews the documents Cairo). Once printed, the office in Cairo will mail sociation and the powers of attorney are required. and issues an invoice detailing all the cost men- the tax ID to Ismailia within a couple of days via tioned above for the company’s establishment. express mail. Unlike Cairo, the notarization fees and commercial Procedure 5. Obtain the notification of incorporation from the Department of Upon obtaining the card, the company may registration fees are not lumped into a single pay- choose to register for sales tax, provided that they ment. Instead, the investor must pay each relevant Companies in the GAFI one-stop shop have started production. Companies are obliged to authority separately. in Ismailia register for sales tax only once they reach at least Decree No. 282 of 2007 allows corporations to Time: 1 day EGP 54,000 in sales for industrial activities and determine in the constitutive contract the name of Cost: No cost EGP 150,000 in sales for commercial activities. the chairman, the vice chairman and the CEO and The required documents include the articles of Comments: When the company contract has their responsibilities before incorporation enabling association and the powers of attorney, the bank been submitted, the competent authority must the corporations to immediately withdraw cash signature authentication (to be issued to the ratify the articles of incorporation and give the from the companies under incorporation account appropriate person by the manager having the applicant a certificate indicating that all the requi- at the bank after registering in the Commercial power to sign on behalf of the company), the red papers have been submitted. This certificate Registry. tax card, an original extract from the company’s allows for the registration of the company in the commercial register, and the original copy of the The following fees for company establishment are Commercial Registry. This certificate is issued company’s lease agreement for its premises. paid at this stage: within 24 hours following the submission of a. Establishment fees: 0.1% of start-up capital the notarized contract. The company assumes (minimum of EGP 100 and maximum of EGP legal responsibility and judicial personality from Procedure 8. Open a company file and 1,000 according to Article 17 (d) of the Compa- the date of registration. Where the competent register employees with the National nies Law); authority has no objection, the Department of Authority for Social Insurance office in b. Commercial Syndicate fee: EGP 125 (for start- Companies is thereafter responsible for publishing Port Said up capital less than or equal to EGP 500,000) the announcement of the company establishment Time: 3 days in the Investment Gazette at the expense of the or EGP 250 (for start-up capital more than EGP Cost: No cost 500,000); company. Comments: Social insurance provides com- c. Publication fee: EGP 150 (for a limited liability pensation for disability, retirement (pension), company in Arabic) or EGP 300 (for a limited unemployment, and work-related injuries. By liability company in Arabic and English); law, employers are required to subscribe to the d. Chamber of Commerce fee: 0.2% of start-up social insurance system. Otherwise, they may be capital (minimum of EGP 24 and maximum of subject to sanctions. Unlike the GAFI one-stop EGP 2,000); and shop in Cairo, the one-stop shop in Ismailia does e. Operation certificate fee: EGP 29. not include an office representing the National Authority for Social Insurance. Companies must

* This procedure can be completed simultaneously with previous procedures. 76 DOING BUSINESS IN EGYPT 2014

register their employees at one of the National Procedure 2. Obtain a certificate from Procedure 4. Notarize the company Authority for Social Insurance offices available an authorized bank and open a bank contract at the Investment Notarization throughout Port Said. account Office in the GAFI one-stop shop in The employer must submit a fully completed, Assuit and pay notary fees authority-issued application (Form 1 and 2) and Time: 1 day the following documents to the competent office: Cost: EGP 400 (EGP 250 for the bank certificate Time: 1 day a. Company’s commercial registration; + account opening fees ranging from EGP 100 to Cost: EGP 473 (Notary public fee: 0.25% of capi- 200) tal with a minimum of EGP 10 and a maximum of b. Company’s tax card; Comments: Unlike Cairo and Alexandria, there EGP 1,000) c. Company’s articles of incorporation; are no bank branches within the GAFI one-stop Comments: The articles of association must be d. Deed or lease agreement for company premi- shop in Assuit so applicants can obtain the bank registered and certain documents deposited with ses; certificate from any authorized bank. The cost to the Investment Notarization Office at the GAFI e. Employer to fill in Form No. 2; open a bank account and obtain a bank certificate one-stop shop. The documents that must be f. Employer’s bank signature certificate; is between EGP 300-500. Upon an agreement notarized include: between GAFI and the Central Bank, investors do g. Employer’s graduation certificate; a. Original certificate of non-confusion of the not need to submit the articles of association to company name; h. Employees’ to fill in Form No. 1; the bank in order to obtain the bank certificate. i. Employees’ copy of identification card; b. Original certificate from an authorized bank; j. Employee’s graduation certificate; and Procedure 3. Submit documents to c. A copy of the powers of attorney from the founders to their representative; k. Employees’ birth certificate (copy) if they do the Department of Companies in the not have a social insurance number; or Form GAFI One-stop shop in Assuit and pay d. A copy of the founders’ ID cards or passports; No. 6 for clearance/termination from emplo- registration fees e. Security clearances for foreign partners (if yees’ previous jobs. Time: 2 days relevant); The company premises are then subject to inspec- Cost: EGP 923 (see comments) f. Original certificate indicating that the tion by relevant authorities - such as the National company’s auditor is listed at the Registry of Comments: The investor needs to submit the Authority for Social Insurance and GAFI. Inspec- accountants and auditors; approved company contract, along with the rest tion takes place in practice only if there is any of the required documentation, including the g. Application provided by GAFI; and complaint filed against the company, or suspicion Certificate of Non-Confusion (shahadat adam h. Stamped articles of association. that the company is an image organization that al-iltibas) issued by the Commercial Registry and Due to the absence of a bank branch in the Assuit does not actually conduct business as claimed in the powers of attorney. The investor deposits the one-stop shop, the notarization fees (0.25% of its submitted documents. Companies registering documents at the reception desk in the GAFI one- capital) are paid directly at the Investment Notari- for sales tax will undergo inspection. stop shop in Assuit (the closest one-stop shop), zation Office in the one-stop shop. No stamp duty where they are reviewed immediately by a lawyer. STARTING A BUSINESS is levied, according to the amendments (published Applicants who wish to register their company on July 1, 2006) to the Stamp Duty Law (No. 111 Sohag must submit an application at the nearest GAFI of 1980). The original copies of the articles of as- one-stop shop in Assuit. Time is calculated as 2 sociation and the powers of attorney are required. Standard company legal form: Sharikat that Mas- days including 1 day of travel time to and from souliyyah Mahdoodah Assuit by car or bus (1-2 hours each way). The Procedure 5. Obtain the notification of Minimum capital requirement: EGP 0 (US$ 0) employee of the division reviews the documents incorporation from the Department of Data as of: June 2013 and issues an invoice detailing all the cost men- Companies in the GAFI one-stop shop tioned above for the company’s establishment. in Assuit Procedure 1. Obtain a Certificate of Unlike Cairo, the notarization fees and commercial Non-Confusion to reserve the company registration fees are not lumped into a single pay- Time: 1 day name at the Commercial Registry office ment. Instead, the investor must pay each relevant Cost: No cost in the General Authority for Investment authority separately. Comments: When the company contract has and Free Zones (GAFI) one-stop shop in Decree No. 282 of 2007 allows corporations to been submitted, the competent authority must Assuit and pay fees determine in the constitutive contract the name of ratify the articles of incorporation and give the the chairman, the vice chairman and the CEO and applicant a certificate indicating that all the requi- Time: 1 day their responsibilities before incorporation enabling red papers have been submitted. This certificate Cost: EGP 25 the corporations to immediately withdraw cash allows for the registration of the company in the Comments: Investors must reserve a company from the companies under incorporation account Commercial Registry. This certificate is issued name at the General Authority for Investment and at the bank after registering in the Commercial within 24 hours following the submission of Free Zones (GAFI) one-stop shop in Assuit. The Registry. the notarized contract. The company assumes Investment Services Department will first check The following fees for company establishment are legal responsibility and judicial personality from the legality of the proposed company name. Once paid at this stage: the date of registration. Where the competent the name is deemed to be legally admissible, the authority has no objection, the Department of a. Establishment fees: 0.1% of start-up capital Investment Services Department will send a fax Companies is thereafter responsible for publishing (minimum of EGP 100 and maximum of EGP to the central Commercial Registry office in Cairo. the announcement of the company establishment 1,000 according to Article 17 (d) of the Compa- The Commercial Registry in Cairo will check that in the Investment Gazette at the expense of the nies Law); the desired company name is not in use and will company. issue the Certificate of Non-Confusion (shahadat b. Commercial Syndicate fee: EGP 125 (for start- adam al-iltibas) within a few hours and fax it back up capital less than or equal to EGP 500,000) Procedure 6. Register the Notification to the one-stop shop in Assuit. or EGP 250 (for start-up capital more than EGP of Incorporation at the Commercial 500,000); There is a new fee of EGP25 for this procedure Registry office at the GAFI One Stop according to the Internal Trade Development c. Publication fee: EGP 150 (for a limited liability Shop in Assuit Authority’s new Administrative Decree No. 25 of company in Arabic) or EGP 300 (for a limited Time: 1 day 2013 (January 28, 2013). liability company in Arabic and English); d. Chamber of Commerce fee: 0.2% of start-up Cost: EGP 56 (commercial registration fees) capital (minimum of EGP 24 and maximum of Comments: All corporations under both Law EGP 2,000); and 8/1997 and Law 1159/1981 assume legal e. Operation certificate fee: EGP 29. responsibility as soon as they are registered in the commercial registry unless GAFI decides Travel costs for a round trip first class train ticket otherwise; with exceptions for specific activities from Sohag to Assuit: EGP 52.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 77

mentioned in the decree. Applicants must register f. Employer’s bank signature certificate; Procedure 3. Submit documents to the the Notice of Incorporation at the Commercial g. Employer’s graduation certificate; Department of Companies in the GAFI Registry desk within the GAFI one-stop shop in h. Employees’ to fill in Form No. 1; Assuit and pay the associated fees. Unlike Cairo, One-stop shop in Ismailia and pay which has a centralized system of payments that i. Employees’ copy of identification card; registration fees renders this procedure unnecessary, the one-stop j. Employee’s graduation certificate; and Time: 2 days shops in Assuit and Ismailia require that fees be k. Employees’ birth certificate (copy) if they do Cost: EGP 896 paid to each authority separately, resulting in this not have a social insurance number; or Form Comments: The investor needs to submit the extra procedure. No. 6 for clearance/termination from emplo- approved company contract, along with the rest yees’ previous jobs. of the required documentation, including the Procedure 7. Register for taxes at the The company premises are then subject to inspec- Certificate of Non-Confusion (shahadat adam Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National al-iltibas) issued by the Commercial Registry and stop shop in Assuit Authority for Social Insurance and GAFI. Inspec- the powers of attorney. The investor deposits the Time: 1 day tion takes place in practice only if there is any documents at the reception desk in the one-stop Cost: No cost complaint filed against the company, or suspicion shop in Ismailia (the closest one-stop shop), that the company is an image organization that where they are reviewed immediately by a lawyer. Comments: Tax registration (including obtaining does not actually conduct business as claimed in Applicants who wish to register their company the tax card) can be completed at the Investment its submitted documents. Companies registering must submit an application at the nearest GAFI Tax Office at the GAFI one-stop shop in Assuit for sales tax will undergo inspection. one-stop shop in Ismailia. Time is calculated as once incorporation is completed. The Investment 2 days including 1 day of travel time to and from Tax Office issues a receipt/temporary ID with STARTING A BUSINESS Ismailia by car or bus (1-2 hours each way). The all the details on the same day, which allows the Suez employee of the division reviews the documents company to proceed with its operations. This and issues an invoice detailing all the cost men- temporary document is valid for 30 days. The Tax Standard company legal form: Sharikat that Mas- tioned above for the company’s establishment. officer in Assuit will submit the request the same souliyyah Mahdoodah Unlike Cairo, the notarization fees and commercial day as it is received to the Tax Authority office in Minimum capital requirement: EGP 0 (US$ 0) registration fees are not lumped into a single pay- Cairo for printing (all printing is done centrally in ment. Instead, the investor must pay each relevant Data as of: June 2013 Cairo). Once printed, the office in Cairo will mail authority separately. the tax ID to Assuit within a couple of days via express mail. Procedure 1. Obtain a Certificate of Decree No. 282 of 2007 allows corporations to determine in the constitutive contract the name of Upon obtaining the card, the company may Non-Confusion to reserve the company name at the Commercial Registry office the chairman, the vice chairman and the CEO and choose to register for sales tax, provided that they their responsibilities before incorporation enabling have started production. Companies are obliged to in the General Authority for Investment and Free Zones (GAFI) one-stop shop in the corporations to immediately withdraw cash register for sales tax only once they reach at least from the companies under incorporation account EGP 54,000 in sales for industrial activities and Ismailia and pay fees at the bank after registering in the Commercial EGP 150,000 in sales for commercial activities. Time: 1 day Registry. The required documents include the articles of association and the powers of attorney, the bank Cost: EGP 25 The following fees for company establishment are signature authentication (to be issued to the Comments: Investors must reserve a company paid at this stage: appropriate person by the manager having the name at the General Authority for Investment a. Establishment fees: 0.1% of start-up capital power to sign on behalf of the company), the Free Zones (GAFI) one-stop shop in Ismailia. The (minimum of EGP 100 and maximum of EGP tax card, an original extract from the company’s Investment Services Department will first check 1,000 according to Article 17 (d) of the Compa- commercial register, and the original copy of the the legality of the proposed company name. Once nies Law); company’s lease agreement for its premises. the name is deemed to be legally admissible, the b. Commercial Syndicate fee: EGP 125 (for start- Investment Services Department will send a fax up capital less than or equal to EGP 500,000) Procedure 8. Open a company file and to the central Commercial Registry office in Cairo. or EGP 250 (for start-up capital more than EGP register employees with the National The Commercial Registry in Cairo will check that 500,000); the desired company name is not in use and will Authority for Social Insurance office in c. Publication fee: EGP 150 (for a limited liability issue the Certificate of Non-Confusion (shahadat company in Arabic) or EGP 300 (for a limited Sohag adam al-iltibas) within a few hours and fax it back liability company in Arabic and English); Time: 2 days to the one-stop shop in Ismailia. d. Chamber of Commerce fee: 0.2% of start-up Cost: No cost There is a new fee of EGP 25 for this procedure capital (minimum of EGP 24 and maximum of according to the Internal Trade Development Comments: Social insurance provides com- EGP 2,000); and pensation for disability, retirement (pension), Authority’s new Administrative Decree No. 25 of unemployment, and work-related injuries. By 2013 (January 28, 2013). e. Operation certificate fee: EGP 29. law, employers are required to subscribe to the The cost of a round trip bus ticket from Suez to social insurance system. Otherwise, they may be Procedure 2. Obtain a certificate from Ismailia is also included in this procedure: EGP 25. subject to sanctions. Unlike the GAFI one-stop an authorized bank and open a bank shop in Cairo, the one-stop shop in Assuit does account Procedure 4. Notarize the company not include an office representing the National Time: 1 day contract at the Investment Notarization Authority for Social Insurance. Companies, must Office in the GAFI one-stop shop in Cost: EGP 400 (EGP 250 for the bank certificate register their employees at one of the National Ismailia and pay notary fees Authority for Social Insurance offices available + account opening fees ranging from EGP 100 to throughout Sohag. 200) Time: 1 day The employer must submit a fully completed, Comments: Unlike Cairo and Alexandria, there Cost: EGP 473 (Notary public fee: 0.25% of capi- authority-issued application (Form 1 and 2) and are no bank branches within the GAFI one-stop tal with a minimum of EGP 10 and a maximum of the following documents to the competent office: shop in Ismailia so applicants can obtain the bank EGP 1,000) certificate from any authorized bank. The cost to a. Company’s commercial registration; Comments: The articles of association must be open a bank account and obtain a bank certificate registered and certain documents deposited with b. Company’s tax card; is between EGP 300-500. Upon an agreement the Investment Notarization Office at the GAFI c. Company’s articles of incorporation; between GAFI and the Central Bank, investors do one-stop shop. The documents that must be d. Deed or lease agreement for company premi- not need to submit the articles of association to notarized include: ses; the bank in order to obtain the bank certificate. a. Original certificate of non-confusion of the e. Employer to fill in Form No. 2; company name;

* This procedure can be completed simultaneously with previous procedures. 78 DOING BUSINESS IN EGYPT 2014

b. Original certificate from an authorized bank; Procedure 7. Register for taxes at the The company premises are then subject to inspec- c. A copy of the powers of attorney from the Investment Tax Office in the GAFI one- tion by relevant authorities - such as the National founders to their representative; Authority for Social Insurance and GAFI. Inspec- stop shop in Ismailia tion takes place in practice only if there is any d. A copy of the founders’ ID cards or passports; Time: 1 day complaint filed against the company, or suspicion e. Security clearances for foreign partners (if Cost: No cost that the company is an image organization that relevant); Comments: Tax registration (including obtaining does not actually conduct business as claimed in f. Original certificate indicating that the the tax card) can be completed at the Investment its submitted documents. Companies registering company’s auditor is listed at the Registry of Tax Office at the GAFI one-stop shop in Ismailia for sales tax will undergo inspection. accountants and auditors; once incorporation is completed. The Investment g. Application provided by GAFI; and Tax Office issues a receipt/temporary ID with STARTING A BUSINESS h. Stamped articles of association. all the details on the same day, which allows the Tanta company to proceed with its operations. This Due to the absence of a bank branch in the Ismai- Standard company legal form: Sharikat that Mas- lia one-stop shop, the notarization fees (0.25% of temporary document is valid for 30 days. The Tax souliyyah Mahdoodah capital) are paid directly at the Investment Notari- officer in Ismailia will submit the request the same zation Office in the one-stop shop. No stamp duty day as it is received to the Tax Authority office in Minimum capital requirement: EGP 0 (US$ 0) is levied, according to the amendments (published Cairo for printing (all printing is done centrally in Data as of: June 2013 on July 1, 2006) to the Stamp Duty Law (No. 111 Cairo). Once printed, the office in Cairo will mail of 1980). The original copies of the articles of as- the tax ID to Ismailia within a couple of days via Procedure 1. Obtain a Certificate of sociation and the powers of attorney are required. express mail. Non-Confusion to reserve the company Upon obtaining the card, the company may name at the Commercial Registry office Procedure 5. Obtain the notification of choose to register for sales tax, provided that in the General Authority for Investment incorporation from the Department of they have started production. Companies are and Free Zones (GAFI) one-stop shop Companies in the GAFI one-stop shop obliged to register for sales tax only once they in Cairo in Ismailia reach at least EGP54,000 in sales for industrial activities and EGP150,000 in sales for commercial Time: 1 day Time: 1 day activities. The required documents include the Cost: EGP 25 Cost: No cost articles of association and the powers of attorney, Comments: Investors must reserve a company Comments: When the company contract has the bank signature authentication (to be issued name at the General Authority for Investment been submitted, the competent authority must to the appropriate person by the manager having and Free Zones (GAFI) one-stop shop in Cairo. ratify the articles of incorporation and give the the power to sign on behalf of the company), the The Investor Services Department will first check applicant a certificate indicating that all the requi- tax card, an original extract from the company’s the legality of the proposed company name. If red papers have been submitted. This certificate commercial register, and the original copy of the the name is deemed to be legally admissible, the allows for the registration of the company in the company’s lease agreement for its premises. entrepreneur will then go upstairs to the Commer- Commercial Registry. This certificate is issued cial Registry office in the GAFI one-stop shop to within 24 hours following the submission of Procedure 8. Open a company file and pay the required fees and obtain the Certificate of the notarized contract. The company assumes register employees with the National Non-Confusion (shahadat adam al-iltibas) bearing legal responsibility and judicial personality from Authority for Social Insurance office in the official government stamp (khetm el nesr). the date of registration. Where the competent Suez There is a new fee of EGP25 for this procedure authority has no objection, the Department of Time: 2 days according to the Internal Trade Development Companies is thereafter responsible for publishing Authority’s new Administrative Decree No. 25 of the announcement of the company establishment Cost: No cost 2013 (January 28, 2013). in the Investment Gazette at the expense of the Comments: Social insurance provides com- company. pensation for disability, retirement (pension), Procedure 2. Obtain a certificate from unemployment, and work-related injuries. By an authorized bank and open a bank Procedure 6. Register the Notification law, employers are required to subscribe to the account of Incorporation at the Commercial social insurance system. Otherwise, they may be Time: 1 day Registry office at the GAFI One Stop subject to sanctions. Unlike the GAFI one-stop Shop in Ismailia shop in Cairo, the one-stop shop in Ismailia does Cost: EGP 400 (EGP 250 for the bank certificate not include an office representing the National + account opening fees ranging from EGP 100 to Time: 1 day Authority for Social Insurance. Companies must 200) Cost: EGP 56 (commercial registration fees) register their employees at one of the National Comments: The Bank of Alexandria branch at the Comments: All corporations under both Law Authority for Social Insurance offices available General Authority for Investment and Free Zones 8/1997 and Law 1159/1981 assume legal throughout Suez. (GAFI) one-stop shop in Cairo issues and delivers responsibility as soon as they are registered in The employer must submit a fully completed, the certificate in 1–2 days. Investors can go to this the commercial registry unless GAFI decides authority-issued application (Form 1 and 2) and bank branch or any authorized bank to obtain the otherwise; with exceptions for specific activities the following documents to the competent office: bank certificate and open a bank account. Upon mentioned in the decree. Applicants must register a. Company’s commercial registration; an agreement between GAFI and the Central the Notice of Incorporation at the Commercial Bank, investors do not need to submit the articles b. Company’s tax card; Registry desk within the GAFI one-stop shop in of association to the bank in order to obtain the Ismailia and pay the associated fees. Unlike Cairo, c. Company’s articles of incorporation; bank certificate. which has a centralized system of payments that d. Deed or lease agreement for company premi- renders this procedure unnecessary, the one-stop ses; Procedure 3. Submit documents to shops in Assuit and Ismailia require that fees be e. Employer to fill in Form No. 2; the Department of Companies in the paid to each authority separately, resulting in this f. Employer’s bank signature certificate; GAFI one-stop shop in Cairo and obtain extra procedure. g. Employer’s graduation certificate; invoice h. Employees’ to fill in Form No. 1; Time: 2 days i. Employees’ copy of identification card; Cost: EGP 1,437 (see comments) j. Employee’s graduation certificate; and Comments: The investor needs to submit the k. Employees’ birth certificate (copy) if they do approved company contract, along with the rest not have a social insurance number; or Form of the required documentation, including the No. 6 for clearance/termination from emplo- Certificate of Non-Confusion (shahadat adam yees’ previous jobs. al-iltibas) issued by the Commercial Registry and

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - STARTING A BUSINESS 79

the powers of attorney. The investor deposits h. Stamped articles of association. The employer must submit a fully completed, the documents at the reception desk at the GAFI No stamp duty is levied, according to the amend- authority-issued application (Form 1 and 2) and one-stop shop in Cairo (the closest one-stop ments (published on July 1, 2006) to the Stamp the following documents to the competent office: shop), where they are reviewed immediately by Duty Law (No. 111 of 1980). a. Company’s commercial registration; a lawyer. Applicants who wish to register their b. Company’s tax card; company must submit an application at the Procedure 5. Obtain the notification of c. Company’s articles of incorporation; nearest GAFI one-stop shop in Cairo. Time is incorporation from the Department of d. Deed or lease agreement for company premi- calculated as 2 days including 1 day of travel time Companies in the GAFI one-stop shop to and from Cairo by either car or train (2-3 hours ses; in Cairo each way). The employee of the division reviews e. Employer to fill in Form No. 2; Time: 1 day the documents and issues an invoice detailing f. Employer’s bank signature certificate; all the cost mentioned above for the company’s Cost: No cost g. Employer’s graduation certificate; establishment which should be paid at once in a Comments: When the company contract has h. Employees’ to fill in Form No. 1; single payment at the Bank of Alexandria branch been submitted, the competent authority must in the one-stop shop. ratify the articles of incorporation and give the i. Employees’ copy of identification card; Decree No. 282 of 2007 allows corporations to applicant a certificate indicating that all the requi- j. Employee’s graduation certificate; and determine in the constitutive contract the name of red papers have been submitted. This certificate k. Employees’ birth certificate (copy) if they do the chairman, the vice chairman and the CEO and allows for the registration of the company in the not have a social insurance number; or Form their responsibilities before incorporation enabling Commercial Registry. This certificate is issued No. 6 for clearance/termination from emplo- the corporations to immediately withdraw cash within 24 hours following the submission of yees’ previous jobs. from the companies under incorporation account the notarized contract. The company assumes The company premises are then subject to inspec- at the bank after registering in the Commercial legal responsibility and judicial personality from Registry. tion by relevant authorities - such as the National the date of registration. Where the competent Authority for Social Insurance and GAFI. Inspec- All the fees for company establishment are paid at authority has no objection, the Department of tion takes place in practice only if there is any this stage, including: Companies is thereafter responsible for publishing complaint filed against the company, or suspicion a. Notary public fee: 0.25% of start-up capital the announcement of the company establishment that the company is an image organization that (minimum of EGP 10 and a maximum of EGP in the Investment Gazette at the expense of the does not actually conduct business as claimed in 1,000); company. its submitted documents. Companies registering for sales tax will usually undergo inspection. b. Establishment fees: 0.1% of start-up capital Procedure 6. Register for taxes at the (minimum of EGP 100 and maximum of EGP 1,000 according to Article 17 (d) of the Compa- Investment Tax Office in the GAFI one- STARTING A BUSINESS stop shop in Cairo nies Law); Zagazig c. Commercial Syndicate fee: EGP 125 (for start- Time: 1 day up capital less than or equal to EGP 500,000) Cost: No cost Standard company legal form: Sharikat that Mas- souliyyah Mahdoodah or EGP 250 (for start-up capital more than EGP Comments: Upon incorporation, the company can 500,000); complete tax registration and obtain the tax card Minimum capital requirement: EGP 0 (US$ 0) d. Publication fee: EGP 150 (for a limited liability at the one-stop shop’s tax counter on the first Data as of: June 2013 company in Arabic) or EGP 300 (for a limited floor. The tax cards are sent via courier to a central liability company in Arabic and English); location in Cairo (located near the one-stop shop) Procedure 1. Obtain a Certificate of e. Chamber of Commerce fee: 0.2% of start-up for printing. If the request for a tax card is submit- Non-Confusion to reserve the company capital (minimum of EGP 24 and maximum of ted before noon, the tax card will be printed out name at the Commercial Registry office EGP 2,000); and issued on the same day. Requests submitted in the General Authority for Investment f. Commercial registration fee: EGP 56; and after noon will be processed on the following day. and Free Zones (GAFI) one-stop shop g. Operation certificate fee: EGP 29. Upon obtaining the card, the company may in Cairo choose to register for sales tax, provided that they Time: 1 day The cost of a round trip ticket from Tanta to Cairo have started production. Companies are obliged to is approximately EGP 37.44. register for sales tax only once they reach at least Cost: EGP 25 EGP 54,000 in sales for industrial activities and Comments: Investors must reserve a company Procedure 4. Notarize the company EGP 150,000 in sales for commercial activities. name at the General Authority for Investment contract at the Investment Notarization The required documents include the articles of and Free Zones (GAFI) one-stop shop in Cairo. Office in the GAFI one-stop shop in association and the powers of attorney, the bank The Investor Services Department will first check Cairo signature authentication (to be issued to the the legality of the proposed company name. If the name is deemed to be legally admissible, the Time: 1 day appropriate person by the manager having the power to sign on behalf of the company), the entrepreneur will then go upstairs to the Commer- Cost: No cost tax card, an original extract from the company’s cial Registry office in the GAFI one-stop shop to Comments: The articles of association must be commercial register, and the original copy of the pay the required fees and obtain the Certificate of registered and certain documents deposited with company’s lease agreement for its premises. Non-Confusion (shahadat adam al-iltibas) bearing the Investment Notarization Office at the GAFI the official government stamp (khetm el nesr). one-stop shop. The documents requiring notari- Procedure 7. Open a company file and There is a new fee of EGP 25 for this procedure zation include: register employees with the National according to the Internal Trade Development a. Original certificate of non-confusion of the Authority for Social Insurance office in Authority’s new Administrative Decree No. 25 of company name; Tanta 2013 (January 28, 2013). b. Original certificate from an authorized bank; Time: 3 days c. A copy of the powers of attorney from the Cost: No cost founders to their representative; Comments: Social insurance provides com- d. A copy of the founders’ ID cards or passports; pensation for disability, retirement (pension), e. Security clearances for foreign partners (if unemployment, and work-related injuries. By law, relevant); employers are required to subscribe to the social f. Original certificate indicating that the insurance system. Otherwise, they may be subject company’s auditor is listed at the Registry of to sanctions. accountants and auditors; g. Application provided by GAFI; and

* This procedure can be completed simultaneously with previous procedures. 80 DOING BUSINESS IN EGYPT 2014

