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Executive Summary

The Egyptian government understands that attracting foreign investment is key to addressing many of the economic challenges it faces, including low economic growth, high unemployment, current account imbalances, and hard currency shortages. Despite significant structural improvements since the floating of the Egyptian Pound (EGP) and the start of a three-year International Monetary Fund (IMF)-backed economic reform program in November 2016, Egypt’s investment climate remains challenging.

The government continues to implement an economic reform agenda to address its fiscal and structural imbalances, which, in addition to floating the pound, has included the imposition of a new value added tax (VAT), fuel and electricity subsidy cuts, and a new civil service law. After establishing a more stable macroeconomic outlook, buttressed by IMF and other multilateral funds, a successful Eurobond issuance, and bilateral financing agreements, Egypt’s government will focus on structural reforms to improve productive capacity, increase exports, and grow the economy. The next phase in its reform program will most likely include a new investment law and revised bankruptcy law, which should improve the ease of doing business and further increase clarity for foreign investors. The government is also hoping to attract significant international investment in several “mega projects” including a large-scale industrial and logistics zone around the Suez Canal, the creation of a new national administrative capital, a 1.5 million feddan (acre) agricultural land reclamation and development project, and the development of mineral extraction opportunities in a special 10,000 square kilometer zone.

Higher investor confidence and the restarting of Egypt’s interbank foreign exchange (FX) market since November 2016 has resulted in increased foreign portfolio investment and foreign reserves. Although FX is more available than before the floatation and the parallel market has all but disappeared, hard currency, especially for uses other than the import of commodities, can be difficult to access. Despite progress in working through the backlog in demand among companies for foreign exchange, investors report there can be delays of weeks to months for transfers of foreign exchange to be executed.

Egypt honors its laws, treaties, and trade agreements. It is party to 100 bilateral investment treaties, including a 1992 treaty with the United States, and is a member of the World Trade Organization (WTO), the Common Market for Eastern and Southern Africa (COMESA), and the Greater Arab Free Trade Area (GAFTA). In many sectors, there is no legal difference between foreign and domestic investors. Special requirements exist for foreign investment in particular sectors, such as upstream oil and gas development, where joint ventures are required, as well as real estate.

Egypt is a signatory to international arbitration agreements, although Egyptian courts do not always recognize foreign judgments. Dispute resolution is slow, with the time to adjudicate a case to completion averaging three to five years. Other obstacles to investment include excessive bureaucracy, regulatory complexity, a mismatch between job skills and labor market demand, slow and cumbersome customs procedures, and non-tariff trade barriers.

Labor rules prevent companies from hiring more than 10 percent non-Egyptians (25 percent in Free Zones), and foreigners are not allowed to operate sole proprietorships or simple partnerships. A foreign company wishing to import for trading purposes must do so through a wholly Egyptian-owned importer. Inadequate protection of intellectual property rights (IPR) is a significant hurdle in certain sectors to direct investment in Egypt. Egypt remains on the U.S. Trade Representative’s Special 301 Watch List.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 108 of 176
World Bank’s Doing Business Report “Ease of Doing Business” 2016 122 of 190
Global Innovation Index 2016 107 of 128
page 19 – chapter 1 – The Global Innovation Index 2016: Winning with Global Innovation, PDF
U.S. FDI in partner country ($M USD, stock positions) 2015 $2.3 billion
World Bank GNI per capita 2015 $3,340

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The floatation of the Egyptian Pound (EGP) in November 2016 and the reestablishment of Egypt’s interbank foreign exchange (FX) market as part of the IMF program was the first major step in restoring investor confidence that immediately led to increased portfolio investment and may lead to increased FDI over the long term. As the government continues its economic reform agenda, a more stable macro-economic outlook should allow Egypt to focus on the structural reforms necessary to support strong economic growth. The next phase of reform will include a new investment law, a bankruptcy law and other reforms to reduce regulatory overhang and improve the ease of doing business. Successful implementation of these reforms should give greater confidence to foreign investors leading to increased FDI. Egypt’s government has announced plans to improve its business climate through investment promotion, facilitation, efficient business services and advocacy of investor friendly policies.

With a few exceptions, Egypt does not legally discriminate between nationals and foreign individuals in the formation and operation of private companies. The 1997 Investment Incentives Law was designed to encourage domestic and foreign investment in targeted economic sectors and to promote decentralization of industry away from the Nile Valley. The law allows 100 percent foreign ownership of investment projects and guarantees the right to remit income earned in Egypt and to repatriate capital. Despite this guarantee, companies have experienced difficulty remitting earned income.

The Tenders Law (law 89 of 1998) requires the government to consider both price and best value in awarding contracts and to issue an explanation for refusal of a bid. However, the law contains preferences for Egyptian domestic contractors, who are accorded priority if their bids do not exceed the lowest foreign bid by more than 15 percent.

The Capital Markets Law (law 95 of 1992) and its amendments and regulations govern Egypt’s capital markets. Foreign investors can buy shares on the Egyptian Stock Exchange on the same basis as local investors. Foreign investors, both institutional and private, have reported difficulties obtaining hard currency for profit repatriation.

The General Authority for Investment (GAFI) is Egypt’s investment promotion agency to facilitate foreign investment. GAFI is an affiliate of the Ministry of Investment (MOI) and the principal government body regulating and facilitating investment in Egypt. Although GAFI retains its traditional regulatory powers, today it is attempting to act as an effective, proactive investment promotion agency with promotion, facilitation, business matchmaking, organizing events for Egyptian expatriates, investor aftercare, and research and market intelligence functions.

GAFI has developed a “One-Stop Shop” (OSS), designed to be Egypt’s one-stop shop for investment, easing the way for global investors looking for opportunities presented by Egypt’s domestic economy and the nation’s competitive advantages as an export hub for Europe, the Arab world and Africa. In addition to promoting Egypt’s investment opportunities in various sectors, GAFI has announced new initiatives aimed at promoting the investment climate in Egypt including the adoption of new investment regimes (investment zones and special economic zones) and the establishment of the SME Entrepreneurial Center and Fund (Bedaya).

GAFI’s OSS was established to help investors obtain regulatory approval to facilitate start-up operations in Egypt. It has a mandate to coordinate with the 47 ministries and government agencies who control the issuance of the licenses and approvals required for the establishment of businesses in Egypt. Services offered through the OSS include: establishment services, legal services, technical services, governmental services, publication in Investment Gazette, and tax exemption services. Other services GAFI provides include:

  • Advice and support to help in the evaluation of Egypt as a potential investment location;
  • Identification of suitable locations and site selection options within Egypt;
  • Assistance in identifying suitable Egyptian partners through the organization of business forums;
  • Aftercare and dispute settlement services.

There are five OSS Branches, including Cairo (the main center), Alexandria, Ismailia, Asyut, and 10th of Ramadan City.

Egypt maintains ongoing communication with investors through formal business roundtables, investment promotion events (conferences and seminars), one-on-one investment meetings, and through the public GAFI website .

Limits on Foreign Control and Right to Private Ownership and Establishment

The Egyptian Companies Law does not set any limitation on foreigners, neither as shareholders nor as managers/board members, except for Limited Liability Companies where the only restriction is that one of the managers should be an Egyptian national. In addition, all companies, both foreign and domestic, are required to acquire a commercial and tax license. All foreign companies must pass a security clearance process. Although companies are able to operate while undergoing this often lengthy security screening, if it is rejected they must cease operations and undergo a lengthy appeals process. Businesses have cited instances where Egyptian clients were hesitant to engage in protracted business contracts with foreign businesses that have not yet received security clearance, and have expressed concern about seemingly arbitrary refusals, a lack of explanation when a security clearance is not issued, and a lengthy appeals process. Although the Government of Egypt has made progress streamlining the business registration process at the General Authority for Investment, lack of familiarity or experience working with foreigners has sometimes led to inconsistent and questionable treatment by banks and government officials, delaying registration.

Sector-specific limitations to investment include restrictions on foreign shareholding of companies owning lands in the Sinai Peninsula. Likewise, the Import-Export Law requires companies wishing to register in the Import Registry to be 51 percent owned and managed by Egyptians (the percent ownership was reduced from 100 to 51 percent by Presidential decree). In 2016, the Ministry of Trade prepared an amendment to the law allowing the registration of importing companies owned by foreign shareholders; as of April 2017, the law had not yet been submitted to Parliament.

Land/Real Estate Law 15 of 1963 explicitly prohibits foreign individual or corporate ownership of agricultural land (defined as traditional agricultural land in the Nile Valley, Delta and Oases). The ownership of land by foreigners is governed by three laws: Law No. 15 of 1963, Law No. 143 of 1981, and Law No. 230 of 1996. Law No. 15 stipulates that no foreigners, whether natural or juristic persons, may acquire agricultural land. Law No. 143 governs the acquisition and ownership of desert land. Certain limits are placed on the number of feddans (one feddan is equal to approximately one hectare) that may be owned by individuals, families, cooperatives, partnerships and corporations. Partnerships are permitted to own 10,000 feddans. Joint stock companies are permitted to own 50,000 feddans.

Under Law No. 230 non-Egyptians are allowed to own real estate (vacant or built) only under the following conditions:

  • Ownership is limited to two real estate properties in Egypt that serve as accommodation for the owner and his family (spouses and minors) in addition to the right to own real estate needed for activities licensed by the Egyptian Government.
  • The area of each real estate property does not exceed 4,000 m².
  • The real estate is not considered a historical site.

Exemption from first and second conditions is subject to the approval of the Prime Minister. Ownership in tourist areas and new communities is subject to conditions established by the Cabinet of Ministers. Non-Egyptians owning vacant real estate in Egypt must build within a period of five years from the date their ownership is registered by a notary public. Non-Egyptians cannot sell their real estate for five years after registration of ownership, unless the consent of the Prime Minister for an exemption is obtained. Additional information is available online .

Other Investment Policy Reviews

Neither the Organization for Economic Cooperation and Development nor the World Trade Organization nor the United Nations Conference on Trade Development has conducted an investment policy review of Egypt in the past three years.

Business Facilitation

The World Bank ranks Egypt among the easiest countries in the Middle East and North Africa in which to establish a business, although there are often significant delays obtaining required licenses, approvals, and permissions to engage in business after establishment. According to the World Bank, a business can be started in 8 days, compared to a regional average of 19 and a global average of 42. Business registration is unavailable online and must be done in person at the General Authority for Investment (GAFI), located in Nasr City, Cairo, or at GAFI’s branch offices in Ismailia, Assyutt, and Alexandria. In addition to administrative processes at GAFI, new business founders must open a company file and register employees at the National Authority of Social Insurance and obtain a bank certificate from an authorized bank in order to open a bank account. Businesses have reported registration times anywhere from 1-10 weeks. In addition to registering, businesses must obtain licenses authorizing business activity. Businesses have reported the time required to obtain business licenses ranges from 3-12 months.

The government seeks to facilitate the creation and operation of small and medium-sized enterprises (SME) in order to support job creation and entrepreneurship in Egypt. To support this government priority, the Central Bank of Egypt has directed banks present in Egypt to lend 20 percent of their loan portfolio to Egyptian SME’s by the year 2020. In addition, microfinance institutions are now licensed and regulated by Egypt’s non-bank financial regulator, the Egyptian Financial Services Authority (EFSA), in accordance with a new law to support lending to Egypt’s smallest firms. The government defines small and medium-sized enterprises as follows: Enterprises with paid-up capital of less than 50,000 EGP and fewer than ten employees are classified as micro enterprises. Enterprises with paid-up capital between 50,000 and 5 million EGP (for industrial establishments) or 50,000 and 3 million EGP (for non-industrial establishments) and fewer than 200 employees are classified as small enterprises. Enterprises with paid-up capital between 5 million and 10 million EGP (for industrial establishments) or 3 million and 5 million EGP (for non-industrial establishments) and fewer than 200 employees are classified as medium-size enterprises.

GAFI has an Arabic registration page on its website. Investors can create a username and password and interact with the Authority’s staff to proceed with initial registration. Then, the investor must appear in person at GAFI to pay fees and receive incorporation documents. Additional information is available on the GAFI website .

Outward Investment

Egypt promotes and incentivizes outward investment. According to the FDI Markets database for the period from January 2003 to May 2015, outward investment featured the following:

64 Egyptian FDI projects were implemented by Egyptian companies. Estimated total value of projects, which employed some 41 thousand workers, was $19.8 billion.

Algeria, Saudi Arabia, United States, Georgia, Jordan, United Arab Emirates, Pakistan, Iraq, Sudan and Indonesia, respectively, received the largest sum of Egyptian outward investment in terms of total project value. Algeria, Saudi Arabia and the United States accounted for about 49 percent.