Procedure 2. Obtain a certificate from f. Commercial registration fee: EGP 56; and Procedure 6. Register for taxes at the an authorized bank and open a bank g. Operation certificate fee: EGP 29. Investment Tax Office in the GAFI one- account The cost of a round trip ticket from Zagazig to stop shop in Cairo Time: 1 day Cairo is approximately EGP 37.44. Time: 1 day Cost: EGP 400 (EGP 250 for the bank certificate Procedure 4. Notarize the company Cost: No cost + account opening fees ranging from EGP 100 to contract at the Investment Notarization Comments: Upon incorporation, the company can 200) Office in the GAFI one-stop shop in complete tax registration and obtain the tax card Comments: The Bank of Alexandria branch at the Cairo at the one-stop shop’s tax counter on the first General Authority for Free Zones and Investment floor. The tax cards are sent via courier to a central (GAFI) one-stop shop in Cairo issues and delivers Time: 1 day location in Cairo (located near the one-stop shop) the certificate in 1–2 days. Investors can go to this Cost: No cost for printing. If the request for a tax card is submit- bank branch or any authorized bank to obtain the Comments: The articles of association must be ted before noon, the tax card will be printed out bank certificate and open a bank account. Upon registered and certain documents deposited with and issued on the same day. Requests submitted an agreement between GAFI and the Central the Investment Notarization Office at the GAFI after noon will be processed on the following day. Bank, investors do not need to submit the articles one-stop shop. The documents requiring notari- Upon obtaining the card, the company may of association to the bank in order to obtain the zation include: choose to register for sales tax, provided that they bank certificate. a. Original certificate of non-confusion of the have started production. Companies are obliged to company name; register for sales tax only once they reach at least Procedure 3. Submit documents to EGP 54,000 in sales for industrial activities and b. Original certificate from an authorized bank; the Department of Companies in the EGP 150,000 in sales for commercial activities. GAFI one-stop shop in Cairo and obtain c. A copy of the powers of attorney from the The required documents include the articles of invoice founders to their representative; association and the powers of attorney, the bank d. A copy of the founders’ ID cards or passports; signature authentication (to be issued to the Time: 2 days e. Security clearances for foreign partners (if appropriate person by the manager having the Cost: EGP 1,437 relevant); power to sign on behalf of the company), the Comments: The investor needs to submit the tax card, an original extract from the company’s f. Original certificate indicating that the approved company contract, along with the rest commercial register, and the original copy of the company’s auditor is listed at the Registry of of the required documentation, including the company’s lease agreement for its premises. accountants and auditors; Certificate of Non-Confusion (shahadat adam al-iltibas) issued by the Commercial Registry and g. Application provided by GAFI; and the powers of attorney. The investor deposits h. Stamped articles of association. Procedure 7. Open a company file and the documents at the reception desk at the GAFI No stamp duty is levied, according to the amend- register employees with the National one-stop shop in Cairo (the closest one-stop ments (published on July 1, 2006) to the Stamp Authority for Social Insurance office in shop), where they are reviewed immediately by Duty Law (No. 111 of 1980). a lawyer. Applicants who wish to register their Zagazig company must submit an application at the Procedure 5. Obtain the notification of Time: 3 days nearest GAFI one-stop shop in Cairo. Time is incorporation from the Department of Cost: No cost calculated as 2 days including 1 day of travel time Companies in the GAFI one-stop shop Comments: Social insurance provides com- to and from Cairo by either car or train (2-3 hours pensation for disability, retirement (pension), each way). The employee of the division reviews in Cairo unemployment, and work-related injuries. By law, the documents and issues an invoice detailing Time: 1 day employers are required to subscribe to the social all the cost mentioned above for the company’s Cost: No cost insurance system. Otherwise, they may be subject establishment which should be paid at once in a Comments: When the company contract has to sanctions. single payment at the Bank of Alexandria branch been submitted, the competent authority must in the one-stop shop. The employer must submit a fully completed, ratify the articles of incorporation and give the authority-issued application (Form 1 and 2) and Decree No. 282 of 2007 allows corporations to applicant a certificate indicating that all the requi- the following documents to the competent office: determine in the constitutive contract the name of red papers have been submitted. This certificate a. Company’s commercial registration; the chairman, the vice chairman and the CEO and allows for the registration of the company in the their responsibilities before incorporation enabling Commercial Registry. This certificate is issued b. Company’s tax card; the corporations to immediately withdraw cash within 24 hours following the submission of c. Company’s articles of incorporation; from the companies under incorporation account the notarized contract. The company assumes d. Deed or lease agreement for company premi- at the bank after registering in the Commercial legal responsibility and judicial personality from ses; Registry. the date of registration. Where the competent e. Employer to fill in Form No. 2; All the fees for company establishment are paid at authority has no objection, the Department of this stage, including: Companies is thereafter responsible for publishing f. Employer’s bank signature certificate; a. Notary public fee: 0.25% of start-up capital the announcement of the company establishment g. Employer’s graduation certificate; (minimum of EGP 10 and a maximum of EGP in the Investment Gazette at the expense of the h. Employees’ to fill in Form No. 1; 1,000); company. i. Employees’ copy of identification card; b. Establishment fees: 0.1% of start-up capital j. Employee’s graduation certificate; and (minimum of EGP 100 and maximum of EGP k. Employees’ birth certificate (copy) if they do 1,000 according to Article 17 (d) of the Compa- not have a social insurance number; or Form nies Law); No. 6 for clearance/termination from emplo- c. Commercial Syndicate fee: EGP 125 (for start- yees’ previous jobs. up capital less than or equal to EGP 500,000) The company premises are then subject to inspec- or EGP 250 (for start-up capital more than EGP tion by relevant authorities - such as the National 500,000); Authority for Social Insurance and GAFI. Inspec- d. Publication fee: EGP 150 (for a limited liability tion takes place in practice only if there is any company in Arabic) or EGP 300 (for a limited complaint filed against the company, or suspicion liability company in Arabic and English); that the company is an image organization that e. Chamber of Commerce fee: 0.2% of start-up does not actually conduct business as claimed in capital (minimum of EGP 24 and maximum of its submitted documents. Companies registering EGP 2,000); for sales tax will usually undergo inspection.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 81

b. A copy of the supervising engineer’s ID (who is LIST OF PROCEDURES Procedure 5*. Obtain project clearance from Antiquities Authority submitting the file); DEALING WITH CONSTRUCTION c. The Construction Value Form, approved by the Time: 30 days PERMITS supervising engineer; Cost: EGP 1,000 (EGP 100 for the application fee d. The Site Validity Certificate; Alexandria + EGP 900 for the labor costs) e. A receipt attesting to the payment of fees for Comments: BuildCo needs to obtain project Warehouse value: EGP 1,000,000 (US$ 158,674) examination of the drawings and details; Data as of: June 2013 clearance from the Antiquities Authority before submitting the application for the building permit. f. An overall drawing of the site (scale minimum Procedure 1. Apply for the Site Validity 1:1,000) that indicates (i) the boundaries and dimensions of the land for which the permit is Certificate at the Municipal Authority Procedure 6*. Obtain project clearance from Electricity Company required, together with the total land area, and Time: 1 day (ii) the part on which construction is requested, Cost: EGP 200 Time: 20 days as well as the facing roads and their widths; Comments: BuildCo applies at the Municipal Cost: EGP 500 g. Three copies of the architectural drawings for Authority to obtain the Site Validity Certificate, Comments: BuildCo needs to visit the local the plans and elevations; a vertical section, which proves the conformance of the site with the branch of the Electricity Company to obtain a pro- indicating the building height and the road’s planning and building requirements. The request ject clearance before submitting the application zero level and the structural drawings of the identifies the site, the address and the borders of for the building permit. The documents attached foundations, columns, and the reinforced the land. A copy of the applicant’s national ID and to the request include: the Site Validity Certificate, ceilings, together with copies of the structural receipt of the payment must be attached to the all architectural drawings, a copy of the owner’s calculation notes. All drawings must be signed request. Article 19 of Law 119/2008 sets a ceiling ID, a copy of the supervising engineer’s ID, a copy by an accredited engineer. of EGP 200 for the fee related to the obtainment of the supervising engineer’s authorization, and The Building Law establishes a 30-day statutory of the Site Validity Certificate. This ceiling can be a copy of the ownership contract of the plot of time limit for issuing building permits. This time increased by no more than 3% every year. land. The Electricity Company inspects the site in limit can be extended in case the Municipal order to make sure that the electric system of the Authority considers the application incomplete. Procedure 2. Receive on-site inspection warehouse is in line with the electricity network. The engineer of the Municipal Authority reviews from the Municipal Authority (i) the building permit file in order to check its Procedure 7*. Obtain project clearance Time: 1 day completeness, and (ii) the drawings, to check if from Improvements Department they comply with the Site Validity Certificate. Cost: No cost Time: 10 days Comments: Before issuing the Site Validity Certifi- Procedure 10*. Obtain approval of the cate, an inspector from the Municipal Engineering Cost: EGP 9,290 (EGP 10 per square meter of the land) Execution Supervision Certificate from Department inspects the construction site (i) to the Syndicate of Engineers verify that there are no pre-existing buildings or Comments: BuildCo needs to obtain project clea- illegal demolitions on the plot of land, and (ii) to rance from the Improvements Department before Time: 1 day check the data to ensure there are no irregularities submitting the application for the building permit. Cost: EGP 312 on the plot of land. Comments: BuildCo must obtain the approval Procedure 8*. Obtain clearance from of the Execution Supervision Certificate by the Procedure 3. Obtain Site Validity Agriculture Department local branch of the Syndicate of Engineers. The Certificate from the Municipal Authority Time: 3 days approval certifies that the supervising engineer is Time: 28 days Cost: EGP 750 truly licensed and that s/he is not supervising too many projects. Cost: No cost Comments: BuildCo needs to obtain clearance Comments: The Site Validity Certificate is issued from the Agriculture Department. The clearance Procedure 11. Inform the Municipal concerns the presence of white ants. BuildCo after the inspection. According to Article 110 of Authority before starting construction Law 144/2009, the Site Validity Certificate should pays a fee to the Agriculture Department, which be issued within 1 week after the submission of will then spray the plot of land with an insecticide Time: 1 day the application. If there are any hindrances to against white ants. Once the plot of land has been Cost: No cost the site, the administrative body shall issue a sprayed, the Agriculture Department issues a re- Comments: BuildCo sends a letter to the Muni- statement indicating the hindrances that block the ceipt that BuildCo will attach to the application for cipal Authority to inform them that construction issuance of the Site Validity Certificate. obtaining the building permit from the Municipal work will start. The letter must be sent at least Authority. 15 days before starting construction. Attached Procedure 4. Obtain project clearance to the letter, BuildCo sends (i) the Contracting from Civil Aviation Authority Procedure 9. Apply and obtain building Contract, approved by the Egyptian Federation for permit from the Smart Centre for Time: 50 days Construction and Building Contractors, if applica- Project Services ble, (ii) and the Execution Supervision Certificate, Cost: EGP 2,153 (EGP 1,900 for coordinates map approved by the Syndicate of Engineers. and level determination certificate + EGP 253 for Time: 45 days Cost: EGP 6,260 [Insurance fee: 0.2% of cons- approval by the Civil Aviation Authority) Procedure 12. Receive on-site inspection Comments: BuildCo needs to obtain project truction cost (1,300 square meters * EGP 600 * 0.2% = EGP 1,560) + EGP 1,060 for the permit from the Municipal Engineering clearance from the Civil Aviation Authority before Department - I submitting the application for the building permit. issuance fee + EGP 1,000 for the commission of The applicant must attach a coordinates map and the Smart Center + engineering stamps from the Time: 1 day a level determination certificate to the request for Syndicate of Engineers: 0.3% of construction cost Cost: No cost clearance. (1,300 square meters * EGP 600 * 0.3% = EGP 2,340) + EGP 300 for stamps from the Municipal Comments: The Municipal Engineering De- Engineering Department] partment inspects the construction site periodica- lly. Each inspection takes one day. Comments: To obtain a building permit from the Municipal Authority, the supervising engineer must file the following documents, along with the clearances described in the previous procedures: a. The original ownership contract of the plot of land (notarized);

* This procedure can be completed simultaneously with previous procedures. 82 DOING BUSINESS IN EGYPT 2014

Procedure 13. Receive on-site inspection Procedure 18*. Obtain water and the site, the administrative body shall issue a from the Municipal Engineering sewerage connection statement indicating the hindrances that block the issuance of the Site Validity Certificate. Department - II Time: 30 days Time: 1 day Cost: EGP 15,000 Procedure 4. Apply and obtain building Cost: No cost Comments: BuildCo submits two applications to permit from the Municipal Authority Comments: The Municipal Engineering De- the Water and Sewerage Company, one for the Time: 60 days water connection and one for the sewerage con- partment inspects the construction site periodica- Cost: EGP 5,030 [EGP 1,000 for the permit is- nection. The two applications can be submitted lly. Each inspection takes one day. suance fees + Insurance fee: 0.2% of construction simultaneously. After two inspections (one for cost (1,300 square meters * EGP 300 * 0.2% = each connection), fees are estimated. Once the Procedure 14. Obtain clearance from EGP 780) + insurance for removal of excavation fees are paid the warehouse can be connected to Civil Defense and Firefighting Authority output and construction waste: EGP 5 * square the water and to the sewerage system. Time: 15 days meters of building footprint (650square meters * EGP 5 = EGP 3,250)] Cost: No cost Procedure 19*. Obtain phone connection Comments: Once the construction works are from Telecom Egypt Comments: To obtain a building permit from the Municipal Authority, the supervising engineer completed, BuildCo’s supervising engineer visits Time: 15 days the Civil Defense and Firefighting Authority to must file the following documents: inform it that the building is ready for inspection. Cost: EGP 50 a. A copy of the ownership contract of the plot of After the inspection takes place, the Civil Defense Comments: To obtain a phone connection, the land (notarized); and Firefighting Authority sends a letter of clea- company must submit the following documents: b. A copy of the supervising engineer’s ID (who is rance to BuildCo. This letter has to be attached a. Title deed for the unit, or lease contract, if not submitting the file); to the Construction Conformity Certificate that owned by the applicant; c. The supervising engineer’s authorization to act is then submitted to the Municipal Authority to b. Copy of applicant’s ID; on behalf of the owner; obtain the letters for connection to utilities. The inspection has no cost. c. Owner ID; d. The Construction Value Form, approved by the d. Commercial registry and taxes ID. supervising engineer; Procedure 15. Submit Construction e. The Standard Guarantee Certificate, approved Conformity Certificate and receive final DEALING WITH CONSTRUCTION PERMITS by the supervising engineer; inspection from the Municipal Authority Assuit f. The Site Validity Certificate; g. An overall drawing of the site (scale minimum Time: 15 days Warehouse value: EGP 1,000,000 (US$ 158,674) 1:1,000) that indicates (i) the boundaries and Cost: No cost Data as of: June 2013 dimensions of the land for which the permit is Comments: The supervising engineer has to Procedure 1. Apply for the Site Validity required, together with the total land area, and submit to the Municipal Engineering Department (ii) the part on which construction is requested, a certificate stating that the building has been Certificate at the Municipal Authority as well as the facing roads and their widths; built in accordance with the relevant laws and Time: 1 day h. Three copies of the architectural drawings for regulations (the Construction Conformity Certifi- Cost: EGP 74 the plans and elevations; a vertical section, cate). The Engineering Department makes a final indicating the building height and the road’s inspection to certify that the warehouse conforms Comments: BuildCo applies at the Municipal zero level and the structural drawings of the to the specifications outlined in the building per- Authority to obtain the Site Validity Certificate, foundations, columns, and the reinforced mit. After the inspection, the Municipal Authority which proves the conformance of the site with the ceilings, together with copies of the structural issues letters allowing the connection to utilities. planning and building requirements. The request identifies the site, the address and the borders of calculation notes. All drawings must be signed the land. A copy of the applicant’s national ID and by an accredited engineer and approved by the Procedure 16. Obtain letters from Syndicate of Engineers. Municipal Authority about utility receipt of the payment must be attached to the request. Article 19 of Law 119/2008 sets a ceiling The Building Law establishes a 30-day statutory connections of EGP 200 for the fee related to the obtainment time limit for issuing building permits. This time Time: 2 days of the Site Validity Certificate. This ceiling can be limit can be extended in case the Municipal Cost: EGP 350 increased by no more than 3% every year. Authority considers the application incomplete. Comments: BuildCo collects from the Municipal The engineer of the Municipal Authority reviews Authority the letters that authorize the connection Procedure 2. Receive on-site inspection (i) the building permit file in order to check its of the warehouse to utilities and brings them to from the Municipal Authority completeness, and (ii) the drawings, to check if the utility companies. Time: 1 day they comply with the Site Validity Certificate. Cost: No cost Procedure 17. Register the building with Procedure 5*. Obtain approvals from Comments: Before issuing the Site Validity Certifi- the Syndicate of Engineers the Real Estate Registry cate, an inspector from the Municipal Engineering Time: 60 days Department inspects the construction site (i) to Time: 1 day Cost: EGP 2,000 verify that there are no pre-existing buildings or Cost: EGP 1,910 Comments: In order to register the building, illegal demolitions on the plot of land, and (ii) to Comments: After the building permit has been BuildCo submits to the Real Estate Registry a check the data to ensure there are no irregularities obtained, BuildCo must obtain stamps of approval building registration form, the building permit for on the plot of land. from the Syndicate of Engineers on the following the warehouse, and the ownership contract of the documents: land on which the warehouse has been built. Law Procedure 3. Obtain Site Validity a. The Engineer Supervision Certificate; 83 of 2006 establishes the registration fees. Certificate from the Municipal Authority b. The architectural drawings; Time: 28 days c. The Standard Guarantee Certificate. Cost: No cost Comments: The Site Validity Certificate is issued after the inspection. According to Article 110 of Law 144/2009, the Site Validity Certificate should be issued within 1 week after the submission of the application. If there are any hindrances to

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 83

Procedure 6. Inform the Municipal to the specifications outlined in the building per- receipt of the payment must be attached to the Authority before starting construction mit. After the inspection, the Municipal Authority request. Article 19 of Law 119/2008 sets a ceiling issues letters allowing the connection to utilities. of EGP 200 for the fee related to the obtainment Time: 1 day of the Site Validity Certificate. This ceiling can be Cost: No cost Procedure 12. Register the building with increased by no more than 3% every year. Comments: BuildCo sends a letter to the Muni- the Real Estate Registry cipal Authority to inform them that construction Time: 60 days Procedure 2. Receive on-site inspection work will start. The letter must be sent at least from the Municipal Authority Cost: EGP 2,000 15 days before starting construction. Attached Time: 1 day to the letter, BuildCo sends (i) the Contracting Comments: In order to register the building, Cost: No cost Contract, approved by the Egyptian Federation for BuildCo submits to the Real Estate Registry a Construction and Building Contractors, if applica- building registration form, the building permit for Comments: Before issuing the Site Validity Certifi- ble, (ii) and the Execution Supervision Certificate, the warehouse, and the ownership contract of the cate, an inspector from the Municipal Engineering approved by the Syndicate of Engineers. land on which the warehouse has been built. Law Department inspects the construction site (i) to 83 of 2006 establishes the registration fees. verify that there are no pre-existing buildings or Procedure 7. Receive on-site inspection illegal demolitions on the plot of land, and (ii) to from the Municipal Engineering Procedure 13*. Obtain water connection check the data to ensure there are no irregularities on the plot of land. Department - I Time: 35 days Time: 1 day Cost: EGP 1,532 (EGP 32 for the application fee + Procedure 3. Obtain Site Validity EGP 1,500 for the cost of the pipes) Cost: No cost Certificate from the Municipal Authority Comments: BuildCo submits an application to Comments: The Municipal Engineering De- the Water and Sewerage Company, along with Time: 19 days partment inspects the construction site periodica- the original license, and a copy of the building Cost: No cost lly. Each inspection takes one day. permit. Once the application for water connection Comments: The Site Validity Certificate is issued is submitted, an inspection takes place. After the Procedure 8. Receive on-site inspection after the inspection. According to Article 110 of inspection the fees are estimated. Once the fees Law 144/2009, the Site Validity Certificate should from the Municipal Engineering are paid, the warehouse can be connected to the be issued within 1 week after the submission of Department - II water system. the application. If there are any hindrances to Time: 1 day the site, the administrative body shall issue a Cost: No cost Procedure 14. Obtain sewerage statement indicating the hindrances that block the issuance of the Site Validity Certificate. Comments: The Municipal Engineering De- connection partment inspects the construction site periodica- Time: 7 days Procedure 4. Obtain project clearance lly. Each inspection takes one day. Cost: EGP 2,900 [EGP 900 for application fees and administration cost + Cost of the pipes and from Civil Aviation Authority Procedure 9. Receive on-site inspection labor: EGP 150 per meter of connection (EGP 150 Time: 50 days from the Municipal Engineering * 10 meters = EGP 1,500) + EGP 500 for scrutiny Cost: EGP 1,403 (EGP 650 for the coordinates Department - III and inspection fees] map + EGP 253 for the approval by the Civil Avia- Time: 1 day Comments: After the obtainment of the water tion Authority + EGP 500 for hiring a facilitator) connection, BuildCo submits an application for Cost: No cost Comments: BuildCo needs to obtain project sewerage connection. After an inspection, fees are clearance from the Civil Aviation Authority before Comments: The Municipal Engineering De- estimated. Once the fees are paid the warehouse submitting the application for the building permit. partment inspects the construction site periodica- can be connected to the sewerage system. The approval must be obtained in Cairo. BuildCo lly. Each inspection takes one day. hires a private facilitator to complete this proce- Procedure 15*. Obtain phone connection dure and to go to Cairo on its behalf. Procedure 10. Obtain clearance from from Telecom Egypt Civil Defense and Firefighting Authority Time: 15 days Procedure 5*. Obtain project clearance Time: 21 days Cost: EGP 50 from Civil Defense and Firefighting Cost: No cost Authority Comments: To obtain a phone connection, the Comments: Once the construction works are company must submit the following documents: Time: 45 days completed, BuildCo’s supervising engineer visits a. Title deed for the unit, or lease contract, if not Cost: EGP 13,000 (EGP 10 per square meter of the Civil Defense and Firefighting Authority to owned by the applicant; the property) inform it that the building is ready for inspection. Comments: BuildCo needs to obtain project After the inspection takes place, the Civil Defense b. Copy of applicant’s ID; clearance from the Civil Defense and Firefighting and Firefighting Authority sends a letter of clea- c. Owner ID; Authority before submitting the application for rance to BuildCo. This letter has to be attached d. Commercial registry and taxes ID. the building permit. This procedure is required for to the Construction Conformity Certificate that all non-residential buildings. The Civil Defense is then submitted to the Municipal Authority to DEALING WITH CONSTRUCTION PERMITS and Firefighting Authority needs to make sure obtain the letters for connection to utilities. The that the project abides to the legal requirements inspection has no cost. Aswan on fire safety. The Civil Defense and Firefighting Warehouse value: EGP 1,000,000 (US$ 158,674) Procedure 11. Submit Construction Authority examines the preliminary drawings Data as of: June 2013 and inspects the plot of land before clearing the Conformity Certificate and receive final project. BuildCo has to attach this clearance to the inspection from the Municipal Authority Procedure 1. Apply for the Site Validity application for the building permit. Time: 27 days Certificate at the Municipal Authority Cost: No cost Time: 1 day Comments: The supervising engineer has to Cost: EGP 50 submit to the Municipal Engineering Department Comments: BuildCo applies at the Municipal a certificate stating that the building has been Authority to obtain the Site Validity Certificate, built in accordance with the relevant laws and which proves the conformance of the site with the regulations (the Construction Conformity Certifi- planning and building requirements. The request cate). The Engineering Department makes a final identifies the site, the address and the borders of inspection to certify that the warehouse conforms the land. A copy of the applicant’s national ID and

* This procedure can be completed simultaneously with previous procedures. 84 DOING BUSINESS IN EGYPT 2014

Procedure 6*. Obtain project clearance calculation notes. All drawings must be signed Procedure 14. Obtain clearance from from Electricity Company by an accredited engineer and approved by the Civil Defense and Firefighting Authority Syndicate of Engineers. Time: 10 days Time: 7 days The Building Law establishes a 30-day statutory Cost: No cost time limit for issuing building permits. This time Cost: No cost Comments: BuildCo needs to visit the local limit can be extended in case the Municipal Comments: Once the construction works are branch of the Electricity Company to obtain a pro- Authority considers the application incomplete. completed, BuildCo’s supervising engineer visits ject clearance before submitting the application The engineer of the Municipal Authority reviews the Civil Defense and Firefighting Authority to for the building permit. The documents attached (i) the building permit file in order to check its inform it that the building is ready for inspection. to the request include: the Site Validity Certificate, completeness, and (ii) the drawings, to check if After the inspection takes place, the Civil Defense all architectural drawings, a copy of the owner ID, they comply with the Site Validity Certificate. and Firefighting Authority sends a letter of clea- a copy of the supervising engineer’s ID, a copy of rance to BuildCo. This letter has to be attached the supervising engineer’s authorization, and a Procedure 9*. Obtain approval of the to the Construction Conformity Certificate that copy of the ownership contract of the plot of land. Execution Supervision Certificate from is then submitted to the Municipal Authority to The Electricity Company inspects the site in order the Syndicate of Engineers obtain the letters for connection to utilities. The to make sure that the electric system of the ware- inspection has no cost. house is in line with the electricity network. Time: 1 day Cost: EGP 250 Procedure 15. Submit Construction Procedure 7*. Obtain clearance from Comments: BuildCo must obtain the approval of Conformity Certificate and receive final Agriculture Department the Execution Supervision Certificate by the local inspection from the Municipal Authority branch of the Syndicate of Engineers. The approval Time: 3 days Time: 7 days certifies that the engineer is truly licensed and Cost: EGP 4,550 (EGP 5.5 per square meter of that s/he is not supervising too many projects. Cost: No cost building footprint) Comments: The supervising engineer has to Comments: BuildCo needs to obtain clearance Procedure 10. Inform the Municipal submit to the Municipal Engineering Department from the Agriculture Department. The clearan- Authority before starting construction a certificate stating that the building has been ce concerns the white ants. BuildCo brings to built in accordance with the relevant laws and Time: 1 day the Agriculture Department a letter from the regulations (the Construction Conformity Certifi- Municipal Authority that summarizes the project Cost: No cost cate). The Engineering Department makes a final features. After submitting this letter, BuildCo Comments: BuildCo sends a letter to the Muni- inspection to certify that the warehouse conforms pays the fees and receives a receipt. The fees are cipal Authority to inform them that construction to the specifications outlined in the building perfor spraying the building with insecticide. The work will start. The letter must be sent at least 15 mit. After the inspection, the Municipal Authority spraying will be done after the construction of the days before starting construction. Attached to the issues letters allowing the connection to utilities. warehouse. letter, BuildCo sends (i) the Contracting Contract, approved by the Egyptian Federation for Construc- Procedure 16. Obtain letters from Procedure 8. Apply and obtain building tion and Building Contractors, if applicable,(ii) and Municipal Authority about utility permit from the Customer Service the Execution Supervision Certificate, approved by connections the Syndicate of Engineers. Center Time: 4 days Time: 60 days Procedure 11. Receive on-site inspection Cost: EGP 180 Cost: EGP 5,540 [Insurance fee: 0.2% of cons- from the Municipal Engineering Comments: BuildCo collects from the Municipal truction cost (1,300 square meters * EGP 400 Department - I Authority the letters that authorize the connection * 0.2% = EGP 1,040) + Façade fee: EGP 100 + of the warehouse to utilities and brings them to Time: 1 day Permit issuance fees: EGP 500 + Cleaning fee: 1% the utility companies. of construction cost (1,300 square meters * EGP Cost: No cost 300 * 1.0% = EGP 3,900)] Comments: The Municipal Engineering De- Procedure 17. Register the building with Comments: To obtain a building permit from the partment inspects the construction site periodica- the Real Estate Registry Municipal Authority, the supervising engineer lly. Each inspection takes one day. must file the following documents, along with the Time: 60 days clearances described in the previous procedures: Procedure 12. Receive on-site inspection Cost: EGP 2,000 a. A copy of the ownership contract of the plot of from the Municipal Engineering Comments: In order to register the building, land (notarized); Department - II BuildCo submits to the Real Estate Registry a building registration form, the building permit for b. A copy of the supervising engineer’s ID (who is Time: 1 day submitting the file); the warehouse, and the ownership contract of the Cost: No cost land on which the warehouse has been built. Law c. The supervising engineer’s authorization to act Comments: The Municipal Engineering De- 83 of 2006 establishes the registration fees. on behalf of the owner; partment inspects the construction site periodica- d. The Construction Value Form, approved by the lly. Each inspection takes one day. Procedure 18*. Obtain water and supervising engineer; sewerage connection e. The Site Validity Certificate; Procedure 13. Receive on-site inspection Time: 30 days from the Municipal Engineering f. An overall drawing of the site (scale minimum Cost: EGP 15,000 1:1,000) that indicates (i) the boundaries and Department - III Comments: BuildCo submits two applications to dimensions of the land for which the permit is Time: 1 day required, together with the total land area, and the Water and Sewerage Company, one for the Cost: No cost (ii) the part on which construction is requested, water connection and one for the sewerage con- as well as the facing roads and their widths. Comments: The Municipal Engineering De- nection. The two applications can be submitted partment inspects the construction site periodica- simultaneously. After two inspections (one for g. Three copies of the architectural drawings for lly. Each inspection takes one day. each connection), fees are estimated. Once the the plans and elevations; a vertical section, fees are paid the warehouse can be connected to indicating the building height and the road’s the water and to the sewerage system. zero level and the structural drawings of the foundations, columns, and the reinforced ceilings, together with copies of the structural

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 85

Procedure 19*. Obtain phone connection Procedure 5*. Obtain project clearance (i) the building permit file in order to check its from Telecom Egypt from Electricity Company completeness, and (ii) the drawings, to check if they comply with the Site Validity Certificate. Time: 20 days Time: 30 days Cost: EGP 50 Cost: No cost Procedure 8. Inform the Municipal Comments: To obtain a phone connection, the Comments: BuildCo needs to visit the local Authority before starting construction company must submit the following documents: branch of the Electricity Company to obtain a pro- Time: 1 day ject clearance before submitting the application a. Title deed for the unit, or lease contract, if not Cost: No cost owned by the applicant; for the building permit. The documents attached to the request include: the Site Validity Certificate, Comments: BuildCo sends a letter to the Muni- b. Copy of applicant’s ID; all architectural drawings, a copy of the owner ID, cipal Authority to inform them that construction c. Owner ID; a copy of the supervising engineer’s ID, a copy of work will start. The letter must be sent at least d. Commercial registry and taxes ID. the supervising engineer’s authorization, and a 15 days before starting construction. Attached copy of the ownership contract of the plot of land. to the letter, BuildCo sends (i) the Contracting DEALING WITH CONSTRUCTION PERMITS The Electricity Company inspects the site in order Contract, approved by the Egyptian Federation for Construction and Building Contractors, if applica- Cairo to make sure that the electric system of the warehouse is in line with the electricity network. ble, (ii) and the Execution Supervision Certificate, Warehouse value: EGP 1,000,000 (US$ 158,674) approved by the Syndicate of Engineers. Data as of: June 2013 Procedure 6*. Obtain project clearance from Civil Defense and Firefighting Procedure 9. Receive on-site inspection Procedure 1. Apply for the Site Validity Authority from the Municipal Engineering Certificate at the Municipal Authority Department - I Time: 30 days Time: 1 day Time: 1 day Cost: No cost Cost: EGP 200 Cost: No cost Comments: BuildCo needs to obtain project Comments: BuildCo applies at the Municipal clearance from the Civil Defense and Firefighting Comments: The Municipal Engineering De- Authority to obtain the Site Validity Certificate, Authority before submitting the application for the partment inspects the construction site periodica- which proves the conformance of the site with the building permit. The Civil Defense and Firefighting lly. Each inspection takes one day. planning and building requirements. The request Authority examines the project to make sure that identifies the site, the address and the borders of it abides to the legal requirements on fire safety. Procedure 10. Receive on-site inspection the land. A copy of the applicant’s national ID and BuildCo must attach the clearance to the applica- from the Municipal Engineering receipt of the payment must be attached to the tion for the building permit. Department - II request. Article 19 of Law 119/2008 sets a ceiling Time: 1 day of EGP 200 for the fee related to the obtainment Procedure 7. Apply and obtain building Cost: No cost of the Site Validity Certificate. This ceiling can be permit from the Municipal Authority increased by no more than 3% every year. Comments: The Municipal Engineering De- Time: 30 days partment inspects the construction site periodica- Procedure 2. Receive on-site inspection Cost: EGP 2,561 lly. Each inspection takes one day. from the Municipal Authority Comments: To obtain a building permit from the Time: 1 day Municipal Authority, the supervising engineer Procedure 11. Receive on-site inspection must file the following documents, along with the from the Municipal Engineering Cost: No cost clearances described in the previous procedures: Department - III Comments: Before issuing the Site Validity Certifi- a. The original ownership contract of the plot of cate, an inspector from the Municipal Engineering Time: 1 day land; Department inspects the construction site (i) to Cost: No cost verify that there are no pre-existing buildings or b. A copy of the supervising engineer’s ID (who is Comments: The Municipal Engineering De- illegal demolitions on the plot of land, and (ii) to submitting the file); partment inspects the construction site periodica- check the data to ensure there are no irregularities c. The supervising engineer’s authorization to act lly. Each inspection takes one day. on the plot of land. on behalf of the owner; d. The Construction Value Form, approved by the Procedure 12. Receive on-site inspection Procedure 3. Obtain Site Validity supervising engineer. from the Municipal Engineering Certificate from the Municipal Authority e. The Site Validity Certificate; Department - IV Time: 15 days f. A receipt attesting to the payment of fees for Time: 1 day Cost: No cost examination of the drawings and details; Cost: No cost Comments: The Site Validity Certificate is issued g. An overall drawing of the site (scale minimum Comments: The Municipal Engineering De- after the inspection. According to Article 110 of 1:1,000) that indicates (i) the boundaries and partment inspects the construction site periodica- Law 144/2009, the Site Validity Certificate should dimensions of the land for which the permit is lly. Each inspection takes one day. be issued within 1 week after the submission of required, together with the total land area, and the application. If there are any hindrances to (ii) the part on which construction is requested, Procedure 13. Receive on-site inspection the site, the administrative body shall issue a as well as the facing roads and their widths. from the Municipal Engineering statement indicating the hindrances that block the h. Three copies of the architectural drawings for Department - V issuance of the Site Validity Certificate. the plans and elevations; a vertical section, indicating the building height and the road’s Time: 1 day Procedure 4. Obtain approval of the zero level and the structural drawings of the Cost: No cost Execution Supervision Certificate from foundations, columns, and the reinforced Comments: The Municipal Engineering De- the Syndicate of Engineers ceilings, together with copies of the structural partment inspects the construction site periodica- Time: 1 day calculation notes. All drawings must be signed lly. Each inspection takes one day. by an accredited engineer. Cost: EGP 312 The Building Law establishes a 30-day statutory Comments: BuildCo must obtain the approval of time limit for issuing building permits. This time the Execution Supervision Certificate by the local limit can be extended in case the Municipal branch of the Syndicate of Engineers. The approval Authority considers the application incomplete. certifies that the engineer is truly licensed and The engineer of the Municipal Authority reviews that s/he is not supervising too many projects.

* This procedure can be completed simultaneously with previous procedures. 86 DOING BUSINESS IN EGYPT 2014

Procedure 14. Receive on-site inspection Procedure 20*. Obtain water and the site, the administrative body shall issue a from the Municipal Engineering sewerage connection statement indicating the hindrances that block the issuance of the Site Validity Certificate. Department - VI Time: 60 days Time: 1 day Cost: EGP 15,000 Procedure 4. Apply and obtain building Cost: No cost Comments: BuildCo submits two applications to permit from the Municipal Authority Comments: The Municipal Engineering De- the Greater Cairo Water Authority, one for the Time: 30 days water connection and one for the sewerage con- partment inspects the construction site periodica- Cost: EGP 3,735 [Insurance fee: 0.2% of cons- nection. The two applications can be submitted lly. Each inspection takes one day. truction cost (1,300 square meters * EGP 300 * simultaneously. After two inspections (one for 0.2% = EGP 780) + EGP 1,200 for the licensing each connection), fees are estimated. Once the Procedure 15. Receive on-site inspection fees + engineering stamps from the Syndicate fees are paid the warehouse can be connected to from the Municipal Engineering of Engineers: 0.45% of construction cost (1,300 the water and to the sewerage system. Department - VII square meters * EGP 300 * 0.45% = EGP 1,755)] Time: 1 day Procedure 21*. Obtain phone connection Comments: To obtain a building permit from the Cost: No cost from Telecom Egypt Municipal Authority, the supervising engineer must file the following documents: Comments: The Municipal Engineering De- Time: 18 days partment inspects the construction site periodica- a. The original ownership contract of the plot of Cost: EGP 50 lly. Each inspection takes one day. land (notarized); Comments: To obtain a phone connection, the b. A copy of the supervising engineer’s ID (who is Procedure 16. Receive on-site inspection company must submit the following documents: submitting the file); from the Civil Defense and Firefighting a. Title deed for the unit, or lease contract, if not c. The supervising engineer’s authorization to act Authority owned by the applicant; on behalf of the owner; Time: 15 days b. Copy of applicant’s ID; d. The Construction Value Form, approved by the Cost: No cost c. Owner ID; supervising engineer; Comments: After the construction has been d. Commercial registry and taxes ID. e. The Site Validity Certificate; completed, the Civil Defense and Firefighting f. An overall drawing of the site (scale minimum Authority inspects the building to check if it com- DEALING WITH CONSTRUCTION PERMITS 1:1,000) that indicates (i) the boundaries and plies with the fire safety regulations. Damietta dimensions of the land for which the permit is required, together with the total land area, and Procedure 17. Obtain approval of the Warehouse value: EGP 1,000,000 (US$ 158,674) (ii) the part on which construction is requested, Construction Conformity Certificate Data as of: June 2013 as well as the facing roads and their widths; from the Syndicate of Engineers Procedure 1. Apply for the Site Validity g. Three copies of the architectural drawings for the plans and elevations; a vertical section, Time: 1 day Certificate at the Municipal Authority indicating the building height and the road’s Cost: EGP 300 Time: 1 day zero level and the structural drawings of the Comments: The supervising engineer has to Cost: EGP 75 foundations, columns, and the reinforced submit to the Syndicate of Engineers the Cons- Comments: BuildCo applies at the Municipal ceilings, together with copies of the structural truction Conformity Certificate, which states that Authority to obtain the Site Validity Certificate, calculation notes. All drawings must be signed the building has been built in accordance with the which proves the conformance of the site with the by an accredited engineer. relevant laws and regulations. In this city, before planning and building requirements. The request The Building Law establishes a 30-day statutory being submitted to the Municipal Authority, the identifies the site, the address and the borders of time limit for issuing building permits. This time Construction Conformity Certificate must be the land. A copy of the applicant’s national ID and limit can be extended in case the Municipal approved by the Syndicate of Engineers. receipt of the payment must be attached to the Authority considers the application incomplete. request. Article 19 of Law 119/2008 sets a ceiling The engineer of the Municipal Authority reviews Procedure 18. Submit Construction of EGP 200 for the fee related to the obtainment (i) the building permit file in order to check its Conformity Certificate and receive final of the Site Validity Certificate. This ceiling can be completeness, and (ii) the drawings, to check if inspection from the Municipal Authority increased by no more than 3% every year. they comply with the Site Validity Certificate. Time: 15 days Procedure 5*. Obtain approval of the Cost: No cost Procedure 2. Receive on-site inspection from the Municipal Authority Execution Supervision Certificate from Comments: The supervising engineer submits to the Syndicate of Engineers the Municipal Engineering Department the Cons- Time: 1 day truction Conformity Certificate. The Engineering Cost: No cost Time: 1 day Department makes a final inspection to certify Comments: Before issuing the Site Validity Certifi- Cost: EGP 257 that the warehouse conforms to the specifica- cate, an inspector from the Municipal Engineering Comments: BuildCo must obtain the approval of tions outlined in the building permit. After the Department inspects the construction site (i) to the Execution Supervision Certificate by the local inspection, the Municipal Authority issues letters verify that there are no pre-existing buildings or branch of the Syndicate of Engineers. The approval allowing the connection to utilities. illegal demolitions on the plot of land, and (ii) to certifies that the engineer is truly licensed and check the data to ensure there are no irregularities that s/he is not supervising too many projects. Procedure 19. Register the building with on the plot of land. the Real Estate Registry Procedure 6. Inform the Municipal Time: 60 days Procedure 3. Obtain Site Validity Authority before starting construction Cost: EGP 2,000 Certificate from the Municipal Authority Time: 1 day Comments: In order to register the building, Time: 5 days Cost: No cost BuildCo submits to the Real Estate Registry a Cost: No cost Comments: BuildCo sends a letter to the Muni- building registration form, the building permit for Comments: The Site Validity Certificate is issued cipal Authority to inform them that construction the warehouse, and the ownership contract of the after the inspection. According to Article 110 of work will start. The letter must be sent at least land on which the warehouse has been built. Law Law 144/2009, the Site Validity Certificate should 15 days before starting construction. Attached 83 of 2006 establishes the registration fees. be issued within 1 week after the submission of to the letter, BuildCo sends (i) the Contracting the application. If there are any hindrances to Contract, approved by the Egyptian Federation for

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 87

Construction and Building Contractors, if applica- Procedure 14. Obtain clearance from a. Title deed for the unit, or lease contract, if not ble, (ii) and the Execution Supervision Certificate, Civil Defense and Firefighting Authority owned by the applicant; approved by the Syndicate of Engineers. b. Copy of applicant’s ID; Time: 7 days c. Owner ID; Procedure 7. Receive on-site inspection Cost: No cost d. Commercial registry and taxes ID. from the Municipal Engineering Comments: Once the construction works are Department - I completed, BuildCo’s supervising engineer visits DEALING WITH CONSTRUCTION PERMITS Time: 1 day the Civil Defense and Firefighting Authority to inform it that the building is ready for inspection. Fayoum Cost: No cost After the inspection takes place, the Civil Defense Warehouse value: EGP 1,000,000 (US$ 158,674) Comments: The Municipal Engineering De- and Firefighting Authority sends a letter of clea- partment inspects the construction site periodica- rance to BuildCo. This letter has to be attached Data as of: June 2013 lly. Each inspection takes one day. to the Construction Conformity Certificate that Procedure 1. Apply for the Site Validity is then submitted to the Municipal Authority to Procedure 8. Receive on-site inspection obtain the letters for connection to utilities. The Certificate at the Municipal Authority from the Municipal Engineering inspection has no cost. Time: 1 day Department - II Cost: EGP 53 Time: 1 day Procedure 15. Submit Construction Comments: BuildCo applies at the Municipal Conformity Certificate and receive final Cost: No cost Authority to obtain the Site Validity Certificate, inspection from the Municipal Authority which proves the conformance of the site with the Comments: The Municipal Engineering De- planning and building requirements. The request partment inspects the construction site periodica- Time: 11 days identifies the site, the address and the borders of lly. Each inspection takes one day. Cost: No cost the land. A copy of the applicant’s national ID and Comments: The supervising engineer has to receipt of the payment must be attached to the Procedure 9. Receive on-site inspection submit to the Municipal Engineering Department request. Article 19 of Law 119/2008 sets a ceiling from the Municipal Engineering a certificate stating that the building has been of EGP 200 for the fee related to the obtainment Department - III built in accordance with the relevant laws and of the Site Validity Certificate. This ceiling can be Time: 1 day regulations (the Construction Conformity Certifi- increased by no more than 3% every year. cate). The Engineering Department makes a final Cost: No cost inspection to certify that the warehouse conforms Procedure 2. Receive on-site inspection Comments: The Municipal Engineering De- to the specifications outlined in the building per- from the Municipal Authority partment inspects the construction site periodica- mit. After the inspection, the Municipal Authority lly. Each inspection takes one day. issues letters allowing the connection to utilities. Time: 1 day Cost: No cost Procedure 10. Receive on-site inspection Procedure 16. Register the building with Comments: Before issuing the Site Validity Certifi- from the Municipal Engineering the Real Estate Registry cate, an inspector from the Municipal Engineering Department - IV Time: 60 days Department inspects the construction site (i) to verify that there are no pre-existing buildings or Time: 1 day Cost: EGP 2,000 illegal demolitions on the plot of land, and (ii) to Cost: No cost Comments: In order to register the building, check the data to ensure there are no irregularities Comments: The Municipal Engineering De- BuildCo submits to the Real Estate Registry a on the plot of land. partment inspects the construction site periodica- building registration form, the building permit for lly. Each inspection takes one day. the warehouse, and the ownership contract of the Procedure 3. Obtain Site Validity land on which the warehouse has been built. Law Certificate from the Municipal Authority Procedure 11. Receive on-site inspection 83 of 2006 establishes the registration fees. from the Municipal Engineering Time: 13 days Department - V Procedure 17*. Obtain water and Cost: No cost Time: 1 day sewerage connection Comments: The Site Validity Certificate is issued Time: 45 days after the inspection. According to Article 110 of Cost: No cost Law 144/2009, the Site Validity Certificate should Cost: EGP 9,200 (EGP 5,600 for the water Comments: The Municipal Engineering De- be issued within 1 week after the submission of connection + EGP 3,600 for the sewerage partment inspects the construction site periodica- the application. If there are any hindrances to connection) lly. Each inspection takes one day. the site, the administrative body shall issue a Comments: BuildCo submits an application to the statement indicating the hindrances that block the Procedure 12. Receive on-site inspection Potable Water and Sanitary Drainage Company, issuance of the Site Validity Certificate. from the Municipal Engineering along with the original license, and a copy of the Department - VI building permit. BuildCo can apply for connections Procedure 4. Obtain clearance from both for water and sewerage simultaneously (two Agriculture Department Time: 1 day applications to the same office). The officials Cost: No cost of the Potable Water and Sanitary Drainage Time: 7 days Comments: The Municipal Engineering De- Company will then inspect the site and provide a Cost: EGP 7,432 (EGP 8 per square meter of the partment inspects the construction site periodica- cost estimate for the connection. After BuildCo land) lly. Each inspection takes one day. has paid the connection cost to the Potable Water Comments: BuildCo needs to obtain clearance and Sanitary Drainage Company, the warehouse from the Agriculture Department. The clearance Procedure 13. Receive on-site inspection will be connected to the water and sewerage concerns the presence of white ants. BuildCo from the Municipal Engineering networks. pays a fee to the Agriculture Department, which Department - VII will then spray the plot of land with an insecticide Procedure 18*. Obtain phone connection against white ants. Once the plot of land has been Time: 1 day from Telecom Egypt sprayed, the Agriculture Department issues a re- Cost: No cost Time: 15 days ceipt that BuildCo will attach to the application for Comments: The Municipal Engineering De- obtaining the building permit from the Municipal Cost: EGP 50 (EGP 5 for the application fee + EGP partment inspects the construction site periodica- Authority. 45 for the connection fee) lly. Each inspection takes one day. Comments: To obtain a phone connection, the company must submit the following documents:

* This procedure can be completed simultaneously with previous procedures. 88 DOING BUSINESS IN EGYPT 2014

Procedure 5*. Obtain clearance from Procedure 9. Obtain a letter from Procedure 14. Receive on-site inspection Information Department the Municipal Authority about the from the Municipal Engineering Time: 1 day Improvements Department clearance Department - II Cost: EGP 6,039 (EGP 6.5 per square meter of Time: 15 days Time: 1 day the land) Cost: No cost Cost: No cost Comments: BuildCo needs to obtain clearance Comments: The Municipal Authority issues a Comments: The Municipal Engineering De- from the Information Department. The clearance letter that BuildCo must bring to the Improve- partment inspects the construction site periodica- gives the exact position of each utility network ments Department in order to obtain the project lly. Each inspection takes one day. with respect to the plot of land. clearance. BuildCo states that there is no financial indebtedness on the land, or, if there is, pays the Procedure 15. Receive on-site inspection Procedure 6*. Obtain approval of the fees. BuildCo will then receive the approval from from the Municipal Engineering Execution Supervision Certificate from the Improvement Department and bring it back to Department - III the Municipal Authority. the Syndicate of Engineers Time: 1 day Time: 1 day Procedure 10*. Obtain a letter from the Cost: No cost Cost: EGP 250 Municipal Authority about electricity Comments: The Municipal Engineering De- Comments: BuildCo must obtain approval of the clearance partment inspects the construction site periodica- Execution Supervision Certificate by the local lly. Each inspection takes one day. branch of the Syndicate of Engineers. The approval Time: 7 days certifies that the engineer is truly licensed and Cost: EGP 55 Procedure 16. Receive on-site inspection that s/he is not supervising too many projects. Comments: The Municipal Authority issues a from the Municipal Engineering letter that BuildCo must bring to the Electricity Department - IV Procedure 7. Apply for the building Company in order to obtain the project clearance. permit at the Municipal Authority After receiving the approval, BuildCo brings it Time: 1 day Cost: No cost Time: 1 day back to the Municipal Authority. Comments: The Municipal Engineering De- Cost: EGP 7 (application fee) Procedure 11. Obtain building permit partment inspects the construction site periodica- Comments: To obtain a building permit from the from the Municipal Authority lly. Each inspection takes one day. Municipal Authority, the supervising engineer Time: 45 days must file the following documents, along with the Procedure 17. Receive on-site inspection clearances described in the previous procedures: Cost: EGP 4,415 [Insurance fee: 0.2% of construc- from the Municipal Engineering tion cost (1,300 square meters * EGP 300 * 0.2% a. A copy of the ownership contract of the plot of Department - V land (notarized); = EGP 780)+ Labor insurance: 0.6% of construction cost (1,300 square meters * EGP 300 * 0.6% Time: 1 day b. A copy of the supervising engineer’s ID (who is = EGP 2,340) + EGP 100 for administrative fees submitting the file); Cost: No cost + EGP 25 for governmental stamps + engineering Comments: The Municipal Engineering De- c. The supervising engineer’s authorization to act stamps from the Syndicate of Engineers: 0.3% on behalf of the owner (“Power of Attorney”); partment inspects the construction site periodica- of construction cost (1,300 square meters * EGP lly. Each inspection takes one day. d. The Construction Value Form, approved by the 300* 0.3% = EGP 1,170)] supervising engineer; Comments: The Building Law establishes a Procedure 18. Obtain approval of the e. The Site Validity Certificate; 30-day statutory time limit for issuing building Construction Conformity Certificate f. A receipt attesting to the payment of fees for permits. This time limit can be extended in case from the Syndicate of Engineers examination of the drawings and details; the Municipal Authority considers the application incomplete. The engineer of the Municipal Time: 1 day g. An overall drawing of the site (scale minimum Authority reviews (i) the building permit file in Cost: EGP 305 1:1,000) that indicates (i) the boundaries and order to check its completeness, and (ii) the dimensions of the land for which the permit is Comments: The supervising engineer has to drawings, to check if they comply with the Site required, together with the total land area, and submit to the Syndicate of Engineers the Cons- Validity Certificate. (ii) the part on which construction is requested, truction Conformity Certificate, which states that as well as the facing roads and their widths; the building has been built in accordance with the Procedure 12. Inform the Municipal relevant laws and regulations. In this city, before h. One copy of the architectural drawings for the Authority before starting construction being submitted to the Municipal Authority, the plans and elevations; a vertical section, indica- Construction Conformity Certificate must be ting the building height and the road’s zero level Time: 1 day approved by the Syndicate of Engineers. and the structural drawings of the foundations, Cost: No cost columns, and the reinforced ceilings, together Comments: BuildCo sends a letter to the Muni- Procedure 19. Submit Construction with copies of the structural calculation notes. cipal Authority to inform them that construction Conformity Certificate and receive final All drawings must be signed by an accredited work will start. The letter must be sent at least engineer; 15 days before starting construction. Attached inspection from the Municipal Authority i. A copy of the Execution Supervision Certificate, to the letter, BuildCo sends (i) the Contracting Time: 5 days stamped by the Syndicate of Engineers. Contract, approved by the Egyptian Federation for Cost: No cost Construction and Building Contractors, if applica- Comments: The supervising engineer has to sub- Procedure 8. Receive on-site inspection ble, (ii) and the Execution Supervision Certificate, mit to the Municipal Engineering Department a from Municipal Engineering Department approved by the Syndicate of Engineers. certificate stating that the building has been built in accordance with the relevant laws and regula- Time: 1 day Procedure 13. Receive on-site inspection Cost: No cost tions. The Engineering Department makes a final from the Municipal Engineering inspection to certify that the warehouse conforms Comments: An engineer from the Municipal Engi- Department - I to the specifications outlined in the building per- neering Department inspects the construction site Time: 1 day mit. After the inspection, the Municipal Authority before issuing the building permit to make sure issues letters allowing the connection to utilities. there are no irregularities. Cost: No cost Comments: The Municipal Engineering De- partment inspects the construction site periodica- lly. Each inspection takes one day.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 89

Procedure 20. Obtain letters from of EGP 200 for the fee related to the obtainment h. Three copies of the architectural drawings for Municipal Authority about utility of the Site Validity Certificate. This ceiling can be the plans and elevations; a vertical section, increased by no more than 3% every year. indicating the building height and the road’s connections zero level and the structural drawings of the Time: 7 days Procedure 2. Receive on-site inspection foundations, columns, and the reinforced Cost: No cost from the Municipal Authority ceilings, together with copies of the structural calculation notes. All drawings must be signed Comments: BuildCo collects from the Municipal Time: 1 day by an accredited engineer. Authority the letters that authorize the connection Cost: No cost of the warehouse to utilities and brings them to The Building Law establishes a 30-day statutory the utility companies. Comments: Before issuing the Site Validity Certifi- time limit for issuing building permits. This time cate, an inspector from the Municipal Engineering limit can be extended in case the Municipal Procedure 21. Register the building with Department inspects the construction site (i) to Authority considers the application incomplete. verify that there are no pre-existing buildings or the Real Estate Registry The engineer of the Municipal Authority reviews illegal demolitions on the plot of land, and (ii) to (i) the building permit file in order to check its Time: 60 days check the data to ensure there are no irregularities completeness, and (ii) the drawings, to check if Cost: EGP 2,000 on the plot of land. they comply with the Site Validity Certificate. Comments: In order to register the building, BuildCo submits to the Real Estate Registry a Procedure 3. Obtain Site Validity Procedure 6. Inform the Municipal building registration form, the building permit for Certificate from the Municipal Authority Authority before starting construction the warehouse, and the ownership contract of the Time: 15 days Time: 1 day land on which the warehouse has been built. Law Cost: No cost 83 of 2006 establishes the registration fees. Cost: No cost Comments: The Site Validity Certificate is issued Comments: BuildCo sends a letter to the Muni- Procedure 22*. Obtain water and after the inspection. According to Article 110 of cipal Authority to inform them that construction Law 144/2009, the Site Validity Certificate should sewerage connection work will start. The letter must be sent at least be issued within 1 week after the submission of 15 days before starting construction. Attached Time: 21 days the application. If there are any hindrances to to the letter, BuildCo sends (i) the Contracting Cost: EGP 7,800 [EGP 6,800 for the water the site, the administrative body shall issue a Contract, approved by the Egyptian Federation for connection (EGP 1,000 for the water meter+ statement indicating the hindrances that block the Construction and Building Contractors, if applica- EGP 600 + EGP 4 * 1,300 square meters for the issuance of the Site Validity Certificate. ble, (ii) and the Execution Supervision Certificate, connection fee) + EGP 1,000 for the sewerage approved by the Syndicate of Engineers. connection] Procedure 4. Obtain approval of the Comments: BuildCo submits two applications to Execution Supervision Certificate from Procedure 7. Receive on-site inspection the Water and Sewerage Company: one for the the Syndicate of Engineers from the Municipal Engineering water connection and one for the sewerage con- Time: 1 day Department - I nection. The two applications can be submitted Cost: EGP 312 Time: 1 day simultaneously. After two inspections (one for each connection), fees are estimated. Once the Comments: BuildCo must obtain the approval of Cost: No cost fees are paid the warehouse can be connected to the Execution Supervision Certificate by the local Comments: The Municipal Engineering De- the water and to the sewerage system. branch of the Syndicate of Engineers. The approval partment inspects the construction site periodica- certifies that the engineer is truly licensed and lly. Each inspection takes one day. Procedure 23*. Obtain phone that s/he is not supervising too many projects. connection from Telecom Egypt Procedure 8. Receive on-site inspection Procedure 5. Apply and obtain building from the Municipal Engineering Time: 7 days permit from the Municipal Authority Cost: EGP 50 Department - II Time: 30 days Comments: To obtain a phone connection, the Time: 1 day Cost: EGP 2,560 [Insurance fee: 0.2% of company must submit the following documents: Cost: No cost construction cost (1,300 square meters * EGP a. Title deed for the unit, or lease contract, if not 600 * 0.2% = EGP 1,560)+ EGP 1,000 for the Comments: The Municipal Engineering De- owned by the applicant; construction fees] partment inspects the construction site periodica- lly. Each inspection takes one day. b. Copy of applicant’s ID; Comments: To obtain a building permit from the c. Owner ID; Municipal Authority, the supervising engineer Procedure 9. Receive on-site inspection must file the following documents: d. Commercial registry and taxes ID. from the Municipal Engineering a. The original ownership contract of the plot of Department - III DEALING WITH CONSTRUCTION PERMITS land; Time: 1 day Giza b. A copy of the supervising engineer’s ID (who is submitting the file); Cost: No cost Warehouse value: EGP 1,000,000 (US$ 158,674) c. The supervising engineer’s authorization to act Comments: The Municipal Engineering De- Data as of: June 2013 on behalf of the owner; partment inspects the construction site periodica- lly. Each inspection takes one day. Procedure 1. Apply for the Site Validity d. The Construction Value Form, approved by the supervising engineer; Certificate at the Municipal Authority Procedure 10. Receive on-site inspection e. The Site Validity Certificate; Time: 1 day from the Municipal Engineering f. A receipt attesting to the payment of fees for Cost: EGP 200 Department - IV examination of the drawings and details; Comments: BuildCo applies at the Municipal Time: 1 day g. An overall drawing of the site (scale minimum Authority to obtain the Site Validity Certificate, 1:1,000) that indicates (i) the boundaries and Cost: No cost which proves the conformance of the site with the dimensions of the land for which the permit is Comments: The Municipal Engineering De- planning and building requirements. The request required, together with the total land area, and partment inspects the construction site periodica- identifies the site, the address and the borders of (ii) the part on which construction is requested, lly. Each inspection takes one day. the land. A copy of the applicant’s national ID and as well as the facing roads and their widths; receipt of the payment must be attached to the request. Article 19 of Law 119/2008 sets a ceiling

* This procedure can be completed simultaneously with previous procedures. 90 DOING BUSINESS IN EGYPT 2014

Procedure 11. Receive on-site inspection Procedure 17. Register the building with Procedure 2. Receive on-site inspection from the Municipal Engineering the Real Estate Registry from the Municipal Authority Department - V Time: 60 days Time: 1 day Time: 1 day Cost: EGP 2,000 Cost: No cost Cost: No cost Comments: In order to register the building, Comments: Before issuing the Site Validity Certifi- Comments: The Municipal Engineering De- BuildCo submits to the Real Estate Registry a cate, an inspector from the Municipal Engineering partment inspects the construction site periodica- building registration form, the building permit for Department inspects the construction site (i) to lly. Each inspection takes one day. the warehouse, and the ownership contract of the verify that there are no pre-existing buildings or land on which the warehouse has been built. Law illegal demolitions on the plot of land, and (ii) to Procedure 12. Receive on-site inspection 83 of 2006 establishes the registration fees. check the data to ensure there are no irregularities from the Municipal Engineering on the plot of land. Department - VI Procedure 18*. Obtain water and sewerage connection Procedure 3. Obtain Site Validity Time: 1 day Time: 60 days Certificate from the Municipal Authority Cost: No cost Cost: EGP 15,000 (EGP 8,000 for the water Time: 8 days Comments: The Municipal Engineering De- connection + EGP 7,000 for the sewerage con- Cost: No cost partment inspects the construction site periodica- nection) lly. Each inspection takes one day. Comments: The Site Validity Certificate is issued Comments: BuildCo submits two applications to after the inspection. According to Article 110 of Procedure 13. Receive on-site inspection the Water and Sewerage Company, one for the Law 144/2009, the Site Validity Certificate should from the Municipal Engineering water connection and one for the sewerage con- be issued within 1 week after the submission of Department - VII nection. The two applications can be submitted the application. If there are any hindrances to simultaneously. After two inspections (one for the site, the administrative body shall issue a Time: 1 day each connection), fees are estimated. Once the statement indicating the hindrances that block the Cost: No cost fees are paid the warehouse can be connected to issuance of the Site Validity Certificate. Comments: The Municipal Engineering De- the water and to the sewerage system. partment inspects the construction site periodica- Procedure 4. Obtain approval of the lly. Each inspection takes one day. Procedure 19*. Obtain phone connection Execution Supervision Certificate from from Telecom Egypt the Syndicate of Engineers Procedure 14. Receive on-site inspection Time: 10 days Time: 1 day from the Civil Defense and Firefighting Cost: EGP 50 Cost: EGP 250 Authority Comments: To obtain a phone connection, the Comments: BuildCo must obtain the approval of Time: 15 days company must submit the following documents: the Execution Supervision Certificate by the local Cost: No cost a. Title deed for the unit, or lease contract, if not branch of the Syndicate of Engineers. The approval Comments: After the construction has been owned by the applicant; certifies that the engineer is truly licensed and completed, the Civil Defense and Firefighting b. Copy of applicant’s ID; that s/he is not supervising too many projects. Authority inspects the building to check if it com- c. Owner ID; plies with the fire safety regulations. Procedure 5. Apply and obtain building d. Commercial registry and taxes ID. permit from the Municipal Authority Procedure 15. Obtain approval of the DEALING WITH CONSTRUCTION PERMITS Time: 21 days Construction Conformity Certificate Cost: EGP 2,240 [Insurance fee: 0.2% of cons- from the Syndicate of Engineers Ismailia truction cost (1,300 square meters * EGP 300 Time: 1 day Warehouse value: EGP 1,000,000 (US$ 158,674) *0.2% = EGP 780)+ EGP 1,400 for the permit Cost: EGP 300 Data as of: June 2013 issuance fees + EGP 60 for taxes] Comments: To obtain a building permit from the Comments: The supervising engineer has to Procedure 1. Apply for the Site Validity submit to the Syndicate of Engineers the Cons- Municipal Authority, the supervising engineer truction Conformity Certificate, which states that Certificate at the Municipal Authority must file the following documents: the building has been built in accordance with the Time: 1 day a. A copy of the ownership contract of the plot of relevant laws and regulations. In this city, before Cost: EGP 200 land (notarized); being submitted to the Municipal Authority, the Comments: BuildCo applies at the Municipal b. A copy of the supervising engineer’s ID (who is Construction Conformity Certificate must be Authority to obtain the Site Validity Certificate, submitting the file); approved by the Syndicate of Engineers. which proves the conformance of the site with the c. The supervising engineer’s authorization to act planning and building requirements. The request on behalf of the owner; Procedure 16. Submit Construction identifies the site, the address and the borders of d. The Construction Value Form, approved by the Conformity Certificate and receive final the land. A copy of the applicant’s national ID and supervising engineer; inspection from the Municipal Authority receipt of the payment must be attached to the e. The Site Validity Certificate; Time: 15 days request. Article 19 of Law 119/2008 sets a ceiling of EGP 200 for the fee related to the obtainment f. A receipt attesting to the payment of fees for Cost: No cost of the Site Validity Certificate. This ceiling can be examination of the drawings and details; Comments: The supervising engineer submits to increased by no more than 3% every year. g. An overall drawing of the site (scale minimum the Municipal Engineering Department the Cons- 1:1,000) that indicates (i) the boundaries and truction Conformity Certificate. The Engineering dimensions of the land for which the permit is Department makes a final inspection to certify required, together with the total land area, and that the warehouse conforms to the specifica- (ii) the part on which construction is requested, tions outlined in the building permit. After the as well as the facing roads and their widths; inspection, the Municipal Authority issues letters h. Three copies of the architectural drawings for allowing the connection to utilities. the plans and elevations; a vertical section, indicating the building height and the road’s zero level and the structural drawings of the foundations, columns, and the reinforced

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 91

ceilings, together with copies of the structural Procedure 11. Receive on-site inspection Procedure 17. Register the building with calculation notes. All drawings must be signed from the Municipal Engineering the Real Estate Registry by an accredited engineer; Department - V Time: 60 days i. A copy of the Execution Supervision Certificate, stamped by the Syndicate of Engineers. Time: 1 day Cost: EGP 2,000 The Building Law establishes a 30-day statutory Cost: No cost Comments: In order to register the building, time limit for issuing building permits. This time Comments: The Municipal Engineering De- BuildCo submits to the Real Estate Registry a limit can be extended in case the Municipal partment inspects the construction site periodica- building registration form, the building permit for Authority considers the application incomplete. lly. Each inspection takes one day. the warehouse, and the ownership contract of the The engineer of the Municipal Authority reviews land on which the warehouse has been built. Law (i) the building permit file in order to check its Procedure 12. Receive on-site inspection 83 of 2006 establishes the registration fees. completeness, and (ii) the drawings, to check if from the Municipal Engineering they comply with the Site Validity Certificate. Department - VI Procedure 18*. Obtain sewerage connection Time: 1 day Procedure 6. Inform the Municipal Time: 25 days Cost: No cost Authority before starting construction Cost: EGP 3,500 Comments: The Municipal Engineering De- Time: 1 day partment inspects the construction site periodica- Comments: BuildCo submits an application to Cost: No cost lly. Each inspection takes one day. the Department for Sewerage of the Municipal Comments: BuildCo sends a letter to the Muni- Authority, along with the original license, and a cipal Authority to inform them that construction Procedure 13. Receive on-site inspection copy of the building permit. Once the application works will start. The letter must be sent at least from the Municipal Engineering is submitted, an inspection takes place. After the 15 days before starting constructions. Attached Department - VII inspection the fees are estimated. Once the fees to the letter, BuildCo sends : (i) the Contracting are paid, the warehouse can be connected to the Contract, approved by the Egyptian Federation for Time: 1 day sewerage system. Construction and Building Contractors, if applica- Cost: No cost ble,; (ii) and the Execution Supervision Certificate, Comments: The Municipal Engineering De- Procedure 19*. Obtain water connection approved by the Syndicate of Engineers. partment inspects the construction site periodica- Time: 6 days lly. Each inspection takes one day. Cost: EGP 3,000 Procedure 7. Receive on-site inspection Procedure 14. Receive on-site inspection Comments: BuildCo submits an application for from the Municipal Engineering water connection to the Suez Canal Authority. Department - I from the Civil Defense and Firefighting After an inspection, fees are estimated. Once the Time: 1 day Authority fees are paid the warehouse can be connected to Cost: No cost Time: 1 day the water system. Comments: The Municipal Engineering De- Cost: No cost Procedure 20*. Obtain phone partment inspects the construction site periodica- Comments: After the construction has been lly. Each inspection takes one day. completed, the Civil Defense and Firefighting connection from Telecom Egypt Authority inspects the building to check if it com- Time: 15 days Procedure 8. Receive on-site inspection plies with the fire safety regulations. Cost: EGP 50 from the Municipal Engineering Comments: To obtain a phone connection, the Department - II Procedure 15. Submit Construction company must submit the following documents: Conformity Certificate and receive final Time: 1 day a. Title deed for the unit, or lease contract, if not inspection from the Municipal Authority Cost: No cost owned by the applicant; Comments: The Municipal Engineering De- Time: 4 days b. Copy of applicant’s ID; partment inspects the construction site periodica- Cost: No cost c. Owner ID; lly. Each inspection takes one day. Comments: The supervising engineer has to d. Commercial registry and taxes ID. submit to the Municipal Engineering Department Procedure 9. Receive on-site inspection a certificate stating that the building has been DEALING WITH CONSTRUCTION PERMITS from the Municipal Engineering built in accordance with the relevant laws and Department - III regulations (the Construction Conformity Certifi- Kharga cate). The Engineering Department makes a final Time: 1 day Warehouse value: EGP 1,000,000 (US$ 158,674) inspection to certify that the warehouse conforms Data as of: June 2013 Cost: No cost to the specifications outlined in the building per- Comments: The Municipal Engineering De- mit. After the inspection, the Municipal Authority Procedure 1. Apply for the Site Validity partment inspects the construction site periodica- issues letters allowing the connection to utilities. Certificate at the Municipal Authority lly. Each inspection takes one day. Procedure 16. Obtain letters from Time: 1 day Procedure 10. Receive on-site inspection Municipal Authority about utility Cost: EGP 182 from the Municipal Engineering connections Comments: BuildCo applies at the Municipal Department - IV Time: 4 days Authority to obtain the Site Validity Certificate, Time: 1 day which proves the conformance of the site with the Cost: EGP 11 (EGP 2.75 for each governmental planning and building requirements. The request Cost: No cost stamp. 4 stamps are required.) identifies the site, the address and the borders of Comments: The Municipal Engineering De- Comments: BuildCo collects from the Municipal the land. A copy of the applicant’s national ID and partment inspects the construction site periodica- Authority the letters that authorize the connection receipt of the payment must be attached to the lly. Each inspection takes one day. of the warehouse to utilities and brings them to request. Article 19 of Law 119/2008 sets a ceiling the utility companies. of EGP 200 for the fee related to the obtainment of the Site Validity Certificate. This ceiling can be increased by no more than 3% every year.