The Orascom Group was the largest Egyptian company investing abroad, implementing 31 projects with total investment estimated to be $9.5 billion.

The host country does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Egypt has signed almost 100 bilateral investment agreements, including with Belgium, China, Finland, France, Germany, Greece, Italy, Japan, Libya, Luxembourg, Morocco, the Netherlands, Romania, Singapore, Sudan, Sweden, Switzerland, Thailand, Tunisia, the United Kingdom, and the United States. The full list can be found at The U.S-Egypt Bilateral Investment Treaty provides for fair, equitable, and nondiscriminatory treatment for investors of both nations. The treaty includes provisions for international legal standards on expropriation and compensation; free financial transfers; and procedures for the settlement of investment disputes, including international arbitration.

In addition to bilateral investment agreements, Egypt is also a signatory to a wide variety of agreements covering trade issues. Egypt joined the Common Market for Eastern and Southern Africa (COMESA) in June 1998. In July 1999, Egypt and the United States signed a Trade and Investment Framework Agreement (TIFA). In June 2001, Egypt signed an Association Agreement with the European Union (EU) which entered into force on June 1, 2004. The agreement provided immediate duty free access of Egyptian products into EU markets, while duty free access for EU products was phased in over a 12-year period ending in 2016. In 2010, Egypt and the EU completed an agricultural annex to their FTA, liberalizing trade in over 90 percent of agricultural goods.

Egypt is also a member of the Greater Arab Free Trade Agreement (GAFTA), and a member of the Agadir Agreement with Jordan, Morocco, and Tunisia, which relaxes rules of origin requirements on products jointly manufactured by the countries for export to Europe. Egypt also has an FTA with Turkey, in force since March 2007, and an FTA with the Mercosur bloc of Latin American nations, which Egypt ratified in January 2013, but which is not yet in force.
In 2004, Egypt and Israel signed an agreement to take advantage of the U.S. Government’s Qualifying Industrial Zone (QIZ) program. The purpose of the QIZ program is to promote stronger ties between the region’s peace partners, as well as to generate employment and higher incomes, by granting duty-free access to goods produced in QIZs in Egypt using a specified percentage of Israeli and local input. Under Egypt’s QIZ agreement, Egypt’s exports to the United States produced in certain industrial areas are eligible for duty-free treatment if they contain a minimum 10.5 percent Israeli content.

The industrial areas currently included in the QIZ program are Alexandria, areas in Greater Cairo such as Sixth of October, Tenth of Ramadan, Fifteenth of May, South of Giza, Shobra El-Khema, Nasr City and Obour, areas in the Delta governorates such as Dakahleya, Damietta, Monofeya and Gharbeya, and areas in the Suez Canal such as Suez, Ismailia, Port Said, and other specified areas in Upper Egypt. Egyptian exports to the United States through the QIZ program have mostly been ready-made garments and processed foods. The value of the Egyptian QIZ exports to the United States was approximately $851 million in 2015.

Egypt has a bilateral tax treaty with the United States. Egypt also has tax agreements with 59 other countries.

The Egyptian parliament passed and the government has implemented a value added tax (VAT) in late 2016, which took the place of the General Sales Tax, as part of the IMF loan and economic reform program. However, the Government decided to postpone the “Stock Market Capital Gains Tax” for three years as of early 2017. In 2016 there were a number of tax disputes between foreign investors and the government, but most of them were resolved through the Tax Department and the Economic Court.

3. Legal Regime

Transparency of the Regulatory System

The Egyptian government has made efforts to improve the transparency of government policy and support a fair, competitive marketplace. However, improving government transparency and consistency has proven difficult and reformers have faced strong resistance from entrenched bureaucratic and private interests. Significant obstacles continue to hinder private investment, including the often arbitrary imposition of bureaucratic impediments and the length of time needed to resolve them. The impetus for positive change that the government reform agenda, strongly supported by the IMF loan program, is necessitating augurs well for improvement in policy implementation and transparency.

Enactment of laws is the purview of the parliament while executive regulations are the domain of line ministries. Under the Constitution, draft legislation can be presented by the President, the Cabinet, and any Member of Parliament. After submission, Parliamentary committees review and approve, including any amendments. Upon parliamentary approval, a judicial body reviews the legislation for constitutionality before referring it to the President for his approval. Although notice and full drafts of legislation are typically printed in the Official Gazette (similar to the Federal Register in the United States), in practice consultation with the public is limited. In recent years, the Ministry of Trade and other government bodies have circulated draft legislation among concerned parties, including business associations and labor unions. This has been a welcome change from previous practice, but is not yet institutionalized across the government.

While Egyptian parliaments have, historically held “social dialogue” sessions with concerned parties and private or civic organizations to discuss proposed legislation, it is unclear to which degree the current parliament, seated in January 2016, will adopt a more inclusive approach to social dialogue. Many aspects of the 2016 IMF program and related economic reforms stimulated parliament to engage more broadly with the public, marking some progress in this respect.

Accounting, legal and regulatory procedures are transparent and consistent with international norms. Egyptian Financial Supervisory Authority (EFSA) supervises & regulates all non-banking financial markets and instruments, including capital markets, futures exchanges, insurance activities, mortgage finance, financial leasing, factoring, securitization and microfinance. It issues rules that facilitate market efficiency and transparency. EFSA has issued legislation and regulatory decisions on non-banking financial laws “encyclopedia” which govern EFSA’s work and the entities under its supervision, with additional information available on EFSA’s website .

The criteria for awarding government contracts and licenses are made available when bid rounds are announced and the process actually used to award contracts is broadly consistent with the procedural requirements set forth by law. Further, set-aside requirements for SME participation in GOE procurement are increasingly highlighted. There is a centralized online website  where key regulations and laws are published.

The parliament, seated in early 2016, and the independent “Administrative Monitoring Authority” both ensure the government’s commitment to follow administrative processes at all levels of government. Egypt does not have an online equivalent of the U.S. Federal Register and there is no centralized online location for key regulatory actions or their summaries.

No new regulatory system including enforcement reforms have been announced since the last ICS. In the time period covered by this report, Post is not aware of the full implementation any regulatory reform effort announced in prior years.

The Cabinet develops and submits proposed regulations to the President following discussion and consultation with the relevant ministry and informal consultation with other interest groups. Based on the recommendations provided in the proposal, including recommendations by the presidential advisors, the president issues “Presidential Decrees” that function as implementing regulations. Presidential decrees are published in the “Official Gazette” for enforcement.

The government agency responsible for enforcing the regulation leverages other departments for implementation across the government. Not all issued regulations are announced online. Theoretically, the enforcement process is legally reviewable.

Before a regulation is implemented, there is an attempt to properly analyze and thoroughly debate proposed legislation and rules using available scientific data. But there are no laws requiring scientific studies or quantitative analysis of impacts of regulations. Not all public comments received by regulators are made public.

International Regulatory Considerations

Egypt is not part of any regional economic block. Egypt follows its own norms and regulatory standards that have been influenced by its traditional trading partners including the United States and Europe. As part of its free trade agreement with the European Union, Egypt has recognized EU standards for imported goods. Egypt recognizes other international standards for certain imported products. For example, food and drugs imports are restricted to goods that have been approved by the following regulatory agencies: FDA, EMA, MHRA, Health Canada and TGA.

Egypt is a member of the WTO. The government has not always notified draft technical regulations to the WTO Committee on Technical Barriers to Trade. For example, the implementation date for controversial Decree 43/2016 did not leave adequate time for Egypt to receive and review comments or make any necessary changes to the measure. The comment period ended on April 1, 2016—two weeks after the decree’s implementation.

Legal System and Judicial Independence

Egypt’s legal system is a civil codified law system based on the French model. If contractual disputes arise, claimants can sue for remedies through the court system or to seek resolution through arbitration. Egypt has written commercial and contractual laws. The country has a system of economic courts, specializing in private sector disputes that have jurisdiction over cases related to economic and commercial matters, including intellectual property disputes. The judiciary is an independent branch of the government.

Regulations and enforcement actions can be appealed through Egypt’s courts, though appellants often complain about the very lengthy judicial process, which can often take years. To enforce judgments of foreign courts in Egypt, the party seeking to enforce the judgment must obtain an exequatur (a legal document issued by governments allowing judgements to be enforced). To apply for an exequatur, the normal procedures for initiating a lawsuit in Egypt must be satisfied. Moreover, several other conditions must be satisfied, including ensuring reciprocity between the Egyptian and foreign country’s courts and verifying the competence of the court rendering the judgment.

Laws and Regulations on Foreign Direct Investment

Egypt’s legal system is a civil codified law system. No specialized court exists for foreign investments.

In 2016, the Import-Export Law was revised to allow companies wishing to register in the Import Registry to be 51 percent owned and managed by Egyptians; formerly the law required 100 percent Egyptian ownership and management. In November 2016, the Supreme Investment Council also announced seventeen presidential decrees designed to spur investment or resolve longstanding issues. These include:

  • Forming a “National Payments Council” that will work to restrict the handling of FX outside the banking sector;
  • A decision to postpone for three years the capital gains tax on stock market transactions;
  • Producers of agricultural crops that Egypt imports or exports will get tax exemptions;
  • Five-year tax exemptions for manufacturers of “strategic” goods that Egypt imports or exports;
  • Five-year tax exemptions for agriculture and industrial investments in Upper Egypt;
  • Begin tendering land with utilities for industry in Upper Egypt for free as outlined by the Industrial Development Authority.

The Ministry of Investment has drafted a new Investment Law that has been discussed extensively with all stakeholders and is still under study. Drafts of new laws regarding Bankruptcy, Commercial Registration, and Companies’ Law are also under discussion.

Egypt’s investment law stipulates the establishment of a One-Stop-Shop (OSS) for investors at GAFI. The OSS’s main functions are to (a) facilitate the procurement of business licenses, (b) offer technical advice and information to clients, (c) introduce a transparent and reasonable fee structure, and (d) improve the quality and timeliness of government related processes. 

Competition and Anti-Trust Laws

The Egyptian Competition Authority (ECA) is the body tasked with ensuring free competition in the market and preventing anticompetitive practices. The Authority operates under the Egyptian Competition Law, which covers three categories of violations: (1) cartels; (2) abuse of dominance; and (3) vertical restraints. The ECA monitors the market, detects anti-competitive practices that are considered violations to the law, and takes measures to stop such violations. The Anti-Trust and Competition Protection Council (ACPC) monitors business practices of companies to ensure that they comply with the standards of the free market. The main challenges to competition in Egypt include a regulatory system that protects established companies and large companies, a significant informal sector, and the lack of availability of reliable information.

Expropriation and Compensation

The Investment Incentives Law provides guarantees against nationalization or confiscation of investment projects under the law’s domain. The law also provides guarantees against seizure, requisition, blocking, and placing of assets under custody or sequestration. It offers guarantees against full or partial expropriation of real estate and investment project property. The U.S.-Egypt Bilateral Investment Treaty also provides protection against expropriation. Private firms are able to take cases of alleged expropriation to court, but the judicial system can take several years to resolve a case.

Dispute Settlement

ICSID Convention and New York Convention

Egypt acceded to the International Convention for the Settlement of Investment Disputes (ICSID) in 1971 and is a member of the International Center for the Settlement of Investment Disputes, which provides a framework for the arbitration of investment disputes between the government and foreign investors from another member state, provided that the parties agree to such arbitration. Without prejudice to Egyptian courts, the Investment Incentives Law recognizes the right of investors to settle disputes within the framework of bilateral agreements, the ICSID or through arbitration before the Regional Center for International Commercial Arbitration in Cairo, which applies the rules of the United Nations Commissions on International Trade Law.

Egypt adheres to the 1958 New York Convention on the Enforcement of Arbitral Awards; the 1965 Washington Convention on the Settlement of Investment Disputes between States and the Nationals of Other States; and the 1974 Convention on the Settlement of Investment Disputes between the Arab States and Nationals of Other States. An award issued pursuant to arbitration that took place outside Egypt may be enforced in Egypt if it is either covered by one of the international conventions to which Egypt is party or it satisfies the conditions set out in Egypt’s Dispute Settlement Law 27 of 1994, which provides for the arbitration of domestic and international commercial disputes and limited challenges of arbitration awards in the Egyptian judicial system. The Dispute Settlement Law was amended in 1997 to include disputes between public enterprises and the private sector.

Egypt’s legal system is a civil codified law system. The judiciary is an independent branch of the government. To enforce judgments of foreign courts in Egypt, the party seeking to enforce the judgment must obtain an exequatur. To apply for an exequatur, the normal procedures for initiating a lawsuit in Egypt, and several other conditions must be satisfied, including ensuring reciprocity between the Egyptian and foreign country’s courts and verifying the competence of the court rendering the judgment.