* This procedure can be completed simultaneously with previous procedures. 92 DOING BUSINESS IN EGYPT 2014

Procedure 2. Receive on-site inspection c. The supervising engineer’s authorization to act Procedure 10. Receive on-site inspection from the Municipal Authority on behalf of the owner; from the Municipal Engineering d. The Construction Value Form, approved by the Time: 1 day Department - II supervising engineer; Cost: No cost Time: 1 day e. The Standard Guarantee Certificate, approved Comments: Before issuing the Site Validity Certifi- by the supervising engineer; Cost: No cost cate, an inspector from the Municipal Engineering f. The Site Validity Certificate; Comments: The Municipal Engineering De- Department inspects the construction site (i) to partment inspects the construction site periodica- verify that there are no pre-existing buildings or g. A receipt attesting to the payment of fees for lly. Each inspection takes one day. illegal demolitions on the plot of land, and (ii) to examination of the drawings and details; check the data to ensure there are no irregularities h. An overall drawing of the site (scale minimum Procedure 11. Receive on-site inspection on the plot of land. 1:1,000) that indicates (i) the boundaries and from the Municipal Engineering dimensions of the land for which the permit is Department - III Procedure 3. Obtain Site Validity required, together with the total land area, and Certificate from the Municipal Authority (ii) the part on which construction is requested, Time: 1 day as well as the facing roads and their widths; Cost: No cost Time: 5 days i. Three copies of the architectural drawings for Comments: The Municipal Engineering De- Cost: No cost the plans and elevations; a vertical section, partment inspects the construction site periodica- Comments: The Site Validity Certificate is issued indicating the building height and the road’s lly. Each inspection takes one day. after the inspection. According to Article 110 of zero level and the structural drawings of the Law 144/2009, the Site Validity Certificate should foundations, columns, and the reinforced Procedure 12. Receive on-site inspection be issued within 1 week after the submission of ceilings, together with copies of the structural from the Municipal Engineering the application. If there are any hindrances to calculation notes. All drawings must be signed Department - IV the site, the administrative body shall issue a by an accredited engineer. statement indicating the hindrances that block the Time: 1 day The Building Law establishes a 30-day statutory issuance of the Site Validity Certificate. time limit for issuing building permits. This time Cost: No cost limit can be extended in case the Municipal Comments: The Municipal Engineering De- Procedure 4. Obtain project clearance Authority considers the application incomplete. partment inspects the construction site periodica- from Civil Aviation Authority The engineer of the Municipal Authority reviews lly. Each inspection takes one day. Time: 50 days (i) the building permit file in order to check its Cost: EGP 1,353 (EGP 600 for the coordinates completeness, and (ii) the drawings, to check if Procedure 13. Obtain clearance from map + EGP 253 for the approval by the Civil Avia- they comply with the Site Validity Certificate. Civil Defense and Firefighting Authority tion Authority + EGP 500 for hiring a facilitator) Time: 7 days Procedure 7*. Obtain approval of the Comments: BuildCo needs to obtain project Cost: No cost clearance from the Civil Aviation Authority before Execution Supervision Certificate from the Syndicate of Engineers Comments: Once the construction works are submitting the application for the building permit. completed, BuildCo’s supervising engineer visits The approval must be obtained in Cairo. BuildCo Time: 1 day the Civil Defense and Firefighting Authority to hires a private facilitator to complete this proce- Cost: EGP 250 inform it that the building is ready for inspection. dure and to go to Cairo on its behalf. Comments: BuildCo must obtain the approval of After the inspection takes place, the Civil Defense and Firefighting Authority sends a letter of clea- Procedure 5*. Obtain stamps on the Execution Supervision Certificate by the local branch of the Syndicate of Engineers. The approval rance to BuildCo. This letter has to be attached the architectural drawings from the certifies that the engineer is truly licensed and to the Construction Conformity Certificate that Syndicate of Engineers that s/he is not supervising too many projects. is then submitted to the Municipal Authority to Time: 1 day obtain the letters for connection to utilities. The inspection has no cost. Cost: EGP 315 (EGP 105 for each stamp. Three Procedure 8. Inform the Municipal Authority before starting construction stamps are required.) Procedure 14. Submit Construction Comments: The Syndicate of Engineers stamps Time: 1 day Conformity Certificate and receive final (i.e. approves) the foundation plans, the structural Cost: No cost inspection from the Municipal Authority plans, and the ceiling plans, before these are Comments: BuildCo sends a letter to the Muni- submitted to the Municipal Authority along with Time: 15 days cipal Authority to inform them that construction the application for the building permit. work will start. The letter must be sent at least Cost: No cost 15 days before starting construction. Attached Comments: The supervising engineer has to Procedure 6. Apply and obtain building to the letter, BuildCo sends (i) the Contracting submit to the Municipal Engineering Department permit from the Municipal Authority Contract, approved by the Egyptian Federation for a certificate stating that the building has been Time: 25 days Construction and Building Contractors, if applica- built in accordance with the relevant laws and Cost: EGP 1,278 [EGP 60 for stamp duty + Permit ble, (ii) and the Execution Supervision Certificate, regulations (the Construction Conformity Certifi- issuance fee: EGP 0.26 per square meter (0.26 approved by the Syndicate of Engineers. cate). The Engineering Department makes a final * 1,300 square meters = EGP 338) + Insurance inspection to certify that the warehouse conforms fees: 0.2% of value of the building (1,300 square Procedure 9. Receive on-site inspection to the specifications outlined in the building per- meters * 300 * 0.2% = EGP 780) + Development from the Municipal Engineering mit. After the inspection, the Municipal Authority fee: EGP 50 per floor (EGP 50*2 floors = EGP Department - I issues letters allowing the connection to utilities. 100)] Time: 1 day Procedure 15. Register the building with Comments: To obtain a building permit from the Cost: No cost the Real Estate Registry Municipal Authority, the supervising engineer must file the following documents, along with the Comments: The Municipal Engineering De- Time: 60 days partment inspects the construction site periodica- clearances described in the previous procedures: Cost: EGP 2,000 lly. Each inspection takes one day. a. A copy of the ownership contract of the plot of Comments: In order to register the building, land (notarized); BuildCo submits to the Real Estate Registry a b. A copy of the supervising engineer’s ID (who is building registration form, the building permit for submitting the file) and of the owner of the plot the warehouse, and the ownership contract of the of land; land on which the warehouse has been built. Law 83 of 2006 establishes the registration fees.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 93

Procedure 16*. Obtain water and the site, the administrative body shall issue a Procedure 6*. Obtain approval of the sewerage connection statement indicating the hindrances that block the Execution Supervision Certificate from issuance of the Site Validity Certificate. Time: 30 days the Syndicate of Engineers Cost: EGP 6,000 Procedure 4*. Obtain project clearance Time: 1 day Comments: BuildCo submits two applications to from Improvements Department Cost: EGP 250 the Water and Sewerage Company, one for the Time: 1 day Comments: BuildCo must obtain the approval of water connection and one for the sewerage con- Cost: EGP 20 the Execution Supervision Certificate by the local nection. The two applications can be submitted branch of the Syndicate of Engineers. The approval simultaneously. After two inspections (one for Comments: BuildCo needs to obtain project clea- certifies that the engineer is truly licensed and each connection), fees are estimated. Once the rance from the Improvements Department before that s/he is not supervising too many projects. fees are paid the warehouse can be connected to submitting the application for the building permit. the water and to the sewerage system. Procedure 7. Inform the Municipal Procedure 5. Apply and obtain building Authority before starting construction Procedure 17*. Obtain phone connection permit from the Municipal Authority Time: 1 day from Telecom Egypt Time: 30 days Cost: No cost Time: 14 days Cost: EGP 2,950 [Insurance fee: 0.2% of cons- Comments: BuildCo sends a letter to the Muni- Cost: EGP 50 truction cost (1,300 square meters * EGP 300 * 0.2% = EGP 780)+ EGP 1,000 for the permit cipal Authority to inform them that construction Comments: To obtain a phone connection, the issuance fees + engineering stamps from the work will start. The letter must be sent at least company must submit the following documents: Syndicate of Engineers: 0.3% of construction 15 days before starting construction. Attached a. Title deed for the unit, or lease contract, if not cost (1,300 square meters*EGP 300*0.3% = EGP to the letter, BuildCo sends (i) the Contracting owned by the applicant; 1,170)] Contract, approved by the Egyptian Federation for b. Copy of applicant’s ID; Construction and Building Contractors, if applica- Comments: To obtain a building permit from the ble, (ii) and the Execution Supervision Certificate, c. Owner ID; Municipal Authority, the supervising engineer approved by the Syndicate of Engineers. d. Commercial registry and taxes ID. must file the following documents, along with the clearances described in the previous procedures: Procedure 8. Receive on-site inspection DEALING WITH CONSTRUCTION PERMITS a. The original ownership contract of the plot of from the Municipal Engineering Mansoura land (notarized); Department b. A copy of the supervising engineer’s ID (who is Time: 1 day Warehouse value: EGP 1,000,000 (US$ 158,674) submitting the file); Cost: No cost Data as of: June 2013 c. The Construction Value Form, approved by the supervising engineer; Comments: The Municipal Engineering De- Procedure 1. Apply for the Site Validity partment inspects the construction site periodica- d. The Site Validity Certificate; Certificate at the Municipal Authority lly. Each inspection takes one day. e. A receipt attesting to the payment of fees for Time: 1 day examination of the drawings and details; Cost: EGP 200 Procedure 9. Obtain clearance from Civil f. An overall drawing of the site (scale minimum Defense and Firefighting Authority Comments: BuildCo applies at the Municipal 1:1,000) that indicates (i) the boundaries and Time: 7 days Authority to obtain the Site Validity Certificate, dimensions of the land for which the permit is which proves the conformance of the site with the required, together with the total land area, and Cost: No cost planning and building requirements. The request (ii) the part on which construction is requested, Comments: Once the construction works are identifies the site, the address and the borders of as well as the facing roads and their widths; completed, BuildCo’s supervising engineer visits the land. A copy of the applicant’s national ID and g. Three copies of the architectural drawings for the Civil Defense and Firefighting Authority to receipt of the payment must be attached to the the plans and elevations; a vertical section, inform it that the building is ready for inspection. request. Article 19 of Law 119/2008 sets a ceiling indicating the building height and the road’s After the inspection takes place, the Civil Defense of EGP 200 for the fee related to the obtainment zero level and the structural drawings of the and Firefighting Authority sends a letter of clea- of the Site Validity Certificate. This ceiling can be foundations, columns, and the reinforced rance to BuildCo. This letter has to be attached increased by no more than 3% every year. ceilings, together with copies of the structural to the Construction Conformity Certificate that is then submitted to the Municipal Authority to Procedure 2. Receive on-site inspection calculation notes. All drawings must be signed by an accredited engineer. obtain the letters for connection to utilities. The from the Municipal Authority inspection has no cost. During this procedure, the Municipal Authority Time: 1 day sends a letter to the Electricity Company and Cost: No cost to the Civil Defense and Firefighting Authority, Procedure 10. Submit Construction Conformity Certificate and receive final Comments: Before issuing the Site Validity Certifi- attaching the project documents, to get their cate, an inspector from the Municipal Engineering approvals. inspection from the Municipal Authority Department inspects the construction site (i) to The Building Law establishes a 30-day statutory Time: 7 days verify that there are no pre-existing buildings or time limit for issuing building permits. This time Cost: No cost illegal demolitions on the plot of land, and (ii) to limit can be extended in case the Municipal Comments: The supervising engineer has to check the data to ensure there are no irregularities Authority considers the application incomplete. submit to the Municipal Engineering Department on the plot of land. The engineer of the Municipal Authority reviews a certificate stating that the building has been (i) the building permit file in order to check its built in accordance with the relevant laws and Procedure 3. Obtain Site Validity completeness, and (ii) the drawings, to check if regulations (the Construction Conformity Certifi- Certificate from the Municipal Authority they comply with the Site Validity Certificate. cate). The Engineering Department makes a final Time: 5 days inspection to certify that the warehouse conforms Cost: No cost to the specifications outlined in the building permit. After the inspection, the Municipal Authority Comments: The Site Validity Certificate is issued issues letters allowing the connection to utilities. after the inspection. According to Article 110 of Law 144/2009, the Site Validity Certificate should be issued within 1 week after the submission of the application. If there are any hindrances to

* This procedure can be completed simultaneously with previous procedures. 94 DOING BUSINESS IN EGYPT 2014

Procedure 11. Obtain letters from Procedure 2. Receive on-site inspection h. Three copies of the architectural drawings for Municipal Authority about utility from the Municipal Authority the plans and elevations; a vertical section, indicating the building height and the road’s connections Time: 1 day zero level and the structural drawings of the Time: 7 days Cost: No cost foundations, columns, and the reinforced Cost: No cost Comments: Before issuing the Site Validity Certifi- ceilings, together with copies of the structural Comments: BuildCo collects from the Municipal cate, an inspector from the Municipal Engineering calculation notes. All drawings must be signed Authority the letters that authorize the connection Department inspects the construction site (i) to by an accredited engineer. of the warehouse to utilities and brings them to verify that there are no pre-existing buildings or The Building Law establishes a 30-day statutory the utility companies. illegal demolitions on the plot of land, and (ii) to time limit for issuing building permits. This time check the data to ensure there are no irregularities limit can be extended in case the Municipal Procedure 12. Register the building with on the plot of land. Authority considers the application incomplete. the Real Estate Registry The engineer of the Municipal Authority reviews Procedure 3. Obtain Site Validity (i) the building permit file in order to check its Time: 60 days Certificate from the Municipal Authority completeness, and (ii) the drawings, to check if Cost: EGP 2,000 they comply with the Site Validity Certificate. Time: 5 days Comments: In order to register the building, BuildCo submits to the Real Estate Registry a Cost: No cost Procedure 6*. Obtain approval of the building registration form, the building permit for Comments: The Site Validity Certificate is issued Execution Supervision Certificate from the warehouse, and the ownership contract of the after the inspection. According to Article 110 of the Syndicate of Engineers land on which the warehouse has been built. Law Law 144/2009, the Site Validity Certificate should Time: 1 day 83 of 2006 establishes the registration fees. be issued within 1 week after the submission of the application. If there are any hindrances to Cost: EGP 250 Procedure 13*. Obtain water and the site, the administrative body shall issue a Comments: BuildCo must obtain the approval of sewerage connection statement indicating the hindrances that block the the Execution Supervision Certificate by the local issuance of the Site Validity Certificate. branch of the Syndicate of Engineers. The approval Time: 30 days certifies that the engineer is truly licensed and Cost: EGP 13,500 (EGP 9,000 for water connec- Procedure 4. Obtain project clearance that s/he is not supervising too many projects. tion + EGP 4,500 for sewerage connection) from Civil Aviation Authority Comments: BuildCo submits two applications to Time: 30 days Procedure 7. Inform the Municipal the Water and Sewerage Company, one for the Authority before starting construction water connection and one for the sewerage con- Cost: EGP 2,253 (EGP 2,000 for the coordinates Time: 1 day nection. The two applications can be submitted map and level determination certificate + EGP 253 simultaneously. After two inspections (one for for the approval by the Civil Aviation Authority) Cost: No cost each connection), fees are estimated. Once the Comments: BuildCo needs to obtain project Comments: BuildCo sends a letter to the Muni- fees are paid the warehouse can be connected to clearance from the Civil Aviation Authority before cipal Authority to inform them that construction the water and to the sewerage system. submitting the application for the building permit. work will start. The letter must be sent at least The applicant must attach a coordinates map and 15 days before starting construction. Attached Procedure 14*. Obtain phone connection a level determination certificate to the request for to the letter, BuildCo sends (i) the Contracting from Telecom Egypt clearance. Contract, approved by the Egyptian Federation for Construction and Building Contractors, if applica- Time: 15 days Procedure 5. Apply and obtain building ble, (ii) and the Execution Supervision Certificate, Cost: EGP 50 permit from the Municipal Authority approved by the Syndicate of Engineers. Comments: To obtain a phone connection, the Time: 40 days company must submit the following documents: Procedure 8. Receive on-site inspection Cost: EGP 3,550 [Insurance fee: 0.2% of cons- a. Title deed for the unit, or lease contract, if not truction cost (1,300 square meters * EGP 300 from the Municipal Engineering owned by the applicant; * 0.2% = EGP 780) + Permit fees: EGP 0.5 per Department - I b. Copy of applicant’s ID; square meter of construction area (1,300 square Time: 1 day c. Owner ID; meters * EGP 0.5 = EGP 650) + EGP 120 for the Cost: No cost license issuance fee + EGP 2,000 for the approval d. Commercial registry and taxes ID. Comments: The Municipal Engineering De- stamps from the Syndicate of Engineers] partment inspects the construction site periodica- DEALING WITH CONSTRUCTION PERMITS Comments: To obtain a building permit from the lly. Each inspection takes one day. Municipal Authority, the supervising engineer Port Said must file the following documents, along with the Procedure 9. Receive on-site inspection Warehouse value: EGP 1,000,000 (US$ 158,674) clearances described in the previous procedures: from the Municipal Engineering Data as of: June 2013 a. A copy of the ownership contract of the plot of Department - II land (notarized); Time: 1 day Procedure 1. Apply for the Site Validity b. A copy of the supervising engineer’s ID (who is Certificate at the Municipal Authority submitting the file); Cost: No cost Time: 1 day c. The supervising engineer’s authorization to act Comments: The Municipal Engineering De- Cost: EGP 200 on behalf of the owner; partment inspects the construction site periodica- lly. Each inspection takes one day. Comments: BuildCo applies at the Municipal d. The Construction Value Form, approved by the Authority to obtain the Site Validity Certificate, supervising engineer; Procedure 10. Receive on-site inspection which proves the conformance of the site with the e. The Site Validity Certificate; from the Municipal Engineering planning and building requirements. The request f. A receipt attesting to the payment of fees for identifies the site, the address and the borders of Department - III examination of the drawings and details; the land. A copy of the applicant’s national ID and Time: 1 day g. An overall drawing of the site (scale minimum the receipt of payment must be attached to the Cost: No cost 1:1,000) that indicates (i) the boundaries and request. Article 19 of Law 119/2008 sets a ceiling Comments: The Municipal Engineering De- of EGP 200 for the fee related to the obtainment dimensions of the land for which the permit is required, together with the total land area, and partment inspects the construction site periodica- of the Site Validity Certificate. This ceiling can be lly. Each inspection takes one day. increased by no more than 3% every year. (ii) the part on which construction is requested, as well as the facing roads and their widths;

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 95

Procedure 11. Submit Construction a. Title deed for the unit, or lease contract, if not the site, the administrative body shall issue a Conformity Certificate and receive final owned by the applicant; statement indicating the hindrances that block the issuance of the Site Validity Certificate. inspection from the Municipal Authority b. Copy of applicant’s ID; c. Owner ID; Time: 50 days Procedure 5. Apply and obtain building Cost: No cost d. Commercial registry and taxes ID. permit from the Municipal Authority Comments: The supervising engineer has to DEALING WITH CONSTRUCTION PERMITS Time: 30 days submit to the Municipal Engineering Department Cost: EGP 3,230 [Insurance fee: 0.2% of cons- a certificate stating that the building has been Sohag truction cost (1,300 square meters * EGP 300 * built in accordance with the relevant laws and Warehouse value: EGP 1,000,000 (US$ 158,674) 0.2% = EGP 780) + EGP 1,120 for permit issuance regulations (the Construction Conformity Certifi- Data as of: June 2013 fees + EGP 160 for governmental stamps on the cate). The Engineering Department makes a final license paper + Governorate Service Fund: 0.3% inspection to certify that the warehouse conforms Procedure 1. Obtain project clearance of construction cost (1,300 square meters * EGP to the specifications outlined in the building per- from Civil Defense and Firefighting 300 * 0.3% = EGP 1,170)] mit. After the inspection, the Municipal Authority issues letters allowing the connection to utilities. Authority Comments: To obtain a building permit from the Time: 15 days Municipal Authority, the supervising engineer must file the following documents, along with the Procedure 12. Obtain letters from Cost: EGP 975 (EGP 0.75 per square meter of the clearances described in the previous procedures: Municipal Authority about utility building) a. The original ownership contract of the plot of connections Comments: In order to be able to apply for the land; Time: 2 days building permit, BuildCo must obtain a clearance from the Civil Defense and Firefighting Authority b. A copy of the supervising engineer’s ID (who is Cost: No cost (CDFFA) confirming that the building site is sui- submitting the file) and of the owner of the plot Comments: BuildCo collects from the Municipal table for the project. The purpose is to make sure of land; Authority the letters that authorize the connection that (i) the road to the site where the warehouse c. The supervising engineer’s authorization to act of the warehouse to utilities and brings them to will be built is large enough for the CDFFA trucks on behalf of the owner (“Power of Attorney”); the utility companies. to pass; (ii) there is a source of water nearby. To d. The Construction Value Form, approved by the obtain the clearance, BuildCo submits a copy of supervising engineer; Procedure 13. Register the building with the map of the area where the warehouse is to e. The Site Validity Certificate; the Real Estate Registry be built. After the map is submitted, the CDFFA f. A receipt attesting to the payment of fees for Time: 60 days inspects the site and prepares the clearance. The examination of the drawings and details; Cost: EGP 2,000 clearance must be submitted together with the building permit application. g. An overall drawing of the site (scale minimum Comments: In order to register the building, 1:1,000) that indicates (i) the boundaries and BuildCo submits to the Real Estate Registry a Procedure 2*. Apply for the Site Validity dimensions of the land for which the permit is building registration form, the building permit for Certificate at the Municipal Authority required, together with the total land area, and the warehouse, and the ownership contract of the (ii) the part on which construction is requested, land on which the warehouse has been built. Law Time: 1 day as well as the facing roads and their widths; 83 of 2006 establishes the registration fees. Cost: EGP 100 h. Three copies of the architectural drawings for Comments: BuildCo applies at the Municipal the plans and elevations; a vertical section, Procedure 14*. Obtain sewerage Authority to obtain the Site Validity Certificate, indicating the building height and the road’s connection which proves the conformance of the site with the zero level and the structural drawings of the Time: 40 days planning and building requirements. The request foundations, columns, and the reinforced Cost: EGP 2,000 [Cost of connection: EGP 120 identifies the site, the address and the borders of ceilings, together with copies of the structural per meter (EGP 120 * 10 meters = EGP 1,200) + the land. A copy of the applicant’s national ID and calculation notes. All drawings must be signed Cost of fixing the road: EGP 75 per meter (EGP receipt of the payment must be attached to the by an accredited engineer. 75 * 10 meters = EGP 750) + Labor cost: EGP 50 request. Article 19 of Law 119/2008 sets a ceiling The Building Law establishes a 30-day statutory per day)] of EGP 200 for the fee related to the obtainment time limit for issuing building permits. This time of the Site Validity Certificate. This ceiling can be limit can be extended in case the Municipal Comments: BuildCo submits an application to increased by no more than 3% every year. the Department for Sewerage of the Municipal Authority considers the application incomplete. Authority, along with the original license, and a The engineer of the Municipal Authority reviews Procedure 3. Receive on-site inspection (i) the building permit file in order to check its copy of the building permit. Once the application from the Municipal Authority is submitted, an inspection takes place. After the completeness, and (ii) the drawings, to check if inspection, the fees are estimated. Once the fees Time: 1 day they comply with the Site Validity Certificate. are paid, the warehouse can be connected to the Cost: No cost Procedure 6*. Obtain approval of the sewerage system. Comments: Before issuing the Site Validity Certifi- cate, an inspector from the Municipal Engineering Execution Supervision Certificate from Procedure 15*. Obtain water connection Department inspects the construction site (i) to the Syndicate of Engineers Time: 40 days verify that there are no pre-existing buildings or Time: 1 day Cost: EGP 10,000 illegal demolitions on the plot of land, and (ii) to Cost: EGP 250 check the data to ensure there are no irregularities Comments: BuildCo submits an application for Comments: BuildCo must obtain the approval of on the plot of land. water connection to the Suez Canal Authority. the Execution Supervision Certificate by the local After an inspection, fees are estimated. Once the Procedure 4. Obtain Site Validity branch of the Syndicate of Engineers. The approval fees are paid the warehouse can be connected to certifies that the engineer is truly licensed and the water system. Certificate from the Municipal Authority that s/he is not supervising too many projects. Time: 5 days Procedure 16*. Obtain phone connection Cost: No cost from Telecom Egypt Comments: The Site Validity Certificate is issued Time: 15 days after the inspection. According to Article 110 of Cost: EGP 50 Law 144/2009, the Site Validity Certificate should be issued within 1 week after the submission of Comments: To obtain a phone connection, the the application. If there are any hindrances to company must submit the following documents:

* This procedure can be completed simultaneously with previous procedures. 96 DOING BUSINESS IN EGYPT 2014

Procedure 7. Inform the Municipal Procedure 13. Submit Construction DEALING WITH CONSTRUCTION PERMITS Authority before starting construction Conformity Certificate and receive final Suez Time: 1 day inspection from the Municipal Authority Warehouse value: EGP 1,000,000 (US$ 158,674) Cost: No cost Time: 30 days Data as of: June 2013 Comments: BuildCo sends a letter to the Muni- Cost: No cost cipal Authority to inform them that construction Comments: The supervising engineer has to Procedure 1. Apply for the Site Validity work will start. The letter must be sent at least submit to the Municipal Engineering Department Certificate at the Municipal Authority 15 days before starting construction. Attached a certificate stating that the building has been Time: 1 day to the letter, BuildCo sends (i) the Contracting built in accordance with the relevant laws and Contract, approved by the Egyptian Federation for regulations (the Construction Conformity Certifi- Cost: EGP 220 Construction and Building Contractors, if applica- cate). The Engineering Department makes a final Comments: BuildCo applies at the Municipal ble, (ii) and the Execution Supervision Certificate, inspection to certify that the warehouse conforms Authority to obtain the Site Validity Certificate, approved by the Syndicate of Engineers. to the specifications outlined in the building per- which proves the conformance of the site with the mit. After the inspection, the Municipal Authority planning and building requirements. The request Procedure 8. Receive on-site inspection issues letters allowing the connection to utilities. identifies the site, the address and the borders of from the Municipal Engineering the land. A copy of the applicant’s national ID and Department - I Procedure 14. Register the building with receipt of the payment must be attached to the the Real Estate Registry request. Article 19 of Law 119/2008 sets a ceiling Time: 1 day of EGP 200 for the fee related to the obtainment Cost: No cost Time: 60 days of the Site Validity Certificate. This ceiling can be Comments: The Municipal Engineering De- Cost: EGP 2,000 increased by no more than 3% every year. partment inspects the construction site periodica- Comments: In order to register the building, lly. Each inspection takes one day. BuildCo submits to the Real Estate Registry a Procedure 2. Receive on-site inspection building registration form, the building permit for from the Municipal Authority Procedure 9. Receive on-site inspection the warehouse, and the ownership contract of the Time: 1 day from the Municipal Engineering land on which the warehouse has been built. Law Cost: No cost Department - II 83 of 2006 establishes the registration fees. Comments: Before issuing the Site Validity Certifi- Time: 1 day Procedure 15*. Obtain water connection cate, an inspector from the Municipal Engineering Cost: No cost Department inspects the construction site (i) to Time: 30 days Comments: The Municipal Engineering De- verify that there are no pre-existing buildings or Cost: EGP 3,033 (EGP 3,000 for connection + partment inspects the construction site periodica- illegal demolitions on the plot of land, and (ii) to EGP 33 for inspection fee) lly. Each inspection takes one day. check the data to ensure there are no irregularities Comments: BuildCo submits an application to on the plot of land. Procedure 10. Receive on-site inspection the water and sewerage company, along with from the Municipal Engineering the original license, and a copy of the building Procedure 3. Obtain Site Validity Department - III permit. Once the application for water connection Certificate from the Municipal Authority is submitted, an inspection takes place. After the Time: 23 days Time: 1 day inspection the fees are estimated. Once the fees Cost: No cost are paid, the warehouse can be connected to the Cost: No cost Comments: The Municipal Engineering De- water system. Comments: The Site Validity Certificate is issued partment inspects the construction site periodica- after the inspection. According to Article 110 of lly. Each inspection takes one day. Procedure 16*. Obtain sewerage Law 144/2009, the Site Validity Certificate should connection be issued within 1 week after the submission of the application. If there are any hindrances to Procedure 11. Receive on-site inspection Time: 1 day from the Municipal Engineering the site, the administrative body shall issue a Cost: EGP 12,000 statement indicating the hindrances that block the Department - IV Comments: The sewerage system does not reach issuance of the Site Validity Certificate. Time: 1 day the peri-urban area of Sohag (it reaches only the Cost: No cost city center). BuildCo needs to install a septic tank, Procedure 4. Apply and obtain building Comments: The Municipal Engineering De- which costs around EGP 12,000. permit from the Municipal Authority partment inspects the construction site periodica- Time: 45 days lly. Each inspection takes one day. Procedure 17*. Obtain phone connection from Telecom Egypt Cost: EGP 2,116 [EGP 5.5 for the scrutiny fee + EGP 60.5 for stamp duty + Insurance fee: 0.2% Procedure 12. Obtain clearance from Time: 18 days of construction cost (1,300 square meters * EGP Civil Defense and Firefighting Authority Cost: EGP 50 300 * 0.2% = EGP 780) + EGP 100 for the permit Time: 7 days Comments: To obtain a phone connection, the issuance fees + engineering stamps from the Cost: No cost company must submit the following documents: Syndicate of Engineers: 0.3% of construction cost a. Title deed for the unit, or lease contract, if not (1,300 square meters * EGP 300 * 0.3% = EGP Comments: Once the construction works are 1,170)] completed, BuildCo’s supervising engineer visits owned by the applicant; the Civil Defense and Firefighting Authority to b. Copy of applicant’s ID; Comments: To obtain a building permit from the Municipal Authority, the supervising engineer inform it that the building is ready for inspection. c. Owner ID; After the inspection takes place, the Civil Defense must file the following documents: d. Commercial registry and taxes ID. and Firefighting Authority sends a letter of clea- a. A copy of the ownership contract of the plot of rance to BuildCo. This letter has to be attached land (notarized); to the Construction Conformity Certificate that b. A copy of the supervising engineer’s ID (who is is then submitted to the Municipal Authority to submitting the file); obtain the letters for connection to utilities. The c. The Construction Value Form, approved by the inspection has no cost. supervising engineer; d. The Site Validity Certificate; e. A receipt attesting to the payment of fees for examination of the drawings and details;

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 97

f. An overall drawing of the site (scale minimum Procedure 9. Obtain letters from DEALING WITH CONSTRUCTION PERMITS 1:1,000) that indicates (i) the boundaries and Municipal Authority about utility dimensions of the land for which the permit is Tanta connections required, together with the total land area, and Warehouse value: EGP 1,000,000 (US$ 158,674) (ii) the part on which construction is requested, Time: 5 days Data as of: June 2013 as well as the facing roads and their widths; Cost: EGP 7 g. Three copies of the architectural drawings for Comments: BuildCo collects from the Municipal Procedure 1. Apply for the Site Validity the plans and elevations; a vertical section, Authority the letters that authorize the connection Certificate at the Municipal Authority indicating the building height and the road’s of the warehouse to utilities and brings them to Time: 1 day zero level and the structural drawings of the the utility companies. foundations, columns, and the reinforced Cost: EGP 80 ceilings, together with copies of the structural Procedure 10. Register the building with Comments: BuildCo applies at the Municipal calculation notes. All drawings must be signed the Real Estate Registry Authority to obtain the Site Validity Certificate, by an accredited engineer. which proves the conformance of the site with the Time: 60 days The Building Law establishes a 30-day statutory planning and building requirements. The request time limit for issuing building permits. This time Cost: EGP 2,000 identifies the site, the address and the borders of limit can be extended in case the Municipal Comments: In order to register the building, the land. A copy of the applicant’s national ID and Authority considers the application incomplete. BuildCo submits to the Real Estate Registry a receipt of the payment must be attached to the The engineer of the Municipal Authority reviews building registration form, the building permit for request. Article 19 of Law 119/2008 sets a ceiling (i) the building permit file in order to check its the warehouse, and the ownership contract of the of EGP 200 for the fee related to the obtainment completeness, and (ii) the drawings, to check if land on which the warehouse has been built. Law of the Site Validity Certificate. This ceiling can be they comply with the Site Validity Certificate. 83 of 2006 establishes the registration fees. increased by no more than 3% every year.

Procedure 5*. Obtain approval of the Procedure 11*. Obtain sewerage Procedure 2. Receive on-site inspection Execution Supervision Certificate from connection from the Municipal Authority the Syndicate of Engineers Time: 30 days Time: 1 day Time: 1 day Cost: EGP 3,500 Cost: No cost Cost: EGP 250 Comments: BuildCo submits an application to Comments: Before issuing the Site Validity Certifi- Comments: BuildCo must obtain the approval of the Department for Sewerage of the Municipal cate, an inspector from the Municipal Engineering the Execution Supervision Certificate by the local Authority, along with the original license, and a Department inspects the construction site (i) to branch of the Syndicate of Engineers. The approval copy of the building permit. Once the application verify that there are no pre-existing buildings or certifies that the engineer is truly licensed and is submitted, an inspection takes place. After the illegal demolitions on the plot of land, and (ii) to that s/he is not supervising too many projects. inspection the fees are estimated. Once the fees check the data to ensure there are no irregularities are paid, the warehouse can be connected to the on the plot of land. Procedure 6. Inform the Municipal sewerage system. Authority before starting construction Procedure 3. Obtain Site Validity Procedure 12*. Obtain water connection Certificate from the Municipal Authority Time: 1 day Time: 30 days Time: 13 days Cost: No cost Cost: EGP 3,000 Cost: No cost Comments: BuildCo sends a letter to the Muni- cipal Authority to inform them that construction Comments: BuildCo submits an application for Comments: The Site Validity Certificate is issued work will start. The letter must be sent at least water connection to the Suez Canal Authority. after the inspection. According to Article 110 of 15 days before starting construction. Attached After an inspection, fees are estimated. Once the Law 144/2009, the Site Validity Certificate should to the letter, BuildCo sends (i) the Contracting fees are paid the warehouse can be connected to be issued within 1 week after the submission of Contract, approved by the Egyptian Federation for the water system. the application. If there are any hindrances to Construction and Building Contractors, if applica- the site, the administrative body shall issue a ble, (ii) and the Execution Supervision Certificate, Procedure 13*. Obtain phone connection statement indicating the hindrances that block the approved by the Syndicate of Engineers. from Telecom Egypt issuance of the Site Validity Certificate. Time: 7 days Procedure 4. Obtain approvals from the Procedure 7. Receive on-site inspection Cost: EGP 50 Syndicate of Engineers from the Technical Inspection Authority Comments: To obtain a phone connection, the Time: 1 day company must submit the following documents: Time: 1 day Cost: No cost a. Title deed for the unit, or lease contract, if not Cost: EGP 1,755 [0.45% of construction cost owned by the applicant; (1,300 square meters * EGP 300 * 0.45% = EGP Comments: The Municipal Authority inspects the 1,755)] construction site. b. Copy of applicant’s ID; Comments: In order to obtain the building permit c. Owner ID; Procedure 8. Submit Construction the applicant must pay to the Syndicate of d. Commercial registry and taxes ID. Conformity Certificate and receive final Engineers a fee equal to 0.45% of the construction cost. After having paid the fee, the applicant inspection from the Municipal Authority submits the receipt of payment to the Municipal Time: 7 days Authority. Cost: No cost Comments: The supervising engineer has to Procedure 5. Apply and obtain building submit to the Municipal Engineering Department permit from the Municipal Authority a certificate stating that the building has been Time: 30 days built in accordance with the relevant laws and Cost: EGP 942 [(Insurance fee: 0.2% of construc- regulations (the Construction Conformity Certifi- tion cost (1,300 square meters * EGP 300 * 0.2% cate). The Engineering Department makes a final = EGP 780) + EGP 100 for the permit issuance inspection to certify that the warehouse conforms fees + EGP 61.5 for governmental stamps)] to the specifications outlined in the building per- Comments: To obtain a building permit from the mit. After the inspection, the Municipal Authority Municipal Authority, the supervising engineer issues letters allowing the connection to utilities. must file the following documents:

* This procedure can be completed simultaneously with previous procedures. 98 DOING BUSINESS IN EGYPT 2014

a. The original ownership contract of the plot of Procedure 9. Receive on-site inspection Procedure 15. Register the building with land; from the Municipal Engineering the Real Estate Registry b. A copy of the supervising engineer’s ID (who is Department - II Time: 60 days submitting the file); Time: 1 day Cost: EGP 2,000 c. The engineer’ authorization to act on behalf of the owner (“Power of Attorney”); Cost: No cost Comments: In order to register the building, BuildCo submits to the Real Estate Registry a d. The Construction Value Form, approved by the Comments: The Municipal Engineering De- building registration form, the building permit for supervising engineer; partment inspects the construction site periodica- lly. Each inspection takes one day. the warehouse, and the ownership contract of the e. The Site Validity Certificate; land on which the warehouse has been built. Law f. A receipt attesting to the payment of fees for Procedure 10. Receive on-site inspection 83 of 2006 establishes the registration fees. examination of the drawings and details; from the Municipal Engineering g. An overall drawing of the site (scale minimum Department - III Procedure 16*. Obtain water and 1:1,000) that indicates (i) the boundaries and sewerage connection Time: 1 day dimensions of the land for which the permit is Time: 40 days required, together with the total land area, and Cost: No cost Cost: EGP 15,000 (ii) the part on which construction is requested, Comments: The Municipal Engineering De- as well as the facing roads and their widths; partment inspects the construction site periodica- Comments: BuildCo submits two applications to the Water and Sewerage Company, one for the h. Three copies of the architectural drawings for lly. Each inspection takes one day. water connection and one for the sewerage con- the plans and elevations; a vertical section, nection. The two applications can be submitted indicating the building height and the road’s Procedure 11. Receive on-site inspection simultaneously. After two inspections (one for zero level and the structural drawings of the from the Municipal Engineering each connection), fees are estimated. Once the foundations, columns, and the reinforced Department - IV fees are paid the warehouse can be connected to ceilings, together with copies of the structural Time: 1 day the water and to the sewerage system. calculation notes. All drawings must be signed by an accredited engineer. Cost: No cost Comments: The Municipal Engineering De- Procedure 17*. Obtain phone connection The Building Law establishes a 30-day statutory from Telecom Egypt time limit for issuing building permits. This time partment inspects the construction site periodica- limit can be extended in case the Municipal lly. Each inspection takes one day. Time: 15 days Authority considers the application incomplete. Cost: EGP 50 The engineer of the Municipal Authority reviews Procedure 12. Receive on-site inspection from the Civil Defense and Firefighting Comments: To obtain a phone connection, the (i) the building permit file in order to check its company must submit the following documents: completeness, and (ii) the drawings, to check if Authority a. Title deed for the unit, or lease contract, if not they comply with the Site Validity Certificate. Time: 1 day owned by the applicant; Cost: No cost Procedure 6*. Obtain approval of the b. Copy of applicant’s ID; Execution Supervision Certificate from Comments: After the construction has been c. Owner ID; completed, the Civil Defense and Firefighting d. Commercial registry and taxes ID. the Syndicate of Engineers Authority inspects the building to check if it com- Time: 1 day plies with the fire safety regulations. DEALING WITH CONSTRUCTION PERMITS Cost: EGP 250 Comments: BuildCo must obtain the approval of Procedure 13. Submit Construction Zagazig the Execution Supervision Certificate by the local Conformity Certificate and receive final Warehouse value: EGP 1,000,000 (US$ 158,674) branch of the Syndicate of Engineers. The approval inspection from the Municipal Authority Data as of: June 2013 certifies that the engineer is truly licensed and Time: 7 days that s/he is not supervising too many projects. Cost: No cost Procedure 1. Apply for the Site Validity Certificate at the Municipal Authority Procedure 7. Inform the Municipal Comments: The supervising engineer has to Time: 1 day Authority before starting construction submit to the Municipal Engineering Department a certificate stating that the building has been Cost: EGP 32 Time: 1 day built in accordance with the relevant laws and Comments: BuildCo applies at the Municipal Cost: No cost regulations (the Construction Conformity Certifi- Authority to obtain the Site Validity Certificate, Comments: BuildCo sends a letter to the Muni- cate). The Engineering Department makes a final which proves the conformance of the site with the cipal Authority to inform them that construction inspection to certify that the warehouse conforms planning and building requirements. The request work will start. The letter must be sent at least to the specifications outlined in the building per- identifies the site, the address and the borders of 15 days before starting construction. Attached mit. After the inspection, the Municipal Authority the land. A copy of the applicant’s national ID and to the letter, BuildCo sends (i) the Contracting issues letters allowing the connection to utilities. receipt of the payment must be attached to the Contract, approved by the Egyptian Federation for request. Article 19 of Law 119/2008 sets a ceiling Construction and Building Contractors, if applica- Procedure 14. Obtain letters from of EGP 200 for the fee related to the obtainment ble, (ii) and the Execution Supervision Certificate, Municipal Authority about utility of the Site Validity Certificate. This ceiling can be approved by the Syndicate of Engineers. connections increased by no more than 3% every year. Time: 10 days Procedure 8. Receive on-site inspection Cost: No cost Procedure 2. Receive on-site inspection from the Municipal Engineering from the Municipal Authority Department - I Comments: BuildCo collects from the Municipal Authority the letters that authorize the connection Time: 1 day Time: 1 day of the warehouse to utilities and brings them to Cost: No cost Cost: No cost the utility companies. Comments: Before issuing the Site Validity Certifi- Comments: The Municipal Engineering De- cate, an inspector from the Municipal Engineering partment inspects the construction site periodica- Department inspects the construction site (i) to lly. Each inspection takes one day. verify that there are no pre-existing buildings or illegal demolitions on the plot of land, and (ii) to check the data to ensure there are no irregularities on the plot of land.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - DEALING WITH CONSTRUCTION PERMITS 99

Procedure 3. Obtain Site Validity ceilings, together with copies of the structural Procedure 12. Obtain clearance from Certificate from the Municipal Authority calculation notes. All drawings must be signed Civil Defense and Firefighting Authority by an accredited engineer. Time: 15 days Time: 10 days Cost: No cost Procedure 7. Receive inspection from Cost: No cost Comments: The Site Validity Certificate is issued Municipal Engineering Department Comments: Once the construction works are after the inspection. According to Article 110 of before obtaining the building permit completed, BuildCo’s supervising engineer visits Law 144/2009, the Site Validity Certificate should Time: 1 day the Civil Defense and Firefighting Authority to be issued within 1 week after the submission of inform it that the building is ready for inspection. the application. If there are any hindrances to Cost: No cost After the inspection takes place, the Civil Defense the site, the administrative body shall issue a Comments: The Municipal Authority inspects the and Firefighting Authority sends a letter of clea- statement indicating the hindrances that block the construction site. rance to BuildCo. This letter has to be attached issuance of the Site Validity Certificate. to the Construction Conformity Certificate that Procedure 8. Obtain building permit is then submitted to the Municipal Authority to Procedure 4. Obtain letter from from the Municipal Authority obtain the letters for connection to utilities. The Information Department Time: 50 days inspection has no cost. Time: 2 days Cost: EGP 2,185 [Insurance fee: 0.2% of construc- Procedure 13. Submit Construction tion cost (1,300 square meters * EGP 300 * 0.2% Cost: EGP 3,252 (EGP 3.5 per each square meter Conformity Certificate and receive final of the land plot) = EGP 780)+ Permit issuance fees: EGP 110 (EGP inspection from the Municipal Authority Comments: BuildCo needs to obtain clearance 55 per each floor) + engineering stamps from the from the Information Department. The clearance Syndicate of Engineers: 0.3% of construction cost Time: 15 days gives the exact position of each utility network (1,300 square meter*EGP 300*0.3% = EGP 1,170 Cost: No cost + governmental stamps: EGP 125)] with respect to the plot of land. Comments: The supervising engineer has to Comments: The Building Law establishes a submit to the Municipal Engineering Department Procedure 5. Obtain clearance from 30-day statutory time limit for issuing building a certificate stating that the building has been Agriculture Department permits. This time limit can be extended in case built in accordance with the relevant laws and the Municipal Authority considers the applica- Time: 7 days regulations (the Construction Conformity Certifi- tion incomplete. The engineer of the Municipal cate). The Engineering Department makes a final Cost: EGP 1,200 Authority reviews (i) the building permit file in inspection to certify that the warehouse conforms Comments: BuildCo needs to obtain clearance order to check its completeness, and (ii) the to the specifications outlined in the building per- from the Agriculture Department. The clearance drawings, to check if they comply with the Site mit. After the inspection, the Municipal Authority concerns the presence of white ants. BuildCo Validity Certificate. issues letters allowing the connection to utilities. pays a fee to the Agriculture Department, which will then spray the plot of land with an insecticide Procedure 9*. Obtain approval of the Procedure 14. Obtain letters from against white ants. Once the plot of land has been Execution Supervision Certificate from Municipal Authority about utility sprayed, the Agriculture Department releases a the Syndicate of Engineers connections receipt that BuildCo will attach to the application Time: 1 day for obtaining the building permit from the Munici- Time: 5 days pal Authority. Cost: EGP 250 Cost: EGP 5 (EGP 2.5 of application fee for each Comments: BuildCo must obtain the approval of letter) Procedure 6. Apply for the building the Execution Supervision Certificate by the local Comments: BuildCo collects from the Municipal permit at the Municipal Authority branch of the Syndicate of Engineers. The approval Authority two letters that authorize the connec- certifies that the engineer is truly licensed and Time: 1 day tion of the warehouse to utilities and brings them that s/he is not supervising too many projects. to the utility companies. Cost: EGP 10 Comments: To obtain a building permit from the Procedure 10. Inform the Municipal Procedure 15. Register the building with Municipal Authority, the supervising engineer Authority before starting construction the Real Estate Registry must file the following documents, along with the Time: 1 day clearances described in the previous procedures: Time: 60 days Cost: No cost a. A copy of the ownership contract of the plot of Cost: EGP 2,000 land (notarized); Comments: BuildCo sends a letter to the Muni- Comments: In order to register the building, cipal Authority to inform them that construction b. A copy of the supervising engineer’s ID (who is BuildCo submits to the Real Estate Registry a work will start. The letter must be sent at least submitting the file); building registration form, the building permit for 15 days before starting construction. Attached the warehouse, and the ownership contract of the c. The supervising engineer’s authorization to act to the letter, BuildCo sends (i) the Contracting land on which the warehouse has been built. Law on behalf of the owner; Contract, approved by the Egyptian Federation for 83 of 2006 establishes the registration fees. d. The Construction Value Form, approved by the Construction and Building Contractors, if applica- supervising engineer; ble, (ii) and the Execution Supervision Certificate, Procedure 16*. Obtain water and e. The Site Validity Certificate; approved by the Syndicate of Engineers. sewerage connection f. A receipt attesting to the payment of fees for Time: 45 days examination of the drawings and details; Procedure 11. Receive on-site inspection from the Municipal Engineering Cost: EGP 8,500 (EGP 5,000 for water connec- g. An overall drawing of the site (scale minimum tion + EGP 3,500 for sewerage connection) 1:1,000) that indicates (i) the boundaries and Department Comments: BuildCo submits two applications to dimensions of the land for which the permit is Time: 1 day the Water and Sewerage Company, one for the required, together with the total land area, and Cost: No cost water connection and one for the sewerage con- (ii) the part on which construction is requested, Comments: The Municipal Authority inspects the nection. The two applications can be submitted as well as the facing roads and their widths; construction site. simultaneously. After two inspections (one for h. Three copies of the architectural drawings for each connection), fees are estimated. Once the the plans and elevations; a vertical section, fees are paid the warehouse can be connected to indicating the building height and the road’s the water and to the sewerage system. zero level and the structural drawings of the foundations, columns, and the reinforced

* This procedure can be completed simultaneously with previous procedures. 100 DOING BUSINESS IN EGYPT 2014

Procedure 17*. Obtain phone connection Procedure 4. Draft and present draft REGISTERING PROPERTY from Telecom Egypt sales contract (mashroa moharar) to Assuit Time: 10 days Lawyers’ Syndicate for verification Property value: EGP 945,334 (US$ 150,000) Cost: EGP 50 Time: 4 days Data as of: June 2013 Comments: To obtain a phone connection, the Cost: EGP 4,727 (0.5% of property value) company must submit the following documents: Comments: The parties’ lawyer drafts a sales Procedure 1. Obtain Property Tax a. Title deed for the unit, or lease contract, if not contract (mashroa moharar) on the stamped Certificate (kashf rasmy) from Property owned by the applicant; form obtained at the Real Estate Registry. The Tax Authority contract is submitted to the Lawyers’ Syndicate b. Copy of applicant’s ID; Time: 4 days for verification. The lawyer who drafts the contract c. Owner ID; reports his/her syndicate identification number Cost: EGP 2 (EGP 1.75 fee for issuance of official d. Commercial registry and taxes ID. on the form and the Lawyers’ Syndicate verifies property tax certificate + EGP 0.5 for expedited if the lawyer is indeed a registered member. The service) verification fees are based on the property value, Comments: Prior to transferring any property, a LIST OF PROCEDURES with a maximum of EGP 5,000. Property Tax Certificate must be obtained from REGISTERING PROPERTY the local Property Tax Authority. This certificate Procedure 5. Obtain the Real Estate is one of the documents to be presented at the Alexandria Registry’s approval (saleh lilshahr) on Real Estate Registry together with the registration request. This is a national requirement established Property value: EGP 945,334 (US$ 150,000) the sales contract (mashroa moharar) by Law No. 114 of 1946. The Property Tax Certifi- Data as of: June 2013 Time: 4 days cate proves that the property has undergone a tax Cost: No cost Procedure 1. Obtain Property Tax assessment and it is registered at the Property Tax Comments: After collecting the contract from the Authority. Certificate (kashf rasmy) from Property Lawyers’ Syndicate, the parties submit it the Real Tax Authority Estate Registry for review. Once the review has Procedure 2. Pay property registration Time: 1 day taken place, the contract is marked as “approved fees at Real Estate Registry Cost: EGP 2 (EGP 1.75 fee for issuance of official to be registered” (saleh lilshahr). Time: 1 day Property Tax Certificate + EGP 0.5 for expedited Cost: EGP 2,000 (see comments) service) Procedure 6. Authenticate sales Comments: As per Law No. 83 of 2006, regis- Comments: Prior to transferring any property, a contract at Authentication Office of Real Estate Registry (tawtheeq) tration fees are based on the size of the property, Property Tax Certificate must be obtained from with a maximum registration fee of EGP 2,000. the local Property Tax Authority. This certificate Time: 1 day The fee schedule is as follows: is one of the documents to be presented at the Cost: No cost Real Estate Registry together with the registration a. Up to and including 100 square meters: EGP request. This is a national requirement established Comments: Once the contract is marked as 500; “approved to be registered”, the parties proceed by Law No. 114 of 1946. The Property Tax Certifi- b. Above this, up to and including 200 square before the competent public officialmowathiq ( ) to cate proves that the property has undergone a tax meters: EGP 1,000; sign and authenticate it. assessment and it is registered at the Property Tax c. Above this, up to and including 300 square Authority. Procedure 7. Submit contract to Real meters: EGP 1,500; Procedure 2. Pay property registration Estate Registry for legalization of the d. More than 300 square meters: EGP 2,000. fees at Real Estate Registry contract (naqil liltakleef) and obtain registration number Procedure 3. Obtain site inspection Time: 1 day by the Egyptian Surveying Authority Time: 3 days Cost: EGP 2,000 (see comments) and approval of inspection report by Comments: As per Law No. 83 of 2006, regis- Cost: No cost Measurement Department Comments: The buyer submits the authenticated tration fees are based on the size of the property, Time: 11 days with a maximum registration fee of EGP 2,000. contract to the main office of the Real Estate Cost: No cost The fee schedule is as follows: Registry for final approval. Once the Registry has granted its approval, a registration number is Comments: The Egyptian Surveying Authority a. Up to and including 100 square meters: EGP issued and the contract is marked as “transcri- inspects the property and prepares a report of its 500; bed for transmission” (naqil liltakleef). The buyer findings (kashf tahdeed) that is delivered to the b. Above this, up to and including 200 square receives a copy of the registered contract and the Measurement Department for approval. Once meters: EGP 1,000; registration process is complete. approved, the report is sent to the Real Estate c. Above this, up to and including 300 square Registry. meters: EGP 1,500; d. More than 300 square meters: EGP 2,000. Procedure 4. Obtain preliminary approval of registration request from Procedure 3. Obtain preliminary Real Estate Registry (maqbul lilshahr) approval of registration request from Time: 15 days Real Estate Registry (maqbul lilshahr) Cost: No cost Time: 36 days Comments: The Real Estate Registry conducts a Cost: No cost technical and legal review of the request and en- Comments: The Real Estate Registry conducts a sures the existing cadastral information matches technical and legal review of the request and en- that of the property being registered. Once the sures the existing cadastral information matches review has taken place, the documents are mar- that of the property being registered. Once the ked as “approved to be authenticated” (maqbul review has taken place, the documents are mar- lilshahr) and released to the parties together with ked as “approved to be authenticated” (maqbul a stamped form that will later be used to draft the lilshahr) and released to the parties together with sales contract. a stamped form that will later be used to draft the sales contract.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - REGISTERING PROPERTY 101

Procedure 5. Draft and present draft REGISTERING PROPERTY Procedure 5. Draft and present draft sales contract (mashroa moharar) to Aswan sales contract (mashroa moharar) to Lawyers’ Syndicate for verification Lawyers’ Syndicate for verification Property value: EGP 945,334 (US$ 150,000) Time: 2 days Time: 2 days Data as of: June 2013 Cost: EGP 4,727 (0.5% of property value) Cost: EGP 4,727 (0.5% of property value) Comments: The parties’ lawyer drafts a sales Procedure 1. Obtain Property Tax Comments: The parties’ lawyer drafts a sales contract (mashroa moharar) on the stamped Certificate (kashf rasmy) from Property contract (mashroa moharar) on the stamped form obtained at the Real Estate Registry. The Tax Authority form obtained at the Real Estate Registry. The contract is submitted to the Lawyers’ Syndicate contract is submitted to the Lawyers’ Syndicate Time: 1 day for verification. The lawyer who drafts the contract for verification. The lawyer who drafts the contract reports his/her syndicate identification number Cost: EGP 2 (EGP 1.75 fee for issuance of official reports his/her syndicate identification number on the form and the Lawyers’ Syndicate verifies property tax certificate + EGP 0.5 for expedited on the form and the Lawyers’ Syndicate verifies if the lawyer is indeed a registered member. The service) if the lawyer is indeed a registered member. The verification fees are based on the property value, Comments: Prior to transferring any property, a verification fees are based on the property value, with a maximum of EGP 5,000. Property Tax Certificate must be obtained from with a maximum of EGP 5,000. the local Property Tax Authority. This certificate Procedure 6. Obtain the Real Estate is one of the documents to be presented at the Procedure 6. Obtain the Real Estate Registry’s approval (saleh lilshahr) on Real Estate Registry together with the registration Registry’s approval (saleh lilshahr) on the sales contract (mashroa moharar) request. This is a national requirement established the sales contract (mashroa moharar) by Law No. 114 of 1946. The Property Tax Certifi- Time: 3 days cate proves that the property has undergone a tax Time: 3 days Cost: No cost assessment and it is registered at the Property Tax Cost: No cost Comments: After collecting the contract from the Authority. Comments: After collecting the contract from the Lawyers’ Syndicate, the parties submit it the Real Lawyers’ Syndicate, the parties submit it the Real Estate Registry for review. Once the review has Procedure 2. Pay property registration Estate Registry for review. Once the review has taken place, the contract is marked as “approved fees at Real Estate Registry taken place, the contract is marked as “approved to be registered” (saleh lilshahr). Time: 1 day to be registered” (saleh lilshahr). Procedure 7. Authenticate sales Cost: EGP 2,000 (see comments) Procedure 7. Authenticate sales contract at Authentication Office of Comments: As per Law No. 83 of 2006, regis- contract at Authentication Office of Real Estate Registry (tawtheeq) tration fees are based on the size of the property, Real Estate Registry (tawtheeq) with a maximum registration fee of EGP 2,000. Time: 9 days Time: 4 days The fee schedule is as follows: Cost: No cost Cost: No cost a. Up to and including 100 square meters: EGP Comments: Once the contract is marked as 500; Comments: Once the contract is marked as “approved to be registered”, the parties proceed “approved to be registered”, the parties proceed b. Above this, up to and including 200 square before the competent public official (mowathiq) before the competent public officialmowathiq ( ) to meters: EGP 1,000; to sign and authenticate it. sign and authenticate it. c. Above this, up to and including 300 square Procedure 8. Submit contract to Real meters: EGP 1,500; Procedure 8. Submit contract to Real Estate Registry for legalization of the d. More than 300 square meters: EGP 2,000. Estate Registry for legalization of the contract (naqil liltakleef) and obtain contract (naqil liltakleef) and obtain registration number Procedure 3. Obtain site inspection registration number by the Egyptian Surveying Authority Time: 7 days Time: 12 days and approval of inspection report by Cost: No cost Measurement Department Cost: No cost Comments: The buyer submits the authenticated Comments: The buyer submits the authenticated Time: 25 days contract to the main office of the Real Estate contract to the main office of the Real Estate Registry for final approval. Once the Registry has Cost: No cost Registry for final approval. Once the Registry has granted its approval, a registration number is Comments: The Egyptian Surveying Authority granted its approval, a registration number is issued and the contract is marked as “transcribed inspects the property and prepares a report of its issued and the contract is marked as “transcri- for transmission” (naqil liltakleef). The buyer findings (kashf tahdeed) that is delivered to the bed for transmission” (naqil liltakleef). The buyer receives a copy of the registered contract and the Measurement Department for approval. Once receives a copy of the registered contract and the registration process is complete. approved, the report is sent to the Real Estate registration process is complete. Registry.

Procedure 4. Obtain preliminary approval of registration request from Real Estate Registry (maqbul lilshahr) Time: 14 days Cost: No cost Comments: The Real Estate Registry conducts a technical and legal review of the request and ensures the existing cadastral information matches that of the property being registered. Once the review has taken place, the documents are marked as “approved to be authenticated” (maqbul lilshahr) and released to the parties together with a stamped form that will later be used to draft the sales contract.