Egypt has a system of economic courts specializing in private sector disputes that have jurisdiction over cases related to economic and commercial matters, including intellectual property disputes. Despite these provisions, business and investors in Egypt’s renewable energy projects have reported significant problems resolving disputes with the Government of Egypt.

Investor-State Dispute Settlement

The U.S.-Egypt Bilateral Investment Treaty allows an investor to take a dispute directly to binding third-party arbitration. The Egyptian courts generally endorse international arbitration clauses in commercial contracts. For example, the Court of Cassation has, on a number of occasions, confirmed the validity of arbitration clauses included in contracts between Egyptian and foreign parties. There have been some claims by U.S. investors under this agreement.

Presidential Decree law No. 17 of 2015 added a new mechanism for simplified settlement of investment disputes aimed at avoiding the court system altogether. In particular, the law established a Ministerial Committee on Investment Contract Disputes, responsible for the settlement of disputes arising from investment contracts to which the State, or a public or private body affiliated therewith, is a party. The decree also established a Complaint Committee to consider challenges connected to the implementation of Egypt’s Investment Law. Finally, the decree established a Committee for Resolution of Investment Disputes that will review complaints or disputes between investors and the government related to the implementation of the Investment Law. In practice, Egypt’s dispute resolution mechanisms are time-consuming but broadly effective. Businesses have, however, reported difficulty collecting payment from the government when awarded a monetary settlement.

Over the past 10 years, there have been several investment disputes that involved both U.S. persons and foreign investors. Most of the cases have been settled, though no definitive number is available. Local courts in Egypt recognize and enforce foreign arbitral awards issued against the government. There are no known extrajudicial actions against foreign investors in Egypt during the period of this report.

International Commercial Arbitration and Foreign Courts

Egypt allows mediation as a mechanism for alternative dispute resolution (ADR), a structured negotiation process in which an independent person known as a mediator assists the parties to identify and assess options and negotiate an agreement to resolve their dispute. GAFI has an Investment Disputes Settlement Center which uses mediation as an ADR.

The Economic Court recognizes and enforces arbitral awards. Judgments of foreign courts may be recognized and enforceable under local courts under limited conditions.

In most cases, domestic courts have found in favor of SOEs involved in investment disputes. In such disputes, non-government parties have often complained about the delays and discrimination in court processes.

There has been at least one reported instance of corruption within Egypt’s arbitration system leading to a sham “award” and judicial procedures against a U.S. company. Delays in this case impeded swift resolution. The U.S. Embassy normally recommends that U.S. companies employ contractual clauses that specify binding international (not local) arbitration of disputes in their commercial agreements.

Bankruptcy Regulations

As of April 2017, Egypt did not have a bankruptcy law per se, although Commercial Law 17 of 1999 includes a chapter on bankruptcy. The terms of the bankruptcy chapter are silent or ambiguous on several key issues crucial to the reduction of settlement risks. The Egyptian government has identified the lack of a functioning bankruptcy code as a significant impediment to investment. In 2015, in an attempt to help accelerate the bankruptcy process, the government amended Egypt’s 1997 Investment Law, stipulating that if a company under liquidation has not received a statement of liquidation from the relevant administrative authorities within 120 days of the liquidator submitting the application, the company will be discharged from its liabilities. On January 4, 2017, the GOE Cabinet approved and submitted a draft bankruptcy bill to the parliament. When enacted, the law will speed up the restructuring and settlement of troubled companies. It will also replace the threat of imprisonment with fines in cases of bankruptcy.

In practice, the paperwork involved in liquidating a business remains convoluted and extremely protracted; starting a business is much easier than shutting one down. Bankruptcy is frowned upon in Egyptian culture and many businesspeople believe they may be found criminally liable if they declare bankruptcy.

4. Industrial Policies

Investment Incentives

Foreign investors can avail themselves of certain incentives under the 1997 Investment Incentives Law, which provides several guarantees and protections.

The 1997 Investment Incentives Law was designed to encourage domestic and foreign investment in targeted economic sectors and to promote decentralization of industry away from the Nile Valley. The law allows 100 percent foreign ownership of investment projects and guarantees the right to remit income earned in Egypt and to repatriate capital. Despite this guarantee, companies have experienced difficulty remitting earned income due to currency controls. Other key provisions include: guarantees against confiscation, sequestration, and nationalization; the right to own land; the right to maintain foreign-currency bank accounts; freedom from administrative attachment; the right to repatriate capital and profits; and equal treatment regardless of nationality. Companies eligible to benefit from incentives provided under the Investment Incentives Law must operate in certain targeted sectors, including: infrastructure; manufacturing and mining; transport; software development; medical services; certain financial services; oil field services; agriculture; reclamation of desert land; hotels; and tourism. Other incentives for projects falling within the scope of this law include:

  • Projects are exempted from certain labor requirements of the Egyptian Companies Law and the Labor Law.
  • Foreign experts’ salaries are exempted from income tax if their stay in Egypt is shorter than one year.
  • Projects are subject to a flat rate of 5 percent in customs duties on imported equipment and machinery.
  • Projects are exempt from stamp duties and notarization fees for 3 years from the date of registration with the commercial register.
  • Projects are exempt from all registration and notarization charges normally levied.

The Tenders Law (Law 89//1998) requires the government to consider both price and best value in awarding contracts and to issue an explanation for refusal of a bid. However, the law contains preferences for Egyptian domestic contractors, who are accorded priority if their bids do not exceed the lowest foreign bid by more than 15 percent.

Decree No. 719//2007 by the Ministry of Industry and Foreign Trade and Ministry of Finance provides incentives for industrial projects in the governorates of Upper Egypt (Upper Egypt refers to governorates in southern Egypt). The decree provides an incentive of LE 15,000 (approx. US$850) for each job opportunity created by the project, on the condition that the investment costs of the project exceed LE 15 million (approx. US$850,000). The decree can be implemented on both new and on-going projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

Public and private free zones are authorized under the Investment Incentive Law and are established by a decree from GAFI. Free zones are located within the national territory, but are considered to be outside Egypt’s customs boundaries, granting firms doing business within them more freedom on transactions and exchanges. Companies producing largely for export (normally 80 percent or more of total production) may be established in free zones and operate in foreign currency. Free zones are open to investment by foreign or domestic investors. Companies operating in free zones are exempted from sales taxes or taxes and fees on capital assets and intermediate goods. The Legislative Package for the Stimulation of Investment, issued in 2015, stipulated a 1 percent duty paid on the value of commodities upon entry for storage projects and a 1 percent duty upon exit for manufacturing and assembly projects.

There are currently 10 public free zones in operation in the following locations: Alexandria, Damietta, East Port Said Port Zone, Ismailia, Qeft, Media Production City, Nasr City, Port Said, Shebin el Kom, and Suez. Private free zones may also be established with a decree by GAFI but are usually limited to a single project. Export-oriented industrial projects are given priority. There is no restriction on foreign ownership of capital in private free zones.

In 2015, limits were introduced on energy-related free zone investments, and licenses will not be granted in free zones for projects in the following sectors: fertilizers; oil and steel; petroleum; natural gas production, liquefaction and transport; or other energy intensive industries.

The Special Economic Zones (SEZ) Law 83//2002 allows establishment of special zones for industrial, agricultural, or service activities designed specifically with the export market in mind. The law allows firms operating in these zones to import capital equipment, raw materials, and intermediate goods duty free. Companies established in the SEZs are also exempt from sales and indirect taxes and can operate under more flexible labor regulations. The first SEZ was established in the northwest Gulf of Suez.

Law 19//2007 authorized creation of investment zones, which require Prime Ministerial approval for establishment. The government regulates these zones through a board of directors, but the zones are established, built, and operated by the private sector. The government does not provide any infrastructure or utilities in these zones. Investment zones enjoy the same benefits as free zones in terms of facilitation of license-issuance, ease of dealing with other agencies, etc., but are not granted the incentives and tax/custom exemptions enjoyed in free zones. Projects in investment zones pay the same tax/customs duties applied throughout Egypt. The aim of the law is to assist the private sector in diversifying its economic activities.

Progress is continuing on establishing the Suez Canal Economy Zone, originally announced by the Government of Egypt in 2014. The zone, a major industrial and logistics services hub built along the Suez Canal, is expected to include upgrades and renovations to ports located along the Suez Canal corridor, including West and East Port Said, Ismailia, Suez, Adabiya, and Ain Sokhna. The government has invited foreign investors to take part in the project, which is expected to be built in several stages, the first of which is scheduled to be completed by 2020. Reported areas for investment include maritime services like ship repair services, bunkering, vessel scrapping and recycling; industrial projects, including pharmaceuticals, food processing, automotive production, consumer electronics, textiles, and petrochemicals; IT services such as research and development and software development; renewable energy; and mixed use, residential, logistics, and commercial developments. Website for the Suez Canal Development Project: 

Performance and Data Localization Requirements

Egypt does have rules on national percentages of employment. Egypt also has onerous visa and work permit issues that in this reporting period has led to at least one large foreign investor to move its MENA headquarters and 600 expat staff to a third country in the region. Application of these provisions that restrict access to foreign worker visas has been inconsistent. The government plans to phase out visas for unskilled workers, but as yet has not. For most other jobs, employers may hire foreign workers on a temporary six-month basis, but must also hire two Egyptians to be trained to do the job during that period. Only jobs where it is not possible for Egyptians to acquire the requisite skills will remain open to foreign workers. Application of these regulations is inconsistent. The Labor Law allows Ministers to set the maximum percentage of foreign workers that may work in companies in a given sector. There are no such sector-wide maximums for the oil and gas industry, but individual concession agreements may contain language establishing limits or procedures regarding the proportion of foreign and local employees.

No performance requirements are specified in the Investment Incentives Law, and the ability to fulfill local content requirements is not a prerequisite for approval to set up assembly projects. In many cases, however, assembly industries still must meet a minimum local content requirement in order to benefit from customs tariff reductions on imported industrial inputs.

Decree 184//2013 allows for the reduction of customs tariffs on intermediate goods if the final product has a certain percentage of input from local manufacturers, beginning at 30 percent local content. As the percentage of local content rises, so does the tariff reduction, reaching up to 90 percent if the amount of local input is 60 percent or above. In certain cases, a minister can grant tariff reductions of up to 40 percent in advance to certain companies without waiting to reach a corresponding percentage of local content. In 2010, Egypt revised its export rebate system to provide exporters with additional subsidies if they used a greater portion of local raw materials.

Manufacturers wishing to export under trade agreements between Egypt and other countries must complete certificates of origin and local content requirements contained therein. Oil and gas exploration concessions, which do not fall under the Investment Incentives Law, do have performance standards, which are specified in each individual agreement and which generally include the drilling of a specific number of wells in each phase of the exploration period stipulated in the agreement.

Egypt does not impose localization barriers on IT firms. Egypt does not make local production a requirement for market access, does not have local content requirements, and does not impose forced technology or IP transfers as a condition of market access. But there are exceptions where the government tries to impose controls by requesting access to a company’s servers located offshore, or request servers to be located in Egypt and thus under the government’s control. Companies not complying with such requests have found it impossible to continue operations.

5. Protection of Property Rights

Real Property

The Egyptian legal system provides protection for real and personal property. Laws on real estate ownership are complex and titles to real property may be difficult to establish and trace. According to the World Bank’s 2016 Doing Business Report, Egypt ranks 111 of 189 for ease of registering property. Additional information is available on the World Bank website .

A National Title Registration Program introduced by the Ministry of State for Administrative Development has been implemented in nine areas within Cairo. This program is intended to simplify property registration and facilitate easier mortgage financing. Real estate registration fees, long considered a major impediment to development of the real estate sector, are capped at no more than EGP 2000 EGP (US$110), irrespective of the property value. In November 2012, the government postponed implementation of an enacted overhaul to the real estate tax and as of April 2017 no action has been taken.

Foreigners are limited to ownership of two residences in Egypt and specific procedures are required for purchasing real estate in certain geographical areas.

The mortgage market is still undeveloped in Egypt, and in practice most purchases are still conducted in cash. Real Estate Finance Law 148//2001 authorized both banks and non-bank mortgage companies to issue mortgages. The law provides procedures for foreclosure on property of defaulting debtors, and amendments passed in 2004 allow for the issuance of mortgage-backed securities. According to the regulations, banks can offer financing in foreign currency of up to 80 percent of the value of a property.

Presidential Decree 17/2015 permitted the government to provide land free of charge, in certain regions only, to investors meeting certain technical and financial requirements. This provision expires on April 1, 2020 and the company must provide cash collateral for five years following commencement of either production (for industrial projects) or operation (for all other projects).