* This procedure can be completed simultaneously with previous procedures. 102 DOING BUSINESS IN EGYPT 2014

REGISTERING PROPERTY Procedure 5. Draft and present draft REGISTERING PROPERTY Cairo sales contract (mashroa moharar) to Damietta Lawyers’ Syndicate for verification Property value: EGP 945,334 (US$ 150,000) Property value: EGP 945,334 (US$ 150,000) Time: 4 days Data as of: June 2013 Data as of: June 2013 Cost: EGP 4,727 (0.5% of property value) Procedure 1. Obtain Property Tax Comments: The parties’ lawyer drafts a sales Procedure 1. Obtain Property Tax Certificate (kashf rasmy) from Property contract (mashroa moharar) on the stamped Certificate (kashf rasmy) from Property Tax Authority form obtained at the Real Estate Registry. The Tax Authority contract is submitted to the Lawyers’ Syndicate Time: 1 day Time: 1 day for verification. The lawyer who drafts the contract Cost: EGP 2 (EGP 1.75 fee for issuance of official reports his/her syndicate identification number Cost: EGP 2 (EGP 1.75 fee for issuance of official property tax certificate + EGP 0.5 for expedited on the form and the Lawyers’ Syndicate verifies property tax certificate + EGP 0.5 for expedited service) if the lawyer is indeed a registered member. The service) Comments: Prior to transferring any property, a verification fees are based on the property value, Comments: Prior to transferring any property, a Property Tax Certificate must be obtained from with a maximum of EGP 5,000. Property Tax Certificate must be obtained from the local Property Tax Authority. This certificate the local Property Tax Authority. This certificate is one of the documents to be presented at the Procedure 6. Obtain the Real Estate is one of the documents to be presented at the Real Estate Registry together with the registration Registry’s approval (saleh lilshahr) on Real Estate Registry together with the registration request. This is a national requirement established the sales contract (mashroa moharar) request. This is a national requirement established by Law No. 114 of 1946. The Property Tax Certifi- by Law No. 114 of 1946. The Property Tax Certifi- cate proves that the property has undergone a tax Time: 10 days cate proves that the property has undergone a tax assessment and it is registered at the Property Tax Cost: No cost assessment and it is registered at the Property Tax Authority. Comments: After collecting the contract from the Authority. Lawyers’ Syndicate, the parties submit it the Real Procedure 2. Pay property registration Estate Registry for review. Once the review has Procedure 2. Pay property registration fees at Real Estate Registry taken place, the contract is marked as “approved fees at Real Estate Registry Time: 1 day to be registered” (saleh lilshahr). Time: 1 day Cost: EGP 2,000 (see comments) Procedure 7. Authenticate sales Cost: EGP 2,000 (see comments) Comments: As per Law No. 83 of 2006, regis- contract at Authentication Office of Comments: As per Law No. 83 of 2006, registration fees are based on the size of the property, Real Estate Registry (tawtheeq) tration fees are based on the size of the property, with a maximum registration fee of EGP 2,000. with a maximum registration fee of EGP 2,000. Time: 1 day The fee schedule is as follows: The fee schedule is as follows: Cost: No cost a. Up to and including 100 square meters: EGP a. Up to and including 100 square meters: EGP 500; Comments: Once the contract is marked as 500; “approved to be registered”, the parties proceed b. Above this, up to and including 200 square b. Above this, up to and including 200 square before the competent public officialmowathiq ( ) to meters: EGP 1,000; meters: EGP 1,000; sign and authenticate it. c. Above this, up to and including 300 square c. Above this, up to and including 300 square meters: EGP 1,500; Procedure 8. Submit contract to Real meters: EGP 1,500; d. More than 300 square meters: EGP 2,000. Estate Registry for legalization of the d. More than 300 square meters: EGP 2,000. contract (naqil liltakleef) and obtain Procedure 3. Obtain site inspection registration number Procedure 3. Obtain site inspection by the Egyptian Surveying Authority by the Egyptian Surveying Authority Time: 10 days and approval of inspection report by and approval of inspection report by Measurement Department Cost: No cost Measurement Department Comments: The buyer submits the authenticated Time: 15 days Time: 18 days contract to the main office of the Real Estate Cost: No cost Registry for final approval. Once the Registry has Cost: No cost Comments: The Egyptian Surveying Authority granted its approval, a registration number is Comments: The Egyptian Surveying Authority inspects the property and prepares a report of its issued and the contract is marked as “transcri- inspects the property and prepares a report of its findings (kashf tahdeed) that is delivered to the bed for transmission” (naqil liltakleef). The buyer findings (kashf tahdeed) that is delivered to the Measurement Department for approval. Once receives a copy of the registered contract and the Measurement Department for approval. Once approved, the report is sent to the Real Estate registration process is complete. approved, the report is sent to the Real Estate Registry. Registry.

Procedure 4. Obtain preliminary Procedure 4. Obtain preliminary approval of registration request from approval of registration request from Real Estate Registry (maqbul lilshahr) Real Estate Registry (maqbul lilshahr) Time: 21 days Time: 71 days Cost: No cost Cost: No cost Comments: The Real Estate Registry conducts a Comments: The Real Estate Registry conducts a technical and legal review of the request and en- technical and legal review of the request and ensures the existing cadastral information matches sures the existing cadastral information matches that of the property being registered. Once the that of the property being registered. Once the review has taken place, the documents are mar- review has taken place, the documents are marked as “approved to be authenticated” (maqbul ked as “approved to be authenticated” (maqbul lilshahr) and released to the parties together with lilshahr) and released to the parties together with a stamped form that will later be used to draft the a stamped form that will later be used to draft the sales contract. sales contract.

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - REGISTERING PROPERTY 103

Procedure 5. Draft and present draft REGISTERING PROPERTY if the lawyer is indeed a registered member. The sales contract (mashroa moharar) to verification fees are based on the property value, Fayoum with a maximum of EGP 5,000. Lawyers’ Syndicate for verification Property value: EGP 945,334 (US$ 150,000) Time: 2 days Procedure 5. Obtain the Real Estate Data as of: June 2013 Cost: EGP 4,727 (0.5% of property value) Registry’s approval (saleh lilshahr) on Comments: The parties’ lawyer drafts a sales Procedure 1. Obtain Property Tax the sales contract (mashroa moharar) contract (mashroa moharar) on the stamped Certificate (kashf rasmy) from Property Time: 5 days form obtained at the Real Estate Registry. The Tax Authority Cost: No cost contract is submitted to the Lawyers’ Syndicate Time: 1 day for verification. The lawyer who drafts the contract Comments: After collecting the contract from the reports his/her syndicate identification number Cost: EGP 2 (EGP 1.75 fee for issuance of official Lawyers’ Syndicate, the parties submit it the Real on the form and the Lawyers’ Syndicate verifies property tax certificate + EGP 0.5 for expedited Estate Registry for review. Once the review has if the lawyer is indeed a registered member. The service) taken place, the contract is marked as “approved verification fees are based on the property value, Comments: Prior to transferring any property, a to be registered” (saleh lilshahr). with a maximum of EGP 5,000. Property Tax Certificate must be obtained from the local Property Tax Authority. This certificate Procedure 6. Authenticate sales Procedure 6. Obtain the Real Estate is one of the documents to be presented at the contract at Authentication Office of Registry’s approval (saleh lilshahr) on Real Estate Registry together with the registration Real Estate Registry (tawtheeq) the sales contract (mashroa moharar) request. This is a national requirement established Time: 1 day by Law No. 114 of 1946. The Property Tax Certifi- Cost: No cost Time: 2 days cate proves that the property has undergone a tax Cost: No cost assessment and it is registered at the Property Tax Comments: Once the contract is marked as Comments: After collecting the contract from the Authority. “approved to be registered”, the parties proceed Lawyers’ Syndicate, the parties submit it the Real before the competent public officialmowathiq ( ) to Estate Registry for review. Once the review has Procedure 2. Pay property registration sign and authenticate it. taken place, the contract is marked as “approved fees at Real Estate Registry to be registered” (saleh lilshahr). Procedure 7. Submit contract to Real Time: 1 day Estate Registry for legalization of the Procedure 7. Authenticate sales Cost: EGP 2,000 (see comments) contract (naqil liltakleef) and obtain contract at Authentication Office of Comments: As per Law No. 83 of 2006, regis- registration number tration fees are based on the size of the property, Real Estate Registry (tawtheeq) Time: 9 days with a maximum registration fee of EGP 2,000. Time: 7 days Cost: No cost The fee schedule is as follows: Cost: No cost Comments: The buyer submits the authenticated a. Up to and including 100 square meters: EGP contract to the main office of the Real Estate Comments: Once the contract is marked as 500; “approved to be registered”, the parties proceed Registry for final approval. Once the Registry has b. Above this, up to and including 200 square before the competent public officialmowathiq ( ) to granted its approval, a registration number is meters: EGP 1,000; sign and authenticate it. issued and the contract is marked as “transcri- c. Above this, up to and including 300 square bed for transmission” (naqil liltakleef). The buyer Procedure 8. Submit contract to Real meters: EGP 1,500; receives a copy of the registered contract and the Estate Registry for legalization of the d. More than 300 square meters: EGP 2,000. registration process is complete. contract (naqil liltakleef) and obtain REGISTERING PROPERTY registration number Procedure 3. Obtain preliminary approval of registration request from Time: 28 days Giza Real Estate Registry (maqbul lilshahr) Cost: No cost Property value: EGP 945,334 (US$ 150,000) Time: 16 days Comments: The buyer submits the authenticated Data as of: June 2013 contract to the main office of the Real Estate Cost: No cost Registry for final approval. Once the Registry has Comments: The Real Estate Registry conducts a Procedure 1. Obtain Property Tax granted its approval, a registration number is technical and legal review of the request and en- Certificate (kashf rasmy) from Property issued and the contract is marked as “transcri- sures the existing cadastral information matches Tax Authority bed for transmission” (naqil liltakleef). The buyer that of the property being registered. Once the Time: 3 days review has taken place, the documents are mar- receives a copy of the registered contract and the Cost: EGP 2 (EGP 1.75 fee for issuance of official ked as “approved to be authenticated” (maqbul registration process is complete. property tax certificate + EGP 0.5 for expedited lilshahr) and released to the parties together with service) a stamped form that will later be used to draft the sales contract. Comments: Prior to transferring any property, a Property Tax Certificate must be obtained from Procedure 4. Draft and present draft the local Property Tax Authority. This certificate sales contract (mashroa moharar) to is one of the documents to be presented at the Real Estate Registry together with the registration Lawyers’ Syndicate for verification request. This is a national requirement established Time: 2 days by Law No. 114 of 1946. The Property Tax Certifi- Cost: EGP 4,727 (0.5% of property value) cate proves that the property has undergone a tax Comments: The parties’ lawyer drafts a sales assessment and it is registered at the Property Tax contract (mashroa moharar) on the stamped Authority. form obtained at the Real Estate Registry. The contract is submitted to the Lawyers’ Syndicate for verification. The lawyer who drafts the contract reports his/her syndicate identification number on the form and the Lawyers’ Syndicate verifies

* This procedure can be completed simultaneously with previous procedures. 104 DOING BUSINESS IN EGYPT 2014

Procedure 2. Pay property registration Procedure 7. Submit contract to Real Procedure 4. Draft and present draft fees at Real Estate Registry Estate Registry for legalization of the sales contract (mashroa moharar) to Time: 1 day contract (naqil liltakleef) and obtain Lawyers’ Syndicate for verification Cost: EGP 2,000 (see comments) registration number Time: 5 days Comments: As per Law No. 83 of 2006, regis- Time: 21 days Cost: EGP 4,727 (0.5% of property value) tration fees are based on the size of the property, Cost: No cost Comments: The parties’ lawyer drafts a sales with a maximum registration fee of EGP 2,000. Comments: The buyer submits the authenticated contract (mashroa moharar) on the stamped The fee schedule is as follows: contract to the main office of the Real Estate form obtained at the Real Estate Registry. The a. Up to and including 100 square meters: EGP Registry for final approval. Once the Registry has contract is submitted to the Lawyers’ Syndicate 500; granted its approval, a registration number is for verification. The lawyer who drafts the contract issued and the contract is marked as “transcri- reports his/her syndicate identification number b. Above this, up to and including 200 square bed for transmission” (naqil liltakleef). The buyer on the form and the Lawyers’ Syndicate verifies meters: EGP 1,000; receives a copy of the registered contract and the if the lawyer is indeed a registered member. The c. Above this, up to and including 300 square registration process is complete. verification fees are based on the property value, meters: EGP 1,500; with a maximum of EGP 5,000. d. More than 300 square meters: EGP 2,000. REGISTERING PROPERTY Procedure 5. Obtain the Real Estate Procedure 3. Obtain preliminary Ismailia Registry’s approval (saleh lilshahr) on approval of registration request from Property value: EGP 945,334 (US$ 150,000) the sales contract (mashroa moharar) Real Estate Registry (maqbul lilshahr) Data as of: June 2013 Time: 3 days Time: 24 days Procedure 1. Obtain Property Tax Cost: No cost Cost: No cost Certificate (kashf rasmy) from Property Comments: After collecting the contract from the Comments: The Real Estate Registry conducts a Tax Authority Lawyers’ Syndicate, the parties submit it the Real technical and legal review of the request and en- Estate Registry for review. Once the review has Time: 1 day sures the existing cadastral information matches taken place, the contract is marked as “approved that of the property being registered. Once the Cost: EGP 2 (EGP 1.75 fee for issuance of official to be registered” (saleh lilshahr). review has taken place, the documents are mar- property tax certificate + EGP 0.5 for expedited ked as “approved to be authenticated” (maqbul service) Procedure 6. Authenticate sales lilshahr) and released to the parties together with Comments: Prior to transferring any property, a contract at Authentication Office of a stamped form that will later be used to draft the Property Tax Certificate must be obtained from Real Estate Registry (tawtheeq) sales contract. the local Property Tax Authority. This certificate Time: 1 day is one of the documents to be presented at the Procedure 4. Draft and present draft Real Estate Registry together with the registration Cost: No cost sales contract (mashroa moharar) to request. This is a national requirement established Comments: Once the contract is marked as Lawyers’ Syndicate for verification by Law No. 114 of 1946. The Property Tax Certifi- “approved to be registered”, the parties proceed cate proves that the property has undergone a tax before the competent public officialmowathiq ( ) to Time: 5 days assessment and it is registered at the Property Tax sign and authenticate it. Cost: EGP 4,727 (0.5% of property value) Authority. Comments: The parties’ lawyer drafts a sales Procedure 7. Submit contract to Real contract (mashroa moharar) on the stamped Procedure 2. Pay property registration Estate Registry for legalization of the form obtained at the Real Estate Registry. The fees at Real Estate Registry contract (naqil liltakleef) and obtain contract is submitted to the Lawyers’ Syndicate Time: 1 day registration number for verification. The lawyer who drafts the contract reports his/her syndicate identification number Cost: EGP 2,000 (see comments) Time: 21 days on the form and the Lawyers’ Syndicate verifies Comments: As per Law No. 83 of 2006, regis- Cost: No cost if the lawyer is indeed a registered member. The tration fees are based on the size of the property, Comments: The buyer submits the authenticated verification fees are based on the property value, with a maximum registration fee of EGP 2,000. contract to the main office of the Real Estate with a maximum of EGP 5,000. The fee schedule is as follows: Registry for final approval. Once the Registry has a. Up to and including 100 square meters: EGP granted its approval, a registration number is Procedure 5. Obtain the Real Estate 500; issued and the contract is marked as “transcribed for transmission” (naqil liltakleef). The buyer Registry’s approval (saleh lilshahr) on b. Above this, up to and including 200 square receives a copy of the registered contract and the the sales contract (mashroa moharar) meters: EGP 1,000; registration process is complete. Time: 4 days c. Above this, up to and including 300 square Cost: No cost meters: EGP 1,500; REGISTERING PROPERTY Comments: After collecting the contract from the d. More than 300 square meters: EGP 2,000. Lawyers’ Syndicate, the parties submit it the Real Kharga Estate Registry for review. Once the review has Procedure 3. Obtain preliminary Property value: EGP 945,334 (US$ 150,000) taken place, the contract is marked as “approved approval of registration request from Data as of: June 2013 to be registered” (saleh lilshahr). Real Estate Registry (maqbul lilshahr) Procedure 1. Obtain Property Tax Time: 20 days Procedure 6. Authenticate sales Certificate (kashf rasmy) from Property contract at Authentication Office of Cost: No cost Tax Authority Comments: The Real Estate Registry conducts a Real Estate Registry (tawtheeq) Time: 1 day technical and legal review of the request and en- Time: 7 days sures the existing cadastral information matches Cost: EGP 2 (EGP 1.75 fee for issuance of official Cost: No cost that of the property being registered. Once the property tax certificate + EGP 0.5 for expedited Comments: Once the contract is marked as review has taken place, the documents are mar- service) “approved to be registered”, the parties proceed ked as “approved to be authenticated” (maqbul Comments: Prior to transferring any property, a before the competent public officialmowathiq ( ) to lilshahr) and released to the parties together with Property Tax Certificate must be obtained from sign and authenticate it. a stamped form that will later be used to draft the the local Property Tax Authority. This certificate sales contract. is one of the documents to be presented at the Real Estate Registry together with the registration

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - REGISTERING PROPERTY 105

request. This is a national requirement established Procedure 6. Authenticate sales Procedure 3. Obtain preliminary by Law No. 114 of 1946. The Property Tax Certifi- contract at Authentication Office of approval of registration request from cate proves that the property has undergone a tax assessment and it is registered at the Property Tax Real Estate Registry (tawtheeq) Real Estate Registry (maqbul lilshahr) Authority. Time: 1 day Time: 7 days Cost: EGP 20 (authentication fee) Cost: No cost Procedure 2. Pay property registration Comments: Once the contract is marked as Comments: The Real Estate Registry conducts a fees at Real Estate Registry “approved to be registered”, the parties proceed technical and legal review of the request and en- Time: 1 day before the competent public officialmowathiq ( ) sures the existing cadastral information matches Cost: EGP 2,650 (see comments) to sign and authenticate it. In Kharga, both the that of the property being registered. Once the buyer and the seller must pay an authentication review has taken place, the documents are mar- Comments: As per Law No. 83 of 2006, regis- fee of EGP 10. ked as “approved to be authenticated” (maqbul tration fees are based on the size of the property, lilshahr) and released to the parties together with with a maximum registration fee of EGP 2,000. Procedure 7. Submit contract to Real a stamped form that will later be used to draft the The fee schedule is as follows: Estate Registry for legalization of the sales contract. a. Up to and including 100 square meters: EGP contract (naqil liltakleef) and obtain 500; registration number Procedure 4. Draft and present draft sales contract (mashroa moharar) to b. Above this, up to and including 200 square Time: 2 days meters: EGP 1,000; Lawyers’ Syndicate for verification Cost: No cost c. Above this, up to and including 300 square Time: 1 day meters: EGP 1,500; Comments: The buyer submits the authenticated contract to the main office of the Real Estate Cost: EGP 4,727 (0.5% of property value) d. More than 300 square meters: EGP 2,000. Registry for final approval. Once the Registry has Comments: The parties’ lawyer drafts a sales In the case of a transfer of property such as the granted its approval, a registration number is contract (mashroa moharar) on the stamped one described in this indicator, authorities in issued and the contract is marked as “transcri- form obtained at the Real Estate Registry. The Kharga also charge EGP 150 as court fees and EGP bed for transmission” (naqil liltakleef). The buyer contract is submitted to the Lawyers’ Syndicate 500 as registration fee for the part of the plot of receives a copy of the registered contract and the for verification. The lawyer who drafts the contract land that is not covered by the building (i.e. 92.9 registration process is complete. reports his/her syndicate identification number square meters). on the form and the Lawyers’ Syndicate verifies REGISTERING PROPERTY if the lawyer is indeed a registered member. The Procedure 3. Obtain preliminary verification fees are based on the property value, approval of registration request from Mansoura with a maximum of EGP 5,000. Real Estate Registry (maqbul lilshahr) Property value: EGP 945,334 (US$ 150,000) Procedure 5. Obtain the Real Estate Time: 17 days Data as of: June 2013 Registry’s approval (saleh lilshahr) on Cost: No cost Procedure 1. Obtain Property Tax the sales contract (mashroa moharar) Comments: The Real Estate Registry conducts a Certificate (kashf rasmy) from Property Time: 5 days technical and legal review of the request and en- Tax Authority sures the existing cadastral information matches Cost: No cost that of the property being registered. Once the Time: 1 day Comments: After collecting the contract from the review has taken place, the documents are mar- Cost: EGP 2 (EGP 1.75 fee for issuance of official Lawyers’ Syndicate, the parties submit it the Real ked as “approved to be authenticated” (maqbul property tax certificate + EGP 0.5 for expedited Estate Registry for review. Once the review has lilshahr) and released to the parties together with service) taken place, the contract is marked as “approved a stamped form that will later be used to draft the Comments: Prior to transferring any property, a to be registered” (saleh lilshahr). sales contract. Property Tax Certificate must be obtained from the local Property Tax Authority. This certificate Procedure 6. Authenticate sales Procedure 4. Draft and present draft is one of the documents to be presented at the contract at Authentication Office of sales contract (mashroa moharar) to Real Estate Registry together with the registration Real Estate Registry (tawtheeq) request. This is a national requirement established Lawyers’ Syndicate for verification Time: 7 days by Law No. 114 of 1946. The Property Tax Certifi- Time: 1 day cate proves that the property has undergone a tax Cost: No cost Cost: EGP 4,727 (0.5% of property value) assessment and it is registered at the Property Tax Comments: Once the contract is marked as Comments: The parties’ lawyer drafts a sales Authority. “approved to be registered”, the parties proceed contract (mashroa moharar) on the stamped before the competent public officialmowathiq ( ) to form obtained at the Real Estate Registry. The Procedure 2. Pay property registration sign and authenticate it. contract is submitted to the Lawyers’ Syndicate fees at Real Estate Registry for verification. The lawyer who drafts the contract Time: 1 day Procedure 7. Submit contract to Real reports his/her syndicate identification number Estate Registry for legalization of the Cost: EGP 2,000 (see comments) on the form and the Lawyers’ Syndicate verifies contract (naqil liltakleef) and obtain if the lawyer is indeed a registered member. The Comments: As per Law No. 83 of 2006, regis- registration number verification fees are based on the property value, tration fees are based on the size of the property, with a maximum of EGP 5,000. with a maximum registration fee of EGP 2,000. Time: 7 days The fee schedule is as follows: Cost: No cost Procedure 5. Obtain the Real Estate a. Up to and including 100 square meters: EGP Comments: The buyer submits the authenticated Registry’s approval (saleh lilshahr) on 500; contract to the main office of the Real Estate Registry for final approval. Once the Registry has the sales contract (mashroa moharar) b. Above this, up to and including 200 square granted its approval, a registration number is Time: 5 days meters: EGP 1,000; issued and the contract is marked as “transcri- Cost: No cost c. Above this, up to and including 300 square bed for transmission” (naqil liltakleef). The buyer Comments: After collecting the contract from the meters: EGP 1,500; receives a copy of the registered contract and the Lawyers’ Syndicate, the parties submit it the Real d. More than 300 square meters: EGP 2,000. registration process is complete. Estate Registry for review. Once the review has taken place, the contract is marked as “approved to be registered” (saleh lilshahr).

* This procedure can be completed simultaneously with previous procedures. 106 DOING BUSINESS IN EGYPT 2014

REGISTERING PROPERTY if the lawyer is indeed a registered member. The Procedure 2. Pay property registration verification fees are based on the property value, fees at Real Estate Registry Port Said with a maximum of EGP 5,000. Time: 1 day Property value: EGP 945,334 (US$ 150,000) Procedure 5. Obtain the Real Estate Cost: EGP 2,000 (see comments) Data as of: June 2013 Registry’s approval (saleh lilshahr) on Comments: As per Law No. 83 of 2006, regis- Procedure 1. Obtain Property Tax the sales contract (mashroa moharar) tration fees are based on the size of the property, Certificate (kashf rasmy) from Property Time: 4 days with a maximum registration fee of EGP 2,000. Tax Authority Cost: No cost The fee schedule is as follows: Time: 1 day Comments: After collecting the contract from the a. Up to and including 100 square meters: EGP Cost: EGP 2 (EGP 1.75 fee for issuance of official Lawyers’ Syndicate, the parties submit it the Real 500; property tax certificate + EGP 0.5 for expedited Estate Registry for review. Once the review has b. Above this, up to and including 200 square service) taken place, the contract is marked as “approved meters: EGP 1,000; Comments: Prior to transferring any property, a to be registered” (saleh lilshahr). c. Above this, up to and including 300 square Property Tax Certificate must be obtained from meters: EGP 1,500; the local Property Tax Authority. This certificate Procedure 6. Authenticate sales d. More than 300 square meters: EGP 2,000. is one of the documents to be presented at the contract at Authentication Office of Real Estate Registry together with the registration Real Estate Registry (tawtheeq) Procedure 3. Obtain preliminary request. This is a national requirement established Time: 1 day approval of registration request from by Law No. 114 of 1946. The Property Tax Certifi- Cost: No cost Real Estate Registry (maqbul lilshahr) cate proves that the property has undergone a tax assessment and it is registered at the Property Tax Comments: Once the contract is marked as Time: 8 days Authority. “approved to be registered”, the parties proceed Cost: No cost before the competent public officialmowathiq ( ) to Comments: The Real Estate Registry conducts a Procedure 2. Pay property registration sign and authenticate it. technical and legal review of the request and en- fees at Real Estate Registry sures the existing cadastral information matches Procedure 7. Submit contract to Real Time: 1 day that of the property being registered. Once the Estate Registry for legalization of the review has taken place, the documents are mar- Cost: EGP 2,000 (see comments) contract (naqil liltakleef) and obtain ked as “approved to be authenticated” (maqbul Comments: As per Law No. 83 of 2006, regis- registration number lilshahr) and released to the parties together with tration fees are based on the size of the property, Time: 3 days a stamped form that will later be used to draft the with a maximum registration fee of EGP 2,000. sales contract. Cost: No cost The fee schedule is as follows: Comments: The buyer submits the authenticated a. Up to and including 100 square meters: EGP Procedure 4. Draft and present draft contract to the main office of the Real Estate 500; sales contract (mashroa moharar) to Registry for final approval. Once the Registry has Lawyers’ Syndicate for verification b. Above this, up to and including 200 square granted its approval, a registration number is meters: EGP 1,000; issued and the contract is marked as “transcri- Time: 2 days c. Above this, up to and including 300 square bed for transmission” (naqil liltakleef). The buyer Cost: EGP 4,727 (0.5% of property value) meters: EGP 1,500; receives a copy of the registered contract and the Comments: The parties’ lawyer drafts a sales d. More than 300 square meters: EGP 2,000. registration process is complete. contract (mashroa moharar) on the stamped form obtained at the Real Estate Registry. The Procedure 3. Obtain preliminary REGISTERING PROPERTY contract is submitted to the Lawyers’ Syndicate approval of registration request from Sohag for verification. The lawyer who drafts the contract Real Estate Registry (maqbul lilshahr) reports his/her syndicate identification number Property value: EGP 945,334 (US$ 150,000) on the form and the Lawyers’ Syndicate verifies Time: 13 days Data as of: June 2013 if the lawyer is indeed a registered member. The Cost: No cost verification fees are based on the property value, Comments: The Real Estate Registry conducts a Procedure 1. Obtain Property Tax with a maximum of EGP 5,000. technical and legal review of the request and en- Certificate (kashf rasmy) from Property sures the existing cadastral information matches Tax Authority Procedure 5. Obtain the Real Estate that of the property being registered. Once the Time: 1 day Registry’s approval (saleh lilshahr) on review has taken place, the documents are mar- Cost: EGP 2 (EGP 1.75 fee for issuance of official the sales contract (mashroa moharar) ked as “approved to be authenticated” (maqbul property tax certificate + EGP 0.5 for expedited lilshahr) and released to the parties together with Time: 2 days service) a stamped form that will later be used to draft the Cost: EGP 30 (registry fees for stamp of approval) sales contract. Comments: Prior to transferring any property, a Comments: After collecting the contract from the Property Tax Certificate must be obtained from Lawyers’ Syndicate, the parties submit it the Real Procedure 4. Draft and present draft the local Property Tax Authority. This certificate Estate Registry for review. Once the review has sales contract (mashroa moharar) to is one of the documents to be presented at the taken place, the contract is marked as “approved Real Estate Registry together with the registration to be registered” (saleh lilshahr). Lawyers’ Syndicate for verification request. This is a national requirement established Time: 1 day by Law No. 114 of 1946. The Property Tax Certifi- Cost: EGP 4,727 (0.5% of property value) cate proves that the property has undergone a tax Comments: The parties’ lawyer drafts a sales assessment and it is registered at the Property Tax contract (mashroa moharar) on the stamped Authority. form obtained at the Real Estate Registry. The contract is submitted to the Lawyers’ Syndicate for verification. The lawyer who drafts the contract reports his/her syndicate identification number on the form and the Lawyers’ Syndicate verifies

* This procedure can be completed simultaneously with previous procedures. LIST OF PROCEDURES - REGISTERING PROPERTY 107

Procedure 6. Authenticate sales Procedure 3. Obtain site inspection Procedure 8. Submit contract to Real contract at Authentication Office of by the Egyptian Surveying Authority Estate Registry for legalization of the Real Estate Registry (tawtheeq) and approval of inspection report by contract (naqil liltakleef) and obtain Time: 2 days Measurement Department registration number Cost: EGP 30 (authentication fee) Time: 15 days Time: 6 days Comments: Once the contract is marked as Cost: No cost Cost: No cost “approved to be registered”, the parties proceed Comments: The Egyptian Surveying Authority Comments: The buyer submits the authenticated before the competent public officialmowathiq ( ) inspects the property and prepares a report of its contract to the main office of the Real Estate to sign and authenticate it. In Sohag, the parties findings, called kashf tahdeed, that is delivered to Registry for final approval. Once the Registry has must pay a EGP 30 authentication fee to the the Measurement Department for approval. Once granted its approval, a registration number is mowathiq. approved, the report is sent to the Real Estate issued and the contract is marked as “transcri- Registry. bed for transmission” (naqil liltakleef). The buyer Procedure 7. Submit contract to Real receives a copy of the registered contract and the Estate Registry for legalization of the Procedure 4. Obtain preliminary registration process is complete. contract (naqil liltakleef) and obtain approval of registration request from registration number Real Estate Registry (maqbul lilshahr) REGISTERING PROPERTY Time: 2 days Time: 15 days Tanta Cost: No cost Cost: No cost Property value: EGP 945,334 (US$ 150,000) Comments: The buyer submits the authenticated Comments: The Real Estate Registry conducts a Data as of: June 2013 contract to the main office of the Real Estate technical and legal review of the request and en- Registry for final approval. Once the Registry has sures the existing cadastral information matches Procedure 1. Obtain Property Tax granted its approval, a registration number is that of the property being registered. Once the Certificate (kashf rasmy) from Property issued and the contract is marked as “transcri- review has taken place, the documents are mar- Tax Authority bed for transmission” (naqil liltakleef). The buyer ked as “approved to be authenticated” (maqbul Time: 1 day receives a copy of the registered contract and the lilshahr) and released to the parties together with registration process is complete. a stamped form that will later be used to draft the Cost: EGP 2 (EGP 1.75 fee for issuance of official sales contract. property tax certificate + EGP 0.5 for expedited REGISTERING PROPERTY service) Comments: Prior to transferring any property, a Suez Procedure 5. Draft and present draft sales contract (mashroa moharar) to Property Tax Certificate must be obtained from Property value: EGP 945,334 (US$ 150,000) Lawyers’ Syndicate for verification the local Property Tax Authority. This certificate Data as of: June 2013 is one of the documents to be presented at the Time: 5 days Real Estate Registry together with the registration Procedure 1. Obtain Property Tax Cost: EGP 4,727 (0.5% of property value) request. This is a national requirement established Certificate (kashf rasmy) from Property Comments: The parties’ lawyer drafts a sales by Law No. 114 of 1946. The Property Tax Certifi- Tax Authority contract (mashroa moharar) on the stamped cate proves that the property has undergone a tax form obtained at the Real Estate Registry. The assessment and it is registered at the Property Tax Time: 1 day contract is submitted to the Lawyers’ Syndicate Authority. Cost: EGP 2 (EGP 1.75 fee for issuance of official for verification. The lawyer who drafts the contract property tax certificate + EGP 0.5 for expedited reports his/her syndicate identification number Procedure 2. Pay property registration service) on the form and the Lawyers’ Syndicate verifies fees at Real Estate Registry Comments: Prior to transferring any property, a if the lawyer is indeed a registered member. The Time: 1 day Property Tax Certificate must be obtained from verification fees are based on the property value, the local Property Tax Authority. This certificate with a maximum of EGP 5,000. Cost: EGP 2,092 (see comments) is one of the documents to be presented at the Comments: As per Law No. 83 of 2006, regis- Real Estate Registry together with the registration Procedure 6. Obtain the Real Estate tration fees are based on the size of the property, request. This is a national requirement established Registry’s approval (saleh lilshahr) on with a maximum registration fee of EGP 2,000. by Law No. 114 of 1946. The Property Tax Certifi- the sales contract (mashroa moharar) The fee schedule is as follows: cate proves that the property has undergone a tax Time: 7 days a. Up to and including 100 square meters: EGP assessment and it is registered at the Property Tax 500; Authority. Cost: No cost b. Above this, up to and including 200 square Comments: After collecting the contract from the meters: EGP 1,000; Procedure 2. Pay property registration Lawyers’ Syndicate, the parties submit it the Real fees at Real Estate Registry Estate Registry for review. Once the review has c. Above this, up to and including 300 square meters: EGP 1,500; Time: 1 day taken place, the contract is marked as “approved to be registered” (saleh lilshahr). d. More than 300 square meters: EGP 2,000. Cost: EGP 2,000 (see comments) In the case of a transfer of property such as the Comments: As per Law No. 83 of 2006, regis- Procedure 7. Authenticate sales one described in this indicator, additional fees are tration fees are based on the size of the property, contract at Authentication Office of charged in Tanta. Namely: with a maximum registration fee of EGP 2,000. Real Estate Registry (tawtheeq) a. Application fee: EGP 20; The fee schedule is as follows: Time: 1 day b. Record preservation fee: EGP 30; a. Up to and including 100 square meters: EGP Cost: No cost 500; c. Court fees: EGP 42. Comments: Once the contract is marked as b. Above this, up to and including 200 square “approved to be registered”, the parties proceed meters: EGP 1,000; before the competent public officialmowathiq ( ) to c. Above this, up to and including 300 square sign and authenticate it. meters: EGP 1,500; d. More than 300 square meters: EGP 2,000.

* This procedure can be completed simultaneously with previous procedures. 108 DOING BUSINESS IN EGYPT 2014

Procedure 3. Obtain preliminary REGISTERING PROPERTY if the lawyer is indeed a registered member. The approval of registration request from verification fees are based on the property value, Zagazig with a maximum of EGP 5,000. Real Estate Registry (maqbul lilshahr) Property value: EGP 945,334 (US$ 150,000) Time: 23 days Data as of: June 2013 Procedure 5. Obtain the Real Estate Cost: No cost Registry’s approval (saleh lilshahr) on Comments: The Real Estate Registry conducts a Procedure 1. Obtain Property Tax the sales contract (mashroa moharar) technical and legal review of the request and en- Certificate (kashf rasmy) from Property Time: 3 days sures the existing cadastral information matches Tax Authority Cost: No cost that of the property being registered. Once the Time: 2 days review has taken place, the documents are mar- Comments: After collecting the contract from the ked as “approved to be authenticated” (maqbul Cost: EGP 2 (EGP 1.75 fee for issuance of official Lawyers’ Syndicate, the parties submit it the Real lilshahr) and released to the parties together with property tax certificate + EGP 0.5 for expedited Estate Registry for review. Once the review has a stamped form that will later be used to draft the service) taken place, the contract is marked as “approved sales contract. Comments: Prior to transferring any property, a to be registered” (saleh lilshahr). Property Tax Certificate must be obtained from Procedure 4. Draft and present draft the local Property Tax Authority. This certificate Procedure 6. Authenticate sales sales contract (mashroa moharar) to is one of the documents to be presented at the contract at Authentication Office of Lawyers’ Syndicate for verification Real Estate Registry together with the registration Real Estate Registry (tawtheeq) request. This is a national requirement established Time: 1 day Time: 13 days by Law No. 114 of 1946. The Property Tax Certifi- Cost: EGP 4,727 (0.5% of property value) cate proves that the property has undergone a tax Cost: EGP 50 (authentication fee) Comments: The parties’ lawyer drafts a sales assessment and it is registered at the Property Tax Comments: Once the contract is marked as contract (mashroa moharar) on the stamped Authority. “approved to be registered”, the parties proceed form obtained at the Real Estate Registry. The before the competent public officialmowathiq ( ) contract is submitted to the Lawyers’ Syndicate Procedure 2. Pay property registration to sign and authenticate it. In Zagazig, the parties for verification. The lawyer who drafts the contract fees at Real Estate Registry must pay EGP 50 as authentication fee to the mowathiq. reports his/her syndicate identification number Time: 1 day on the form and the Lawyers’ Syndicate verifies Cost: EGP 2,000 (see comments) if the lawyer is indeed a registered member. The Procedure 7. Submit contract to Real verification fees are based on the property value, Comments: As per Law No. 83 of 2006, regis- Estate Registry for legalization of the with a maximum of EGP 5,000. tration fees are based on the size of the property, contract (naqil liltakleef) and obtain with a maximum registration fee of EGP 2,000. registration number Procedure 5. Obtain the Real Estate The fee schedule is as follows: Time: 25 days Registry’s approval (saleh lilshahr) on a. Up to and including 100 square meters: EGP Cost: No cost the sales contract (mashroa moharar) 500; Comments: The buyer submits the authenticated Time: 3 days b. Above this, up to and including 200 square contract to the main office of the Real Estate Cost: No cost meters: EGP 1,000; Registry for final approval. Once the Registry has Comments: After collecting the contract from the c. Above this, up to and including 300 square granted its approval, a registration number is Lawyers’ Syndicate, the parties submit it the Real meters: EGP 1,500; issued and the contract is marked as “transcri- Estate Registry for review. Once the review has d. More than 300 square meters: EGP 2,000. bed for transmission” (naqil liltakleef). The buyer taken place, the contract is marked as “approved receives a copy of the registered contract and the to be registered” (saleh lilshahr). Procedure 3. Obtain preliminary registration process is complete. approval of registration request from Procedure 6. Authenticate sales Real Estate Registry (maqbul lilshahr) contract at Authentication Office of Time: 23 days Real Estate Registry (tawtheeq) Cost: No cost Time: 2 days Comments: The Real Estate Registry conducts a Cost: No cost technical and legal review of the request and en- Comments: Once the contract is marked as sures the existing cadastral information matches “approved to be registered”, the parties proceed that of the property being registered. Once the before the competent public officialmowathiq ( ) to review has taken place, the documents are mar- sign and authenticate it. ked as “approved to be authenticated” (maqbul lilshahr) and released to the parties together with Procedure 7. Submit contract to Real a stamped form that will later be used to draft the Estate Registry for legalization of the sales contract. contract (naqil liltakleef) and obtain registration number Procedure 4. Draft and present draft sales contract (mashroa moharar) to Time: 15 days Lawyers’ Syndicate for verification Cost: No cost Time: 1 day Comments: The buyer submits the authenticated Cost: EGP 4,727 (0.5% of property value) contract to the main office of the Real Estate Registry for final approval. Once the Registry has Comments: The parties’ lawyer drafts a sales granted its approval, a registration number is contract (mashroa moharar) on the stamped issued and the contract is marked as “transcri- form obtained at the Real Estate Registry. The bed for transmission” (naqil liltakleef). The buyer contract is submitted to the Lawyers’ Syndicate receives a copy of the registered contract and the for verification. The lawyer who drafts the contract registration process is complete. reports his/her syndicate identification number on the form and the Lawyers’ Syndicate verifies

* This procedure can be completed simultaneously with previous procedures. Indicator details 110 DOING BUSINESS IN EGYPT 2014

Enforcing contracts

Procedures Time (days) Cost (% of claim) (number)

Filing Judgement Enforcement Total days Attorney Court Enforcement Total cost

Alexandria 42 20 678 225 923 18.0 1.3 6.9 26.2 Alexandria

Assuit 42 20 675 270 965 18.0 1.3 6.9 26.2 Assuit

Aswan 42 20 535 190 745 17.9 1.3 6.9 26.1 Aswan

Cairo 42 20 720 270 1,010 18.0 1.3 6.9 26.2 Cairo

Damietta 42 15 600 195 810 10.0 1.3 6.9 18.2 Damietta

Fayoum 42 20 630 180 830 10.0 1.3 6.9 18.2 Fayoum

Giza 42 20 565 225 810 17.5 1.3 6.9 25.7 Giza

Ismailia 42 11 535 160 706 12.5 1.3 6.9 20.7 Ismailia

Kharga 42 11 660 275 946 15.0 1.3 6.9 23.2 New Valley

Mansoura 42 20 760 270 1,050 17.5 1.3 6.9 25.7 Dakahlia

Port Said 42 14 740 210 964 11.3 1.3 6.9 19.5 Port Said

Sohag 42 20 625 270 915 14.3 1.3 6.9 22.5 Sohag

Suez 42 10 685 150 845 17.5 1.3 6.9 25.7 Suez

Tanta 42 20 560 250 830 16.4 1.3 6.9 24.6 Gharbia

Zagazig 42 25 730 350 1,105 17.5 1.3 6.9 25.7 Sharqia INDICATOR DETAILS 111

Trading across borders

Alexandria Damietta Port Said East Port Said West Sokhna (Suez) Time Cost Time Cost Time Cost Time Cost Time Cost (days) (US$) (days) (US$) (days) (US$) (days) (US$) (days) (US$) Export 11 615 10 585 11 694 11 532 12 667 Document 7 125 7 125 7 125 7 125 7 125 preparation Inland transportation 1 220 1 275 1 284 1 205 1 320 and handling Customs 1 100 1 95 1 110 1 95 1 100 Port and terminal 2 170 1 90 2 175 2 107 3 122 handling

Import 14 780 14 857 15 884 14 831 16 1,047 Document 8 210 8 210 8 210 8 210 8 210 preparation Inland transportation 1 220 1 275 1 284 1 205 1 295 and handling Customs 2 100 3 100 4 90 3 90 4 90 Port and terminal 3 250 2 272 2 300 2 326 3 452 handling Acknowledgements

Doing Business in Egypt 2014 was pro- The project was carried out in collabo- More than 380 business consultants, duced by a team led by Marwa Mahgoub ration with the General Authority for In- lawyers, property experts, engineers, ar- and Alessio Zanelli. The team comprised vestment and Free Zones (GAFI) of the chitects, utility providers, public officials Farah Hussein, Maha Hussein, Joyce Ib- Ministry of Investment and the Ministry and magistrates contributed to the Doing rahim, Trimor Mici, Dana Omran, Tom- of State for Local Development. The GAFI Business in Egypt 2014 report. Data collec- maso Rooms, Pilar Sanchez-Bella, and team was led by Mohamed Hisham, tion for the starting a business, registering Mariam Semeda. The report was pre- under the general supervision of Mona property, and enforcing contracts indica- pared under the general direction of Zobaa. The team comprised Amr Abul- tors was coordinated by Helmy, Hamza Mierta Capaul. Invaluable guidance was Fotouh, Ramy El-Sayed, Ibrahim Mustafa, & Partners (Baker & McKenzie). Data provided by Sherif Bahig Hamdy. and Mohannad Omar. Invaluable support collection for the dealing with construc- was provided by Nevine Elshafei, Assis- tion permits indicator was coordinated The team is grateful for valuable com- tant to Minister of Investment, and Has- by Raﬁk Abbas Mahmoud Awad. Data ments provided by colleagues across the san Fahmy, Chairman of GAFI. The team collection for the trading across borders World Bank Group. Peer review com- of the Ministry of State for Local Develop- indicator was coordinated by Almansour ments were received from Sara Alnashar, ment comprised Sherifa Maher and Yas- Al-Borayek from the Alexandria Business Karim Belayachi, Thomas Blatt Laursen, mine Adel and was led by Ahmed Magdi Association. The team is grateful to the Baria Nabil Daye, Nuria De Oca, Amal under the general supervision of Bassem national and local government officials El-Malla, Sherif Bahig Hamdy, Iva Hamel, El-Shemmy. and members of the judiciary who par- Ahmed Kouchouk, Frederic Meunier, ticipated in the project and provided valu- Andrei Minkhnev, Mikiko Imai Ollison, The project team extends special thanks able comments during the consultation Parvina Rakhimova, Valentina Saltane, to counselors Ali Hassanein, Omar Mar- and data-review period. The names those Mehnaz Safavian, Massimiliano Santini, wan, Wadei Nashed and Mohamed Day- wishing to be acknowledged are listed on Periklis Saragiotis, Andrew Stone, Julien hoom from the Ministry of Justice for the following pages. Vilquin, and Andrew Young. Fatma Khalil their assistance during the implementa- Ali, Frederic Bustelo, Salma El-Sharawy, tion phase. The team is also grateful to Cecile Ferro, Penelope Demetra Fidas, Nermine Abulata and Samir El-Gammal Julio Fuster, Madalina Papahagi, Monique from the Ministry of Trade and Industry Pelloux, Thomas Moullier, Mario Nasci- for their input on the trading across bor- mento, Maria Camila Roberts, Pilar Sal- ders indicator. gado-Otonel, and Marilina Vieira provided valuable assistance at various stages of The project was funded by the govern- the project. The communications cam- ment of Switzerland through the State paign was designed and led by Nadine Secretariat for Economic Affairs (SECO), Shamounki Ghannam in collaboration the government of the United States of with Sushmitha Narsia, Hyun Kyong Lee, America through United States Agency Riham Mustafa, and Mohamed Essa. The for International Development (USAID), website (http://www.doingbusiness.org/ and the World Bank Group. Egypt) was developed by Preeti Endlaw, Hashim Zia, and Kunal Patel. The report was edited by Chris Marquardt and type- set by G. Quinn Information Design. LIST OF CONTRIBUTORS 113

PRIVATE SECTOR Esraa Mahmoud Mohamed Beshir Yasser Saad Ashraf Ghareeb UNI FREIGHT ATTORNEY AT LAW YASSER SAAD LAW FIRM ALEXANDRIA INTERNATIONAL CONTAINER TERMINALS (AICT) CONTRIBUTORS Galal Shalaby Mohamed Darwish Youssef Kazlak Abdalhamed Alsereef GALAL SHALABY LAW FIRM ELMAGED ENGINEERING CONSULTANTS ASSUIT KADMAR EGY TRANS Gamal Kandil Mohamed El-Agouz Mohamad Ali Jabir Abdelrahman Megahid GAMAL KANDIL LAW FIRM EL-AGOUZ ENGINEERING & DESIGN COMPANY BUDGET DEPARTMENT DAR ELTASMIMAT ENGINEERING CONSULTANCIES PUBLIC SECTOR Ghada Ragab Mohamed El-Deeb Sanadat Abdulhalim Abdulhamid Ibrahim Hashim ELGHAD ELMOSHREK URBAN DEVELOPMENT EL-DEEB ENGINEERING CONSULTANTS CONTRIBUTORS Abdulkarim ATTORNEY AT LAW CONSULTANTS SALES TAX DEPARTMENT Mohamed Fadel ALEXANDRIA Hamdy El-Herzawy ATTORNEY AT LAW Adel El Guinedy Sherif Ahmed Abulfadl Duaa Ezzeldin Sayid ADEL EL GENEEDY LAW FIRM ATTORNEY AT LAW SALES TAX DEPARTMENT Mohamed Ibrahim Abdelgawad GENERAL ORGANISATION FOR EXPORT AND IMPORT CONTROL (GOEIC) Adel Ismaeil Hani Shatla DAR ELMURAD ENGINEERING Safwat Abdulhalim Abdulkarim NOSCO HANI SHATLA LEGAL OFFICE SALES TAX DEPARTMENT Mohamed Mustafa Hassan Ahmed Mohamad Abdel Nabi COURT OF FIRST INSTANCE Adel Mourise Sohyoun Hany Abdalrashid MODERN DESIGNS FOR ENGINEERING Farghali Shalaan URBAN PLANNING DEPARTMENT MINA MARKO ENGINEERING CONSULTANCY UNI FREIGHT (EL-SAEIDY) Ahmad Mohamad Ahmad Abdulghani Adel Omar Hany Khater Mohamed Nour El-Amin Mohieldeen Al Taher COURT OF ALEXANDRIA EGYPT TELECOM EL-FAROUK CONSULTANTS OFFICE FOR DESIGNS AND ENGINEERING MOHAMED NOUR ENGINEERING OFFICE Sahar Attiah Abdelhakim Abdullah Ahad Adel Sayed Abdelfattah Hassan Ibrahim Hassan Mohamed Rashwan GENERAL AUTHORITY FOR INVESTMENT AND HOUSING DIRECTORATE HASSAN MOHAMED HASSAN LAW FIRM ARAB GROUP FOR ARCHITECTURAL DESIGNS CONSULTANCY GROUP FOR ARCHITECTURE FREE ZONES (GAFI) AND DÉCOR AND CONSTRUCTION Mohamad Fawzi Othman Hassan Ramadan Ahmed Hamed PLANNING AND URBAN DEVELOPMENT EGY TRANS Mohamed Reda Afifi Ahmad Al-Asaas SAFETY LINK DEPARTMENT WORKERS' SYNDICATE FUND ENGINEERING CONSULTANCIES COMPANY Haytham Hussin Wafaa Ibrahim Imtithaal Abdulhamid ? KADMAR Mohamed Shabaan Ahmed Abdelhafiz Alsayed SAFETY LINK FINANCIAL AFFAIRS DEPARTMENT ATTORNEY AT LAW OHOD CONSULTANCY OFFICE Heshmat Sawires Mahmoud Khalil Hasan Khalil Samir Romani Haneen Ahmed Abou El-Hassan ALAM ELBENAA ENGINEERING COMPANY Mohammad Abo Alfetoh EGYPTIAN CUSTOMS AUTHORITY BUDGET DEPARTMENT EL-HASSAN ENGINEERING CONSULTANCY AFFIFY OFFICE Ibrahim El-Said Khalid Mahmoud Mahmoud Mohamad Kurdi Al Habali EL-EMAN ENGINEERING CONSULTANCY Moheb Abdelatif SALES TAX DEPARTMENT FIRE DEPARTMENT Ahmed El Sedeq ATTORNEY AT LAW Siham Abbass Abulezz AHMED SEDEQ AND DIAALDIN DAWOOD Islam Abusamra Hasan Ibrahim SALES TAX DEPARTMENT LAW FIRM FAIRTRANS MARINE, TRADING & FORWARDING Mona Raslan ENGINEERING DEPARTMENT S A E SHAIMAA MOSAAD LAW FIRM Ahmed El-Abbady Nabih Mohamad AlGharib Hasan Abdulaleem Mohamad SALES TAX DEPARTMENT ENGINEERING DEPARTMENT EL-SHAYMAA ENGINEERING OFFICE Khaled Abd Alhamed Nadia Amin NOSCO AL AMEEN LAW FIRM Manar Ahmad Hasan Khloos Ahmed Farag Irshad Hilmi Bsarah INVESTMENT DEPARTMENT ELECTRICITY COMPANY AHMED FARAG LAW FIRM Khaled Abdin Naglaa Hussein UNITED GROUP ENGINEERING CONSULTANCY ATTORNEY AT LAW Naira Abdulmonim Ahmad Wafaa Mahrous Yousef Ahmed Gomaa INVESTMENT DEPARTMENT TECHNICAL OFFICE FOR LICENSES AHMED GOMAA LEGAL OFFICE Khaled AboKresha Osama Ashour KHALED ABOKRESHA LAW FIRM OSAMA ASHOUR LAW FIRM Amro Mohamad Abu Fetouh Sawsan Abdulkarim Ali Ahmed Kilany INVESTMENT DEPARTMENT TECHNICAL OFFICE FOR LICENSES AHMED EL KILANY & ASSOCIATES Khaled El-Agamy Rabea El-Saadany EL-AGAMY ENGINEERING CONSULTANCY RABEA EL-SAADANY ENGINEERING COMPANY Suhaila Mohamad Basyuni Atef Nassan Ahmed Mostafa INVESTMENT DEPARTMENT WATER AND SANITARY DRAINAGE COMPANY STUDY CENTER AND ENGINEERING Khaled Ghonaim Ragab Salim CONSULTANCY EGY TRANS RAGAB SELIM LAW FIRM Mohamad Taha Hasan Alkot HOUSING DIRECTORATE ASWAN Ahmed Shalaby Lamia Mobada Ramez Magdi Noor Mohamad Senusi Abbas LAMIA MOBADA OFFICE OF LAW AND DAMAC Abdin Yasin Mohamad AHMED TAHA SHALABY LAW FIRM GENERAL AUTHORITY FOR INVESTMENT AND CONSULTING SOCIAL INSURANCE BUREAU - EL MONTAZAH FREE ZONES (GAFI) Ahmed Soliman Saber Ammar Nouredin Fathi Mohamad AHMED SHAHER ASHOUR LAW FIRM Lasheen Lasheen AMMAR & ASSOCIATES - LEGAL CONSULTANTS Abdulmohsin Mohamad Ali ENGINEERING OFFICE FOR COMMERCE AND EGYPT TELECOM SALES TAX DEPARTMENT CONTRACTS Saber Magd Ahmed Yousef Mahmoud Attiah DAR EL-EMARA FOR CONSULTING AND SABER BUILDING & CONSTRUCTIONS Lamees Shahada Yasin REAL ESTATE REGISTRY ENGINEERING Magdi Dahman Mohammad MODERN ENGINEERING OFFICE Said Abuelkhair Ahmad Jaber Shehata ELECTRICITY COMPANY Ali Aboul Magd Ali INTERBUILD ENGINEERING CONSULTANTS ALEXANDRIA WATER COMPANY ALI ABOUL MAGD ALI LAW FIRM Magdi El-Beshr Yasin Shahaat MAKKA CENTER FOR ENGINEERING AND Samir El-Tabeey Ahmad Hasan Hashim ELECTRICITY COMPANY ARCHITECTURAL CONSULTANCIES SAMIR EL-TABEEY & ASSOCIATES - Ali Mohamed Ibrahim ALEXANDRIA WATER COMPANY EL-RAWDA ARCHITECTURAL AND ENGINEERING ENGINEERING CONSULTANCY Atef Abdulbaset Hussein DESIGNS Magdy Sakhy Khalid Hamad Sultan WATER AND SANITARY DRAINAGE COMPANY Sayed Abdelghany MAGDY SAKHY LAW FIRM ALEXANDRIA WATER COMPANY Amin Abbasy Abdelmotaleb Abdulnaser Ali Masood MAKKA EL-MOKARRAMA Maha Abubakr ARAB GROUP FOR LEGAL CONSULTING AND Ashraf Mahmoud Mohammad REAL ESTATE REGISTRY MAHA ABO BAKR LAW FIRM ARBITRATION COMMERCIAL REGISTRY Ashraf Boseila Saeed Hashim Awadeh CIVIL PROTECTION DEPARTMENT EGY TRANS Mahmoud El-Gamal Suzan Saad Ahmed Issam Alsayid Abdulmotalib MAHMOUD EL-GAMAL ENGINEERING PORT AUTHORITY AL-SAAD FOR ENGINEERING DESIGNS Ahmad Montasir Ashraf Khalil Ismail CONSULTANTS LEGAL AFFAIRS DEPARTMENT ATTORNEY AT LAW Tarek Nageeb Abdullah Ahmad Mohamad Mahmoud Mohamad Abdulatheem TAREK NAGEEB ABDULLAH CONSULTING & Mohamad Seyam Ashraf Morkos Zaky Abdelhafeth ENGINEERING COMPANY MINISTRY OF FINANCE MUNICIPAL AUTHORITY DAMAC ATTORNEY AT LAW Mohamad Abdulmonim Tareq Ismaeil Mohsin Azmi Ishm Mohamad Hasan Asmaa Abo Alhassan Mansour El-Desouky NOSCO HOUSING DIRECTORATE UNI FREIGHT ATTORNEY AT LAW ELECTRICITY COMPANY Tawfik Sha'ban Zakaria Juma Hazin Ateya Henain Modaser Abd Asmeaa AFFIFY Iman Jaber Jadallah HOUSING DIRECTORATE ATEYA HENAIN PLANNING AND ARCHITECTURE KADMAR INVESTMENT DEPARTMENT CONSULTANCY Walid Ahmed Fouad Tahani Mustafa Kamil Abu- Mohammad Mahmoud Ali Mohamed Abbas Moussa EL-WALID DESIGN AND ENGINEERING emera REVENUES DEPARTMENT Azza Salama Ahmed COMPANY CONSULTANCY GROUP FOR ARCHITECTURE PLANNING AND URBAN DEVELOPMENT SUEZ ENGINEERING AND CONTRACTING Mohammad Fahmi Mahmoud AND DÉCOR Walid Gamaleldin DEPARTMENT COMPANY AlQadi ONEST OFFICE FOR DESIGNS AND ENGINEERING Mohamad Husam Mustafa INVESTMENT SERVICES OFFICE Daifallah Al-Tayeb Mohamed Abd algawad DAIF ALLAH AL TAYEB LAW FIRM INVESTMENT DEPARTMENT KADMAR Walid Saeed Israa Abdelraziq Ahmad WALEED SAID HAMED LAW FIRM INVESTMENT SERVICES OFFICE Diaaldin Dawood Amal Adel Hussamedin Mohamed Abdulaal INVESTMENT DEPARTMENT DIAALDIN DAWOOD LAW FIRM ATTORNEY AT LAW Yasser El-Zeftawy Majdi Mohamad Rabie AL-MADINA AL-MONAWARA CONTRACTORS Ahmad Mohamad AlFakhrani INVESTMENT SERVICES OFFICE Emad Yassin Mohamed Ahmed Fayad ALEXANDRIA PRELIMINARY COURT - EGY TRANS Yasser Hassan Ahmad Abdulsamee Sayed FAYAD ENGINEERING OFFICE COMMERCIAL SECTION YASSER HASSAN & PARTNERS GENERAL AUTHORITY FOR URBAN PLANNING Eslam Howedy Mohamed Akef HOWEDY & PARTNERS ATTORNEY AT LAW 114 DOING BUSINESS IN EGYPT 2014