The ownership of land by foreigners is governed by three laws: Law 15//1963, Law. 143//1981, and Law230//1996. Law No. 15 stipulates that no foreigners, whether natural or juristic persons, may acquire agricultural land. Law No. 143 governs the acquisition and ownership of desert land. Certain limits are placed on the number of feddans (one feddan is equal to approximately one hectare) that may be owned by individuals, families, cooperatives, partnerships and corporations. Partnerships are permitted to own up to 10,000 feddans. Joint stock companies are permitted to own up to 50,000 feddans.

Partnerships and joint stock companies may own desert land within these limits, even if foreign partners or shareholders are involved, provided that at least 51 per cent of the capital is owned by Egyptians. Upon liquidation of the company, however, the land must revert to Egyptian ownership. Law 143 defines desert land as the land lying two kilometers outside city borders. Furthermore, non-Egyptians owning non-improved real estate in Egypt must build within a period of five years from the date their ownership is registered by a notary public. Non-Egyptians may only sell their real estate five years after registration of ownership, unless the consent of the Prime Minister for an exemption is obtained.

Intellectual Property Rights

Egypt was on the Special 301 Watch List in 2016 and has been recommended for Watch List status in 2017 (Note: The annual Special 301 Report is published in late April and can be found at:’s IPR legislation generally meets international standards, but is weakly enforced, which is a major hurdle to direct investment. Shortcomings in the IPR environment include infringements to copyrights and patents, particularly in the pharmaceuticals sector.

Book, music, and entertainment software piracy is prevalent in Egypt, and a significant portion of the piracy takes place online. American film studios represented by the Motion Pictures Association of America are concerned about the illegal distribution of American movies on regional satellite channels, whose signal is widely stolen.

Multinational pharmaceutical companies complain that local generic drug-producing companies infringe on their patents. Delays and inefficiencies in processing patent applications by the Egyptian Patent Office compound the difficulties pharmaceutical companies face in introducing new drugs to the local market. The Egyptian government’s convoluted bureaucratic structure represents a third barrier that must be overcome by pharmaceutical companies seeking to do business in Egypt. For example, the Ministry of Health has the power to issue permits for the sale of drugs, but generally issues these permits without cross-checking patent filings. The result is that a company which does not hold patent rights to a certain drug can be given the right to sell that drug in Egypt.

Law 82/2002 reflects the provisions of the TRIPs Agreement. Article 69 of Egypt’s 2014 constitution mandates that a “specialized body” be established to ensure IPR protection; however, such a body meets only on an ad hoc basis. The Egyptian Customs Authority (ECA) handles IPR enforcement at the national border and the Ministry of Interior’s Department of Investigation handles domestic cases of illegal production. The ECA cannot act unless the trademark owner files a complaint. Moreover, Egypt’s Economic Courts often take years to reach a decision on IPR infringement cases.

ECA’s customs enforcement also tends to focus on protecting Egyptian goods and trademarks. The ECA is taking steps to adopt the World Customs Organization’s (WCO) Interface Public-Members platform, which allows customs officers to detect counterfeit goods by scanning a product’s barcode and checking the WCO trademark database system.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at .

Contact at U.S. Embassy Cairo:
Joon Lee, Economic Officer

6. Financial Sector

Capital Markets and Portfolio Investment

The Egyptian Stock Exchange (EGX) is Egypt’s registered securities exchange. By the end of 2016, more than 270 companies were listed on the EGX with well over 500 billion EGP in in total valuation. There are more than 500,000 investors registered to trade on the exchange. Stock ownership is open to foreign and domestic individuals and entities. The government of Egypt issues dollar-denominated and Egyptian pound-denominated debt instruments. Ownership is open to foreign and domestic individuals and entities. The government has developed a positive outlook toward foreign portfolio investment, recognizing the need to attract foreign capital to help develop the Egyptian economy.

The Capital Market Law 95//1992, along with the Banking Law of 2003, constitutes the primary regulatory frameworks for the financial sector. The law grants foreigners full access to capital markets, and authorizes establishment of Egyptian and foreign companies to provide underwriting of subscriptions, brokerage services, securities and mutual funds management, clearance and settlement of security transactions, and venture capital activities. The law specifies mechanisms for arbitration and legal dispute resolution and prohibits unfair market practices. Law/2009 created the Egyptian Financial Supervisory Authority (EFSA) and brought the regulation of all non-banking financial services under its authority.

Settlement of transactions takes one day for treasury bonds and two days for stocks. Although Egyptian law and regulations allow companies to adopt bylaws limiting or prohibiting foreign ownership of shares, virtually no listed stocks have such restrictions. A significant number of the companies listed on the exchange are family-owned or dominated conglomerates, and free trading of shares in many of these ventures, while increasing, remains limited. Companies are de-listed from the exchange if not traded for six months.

The Higher Investment Council extended the suspension of capital gains tax for three years, until 2020 as part of efforts to draw investors back. In March 2017, the government announced plans to impose a stamp duty on all stock transactions with a duty of 0.125 percent on all buyers and sellers starting in May 2017, followed by an increase to 0.150 percent in the second year and 0.175 percent thereafter. Egypt’s new stamp duty on stock exchange transactions will include for the first time a 0.3 percent levy for investors acquiring more than a third of a company’s stocks.

Foreign investors can access Egypt’s banking system by opening accounts with local banks and buying and selling all marketable securities with brokerages. The government has repeatedly emphasized its commitment to maintaining the profit repatriation system to encourage foreign investment in Egypt, especially since the pound floatation and implementation of the IMF loan program in November 2016. The current system for profit repatriation by foreign firms requires sub-custodian banks to open foreign and local currency accounts for foreign investors (global custodians), which are exclusively maintained for stock exchange transactions. The two accounts serve as a channel through which foreign investors process their sales, purchases, dividend collections, and profit repatriation transactions using the bank’s posted daily exchange rates. The system is designed to allow for settlement of transactions in fewer than two days, though in practice some firms have reported significant delays in repatriating profits due to problems with availability. Foreign firms and individuals continue to report delays in repatriating funds and problems accessing hard currency for the purpose of repatriating profits.

The Egyptian credit market, open to foreigners, is vibrant and active. Repatriation of investment profits is still difficult, as there is not always enough available hard currency to execute FX trades. But the floatation of the Pound has made trading easier, given the re-establishment of the interbank foreign currency trading system.

Money and Banking System

Benefitting from the nation’s increasing economic stability over the past year, Egypt’s banks have enjoyed both ratings upgrades and continued profitability. Thanks to economic reform, a new floating exchange system and talk of new investment legislation, the project finance pipeline is recovering after a period of lower activity. Banking competition is improving to serve a largely untapped retail segment and the nation’s challenging, but potentially rewarding, small and medium-sized enterprise (SME) segment. The Central Bank of Egypt (CBE) has mandated that 20 percent of bank loans go to SMEs within the next four years. Also, with only 14 percent of Egypt’s adult population owning or sharing an account at a formal financial institution (according to a 2014 survey by the World Bank and Gallup), the banking sector has potential for growth and higher inclusion, which the government and banks discuss frequently. A low median income plays a part in modest banking penetration.

Egypt’s banking sector is generally regarded as healthy and well-capitalized, due in part to its deposit-based funding structure and ample liquidity. Analysts estimate that approximately 8 percent of the banking sector’s loans are non-performing. However, since 2011, a high level of exposure to government debt, accounting for over 40 percent of banking system assets, at the expense of private sector lending, has reduced the diversity of bank balance sheets and crowded out domestic investment. Given the floatation of the pound and restart of the interbank trading system, Moody’s and S&P have upgraded the outlook of Egypt’s banking system to stable from negative to reflect improving macroeconomic conditions and ongoing commitment to reform.

Forty banks operate in Egypt, including several foreign banks. The CBE has not issued a new commercial banking license since 1979. The only way for a new commercial bank, whether foreign or domestic, to enter the market (except as a representative office) is to purchase an existing bank. To this end, in 2013, QNB Group acquired National Société Générale Bank Egypt (NSGB). That same year, Emirates NBD, Dubai’s largest bank, bought the Egypt unit of BNP Paribas. In 2015, Citibank sold its retail banking division to CIB Bank. In 2016, Egypt indicated a desire to partially (less than 50 percent) privatize at least two of state-owned banks and other firms through listings on the Egypt Stock Exchange, though no action has been taken as of early 2017.

According to the CBE, banks operating in Egypt held EGP 2.485 trillion in total assets at the end of 2016, of which approximately EGP 1.481 trillion in assets were held by the largest five banks (the National Bank of Egypt, Banque Misr, the Commercial International Bank, Qatar National Bank Al-Ahli, and the Banque Du Caire). Egypt’s three state-owned banks (Banque Misr, Banque du Caire, and National Bank of Egypt) control nearly 40 percent of banking sector assets.

Foreign Exchange and Remittances

Foreign Exchange

Despite progress in accessing hard currency due to the floatation of the pound and re-establishment of the interbank currency trading system in November 2016, businesses operating in Egypt continue to have difficulty obtaining hard currency for business purposes, such as importing inputs, and repatriating profits. In early 2016, the Central Bank lifted dollar deposit limits on households and firms importing priority goods which had been in place since early 2015. Businesses, including foreign-owned firms, which are not operating in priority sectors, continue to encounter difficulty accessing currency, as have importers. But the backlog for demand for foreign currency is declining and wait times to access hard currency is decreasing.

Funds associated with investment can be freely converted into any world currency, depending on the availability of that currency in the local market. Many firms and individuals report the process taking weeks to months with restrictions, even subsequent to the pound’s floatation. But the interbank trading system works in general and currency is increasingly available as the foreign exchange markets reacts positively to the floating exchange system, still maturing after only being in operation since November 2016.

The floating exchange rate operates on the principle of market supply and demand; the exchange rate is dictated by availability of currency and demand by firms and individuals. While there is some reported informal Central Bank window guidance, the rate generally fluctuates depending on market conditions, without direct market intervention by authorities. In general, the EGP has stabilized within an acceptable exchange rate range, which has increased the foreign exchange market’s liquidity, though it is still difficult to access dollars in a truly “free” manner on demand.

Remittance Policies

The 1992 U.S.-Egypt Bilateral Investment Treaty provides for free transfer of dividends, royalties, compensation for expropriation, payments arising out of an investment dispute, contract payments, and proceeds from sales. In practice, large corporations have been unable to repatriate local earnings for months at a time. Even after the pound’s November 2016 devaluation, repatriation has remained difficult, depending on currency availability and CBE window guidance on currency allocation.

The Investment Incentives Law stipulates that non-Egyptian employees hired by projects established under the law are entitled to transfer their earnings abroad. Conversion and transfer of royalty payments are permitted when a patent, trademark, or other licensing agreement has been approved under the Investment Incentives Law.

Banking Law 88/2003 regulates the repatriation of profits and capital. The current system for profit repatriation by foreign firms requires sub-custodian banks to open foreign and local currency accounts for foreign investors (global custodians), which are exclusively maintained for stock exchange transactions. The two accounts serve as a channel through which foreign investors process their sales, purchases, dividend collections, and profit repatriation transactions using the bank’s posted daily exchange rates. The system is designed to allow for settlement of transactions in fewer than two days, though in practice some firms have reported significant delays in repatriating profits due to problems with availability.

Sovereign Wealth Funds

Egypt does not have a sovereign wealth fund.

7. State-Owned Enterprises

State-owned enterprises and military-owned companies compete directly with private companies in many sectors of the Egyptian economy. According to Public Sector Law 203 of 1991, state-owned enterprises should not receive preferential treatment from the government, nor should they be accorded any exemption from legal requirements applicable to private companies. In addition to the state-owned enterprises groups above, 40 percent of the banking sector’s assets are controlled by three state-owned banks (Banque Misr, Banque du Caire, and National Bank of Egypt). In March 2014 the government announced that nine public holding companies will be placed under an independent sovereign fund. As of early 2017 this has not yet occurred.

In an attempt to encourage growth of the private sector, privatization of state-owned enterprises and state-owned banks accelerated under an economic reform program that took place from 1991 to 2008. Following the 2011 revolution, third parties have brought cases in court to reverse privatization deals, and in a number of these cases, Egyptian courts have ruled to reverse the privatization of several former public companies. Most of these cases are still under appeal.

The state-owned telephone company, Telecom Egypt, lost its legal monopoly on the local, long-distance and international telecommunication sectors in 2005. Nevertheless, Telecom Egypt held a de facto monopoly until late 2016 because the National Telecommunications Regulatory Authority (NTRA) had not issued additional licenses to compete in these sectors. But NTRA implemented a unified license regime that now allows a company to offer both fixed line and mobile networks, a deal finalized in October 2016. The agreement allows Telecom Egypt to enter the mobile market and the three existing mobile companies to enter the fixed line market. The introduction of Telecom Egypt as a new mobile operator in the Egyptian market will increase competition among operators, which will benefit users by raising the bar on quality of services as well as improving prices.

Egypt is not a party to the World Trade Organization’s Government Procurement Agreement.

OECD Guidelines on Corporate Governance of SOEs

SOEs in Egypt are structured as individual companies controlled by boards of directors and grouped under government holding companies that are arranged by industry, including Petroleum Products & Gas, Spinning & Weaving; Metallurgical Industries; Chemical Industries; Pharmaceuticals; Food Industries; Building & Construction; Tourism, Hotels & Cinema; Maritime & Inland Transport; Aviation; and Insurance. The holding companies are headed by boards of directors appointed by the Prime Minister with input from the relevant Minister.

Privatization Program

Egypt has not concluded significant privatizations of state-owned enterprises since 2008. Efforts to continue privatization since then have stalled. In March 2016, Prime Minister Sherif Ismail declared that the government would cease efforts to privatize the public sector, saying state-owned enterprises needed to be reformed instead. This statement followed the reestablishment of a Ministry of Public Enterprises in the same month.

Egypt’s privatization program was based on Public Enterprise Law 203//1991, which permitted the sale of state enterprises to foreign entities. In 1991, Egypt began a privatization program for the sale of several hundred wholly or partially state-owned enterprises and all public shares of at least 660 joint venture companies (joint venture is defined as mixed state and private ownership, whether foreign or domestic). Bidding criteria for privatizations were generally clear and transparent.

In 2014, the President signed a law limiting appeal rights on state-concluded contracts to reduce third-party challenges to prior government privatization deals. The law was intended to reassure investors concerned by legal challenges brought against privatization deals and land sales dating back to the pre-2008 period. Ongoing court cases had put many of these now-private firms, many of which are foreign-owned, in legal limbo over concerns that they may be returned to state ownership.

8. Responsible Business Conduct

Responsible Business Conduct (RBC) programs have grown in popularity in Egypt over the last ten years. Most programs are limited to multinational and larger domestic companies and take the form of funding and sponsorship for initiatives supporting entrepreneurship and education. Environmental and technology programs are also garnering greater participation. The Ministry of Trade has engaged constructively with corporations promoting RBC programs, supporting corporate social responsibility conferences and providing Cabinet-level representation as a sign of support to businesses promoting RBC programming.

A number of organizations and corporations work to foster the development of RBC in Egypt. The American Chamber of Commerce has an active corporate social responsibility committee, and Apache Corporation was named a finalist in 2013 for the Secretary’s Award for Corporate Excellence for its work building and maintaining village girls’ schools throughout the country. Microsoft was named a finalist in 2012. Several U.S. pharmaceutical companies are actively engaged in RBC programs related to Egypt’s hepatitis-C epidemic. The Egyptian Corporate Responsibility Center, which is the UN Global Compact local network focal point in Egypt, aims to empower businesses to develop sustainable business models as well as improve the national capacity to design, apply, and monitor sustainable responsible business conduct policies. In March 2010, Egypt launched an environmental, social, and governance (ESG) index, the second of its kind in the world after India’s, with training and technical assistance from Standard and Poor’s.

Egypt does not participate in the Extractive Industries Transparency Initiative. Public information about Egypt’s extractive industry remains limited in the government’s annual budget.

9. Corruption

Egypt has a set of laws to combat corruption by public officials, including an Anti-Bribery Law (which is contained within the Penal Code), an Illicit Gains Law, and a Governmental Accounting Law, among others. However, corruption laws have not been consistently enforced. Transparency International’s Corruption Perceptions Index ranked Egypt 108 out of 176 in its 2016 survey, a drop of 20 places from its rank of 88 in 2015. Transparency International also found that approximately 50 percent of Egyptians reported paying a bribe in order to obtain a public service.

The Penal Code’s provisions covering bribery apply to public officials. However, bribes are frequently transferred to third parties such as officials’ family members and political parties as a means of ensuring an arms-length distance between the bribers and bribed, according to a 2009 report by the Steering Groups of the Middle East and North Africa-Organization for Economic Cooperation and Development’s Initiative. The law does not regulate or sanction the involvement of third-parties in these corrupt transactions.

There are no rules on conflict of interest in competing for public tenders, according to an October 2012 report on the Commercial Laws of Egypt by the European Bank for Reconstruction and Development. The same report also noted that Egyptian legislation was in “medium compliance” with internationally recognized corporate governance principles and identified concerns regarding non-financial disclosure and transparency, especially in regards to conflict of interest situations.

Some private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials. There is no government requirement for private companies to establish internal codes of conduct to prohibit bribery.

Egypt ratified the United Nations Convention against Corruption in February 2005. It has not acceded to the OECD Convention on Combating Bribery or any other regional anti-corruption conventions.

While NGOs are active in encouraging anti-corruption activities, dialogue between the government and civil society on this issue is almost non-existent, the OECD found in 2009 and a trend that continues today. More broadly and increasingly over the past year, while government officials publicly asserted they shared civil society organizations’ goals, they rarely cooperated with NGOs, and applied relevant laws in a highly restrictive manner against NGOs critical of government practices. Media was also limited in its ability to report on corruption, with Article 188 of the Penal Code mandating heavy fines and penalties for unsubstantiated corruption allegations.

U.S. firms have identified corruption as an obstacle to FDI in Egypt. Companies might encounter corruption in the public sector in the form of requests for bribes, using bribes to facilitate required government approvals or licenses, embezzlement, and tampering with official documents. Corruption and bribery are reported in dealing with public services, customs (import license and import duties), public utilities (water and electrical connection), construction permits, and procurement, as well as in the private sector. Businesses have described a dual system of payment for services, with one formal payment and a secondary, unofficial payment required for services to be rendered.

Resources to Report Corruption

Several agencies within the Egyptian government share responsibility for addressing corruption. Egypt’s primary anticorruption body is the Administrative Control Authority (ACA), which has jurisdiction over state administrative bodies, state-owned enterprises, public associations and institutions, private companies undertaking public work, and organizations to which the state contributes in any form. Observers do not judge the ACA to be sufficiently resourced, and the agency does not actively collaborate with civil society.

In addition to the ACA, the Central Auditing Authority (CAA) acts as an anti-corruption body, stationing monitors at state-owned companies to report corrupt practices. The Ministry of Justice’s Illicit Gains Authority is charged with referring cases in which public officials have used their office for private gain. The Public Prosecution Office’s Public Funds Prosecution Department and the Ministry of Interior’s Public Funds Investigations Office likewise share responsibility for addressing corruption in public expenditures.

Contact at government agency or agencies are responsible for combating corruption:

Minister of Interior
General Directorate of Investigation of Public Funds
Telephone: 02-2792-1395/ 02-2792 1396
Fax: 02-2792-2389

10. Political and Security Environment

Late 2016 and early 2017 continued to see a decline in the number of small-scale terrorist attacks against security and civilian targets in Cairo and elsewhere in the Nile Valley. Militant groups have been able to commit significant acts of terrorism, however, including the bombing of the Cairo’s Boutrousiya church in December 2016 that killed 29 women and children. In the Sinai Peninsula, militants affiliated with ISIL have conducted terrorist attacks against military installations and personnel, as well as civilians. The United States designated ISIL’s Sinai affiliate as a Foreign Terrorist Organization in April 2014.

11. Labor Policies and Practices

Official statistics put Egypt’s labor force at nearly 32 million, with an official 2016 unemployment rate between 12 and 13 percent (depending on sources). More realistic estimates are that unemployment is most likely higher, but this is difficult to determine given the Egypt’s large informal economy. The unemployment rate is significantly higher for women (at least double).

Unemployment is at its highest among educated youth, particularly graduates of vocational secondary education. Limited employment opportunities for youth remain a serious challenge to Egypt’s social cohesion. While Egypt attracts some migrant workers – primarily seasonal agricultural workers from neighboring countries and some domestic laborers from Southeast Asia – it remains a net exporter of labor with millions of Egyptians continuing to seek employment abroad.

The government bureaucracy and public sector enterprises are substantially over-staffed compared to the private sector and other international norms. Egypt has the highest number of government workers per capita in the world. Businesses highlight a mismatch between labor skills and market demand, despite high numbers of university graduates in a variety of fields. Foreign companies frequently pay internationally competitive salaries to attract workers with valuable skills.

The Unified Labor Law 12//2003 provides comprehensive guidelines on labor relations, including hiring, working hours, termination of employees, training, health, and safety. The law grants a qualified right for employees to strike, as well as rules and guidelines governing mediation, arbitration, and collective bargaining between employees and employers. Non-discrimination clauses are included, and the law complies with labor-related International Labor Organization (ILO) conventions regulating the employment and training of women and eligible children (Egypt ratified ILO Convention 182 on combating the Worst Forms of Child Labor in April 2002). The law also created a national committee to formulate general labor policies and the National Council of Wages, whose mandate is to discuss wage-related issues and national minimum-wage policy, but it has rarely convened.

Under the Unified Labor Law, workers may join trade unions, but are not required to do so. A trade union or workers’ committee may be formed if 50 employees in an entity express a desire to organize. In March 2011, the Minister of Manpower and Migration (MOMM) issued a decree recognizing complete freedom of association and, subsequently, the Ministry of Manpower and Migration registered well over 1,600 independent trade unions without interference. However, the government stopped registering new independent trade unions in September 2015 and, in March 2016, issued a directive not to recognize documentation from any trade union without a stamp from the Egyptian Trade Union Federation (ETUF), the only official representative of trade unions recognized by the state.

The 2014 Constitution stipulates in article 76 that “establishing unions and federations is a right that is guaranteed by the law.” Only courts are allowed to dissolve unions. The constitution maintained past practice in stipulating that “one syndicate is allowed per profession.” The Egyptian constitutional legislation differentiates between white-collar syndicates (for professional workers e.g. doctors, lawyers, journalists) and blue-collar workers (e.g. transportation, food, mining workers). The government has drafted a “right to be collectively organized” law, but as of March 2017, negotiations on draft legislation continued. Employers complain that the incongruence between labor provisions in the 2014 Constitution, the 2011 Ministerial Decree, and the Trade Union Law of 1976 causes uncertainty when dealing with workers’ representatives.

Workers in Egypt have the right to strike peacefully, but strikers are legally obliged to notify the employer and concerned administrative officials of the reasons and time frame of the strike ten days in advance. The law prohibits strikes in strategic or vital establishments in which the interruption of work could result in disturbing national security or basic services provided to citizens. In practice, however, workers strike often, in all sectors, without following these procedures, but at risk of prosecution by the government. In 2016, for example, 26 leaders of a peaceful labor action in an Alexandria government-owned shipyard faced a closed military trial over alleged disruption of a “national security” facility.

The ILO Committee of Experts has criticized the 1976 Trade Union Law for mandating that only formerly government-controlled Trade Union Federation may organize strikes and that workers must notify employers in advance of strike actions. Strikes – especially in the textile sector – are typically organized and led by workers independently of the Trade Union Federation. For example, over 750 worker-led labor actions in textile mills in the Nile Delta were recorded in 2016 according to an independent NGO report.

Collective negotiation is allowed between trade union organizations and private sector employers or their organizations. Agreements reached through negotiations are recorded in collective agreements regulated by the Unified Labor law and usually registered at MOMM. Collective bargaining is technically not permitted in the public sector, though it exists in practice. The government often intervenes to limit or manage collective bargaining negotiations in all sectors.

MOMM sets worker health and safety standards, which also apply in public and private free zones and the Special Economic Zones (see below). Enforcement and inspection, however, are uneven. The Unified Labor Law prohibits employers from maintaining hazardous working conditions, and workers have the right to remove themselves from hazardous conditions without risking loss of employment.

Egyptian labor laws allow employers to close or downsize for economic reasons. The government, however, has taken steps to halt downsizing in specific cases. The unemployment insurance law, also known as the Emergency Subsidy Fund Law 156//2002, sets a fund to compensate employees whose wages are suspended due to partial or complete closure of their firm or due to its downsizing. The Fund allocates financial resources that will come from a one percent deduction from the base salaries of public and private sector employees. According to foreign investors, certain aspects of Egypt’s labor laws and policies are significant business impediments, particularly the difficulty of dismissing employees.

Egypt has a dispute resolution mechanism for workers. If a dispute concerning work conditions, terms, or employment provisions arises, both the employer and the worker have the right to ask the competent administrative authorities to start informal negotiations to settle the dispute. This right can be exercised only within seven days of the dispute. If within ten days from the time administrative authorities were requested to intervene a solution is not found, both the employer and the worker can resort to a judicial committee within forty-five days of the dispute. This committee is comprised of two judges, a representative of MOMM and representatives from the trade union, and one of the employers’ associations. The decision of this committee is provided within sixty days. If the decision of the judicial committee concerns discharging a worker, the sentence is delivered within fifteen days. When the committee decides against an employer’s decision to fire a worker, the employer must reintegrate the latter in his/her job and pay all due salaries. If the employer does not respect the sentence, the worker is entitled to receive compensation for unlawful dismissal.