Ahmad Mohamad Badawi Omar Mhana Homam Eid Abdulfattah Maghrabi Mohamad Mahmoud Hanafi Ahmad Al Khatib GENERAL AUTHORITY FOR URBAN PLANNING URBAN PLANNING DEPARTMENT ENGINEERS' SYNDICATE EGYPTIAN CUSTOMS AUTHORITY LEGAL AFFAIRS DEPARTMENT Tariq Hamdi Abdulraadi Ibrahim Abou Shehata Hamda Sawfi Amal Hussien Zayan Somaya Subh GOVERNORATE INFORMATION CENTER MUNICIPAL AUTHORITY PLANNING DEPARTMENT SOCIAL INSURANCE BUREAU PARIS DISTRICT Mohamed Fahmy Ahmad AlMaoofi Wadee Ghali Abdullah Abelaziz Hussein Mohamad Ahmad Mahmoud COURT OF FIRST INSTANCE TELECOM EGYPT CITY BOARD SURVEYING DIRECTORATE Hasan MUNICIPAL AUTHORITY CAIRO Rifat Ahmad AlMoawad Mahmoud Abdulsamad Ahmad Raithma Hassan AbdelAziz TELECOM EGYPT MUNICIPAL AUTHORITY GENERAL AUTHORITY FOR INVESTMENT AND Sayed Mahmoud Abdullah Gomaa Madny FREE ZONES (GAFI) BALLAT DISTRICT Jamal Algharib Hamada Mohamad Ahmad Raslan EGYPTIAN CUSTOMS AUTHORITY ENGINEERS' SYNDICATE MUNICIPAL AUTHORITY Mohamad Hamad Shouq Ibrahim Mohamad Badawy Ibrahim GENERAL AUTHORITY FOR INVESTMENT AND ENGINEERS' SYNDICATE Mohamad Issam Shatr Mohamad Al Rizli Abdallah EGYPTIAN CUSTOMS AUTHORITY FREE ZONES (GAFI) HOUSING DIRECTORATE MUNICIPAL AUTHORITY Sharif Ahmad Doudar Mahmoud Mahran Mohamad Mohamad Saeed CIVIL PROTECTION DEPARTMENT Faraj Mohamad Homam Mahmoud AbdelSalam GENERAL AUTHORITY FOR INVESTMENT AND ELECTRICITY COMPANY URBAN PLANNING DEPARTMENT FREE ZONES (GAFI) Mohamad Ashakli Mohamad Masri MUNICIPAL AUTHORITY Atayet Hamed Al Qaasi HOUSING DIRECTORATE Amr Mohamad Abo El Fetouh Adel Mohamad Al Sharif HOUSING DIRECTORATE COMMERCIAL REGISTRY GENERAL AUTHORITY FOR INVESTMENT AND Rabea' Elsayed Ahmed Hasan Ali Issa Sultan Sayid Hegazy FREE ZONES (GAFI) YOUSSEF ELSEDDEEQ CENTER TELECOM EGYPT Wafa Fahim Abu Sabr URBAN PLANNING DEPARTMENT Dalia Hassan INVESTMENT SERVICES OFFICE AbdulNabi Abdelhaleem Ahmad Farghali Ahmad Ahmad Sabry Ahmed EXTERNAL REVENUES DEPARTMENT MINISTRY OF TRANSPORT Salah AlBasran BUSINESS INFORMATION CENTER LEGAL AFFAIRS DEPARTMENT Hussein Al Shafi INVESTMENT SERVICES OFFICE Mohamad Abdulrahman Hiali Eid Kamil Hussein Ali Abdullah INTERNAL REVENUES DEPARTMENT MUNICIPAL AUTHORITY Carmin Kamal Musa BUSINESS INFORMATION CENTER ENGINEERING DEPARTMENT Fayez Abdelaziz LEGAL AFFAIRS DEPARTMENT Sayid Ahmad Hasan Ramadan Ibrahim AbdelBari Makram Fawzy Ghobrial URBAN PLANNING - DAKAHLIA CENTER MUNICIPAL AUTHORITY Alsayid Mahmoud Safi TELECOM EGYPT REVENUES DEPARTMENT General Jaber Bahaildin LEGAL AFFAIRS DEPARTMENT Anwar Ahmad Qinawi Mahmoud Saad Adli Rabi Ahmad Salim Salam ENGINEERING DEPARTMENT Mohamad Saad Zaghlool ENGINEERING DEPARTMENT GENERAL DEPARTMENT FOR NATIONAL MUNICIPAL AUTHORITY DAMIETTA CONTAINER & CARGO HANDLING Fatima Mohamad Abdulaziz P ROTECTION CO. Evitte Maher Ibrahim Khalil Hamadaldin Saad SUEZ CANAL AUTHORITY Ahmad Omar Thab Bahaa Abdulqadir Ali MUNICIPAL AUTHORITY BALLAT DISTRICT GENERAL DEPARTMENT FOR NATIONAL IMPORT DEPARTMENT Salah Rizk Yasser Abulhassan Ahmad Kamal Eddine PROTECTION SUEZ CANAL AUTHORITY Sami Al Balkas COURT OF FIRST INSTANCE Mohamad BALLAT DISTRICT Mohamed Adel El Fakhrany DAMIETTA CONTAINER & CARGO HANDLING Ahmad Mohamed GENERAL DEPARTMENT FOR NATIONAL CO. GIZA ENGINEERING DEPARTMENT PROTECTION Nahid Harb Mohamad Maher Fathalla Masad Al Faqi Saad Amin PARIS DISTRICT PUBLIC PROPERTIES DEPARTMENT Mustafa Mohamad Ibrahim COURT OF FIRST INSTANCE ENGINEERING DEPARTMENT MINISTRY OF HOUSING Khalid Abdulhadi Ahmad Mohamad Mohamad Abdelsalam Abdelaal INVESTMENT DEPARTMENT Salama Abdelaziz FAYOUM TAX DEPARTMENT ENGINEERING DEPARTMENT Alaa Abdulmonim Adam MINISTRY OF HOUSING Amin Amin Ibrahim Galal Ahmad Mohamad Wajd Ibrahim Ibrahim Al Najjar Mohamad SOCIAL INSURANCE BUREAU EGYPTIAN CUSTOMS AUTHORITY Vivian Ahmad Hassan ISMAILIA ONE STOP SHOP URBAN PLANNING DEPARTMENT Abdelnabi Ismail Lotfy kamel Mohamed Majdy Atallah Fahim MINISTRY OF HOUSING Mohamad Jamal Victor Sharom SURVEYING DIRECTORATE SURVEYING DIRECTORATE ISMAILIA ONE STOP SHOP KHARJA CENTER - ENGINEERING AUTHORITY Mohamad Omar Ali Mohamad Kamal Al Zahshan Anas Jaffar HOLDING COMPANY FOR WATER AND WASTE Ashraf Abdel Karim Ashraf Mohamad Alarab SALES TAX DEPARTMENT GOVERNORATE LEGAL DEPARTMENT WATER (HCWW) ISMAILIA GOVERNORATE - GOVERNOR'S OFFICE REGULATION SECTION - KHARJA CENTER Mustafa Ahmad Ali Jamal Abdel Salam Mohamad Ahmad Abdel Ahmad Ibrahim Ahmad Mohamed Adel ELECTRICITY COMPANY ELECTRICITY SECTOR INDUSTRIAL ZONE AUTHORITY HOLDING COMPANY FOR WATER AND WASTE Rahman WATER (HCWW) Abdullah Ibrahim Oweiss Mohamad Abdel Wahab HOUSING DIRECTORATE Salah Mohammad Ali Said AUTHORITY FOR STATE CASES Engy Ahmed Aref URBAN PLANNING DEPARTMENT Hassan Ibrahim Zidan LEGAL AFFAIRS DEPARTMENT CENTRAL BANK OF EGYPT Hasan Ahmad Mustafa Nabih Mohamad HOUSING DIRECTORATE Ahmad Khalafallah BUSINESS INFORMATION CENTER Hoda Attia INVESTMENT AND ECONOMIC AFFAIRS Hamad Mohamad Al Yamani INVESTMENT DEPARTMENT DEPARTMENT MINISTRY OF TRANSPORT Ahmad Tabit Ahmad MEDIA AND PRESS DEPARTMENT Mohamad Abdulghani Ahmad FINANCIAL DEPARTMENT Mamdouh Abdel Bary Salamah Abdelraheem Hassan Fathy Mohamed Hassouna REAL ESTATE REGISTRY FINANCIAL AFFAIRS DEPARTMENT GENERAL ORGANISATION FOR EXPORT AND Sayid Hussein Ali NATIONAL AUTHORITY FOR IRRIGATION Baligh Hamood Amar IMPORT CONTROL (GOEIC) COMMERCIAL REGISTRY Iman Ahmed Mohamed Mohamad Ismail Abdulhamid REAL ESTATE REGISTRY ECONOMIC RESEARCH DEPARTMENT Shaimaa Ali Mohamad Abdulrahman Nawah REAL ESTATE REGISTRY Sayid Abduljawad Mohamad MIFT FINANCIAL DEPARTMENT Sahar Mohamed Tawfik Ismail Ahmad ELECTRICITY COMPANY ABU-RAWASH INDUSTRIAL ZONE Sherif Tourbay Abdelfatah Abdelaziz CHAMBER OF COMMERCE AND INVESTMENT Musaad Hussein Ismail ALEXANDRIA BANK CIVIL PROTECTION DEPARTMENT Zizi Kamel Asmar Hasan Mohamad Ali ELECTRICITY COMPANY URBAN PLANNING DEPARTMENT DAMIETTA Elsayed Saber CHAMBER OF COMMERCE AND INVESTMENT Ashraf Sayid Mohamad Alsayid ENGINEERING DEPARTMENT Hoda AbdelMueaz Hasan Umaima Nasar Hasan URBAN PLANNING DEPARTMENT Hana Ahmad MUNICIPALITY - COMPANIES' DEPARTMENT HOUSING DIRECTORATE SOCIAL INSURANCE BUREAU AbdulMonim Abdulfatah Alaadin Hussein Ibrahim REGISTRATION OFFICE Younis Rashid Mahmoud Shahoutah LICENSING DEPARTMENT Hisham Faraj Mahmoud CIVIL PROTECTION DEPARTMENT ENGINEERS' SYNDICATE SURVEYING DIRECTORATE Salah Hussein Abdullah Victor Sharobeem LEGAL AFFAIRS DEPARTMENT Mohamad Abed Rabo Salim Abbas Alsaid Alieh ENGINEERING DEPARTMENT Mohamad Rajaie Abdulraouf GIZA COMPANY FOR WATER AND WASTE Abdulhamid Ahmad Hamad COMMERCIAL REGISTRY Salama WATER URBAN PLANNING DEPARTMENT MANSOURA GENERAL AUTHORITY FOR INVESTMENT AND Mervet Ali Hassan FREE ZONES (GAFI) Fatahallah Al Jundi Ahmad Murad Abdulsalam REAL ESTATE REGISTRY Ayman Ibrahim Ahmad INVESTMENT AND ECONOMIC AFFAIRS URBAN PLANNING DEPARTMENT TAX DEPARTMENT Ahmad Mohamad Ali Shadi DEPARTMENT Khalid Mostafa Mahmoud SALES TAX DEPARTMENT Hosny Mohamad Alsaeed Faten Mohamad Atef Barakat Thuraya Fetouh Abdelhamid REAL ESTATE REGISTRY REVENUES DEPARTMENT SOCIAL INSURANCE BUREAU Hesham M. Badawy LICENSING DEPARTMENT Attiyah Mohammad AlTaher PORT AUTHORITY Rafaet Mohamad Badawi Imam Mohamad Aldayasty Shehata Ali SOCIAL INSURANCE BUREAU WATER COMPANY IN FAYOUM TELECOM EGYPT Sami Yousef Badir GIZA COMPANY FOR WATER AND WASTE ELECTRICITY COMPANY Hind Hasan Oweiss WATER Sami Mohamad Ismail Mustafa Mohamad Zain ELECTRICITY COMPANY Elham Y. ECONOMIC AFFAIRS DEPARTMENT Ahmad Abbas AbdelBar COURT OF FIRST INSTANCE CITY BOARD Raghda Mohamad Rajab TELECOM EGYPT Al Sayid Jamal KHARGA REGULATION DEPARTMENT Mohamad Saed Abu Eid ECONOMIC AFFAIRS DEPARTMENT Nadia El-Beltagy Rida Suleiman Mohamad ENGINEERING DEPARTMENT Izzat Mohamad Mahmoud MUNICIPAL AUTHORITY Adel Shalabi SOCIAL INSURANCE BUREAU WATER AND SANITATION COMPANY General Fareed Mustafa Ghali CITY BOARD ISMAILIA Abdulwahid Abdu Warad CIVIL PROTECTION DEPARTMENT Farhan Kamil Othman Osama Shabaan SURVEYING DIRECTORATE CITY BOARD Hussein Mohamad Hussein CIVIL PROTECTION DEPARTMENT TAX DEPARTMENT LIST OF CONTRIBUTORS 115

Hamdy Ali Alaadin Mustafa REAL ESTATE REGISTRY CIVIL PROTECTION DEPARTMENT Ashraf Morsy AbdulMonim Ahmad Sahran COURT OF FIRST INSTANCE URBAN PLANNING DEPARTMENT

PORT SAID SUEZ Sa'd Ali Al-Din Mohamed Gaballa PORT SAID GENERAL AUTHORITY RED SEA PORTS AUTHORITY Wesam Yousry Munir Jarees SUEZ CANAL CONTAINER TERMINAL (SCCT) MUNICIPAL AUTHORITY Mohamamd Al-Shami Ayman Badawy PORT SAID CUSTOMS AUTHORITY SOKHNA PORT

Amin Shehata TANTA PORT SAID CONTAINER CARGO HANDLING COMPANY (PSCCHC) Atayet Radwan TAX DEPARTMENT Mustafa Sedqi Al-Se'dawy MUNICIPAL AUTHORITY Mohamad Ahmad Mashali SOCIAL INSURANCE BUREAU El-sayed Abdel-Salam Fawzy MUNICIPAL AUTHORITY Mohamad Assal ELECTRICITY COMPANY SOHAG Mohamad Fouda Osama Ahmad REGULATION DEPARTMENT SURVEYING DIRECTORATE Medhat Farouk Taha Mohamad Abdulaal URBAN PLANNING DEPARTMENT GENERAL AUTHORITY FOR INVESTMENT AND FREE ZONES (GAFI) Adel Atteia WATER AND SANITATION COMPANY Amira Taher Ibrahim GENERAL AUTHORITY FOR INVESTMENT AND Ihab Abdulhamid FREE ZONES (GAFI) CIVIL PROTECTION DEPARTMENT Mahmoud Noureldin ZAGAZIG GENERAL AUTHORITY FOR INVESTMENT AND FREE ZONES (GAFI) Ibrahim Mohamad Rashad TAX DEPARTMENT Bolis Anwar Daws SALES TAX DEPARTMENT Ahmad Abdulaati Shehata SOCIAL INSURANCE BUREAU Makram Hashim Abdulmotalib SALES TAX DEPARTMENT Ali Ibrahim Dessouky ELECTRICITY COMPANY Raslan Qays COMMERCIAL REGISTRY Jawad Mohamad Abulfetouh REGULATION DEPARTMENT Mohamed Fahmy AlAhmr HOUSING DIRECTORATE Ahmad Abdeen WATER AND SANITATION COMPANY Safwan Salman HOUSING DIRECTORATE Othman Othman ENGINEERING DEPARTMENT Hosni Alsayid Mahmoud Farraj REAL ESTATE REGISTRY Majdi Omar Al Shalqani CIVIL PROTECTION DEPARTMENT Husamaldin Saed Abdulhadi WATER AND SANITATION COMPANY Nassim Abu Zaid Khamis REAL ESTATE REGISTRY Ahlam Abdulillah Izzat WATER AND SANITATION COMPANY Ahmed Azab COURT OF FIRST INSTANCE Mohamad Attia Ibrahim EGYPT TELECOM 116 ANNEX

Trade Facilitation in Egypt and the Development of the Suez Canal Corridor Project

Ahmed Farouk Ghoneim with the assistance of Heba El Deken

This annex goes beyond the scope of the subnationalDoing and trade-associated rules and regulations. As a result, Egypt’s Business study and the methodology used therein. It was rank in the Logistics Performance Index improved significantly commissioned by IFC-Cairo to analyze trade facilitation (table 1).2 challenges in Egypt, focusing on the “Suez Canal Corridor” Yet traders continue to face several challenges, associated project as a potential solution to such challenges. The mainly with inspection agencies, domestic transport and, most methodology for the annex was developed independently important, logistics and distribution centers. Egypt ports are by the author and the results were obtained through fragmented by geographical orientation in the case of exports, tailored surveys and interviews (see methodology note at and irregular or infrequent visits by shipping lines in the case the end of the annex). of imports. Although Egypt established a number of free trade Egypt enjoys an enviable geographical advantage in terms of and industrial zones in the 1990s and 2000s, the zones suffer global shipping. Its central location and unique access to main from a lack of infrastructure and utilities, bureaucratic red sea routes—via the Mediterranean and Red Seas that border tape, an inadequate multimodal system, and a lack of efficient it to the north and east—mean the country has the potential trade facilitation measures, among other things.3 to become a central hub for international trade. Yet Egypt has Political instability in recent years has worsened trade not yet taken full advantage of this competitive advantage. conditions. The lack of security has increased transportation So far, the Suez Canal has been used as traditional gateway risks, resulting in extra surcharges to protect the consignments linking the Mediterranean and the Red Sea, without tapping from theft. It has also caused congestion at the ports, further the potential for value-added services and various economic increasing trade-logistics costs. Fewer exports and less tourism activities that can be created in the canal area. If Egypt’s unique have reduced both air and maritime traffic, pushing airlines geographical position remains unutilized it will be overtaken and shipping lines to increase their charges for transporting by the surrounding ports in the region. exports. Shipping lines have begun to disregard their The following document is divided into (a) a general discussion of efforts to facilitate trade and (b) Egypt’s current plans for its ongoing Suez Canal Corridor project. FIGURE 1 Egypt’s performance on the annual Liner Shipping Connectivity Index, 2004–13 A. Trade Facilitation in Egypt

Egypt has a large number of seaports and airports that, 120

combined with its geographical position, make it a global hub SINGAPORE for trade shipments crossing from west to east and from north 100 to south. Egypt already scores relatively high in the UNCTAD’s 1 NETHERLANDS annual Liner Shipping Connectivity Index (LSCI) —ahead 80 of countries such as Greece, Malta, Jordan, Lebanon and Turkey—implying a high level of untapped potential for being SPAIN 60 ITALY a world hub in trade facilitation (figure 1). Egypt TURKEY GREECE Starting in the mid-1990s, and in the wake of several regional 40 MALTA LEBANON trade agreements (including World Trade Organization accords), Egypt undertook several reforms tackling customs, 20 JORDAN compliance with sanitary and phytosanitary regulations,

port facilities, and similar issues. Hoping to become better 0 integrated into the world economy, it also developed an export 2004 2013 promotion strategy and upgraded both physical infrastructure Source: UNCTADStat Database. Available at: unctadstat.unctad.org. ANNEX 117

TABLE 1 Egypt’s Improved Ranking on the Logistics Performance Index: 2007, 2010 and 2012 RANK SCORE (max=5, min=1) Item 2007 2010 2012 Change 2007 2010 2012 Change Overall 97 92 57 +35 2.37 2.61 2.98 +0.37 Customs 119 122 69 +53 2.08 2.11 2.60 +0.49 The efﬁciency of customs and border management clearance Infrastructure 119 106 45 +61 2.00 2.22 3.07 +0.85 The quality of trade and transport infrastructure International shipments 111 110 51 +59 2.33 2.56 3.00 +0.44 The ease of arranging competitively priced shipments Logistics competence 96 54 50 +4 2.38 2.87 2.95 +0.08 The competence and quality of logistics services Tracking and tracing 72 101 66 +35 2.62 2.56 2.86 +0.30 The ability to track and trace consignments Timeliness 96 81 64 +17 2.85 3.31 3.39 +0.08 The frequency with which shipments reach consignees within scheduled or expected delivery times Number of countries 150 155 155 150 155 155

Source: World Bank (2007, 2010 and 2012), Connecting to Compete: Trade Logistics in the Global Economy. Available at: http://siteresources.worldbank. org/INTTLF/Resources/LPI2010_for_web.pdf and http://siteresources.worldbank.org/TRADE/Resources/239070-1336654966193/LPI_2012_ﬁnal.pdf announced departure schedules for lack of sufficient uploaded region where maintenance and repair are available. Establishing containers, damaging particularly exporters of perishable such service centers could increase the frequency of shipping- goods. All these factors have reduced the overall reliability of line calls at Egyptian ports, while enhancing the competiveness Egyptian exporters. of exports by reducing lead time. Following are the main challenges identified by stakeholders 2. Port and Customs Procedures in the interviews and surveys as they affect 1) choice of port, Customs procedures do not seem to constitute a major 2) port and customs procedures, 3) distribution and logistics bottleneck for exporters and importers, partly thanks to a centers and domestic transport, 4) multimodal framework and major reform by the Ministry of Finance between 2004 and 5) electronic measures and risk management techniques. 2008. The only problem exporters and importers identified was 1. Choice of Port the closing time of customs authorities at ports at 2 pm, which started after the 25th of January 2011 revolution. Now, trucks Although exporters’ choice of port is determined largely by the arriving after 2 pm must wait outside the port until the next cargo destination, it is also a function of the port’s capacity as day, resulting in higher cost and delays. well as its ability to finish all loading and clearance procedures in a timely fashion. Related services, such as customs and On the other hand, port operators, customs brokers and health and agriculture quarantine, play a major role for all freight forwarders perceived port services and operations to goods, especially in the case of agricultural and processed be among the most problematic steps in the trade facilitation agricultural goods. value chain, followed mainly by customs procedures. The time required for import inspection, especially for agriculture and For imports, the choice of port depends on exporter preference, health quarantine, varies significantly among the ports studied, frequency of calls by shipping lines, and clearance procedures. ranging from a maximum of 3 days in Port Said East to 7 or even All stakeholders identified the discretionary implementation of 10 days in other ports.5 Export procedures do not seem to suffer health and agriculture quarantine procedures as a main factor major bottlenecks and seem to follow standard procedures in in the choice of port for importers especially, which represents all ports, with the exceptions associated with extra security a major problem associated with the weak coordination among measures and early closing of ports. governmental agencies. A final issue was port efficiency, which differs from one port Another problem is the irregularity and low frequency of to another. Crane efficiency rates (containers moved per hour calling of shipping lines on Egyptian ports, which limits back- per crane) seem to be higher in Port Said East and Alexandria loading.4 The lack of service centers for ships further reduces compared to Suez. The frequency of ships calling on ports also the possibility of supplementary value-added services. Several differ, with the highest rate observed in Port Said East (6 ships shipping lines have left Egyptian ports for other harbors in the daily) compared to other ports (average 2-3 ships daily).6 118 ANNEX

3. Distribution and Logistics Centers of X-ray inspection for all containers, which has added 1 to 2 Most interviewees and survey respondents identified the lack of days to clearance times. It is understood that such measures physical space as a major impediment. Availability of physical were undertaken as precautionary measures in light of space—distribution and logistics centers and warehouses in potential weapons smuggling. However, such measures should the different governorates, located around production clusters be announced as temporary and should be removed as soon and/or major domestic markets—is particularly important for as possible. producers and exporters; their ability to export, import and distribute their products domestically is heavily constrained by B. Egypt’s Current Development Plans the lack of such centers. Additionally, the lack of laboratories at Regarding the Suez Canal Corridor the ports delays clearance of consignments until the samples As discussed, a number of issues have prevented producers, are sent to the main laboratory of the General Authority for exporters and importers from lowering their transaction costs Exports and Imports Control (GOEIC) as well as cooling and competing in the world markets. The Suez Canal Corridor facilities at the Cairo airport terminal.7 Interviewees indicated project is envisaged as a way to establish a fully integrated that distribution and logistics centers could help to solve the “economic corridor” alongside the Suez Canal offering trade, problem. industry, transport, logistics and technology services. By 4. Multimodal Framework and Domestic combining these services with state-of-the-art infrastructure, Transport the project is designed to leverage Egypt’s advantageous The producers, exporters and importers interviewed did not location to allow it to become a crossroads for the world’s major view the lack of a multimodal legislative framework in Egypt trading markets.10 as a major problem. However, the freight forwarders, customs Suez Canal revenues reached US$5.2 billion in 2012–11, brokers and port operators surveyed believe there is a need to up from US$5.05 billion in 2011–10 and US$4.5 billion in establish and enhance the role of such a framework. 2009–10.11 The government of Egypt estimates that having Domestic transport also remains a major bottleneck. Inadequate a zone that offers more value-added services and attracts a development of river and rail transportation to and from ports manufacturing base could eventually result in revenues of up increases the dependence on trucks. Road transportation to US$100 billion and 1 million job opportunities.12 Recently, suffers from traffic congestion, bad roads, old and unsuitable several announcements have been made about embarking on vehicles, and lack of safety measures. The trucking industry this project and several ministries and agencies are involved. does not have organized cooperatives and is dominated by the Coordination among the ministries and agencies took place informal sector. through a specific ministerial committee that was recently formed following a prime ministerial decree and a technical Unfortunately, the fragmentation of the domestic transport secretariat established to handle coordination issues.13 business makes it difficult to introduce a multimodal regulation. The absence of a reliable trucking fleet is embedded The Suez Canal Corridor project is an extension of Port in several socioeconomic problems that make it difficult to Said East port, which has the potential to become a leading tackle by establishing only a legislative framework.8 Interviews global port, taking full advantage of the trade flows on the indicated that, while there are ongoing efforts to develop such Mediterranean Sea, the Red Sea and the Suez Canal. Located legislation, they are still in their infancy. Efficient multimodal at the northern entrance of the Suez Canal, it commands a and trade facilitation could allow Egyptian producers and strategic position along the main Asia-Europe sea route linking traders to better exploit the comparative advantage of different the Baltic, Atlantic, Mediterranean, Black and Caspian seas, ports, thereby lowering the cost of and time for trading. with an extension through the Suez Canal towards the Red Sea. It is already an important port in the Mediterranean and 5. Electronic Measures and Risk Management has been performing well in the last few years in its ability to Techniques accommodate the crossing trade; its container handling rate In the interviews and surveys, the introduction of a single has seen an average annual increase of 79% over the last 5 years, electronic window was perceived as a good step toward compared to an average of 23% in other Mediterranean ports. facilitating trade, as were the electronic data interchange (EDI) and other electronic measures. Although these measures The importance of the port, and of passing through the are not yet fully implemented (the acceptance of electronic Suez Canal, has increased thanks to a number of favorable documents, for example), it does not seem to represent a major international conditions. These include increasing oil prices, obstacle to trade. the increasing importance of lead time, and increasing volumes of trade with countries like China and India. But although the Since the 25th of January revolution, the main issues related Suez Canal has a large share of the global maritime trade— to risk management have been the cancellation of the fast- between 8% and 10% of the world’s seaborne trade and 23% of track “green line” system in March 20129 and the requirement containers pass through the canal14—there is low added value ANNEX 119 being derived from it. The total value added on world trade during this phase. The dredging of the South basin will is around US$90 per container and potentially an additional address the needs of cargo handling activities. Railway US$50 from loading and unloading, where the maximum value operations, general cargo terminals, and electronic added reaches only between US$150–200 per container. In management of the port will start operating at this stage. Europe the value added can reach US$2,000 and US$3,000 per r %VSJOHUIFGPVSUIQIBTF m UIFTUPSBHFGBDJMJUJFT container. distribution and services projects, as well as dredging an The Suez Canal Corridor project has several objectives entrance for the port, will take place. Lastly, the utilization of including (a) the expansion of the existing container terminals the precautionary land and the infrastructure network and at Port Said East port; (b) the construction of new container information technology requirements will be completed. terminal, shipyard for ship repair, and ro-ro (roll-on/roll-off) All the stakeholders interviewed welcomed the idea of terminal; (c) provision of comprehensive logistics services; establishing the Suez Canal Corridor. They believe it can become and (d) establishment of weighbridges, parking facilities, a real logistical hub that addresses the lack of distribution and truck maintenance and repair facilities, tanking facilities, logistics centers and the limitations on domestic transport. container repair and maintenance facilities, offices, hotels, and However, their enthusiasm for the project is strictly contingent restaurants. on the availability of the investment funds required for the Design and Timeline project. The Suez Canal Corridor project consists of two main “poles”: (a) the South Pole, comprising Sokhna port and northwest Methodology Note Gulf of Suez; and (b) the North Pole, comprising Port Said The analysis in this annex had four inputs. First, a desk review East and the Industrial Zone. In between the two poles lies was conducted of official documents and literature. Second, the Technology Valley in Ismailia (Suez and Damietta are not interviews were held with producers, exporters and importers part of the corridor project). The Technology Valley has been 2 using a survey questionnaire focused on trade facilitation allocated 16,500 feddans (about 69.3 km ) of which only 200 issues. Third, a specific trade-facilitation addendum survey have been used so far to build a variety of simple structures. was administered to five port operators, four customs brokers The Suez Canal Corridor would become the largest port in and five freight forwarders operating in five main seaports the region and an international hub port for containers, (Alexandria, Damietta, Port Said East, Port Said West and bulk cargoes and multi-purpose cargoes. It would include an Sokhna). Finally, a number of meetings were carried out with industrial and logistical zone of 1.4 km2; industrial park of 87 representatives of related ministries and civil organizations to km2; administrative and residential areas of 5 km2; and tourism have their input and views on this annex. zone of 5 km2. The whole area designated to the project is in the range of 160 km2. Notes The Dutch Consultancy and Engineering Group DHV designed the original master plan in 2008 based on a contract with Port 1. The Liner Shipping Connectivity Index measures the Said Port Authority. The master plan set three phases for the extent to which countries are connected to global project to be completed by the year 2030 but it has not been shipping networks. It is computed by the United Nations implemented. Current plans, still subject to change, divide the Conference on Trade and Development (UNCTAD) implementation into the following four phases, to be completed using five components of the maritime transport sector: by 2020:15 number of ships, their container-carrying capacity, maximum vessel size, number of services, and number r ѮF êSTU QIBTF XBT DPNQMFUFE JO JODMVEFE UIF of companies that deploy container ships in a country’s construction of the second terminal in Port Said East Port. ports. http://data.worldbank.org/indicator/IS.SHP. The expansion of the terminal was undertaken by Shipping GCNW.XQ and Oil Group AP Moeller–Maersk and has doubled the 2. The Logistics Performance Index measures the logistics total length of the container terminal to 2,400 meters. DP “friendliness” of 155 countries. It helps countries identify World has acquired a 90% stake in the Egyptian Container the challenges and opportunities they face in their trade Company, located near the Suez Canal, for US$670 logistics performance and what they can do to improve. million.16 http://go.worldbank.org/7TEVSUEAR0 r ѮF TFDPOE BOE UIF UIJSE QIBTFT m JOUFOE UP 3. Multimodal transport refers to a transport system that complete the port dredging and elongate the internal combines, under a single contract, two or more ways of channel to 5 km south of the current maneuvering circle. moving goods, such as air, road, rail or sea. The total length of the terminals will be within 12–14 km 4. Back-loading refers to transporting cargo on a return trip range. The logistics and industrial projects should start using space originally used for the outward journey. 120 ANNEX

5. Agriculture and health-related inspections are not included in the Doing Business data given the specific case study assumptions. The products measured by Doing Business in Egypt are not subject to this type of inspection. 6. Self-reported data by port operators. 7. World Bank. 2011. “Trade and Transport Facilitation Assessment.” Presentation at Islamic Development Bank/ World Bank capacity building workshop on trade and competitiveness. http://www.comcec.org/UserFiles/File/ ulastirma/sunumlar/Trade%20and%20Transport%20 Facilitation%20Assessment.pdf 8. Ibid. 9. The “green line” is a system where the consignments of pre-approved traders do not have to be inspected by customs authorities, but rather follow a random inspection. The system has allowed traders to save time and thus reduce transaction costs. 10. Egyptian National Competiveness Council (ENCC). 2012. Egyptian Competitiveness Report: A Sustainable Competitiveness Strategy for Egypt. Cairo: ENCC. http://www.encc.org.eg/inside.php?p=temp_ text&pid=102&id=28. 11. Central Bank of Egypt, Time Series Statistics. http://www. cbe.org.eg/English/Economic+Research/Time+Series/. Accessed on February 23rd, 2013. 12. Dr. Walid Abdel Ghaffar, the ex- head of the SCC technical secretariat, in an interview in Akhbar El Youm, February 23, 2012. 13. Decree no. 144/2013, amended by decree no. 267/2013. 14. Ministry of Investment and General Authority for Investment and Free Zones (GAFI) (2010). Invest in Egypt: Logistics and Transportation Value Proposition. Cairo: GAFI. http://www.gafi.gov.eg/EN/Default.aspx 15. Interview with Dr. Walid Abdel Ghaffar in Akhbar El Youm. 16. GAFI, Invest in Egypt. ANNEX 121

Addendum results Customs Clearance Agencies Freight Forwarders Port Operators

1. What is the most problematic step in the value chain of trade and transport facilitation?

Port procedures and services 2 518

Customs procedures 3 4 7

Related entities (e.g. health and agriculture quarantine) 5

GOEIC procedures 1

Others (warehousing and inventory management, inland transportation, (de)consoli- 0 dation of cargo, ability to trace cargo, trade ﬁnance)

2. What is most important in enhancing trade facilitation?

Upgrading of infrastructure of port facilities 1 416

Better coordination between stakeholders and responsible authorities 4

More developed system of trade ﬁnance 2 2 4

Policies that better regulate trade facilitation process in ports (as pricing of activities, more competition) 3

Upgrading of transport facilities from and to port 2

Better coordination among governmental entities involved 2

Policies that enhance multimodal transport process (concerned with transport to and 2 from ports while ensuring guarantees)

Introduction of distribution or logistic centers 2

Better systems for (de)consolidation of cargo 0

3. What is the most problematic issue at port and related value chain that leads to higher transaction costs?

Transparency of prices of port authorities and freight forwarders 4 5110

Monopoly of port authorities for some services 235

Modest logistics 4

Weak enforcement of regulating laws and decrees 123

Ensuring security of your cargo 1 1 2

Lack of adequate infrastructure 1

Ensuring safety of your cargo 1

Other (regulation of port and terminal activities, ﬁnancing means of trade including insurance) 0 122 ANNEX

Customs Clearance Agencies Freight Forwarders Port Operators

4. Which risk management techniques have helped to reduce transaction cost?

Introduction of green line (white list) and center of large customers 5 4514

Pre clearance procedures 3 418

Other (post audit systems, reduced physical inspection) 0

5. Which e-commerce (electronic data interchange) techniques can reduce/reduced transaction costs?

More e-government services 3 3511

Use of electronic manifest for vessel load planning 4 1 5

Pre-arrival information 1 124

Accepting electronic documents (e.g. cargo deceleration) 2

Fleet tracking using GPS 2

Introduction of e-signature 1

Other (computerized scheduling of truck operations, tracking container status) 0

6. Which of the following service(s) is a priority to facilitate trade?

More efﬁcient multimodal system including liability of shipping line till point of delivery and not only ports 2 327

Establishment of distribution/logistics centers near/around ports 4 116

Development of free zones and special economic zones around/near ports 2 3 5

Introduction of 3 PL system and full outsourcing of logistics services 1 2

7. What urgent reforms are needed for the multimodal system?

Implementation procedures in terms of freight forwarders undertaking the whole value 3 238 chain without any interference while shipping line undertaking liability till point of delivery

Customs Authority's approval and facilitation is needed 3 238

Institutional cooperation between the different governmental transport agencies 3 1 4

Institutional cooperation between ministries of trade, ﬁnance, and transport 3

Legal framework is needed 2

Establishment of infrastructure (e.g. warehouses) 0