Labor Law 12//2003 sought to make it easier to terminate an employment contract in the event of difficult economic conditions. The Law allows an employer to close his establishment totally or partially or to reduce its size of activity for economic reasons, following approval from a committee designated by the Prime Minister. In addition, the employer must pay former employees a sum equal to one month of the employee’s total salary for each of his first five years of service and one and a half months of salary for each year of service over and above the first five years. Workers that have been dismissed have the right to appeal. Workers in the public sector enjoy life-long job security as contracts cannot be terminated in this fashion.

The Labor Law allows Ministers to set the maximum percentage of foreign workers that may work in companies in a given sector. There are no such sector-wide maximums for the oil and gas industry, but individual concession agreements may contain language establishing limits or procedures regarding the proportion of foreign and local employees.

Egypt has regulations restricting access for foreigners to Egyptian worker visas, though application of these provisions has been inconsistent. The government plans to phase out Visas for unskilled workers, but as yet has not. For most other jobs, employers may hire foreign workers on a temporary six-month basis, but must also hire two Egyptians to be trained to do the job during that period. Only jobs where it is not possible for Egyptians to acquire the requisite skills will remain open to foreign workers. Application of these regulations is inconsistent.

The Labor Law allows Ministers to set the maximum percentage of foreign workers that may work in companies in a given sector. There are no such sector-wide maximums for the oil and gas industry, but individual concession agreements may contain language establishing limits or procedures regarding the proportion of foreign and local employees.

The MOMM sets worker health and safety standards, which also apply in public and private free zones and the Special Economic Zones (see below). Enforcement and inspection, however, are uneven. The Unified Labor Law prohibits employers from maintaining hazardous working conditions, and workers have the right to remove themselves from hazardous conditions without risking loss of employment.

Egypt has a dispute resolution mechanism for workers. If a dispute concerning work conditions, terms, or employment provisions arises, both the employer and the worker have the right to ask the competent administrative authorities to start informal negotiations to settle the dispute. This right can be exercised only within seven days of the dispute. If within ten days from the time administrative authorities were requested to intervene a solution is not found, both the employer and the worker can resort to a judicial committee within forty-five days of the dispute. This committee is comprised of two judges, a representative of the Ministry of Manpower and Migration (MOMM) and representatives from the trade union, and one of the employers’ associations. The decision of this committee is provided within sixty days. If the decision of the judicial committee concerns discharging a worker, the sentence is delivered within fifteen days. When the committee decides against an employer’s decision to fire a worker, the employer must reintegrate the latter in his/her job and pay all due salaries. If the employer does not respect the sentence, the worker is entitled to receive compensation for unlawful dismissal.

No U.S. company reported that strikes in 2016 posed an investment risk. Negotiations continue on a draft Trade Unions Law, which is being discussed in parliament. The Labor Law also is being revised. As of March 2017, no agreement has been reached on either bill.

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) has approved $500 million in financing to support lending to small businesses in Egypt and Jordan, including the following: (1) $150 million commitment in partnership with Abraaj Capital, a leading private equity group, to enable growth of smaller companies; (2) $150 million investment guaranty with Citibank for a loan to Citadel Capital, the leading private equity firm in the Middle East and Africa, aimed at expanding its subsidiaries working in critical sectors in the MENA region and including $125 million specifically for Egypt; and (3) a $250 million 10 year partnership with Egyptian banks working directly with SMEs. There is an OPIC agreement between Egypt and the United States, signed in 1999.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $330.8b 2016 $330.8b 
Foreign Direct Investment CBE IMF and World Bank USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 $2.33b 2016 $2.29b BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) 2016 $3.43b 2016 $3.43b BEA data available at
Total inbound stock of FDI as % host GDP 2015 3.8% 2014 7.4% N/A

Measurements of foreign direct investment (FDI) in Egypt vary according to the source and the definitions employed to calculate the figure. The Central Bank of Egypt records figures on quarterly and annual investment flows based on financial records for Egypt’s balance of payments statistics. They are reported in the table below. The Ministry of Petroleum keeps statistics on investment in the oil and gas sector (which accounts for the bulk of FDI in Egypt), while GAFI keeps statistics on all other investments – including re-invested earnings and investment-in-kind. Statistics are not always current. GAFI’s figures are calculated in Egyptian pounds at the historical value and rate of exchange, with no allowance for depreciation, and are cumulative starting from 1971.

U.S. firms are active in a wide range of manufacturing industries, producing goods for the domestic and export markets. U.S. investors include American Express, AIG, Ideal Standard, Apache Corporation, Bechtel, Bristol-Myers Squibb, Cargill, Citibank, Coca-Cola, Devon Energy, Dow Chemical, ExxonMobil, Eveready, General Motors, Guardian Industries, H.J. Heinz, Johnson & Johnson, Kellogg’s, Mars, Mondelez, Microsoft, Proctor and Gamble, Pfizer, PepsiCo, Pioneer, and Xerox. Leading investors from other countries include BG, ENI-AGIP, BP, Vodaphone, and Shell (in the oil/gas sector), Unilever, Al-Futtaim, (UAE), the M.A. Kharafi Group (Kuwait), and the Kingdom Development Company (Saudi Arabia).

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions, 2016)
Inward Direct Investment Outward Direct Investment
Total Inward 8263 100% Total Outward N/A 100%
United Kingdom 5944 47.0 Algeria 3.0b N/A
United Arab Emirates 1328 10.6 Saudi Arabia 2.5b N/A
United States 883 7.0 United States 343m N/A
Belgium 678 5.4 Jordan 312m N/A
Saudi Arabia 313 2.5 Georgia 300k N/A

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars, 2016)
Total Equity Securities Total Debt Securities
All Countries 1,886 100% All Countries 888 100% All Countries 998 100%
Cayman Islands 416 22% Saudi Arabia 347 39% Cayman Islands 406 41%
Saudi Arabia 392 13% International Organizations 250 28% United States 190 19%
International Organizations 250 12% United Kingdom 45 5% Qatar 103 10%
United States 219 5% Italy 36 4% Germany 48 5%
Qatar 103 5% Switzerland 32 4% Saudi Arabia 46 5%

14. Contact for More Information

Jeffrey R. Rands
Economic Officer


Executive Summary

Tunisia has maintained the forward momentum of its democratic transition since the parliamentary and presidential elections of late 2014. This will be further strengthened with the holding of the municipal elections, scheduled to take place in December, 2017. Economically, Tunisia is still going through hardship due to a sluggish recovery after the two terrorist attacks that targeted its important tourism sector in 2015 and the uneasy task of mobilizing funding for the budget.

Both the former and current governments made substantial progress on much-needed structural reform, including passing new public-private partnership, competition, bankruptcy, and renewable energy laws; safeguarding the independence of the Central Bank through a new central bank law; and improving the investment climate through a new investment law. The United States and other donors are partnering with the government to achieve remaining reforms, including those on taxes and customs. Enacting these reforms will help Tunisia attract higher foreign and domestic investment.

Tunisia’s strengths are its proximity to Europe, its relatively educated workforce, and its positive attitude toward foreign direct investment (FDI). In the past, most investments were in electronics manufacturing and textiles; today, the economy is more dynamic. Sectors such as agribusiness, aerospace, telecommunication technologies, and services are increasingly promising.

There is potential for significant improvement to the business climate once the Investment Law of April 1, 2017 enters into force. As economic reforms are adopted by the Parliament and implemented by the government, the business climate is expected to improve through development of more simple, clear, and transparent regulations.

Substantial barriers to investment remain. State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment. The informal sector, estimated to be between 40-60 percent of the overall economy, continues to pose difficulties to companies forced to compete with smuggled goods.

The United States has provided more than $400 million in economic growth-related assistance since 2011, including loan guarantees in 2012, 2014, and 2016 enabling the Government of Tunisia to borrow nearly $1.5 billion to help stabilize government finances, ongoing support for small and medium enterprises, and technical assistance to implement economic reform.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 75 of 175
World Bank’s Doing Business Report “Ease of Doing Business” 2016 77 of 190
Global Innovation Index 2016 77 of 128
U.S. FDI in partner country ($M USD, stock positions) 2015 US$ 311 million
World Bank GNI per capita 2015 US$ 3,980

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Tunisia (GOT) has a favorable attitude toward FDI and is working to ensure a good investment climate in the country. The GOT prioritizes attracting and retaining FDIs, reducing unemployment, and encouraging investment in the interior regions. More than 3,350 foreign companies currently operate in Tunisia, and the government has historically encouraged export-oriented FDI in key sectors such as call centers, electronics, aerospace and aeronautics, automotive parts, textile and apparel, leather and shoes, and agro-food. In 2016, the sectors that attracted the most FDIs were energy (47 percent), electrical and electronic industries (17 percent), pharmaceuticals (6 percent), agro-food (6 percent), and ICT (5 percent). Inadequate infrastructure in the interior regions results in the concentration of most foreign investments in the capital city of Tunis and its suburbs (67 percent) and the eastern coastal regions (27 percent). Internal western and southern regions attracted 6 percent only of foreign investments despite special tax incentives for those regions.

The Tunisian Parliament passed a new Investment Law (#2016-71) in September 2016 that went into effect April 1, 2017. To encourage good governance of investments, the law provides for the creation of three major institutions: the High Investment Council, the Tunisian Investment Authority, and the Tunisian Investment Fund. These institutions are scheduled to be launched in 2017. Meanwhile, the Foreign Investment Promotion Agency (FIPA) continues to be Tunisia’s principal agency to promote foreign investments. FIPA is a one-stop shop for foreign investors; it provides information on investment opportunities, advice on the appropriate conditions for success, assistance and support during the creation and implementation of the project, and contact facilitation and advocacy with all other government authorities.

Under the 2016 Investment Law (article 7), foreign investors enjoy national treatment not less favorable than Tunisian investors for their rights and obligations.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investment is divided into two categories:

  1. “Offshore” investment is defined as commercial entities in which foreign capital accounts for at least 66 percent of equity, and at least 70 percent of the production is destined for the export market. Some exceptions to these percentages exist; for example, foreign equity in the agricultural sector cannot exceed 66 percent of the capital, and foreign investors cannot directly own agricultural land.
  2. “Onshore” investment caps foreign equity participation at a maximum of 49 percent in most non-industrial projects. “Onshore” industrial investment may attain 100 percent foreign equity, subject to government approval.

The 2016 Investment Law (article 4) stipulates that a list of sectors in which investment will be subject to government authorization will be set by decree. These sectors touch on defense and national security, subsidy rationalization, preservation of natural resources, cultural heritage, environment protection, and public health.

Other Investment Policy Reviews

The WTO completed a Trade Policy Review for Tunisia in July 2016. The report is available here .

In November 2012, the GOT conducted an investment policy review (IPR) through the Organization for Economic Cooperation and Development (OECD) ( )

Business Facilitation

The World Bank report Investing Across Sectors affirms that Tunisia has the fewest limits on foreign equity ownership in the Middle East and North Africa (MENA) region. The GOT has opened up the majority of the sectors of the economy to foreign capital participation with the exception of electricity transmission and distribution ( ).

For most businesses, the Agency for Promotion of Industry and Innovation (APII) is the focal point for business registration. Online project declaration for industry or service sector projects for both domestic and foreign investment is available at: 

While the online declaration process is clear and APII aims to respond within 24 hours, there are many additional steps that involve other government agencies in order to complete the business registration. APII has set up a one-stop shop which offers registration of legal papers with the tax office, tax inspection office, court clerk, official Tunisian gazette, and customs. This one-stop shop also houses representatives providing consultations from the Investment Promotion Agency (API), Ministry of Employment, National Social Security Authority (CNSS), Ministry of Interior, and the Ministry of Industry and Trade. The World Bank’s Doing Business 2017 study reports that business registration takes an average of 11 days and costs about $150 (325 Tunisian dinars) .

A local business consulting firm estimates that this process can take up to 40 days and costs $500 on average.

For agriculture and fisheries, business registration information can be found at: .

In the tourism industry, companies must register with the National Office for Tourism at: 

The Foreign Investment Promotion Agency (FIPA) is the central point of contact for foreign investors. Its website is: .

Outward Investment

The GOT does not incentivize outward investment, and capital transfer abroad is tightly controlled by the Central Bank.

2. Bilateral Investment Agreements and Taxation Treaties

The 2002 Trade and Investment Framework Agreement (TIFA) between Tunisia and the United States remains active. A meeting of the bilateral Trade and Investment Council in April 2017 helped promote engagement and cooperative reform efforts. A Bilateral Investment Treaty (BIT) between Tunisia and the United States entered into force in 1993. The BIT with Tunisia differs in certain key aspects from more recent investment agreements signed by the U.S.

Tunisia has bilateral trade agreements with approximately 81 countries, including its neighbors Libya and Algeria. In January 2008, Tunisia’s Association Agreement with the EU went into effect. This agreement eliminated tariffs on industrial goods with the eventual goal of creating a free trade zone between Tunisia and the EU member states. In addition, Tunisia is signatory to the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group which offers private sector political risk insurance guarantees. Tunisia has signed the WTO Agreement, bilateral agreements with the Member States of the European Free Trade Association (EFTA), and bilateral and multilateral agreements with Arab League members and Turkey.

A 1985 bilateral treaty (and 1989 protocol) guarantees U.S. firms freedom from double taxation. In 2013, the Parliament adopted the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

3. Legal Regime

Transparency of the Regulatory System

As stipulated in the 2014 new constitution, Tunisia has adopted a semi-parliamentary political system where power is shared between the Parliament, which fulfils the legislative role, and the Presidency of the Republic and the Government, composed of the ministerial cabinet led by a Prime Minister. The Presidency and the Government fulfill the executive role.

Most laws and regulations are developed by the Government; however, the Presidency of the Republic as well as the Parliament can also develop and propose laws.

The Parliament debates and votes on the adoption of the laws. Draft laws are accessible to the public via the Parliament’s website.

Ministerial decrees, decisions, and other related regulations are debated at the level of the government and adopted by a Ministerial Council headed by the Head of Government.

After adoption, all laws, decrees, and regulations are published on the website of the Official Gazette and enforced by the Government at the national level.

The Government takes few proactive steps to raise public awareness of the public consultation period for new draft laws and decrees. Civil society, NGOs, and political parties are all pushing for increased transparency and inclusiveness in rule-making. Many draft bills, such as the budget laws, were reviewed many times before submission for the final vote under the pressure of civil society. Business associations, chambers of commerce, unions, and political parties reviewed the 2016 Investment Law prior to final adoption.

Not all accounting, legal, and regulatory procedures are in line with international standards.

Publicly listed companies adhere to national accounting norms.

The Parliament has oversight authority on the Government but cannot ensure that all administrative processes are followed.

The World Bank Global Indicators of Regulatory Governance  for Tunisia are available here: .

Tunisia is a member of the Open Government Partnership, a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance. 

International Regulatory Considerations

Tunisia has a free trade agreement in goods with the EU. In its effort to achieve a Deep and Comprehensive Free Trade Agreement (DCFTA), the GOT is working on incorporating as many EU standards as possible in its own regulation.

Tunisia has been a member of the WTO since 1995 and notifies it about draft technical regulations on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

The Tunisian legal system is secular. It is based upon the French Napoleonic code and meets EU standards. While the 2014 Tunisian constitution guarantees the independence of the judiciary, constitutionally mandated reforms of courts and broader judiciary reforms are still Ongoing.

Regulations or enforcement actions are appealable at the Court of Appeal.

Laws and Regulations on Foreign Direct Investment

The 2016 investment law went into effect April 1, 2017. With a total number of 36 articles, the new law is much shorter and clearer than the previous lengthy and complex Investment Code of 1993. It directs tax incentives towards regional development promotion, technology and high added value, research and development (R&D), innovation, small and medium enterprises (SMEs), and toward encouraging investments in certain sectors (such as education, transport, health, and culture) and environmental protection.

The primary one-stop-shop webpage for investors looking for relevant laws and regulations is hosted at the Investment and Innovation Promotion Agency (APII) website . The 2016 Investment Law (article 15) calls for the creation of the Investor’s Unique Point of Contact within the Ministry of Development, Investment, and International Cooperation to assist new and existing investors to launch and expand their projects.

In addition, the Parliament has adopted a suite of economic reform laws since 2015, including a new renewable energy law, competition law, public-private partnership law, bankruptcy law, and central bank statute to enshrine the independence of the Central Bank of Tunisia

Competition and Anti-Trust Laws

The 2015 Competition Law established a government appointed Competition Council to reduce government intervention in the economy and promote competition based on supply and demand.

The law ensures free pricing of most products and services, with the exception of a list (determined by decree) of protected products and services such as bread or electricity. In exceptional cases of large increases or collapse in prices, the Ministry of Industry and Trade reserves the right to regulate prices for a period of up to six months. The law also voided previous agreements that fixed prices, limited free competition or the entry of other companies, and limited or controlled production, distribution, investment, technical progress, or supply centers. The Ministry of Industry and Trade reserves the right to uphold these competition-inhibiting agreements, however, if parties can convince the Competition Council that these practices are necessary for overall technical or economic progress, and that benefits are fairly distributed.

The Competition Council has the power to investigate cases and make recommendations to the Ministry of Industry and Trade upon the Ministry’s request.

Expropriation and Compensation

The 2016 Investment Law (article 8) stipulates that investors’ property may not be expropriated except for public interest. Expropriation, if and when carried out, must comply with legal procedures, be executed without discrimination on the basis of nationality, and provide fair and equitable compensation.

U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). According to Article III of the BIT, the GOT reserves the right for direct and indirect expropriation or nationalization of investments for a public purpose only, in a non-discriminatory manner, and upon advance compensation of the full value of the expropriated investment. The treaty grants the right to prompt review by the relevant Tunisian authorities of the expropriation and compensation’s conformity to the principles of international law. When compensations are granted to national or third country companies whose investments suffer losses owing to events such as war, armed conflict, revolution, state of national emergency, civil disturbance, etc., U.S. companies are accorded “the most favorable treatment in regards to any measures adopted in relation to such losses.” There are no outstanding expropriation cases involving U.S. interests.

Dispute Settlement

ICSID Convention and New York Convention

Tunisia is a member of the International Center for the Settlement of Investment Disputes and is signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

U.S. investments in Tunisia are protected by international law as stipulated in the U.S.-Tunisia Bilateral Investment Treaty (BIT). The U.S.-Tunisia Bilateral Investment Treaty stipulates that procedures shall allow an investor to take a dispute with a Party directly to binding third-party arbitration.

Disputes involving U.S. persons are relatively rare. Over the past 10 years there were four dispute cases involving U.S. investors; three were settled and one is still ongoing. U.S. firms have generally been successful in seeking redress through the Tunisian judicial system.

The Tunisian Code of Civil and Commercial Procedures allows for the enforcement of foreign court decisions under certain circumstances; i.e., arbitration.

There is no pattern of significant investment disputes or discrimination involving U.S. or other foreign investors.

International Commercial Arbitration and Foreign Courts

The Tunisian Arbitration Code brought into effect by Law 93-42 of 26 April 1993 governs arbitration in Tunisia. Certain provisions within the code are based on the UNCITRAL model law. Tunisia has several domestic dispute resolution venues. The best known is the Tunis Center for Conciliation and Arbitration. When an arbitral tribunal does not adhere to the rules governing the process, either party can apply to the national court for relief. Unless the parties have agreed otherwise, an arbitral tribunal may, on the request of one of the parties, order any interim measure that it deems appropriate.

Bankruptcy Regulations

Parliament adopted in April 2016 a new bankruptcy law which merged and replaced Chapter IV of the Commerce Law and the Law N° 95-34 (Recovery of Companies in Economic Difficulties law). These two previous laws had duplicative and cumbersome processes for business rescue and exit and gave creditors a marginal role. The new law increases incentives for failed companies to undergo liquidation by limiting state collection privileges. The improved bankruptcy procedures are intended to decrease the number of non-performing loans and facilitate access of new firms to bank lending.

According to the Word Bank 2017 Doing Business report, Tunisia’s recovery rate (which calculates how many cents on the dollar secured creditors recover from an insolvent firm at the end of insolvency proceedings) is about 52 cents on the dollar (compared to 26 cents on the dollar for MENA as a whole and 73 cents on the dollar for OECD high income countries).

4. Industrial Policies

Investment Incentives

Preferential status (offshore, free trade zone) is usually linked to percentage of foreign corporate ownership, percentage of production for the export market, and investment location. The 2016 Investment Law provides investors with a broad range of incentives linked to increased added value, performance and competitiveness, use of new technologies, regional development, environmental protection, and high employability.

To incentivize the employment of new university graduates, the GOT assumes the employer’s portion of social security costs (16 percent of salary) for the first seven years of the investment, with an extension of up to 10 years for investments in the interior regions. Investments with high job-creation potential may benefit from the purchase of state-owned land for a very small payment (one Tunisian dinar [less than $1] per square meter). Investors who purchase companies in financial distress may also benefit from tax breaks and social security assistance. These advantages are determined on a case-by-case basis.

Further benefits are available for offshore investments, such as tax exemptions on profits and reinvested revenues, duty-free import of capital goods with no local equivalents, and full tax and duty exemption on raw materials, semi-finished goods, and services necessary for operation.

According to the World Bank’s 2017 Ease of Doing Business report, Tunisia’s overall ranking dropped to 77 out of 190, down from 75 a year ago.

Foreign Trade Zones/Free Ports/Trade Facilitation

Tunisia has free trade zones, officially known as “Parcs d’Activités Economiques,” in Bizerte and in Zarzis. While the land is state-owned, a private company manages the free trade zones. They enjoy adequate public utilities and fiber optic connectivity. Companies established in the free trade zones are exempt from taxes and customs duties and benefit from unrestricted foreign exchange transactions. Inputs enjoy limited duty-free entry into Tunisia for transformation and re-export. Factories are considered bonded warehouses and have their own assigned customs personnel.

For example, companies in Bizerte’s free trade zone may rent space for three Euros per square meter annually – a level unchanged since 1996 — plus a low service fee. Long-term renewable leases, up to 25 years, are subject to a negotiable 3 percent escalation clause. Expatriate personnel are allowed duty free entry of personal vehicles. During the first year of operations, companies within the zone must export 100 percent of their production. Each following year, the company may sell domestically up to 30 percent of the previous year’s total volume of production, subject to local customs duties and taxes. Lease termination has not been a problem, and all companies that desired to depart the zone reportedly did so successfully.

Performance and Data Localization Requirements

Foreign resident companies face restrictions related to the employment and compensation of expatriate employees. The 2016 Investment Law limits the percentage of expatriate employees per company to 30 percent of the total work force (excluding oil and gas companies) for the first three years and to 10 percent starting in the fourth year. There are somewhat lengthy renewal procedures for annual work and residence permits, and the GOT has announced its intention to ease them in the future. Although rarely enforced, legislation limits the validity of expatriate work permits to two years.

Central Bank regulations impose administrative burdens on companies seeking to pay for temporary expatriate technical assistance from local revenue. For example, before it receives authorization to transfer payment from its operations in Tunisia, a foreign resident company that utilizes a foreign accountant must document that the service is necessary, fairly valued, and unavailable in Tunisia. This regulation hinders a foreign resident company’s ability to pay for services performed abroad.

The host government does not follow “forced localization,” the policy in which foreign investors must use domestic content in goods or technology.

There are no requirements for foreign Information Technologies (IT) providers to turn over source code, but they need to inform the Ministry of Communication Technologies and Digital Economy about encrypted equipment.

Public companies and institutions are prohibited by the Ministry of Communication Technologies and Digital Economy from freely transmitting and storing personal data outside of the country.

Private and public institutions have to comply with the recommendations of the National Authority for Personal Data Protection (INPDP) when dealing with personal data even if it is business related.

Performance Requirements

Until recently, performance requirements were generally limited to investment in the petroleum sector. Now, such requirements are in force in sectors such as telecommunications and for private sector infrastructure projects on a case by case basis. These requirements tend to be specific to the concession or operating agreement (e.g., drilling a certain number of wells, or producing a certain amount of electricity).

5. Protection of Property Rights

Real Property

Secured interests in property are enforced in Tunisia. Mortgages and liens are in common use, and their recording system is reliable.

Foreign and/or non-resident investors are allowed to lease any type of land, but can only acquire non-agricultural land.

A large portion of privately held lands, especially agriculture lands have no clear titles, and the government is investing a great deal of effort to encourage people to clear and register their properties.

Properties legally purchased have to be duly registered to ensure they remain the property of their actual owners even if they are unoccupied for a long time.

Intellectual Property

Tunisia is a member of the World Intellectual Property Organization (WIPO) and signatory to the United Nations (UNCTAD) Agreement on the Protection of Patents and Trademarks. The agency responsible for patents and trademarks is the National Institute for Standardization and Industrial Property (INNORPI – Institut National de la Normalisation et de la Propriété Industrielle). Tunisia is party to the Madrid Protocol for the International Registration of Marks. Foreign patents and trademarks should be registered with INNORPI.

Tunisia’s patent and trademark laws are designed to protect owners duly registered in Tunisia. In the area of patents, foreign businesses are guaranteed treatment equal to that afforded to Tunisian nationals. Tunisia updated its legislation to meet the requirements of the WTO agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

Copyright protection is the responsibility of the Tunisian Copyright Protection Organization (OTPDA – Organisme Tunisien de Protection des Droits d’Auteur), which also represents foreign copyright organizations.

If a copyright violation is suspected, customs officials are permitted to inspect and seize suspect goods. For products utilizing foreign trademarks registered at INNORPI, the Customs Code allows customs agents to operate throughout the entire country. Tunisian copyright law applies to literary works, art, scientific works, new technologies, and digital works. Its application and enforcement, however, have not always been consistent with foreign commercial expectations. Print, audio, and video media are considered particularly susceptible to copyright infringement. Much smuggling of illegal items takes place through Tunisia’s porous borders.

Resources for Rights Holders

Aisha Y. Salem
Intellectual Property Attaché for the Middle East and North Africa
U.S. Embassy Kuwait City, Kuwait
U.S. Department of Commerce Global Markets
U.S. Patent and Trademark Office
Tel: +965 2259 1455
AmCham Tunisia 
Attorneys list

6. Financial Sector

Capital Markets and Portfolio Investment

Tunisia’s financial system is dominated by its banking sector, with banks accounting for roughly 90 percent of financing in Tunisia. Overreliance on bank financing impedes faster economic growth and stronger job creation. Equity capitalization is relatively small; Tunisia’s stock market provides 6-7 percent of corporate financing. Other mechanisms such as bonds and microfinance contribute marginally to the overall economy.

Created in 1969, the Bourse de Tunis (Tunis stock exchange) listed 79 companies (66 in the main market, 12 in the alternative market, and one in a special group) as of December 2016. Capitalization of these companies was valued at $10.6 billion. During the last five years, the exchange’s regulatory and accounting systems have been brought more in line with international standards, including compliance and investor protections. The exchange is supervised and regulated by the state-run Capital Market Board. Most major global accounting firms are represented in Tunisia. Firms listed on the stock exchange must publish semiannual corporate reports audited by a certified public accountant. Accompanying accounting requirements exceed what many Tunisian firms can, or are willing to, undertake. GOT tax incentives attempt to encourage companies to list on the stock exchange. Newly listed companies that offer 30 percent percent capital share to the public receive a five-year tax reduction on profits. In addition, individual investors receive tax deductions for equity investment in the market. Capital gains are tax free when held by the investor for two years.

Foreign investors are permitted to purchase shares in resident (onshore) firms only through authorized Tunisian brokers or through established mutual funds. To trade, non-resident (offshore) brokers require a Tunisian intermediary and may only service non-Tunisian customers. Tunisian brokerage firms may have foreign participation, as long as that participation is less than 50 percent. Foreign investment of up to 50 percent of a listed firm’s capital does not require authorization.

Money and Banking System

Tunisia hosts 32 banks, of which 21 conduct both commercial and investment services. Two are Islamic universal banks, seven are offshore, and two are business banks. After the fall of the former regime, companies, banks, and real estate that belonged to ousted President Ben Ali’s family were brought under GOT receivership.

Private credit stands at 65 percent of GDP in Tunisia. According to the World Bank, this level lags behind economic peers such as Morocco and Jordan, whose rate is 80 percent. In the World Bank’s 2017 Ease of Doing Business survey, Tunisia’s raking improved in terms of ease of access to credit from 126 in 2016 to 101 in 2017. According to the IMF Financial System Stability Assessment, the banking sector faces significant challenges such as a weak domestic economy and the legacy of the previous regime. In particular, loan quality, solvency, and profitability have deteriorated. Weak underwriting practices contributed to inappropriate lending to well-connected borrowers. Tunisia’s 25 onshore banks offer essentially identical services targeting the same segment of Tunisia’s larger corporations. Meanwhile, SMEs and individuals often have difficulty accessing bank capital due to high collateralization requirements.

Government regulations hold down lending rates. This prevents banks from pricing their loan portfolios appropriately and incentivizes bankers to restrict the provision of credit. Competition among Tunisia’s many banks has the effect of lowering observed interest rates; however, banks often place conditions on loans that impose far higher costs on borrowers than interest rates alone. These non-interest costs may include collateral requirements that come in the form of liens on real estate. Often, the collateral must equal or exceed the value of the loan principal. Collateral requirements are high as banks face regulatory difficulties in collecting collateral, thereby adding to costs. Nonperforming loans (NPLs) increased to 17 percent in 2016.

Beyond the banks and stock exchange, few effective financing mechanisms are available in the Tunisian economy. A true bond market does not exist, and government debt sold to financial institutions is not re-traded on a formal, transparent secondary market. Private equity remains a niche element in the Tunisian financial system. Firms experience difficulty raising sufficient capital, sourcing their transactions, and selling their stakes in successful investments once they mature. The microfinance market remains underexploited, with non-governmental organization Enda Inter-Arabe the dominant lender in the field.

The GOT established two categories of financial service providers: banking (e.g., deposits, loans, payments and exchange operations, and acquisition of operating capital) and investment services (reception, transmission, order execution, and portfolio management). Non-resident financial service providers must present initial minimum capital (fully paid up at subscription) of 25 million Tunisian dinars ($11.7 million) for a bank, 10 million dinars ($4.7 million) for a non-bank financial institution, 7.5 million dinars ($3.5 million) for an investment company, and 250,000 dinars ($112,000) for a portfolio management company.

Foreign Exchange and Remittances

Foreign Exchange

The Tunisian Dinar can be traded only within Tunisia and it is illegal to move dinars out of the country. The dinar is convertible for current account transactions (remittances of investment capital, earnings, loan or lease payments, royalties, etc.). Central Bank authorization is needed for some foreign exchange operations, however. For imports, Tunisian law prohibits the release of hard currency from Tunisia as payment prior to the presentation of certain documents establishing that the merchandise has physically been shipped to Tunisia.

The Tunisian Central Bank pegs the dinar daily to a basket of currencies (including the Euro, the U.S. dollar, and the Japanese yen) weighted to reflect the relative importance of these currencies in Tunisia’s external trade. The dinar is adjusted in real terms to the fluctuations of these currencies, taking into consideration inflation differentials. The exchange rate is freely quoted by Tunisian banks, which command a slight transaction premium. The Central Bank can intervene in the market to stabilize the currency or relieve pressure on the market. In 2016, the dinar depreciated 12.7 percent against the dollar and 3.2 percent against the Euro.

Non-residents are exempt from most exchange regulations. Under foreign currency regulations, non-resident companies are defined as having:

Non-resident individuals who own at least 66 percent of the company’s capital, and

Capital financed by imported foreign currency.

Foreign investors may transfer funds at any time and without prior authorization. This applies to principal as well as dividends or interest capital. The Procedures for repatriation are complex, however, and within the discretion of the Central Bank. The difficulty in the repatriation of capital and dividends is one of the most recurrent complaints made by foreign investors in Tunisia.

There is no limit to the amount of foreign currency that visitors can bring into Tunisia to exchange for dinar. However, amounts exceeding the equivalent of 25,000 dinars ($10,900) must be declared to customs at the port of entry. Non-residents must also report foreign currency imports if they wish to re-export or deposit more than 5,000 dinars ($2,200). Tunisian customs authorities may require currency exchange receipts on exit from the country.

Remittance Policies

Tunisia’s 2016 Investment Law enshrines the right of foreign investors to freely transfer abroad funds in foreign currency with minimal interference from the Central Bank. The new law instructs the relevant authorities to publish, before October 7, 2017, a list of “administrative authorizations;” i.e., investment transactions requiring Central Bank approval, together with the time periods, procedures, and conditions under which approval shall be granted. Only investment transactions cited on this list will require pre-authorization.

Additionally, the list will include specific deadlines to which regulators must adhere in responding to investors’ requests for remittances. If regulators fail to provide a specific response to an investor within these deadlines, the remittance shall be deemed approved. The list, and its associated implementing decrees and procedures, had not yet been published at the time of this report.

Sovereign Wealth Funds

By decree 85-2011, the GOT established a sovereign wealth fund “Caisse des Depots et des Consignations” (CDC) to boost private sector investment and promote Small and Medium Enterprise (SME) development. It is a state-owned investment entity charged with independently managing a portion of the state’s financial assets. The CDC was set up with support from the French CDC and the Moroccan CDG (Caisse de Depots et de Gestion) and became operational in early 2012. The original impetus for the creation of the CDC was to manage assets confiscated from the former ruling family as independently as possible in order to serve the public interest. More information is available about the CDC at .

At the end of 2015, CDC had 5 billion dinars ($2.3 billion) worth of assets and a 200 million dinars ($ 90 million) capital.

All CDC investments are made locally with the objective of boosting investments in the interior regions as well as promoting SME development.

The CDC is governed by a surveillance committee formed by representatives from different ministries and chaired by the Minister of Finance.

7. State-Owned Enterprises

State-owned enterprises (SOEs) are still prominent throughout the economy. Many compete with the private sector in industries such as telecom, banking, and insurance. There remain monopolies in other sectors considered sensitive by the government, such as railroad transportation, water and electricity distribution, postal services, and port logistics. Importation of basic staples and strategic items such as cereals, sugar, edible oil, and steel also remain under SOE control.

Senior management officials of SOEs are appointed by the GOT and report to their respective ministries. The board of directors for each SOE comprises representatives from various ministries and public shareholders depending on the relevant sector. Like private companies, SOEs are required by law to publish independently audited annual reports, whether or not corporate capital is publicly traded on the stock market.

The GOT encourages SOEs to adhere to OECD Guidelines on Corporate Governance, but adherence is not enforced. Investment banks and credit agencies tend to associate SOEs with the government and consider them having the same risk profile for lending purposes.

Privatization Program

The GOT allows foreign participation in its privatization program. A significant share of Tunisia’s FDI in recent years has come from the privatization of state-owned or state-controlled enterprises. Privatization has occurred in many sectors, such as telecommunications, banking, insurance, manufacturing, and fuel distribution, among others.

In 2011, the GOT confiscated the assets of the former regime. The asset list touched upon every major economic sector. According to the GOT Commission to Investigate Corruption and Malfeasance, a court order is required to determine the ultimate handling of frozen assets. Since court actions frequently take years – and with the government facing immediate budgetary needs – the GOT allowed privatization bids for shares in Ooredoo (telecom), Ennakl (car distribution), Carthage Cement (cement), City Cars (car distribution), and Banque de Tunisie (banking). The GOT does not exclude the possibility of selling shares in these companies on the “Bourse de Tunis,” Tunisia’s stock exchange, in its efforts to cope with budget constraints, upgrade the banking sector, and increase foreign reserves. The government is expected to sell some of its stakes in state-owned banks; however, no clear plan has been officially adopted or communicated so far.

8. Responsible Business Conduct

There is no comprehensive national policy on responsible business conduct, although there is increasing awareness among the government, NGOs, and private companies. Tunisia is an adherent to the OECD Guidelines for Multinational Enterprises.

Since 1989, the public sector has been subject to a government procurement law that requires labor, environmental, and other impact studies for large procurement projects. All public institutions are also subject to audits by the Court of Auditors (Cour des Comptes).

The Tunisian Central Bank adopted a circular in 2011 setting guidelines for sound and prudent management, guaranteeing and safeguarding the interests of shareholders, creditors, depositors and staff. The circular also established policies on recruitment, appointment and remuneration, as well as dissemination of information to shareholders, depositors, market counterparts, regulators, and the general public.

The emerging role of non-government organizations in Tunisia, notably in human rights, environmental protection, consumer rights, labor unions, and employer unions has redefined the role of Tunisian businesses to include social responsibility.

The national point of contact for OECD for Multinational Enterprises guidelines is:

Mr. Abdelmajid Mbarek, Director
Ministry of Development, Investment, and International Cooperation
Avenue Mohamed V
1002 Tunis
Tel: +216 7184 9596
Fax: +216 7179 9069

Tunisia has not yet joined the Extractive Industries Transparency Initiative (EITI). Tunisia did participate in the 7th world conference of the EITI in Lima, Peru. Projects related to commercial development of oil, natural gas, or minerals are subject to Parliamentary approval.

9. Corruption

Tunisian and U.S. businesses with regional experience indicate that corruption exists, but may not be as pervasive as that found in neighboring countries. U.S. investors report that corrupt practices involve routine procedures for doing business (customs, transportation, and some bureaucratic paperwork). These behaviors, however, do not appear to pose a significant barrier to doing business in Tunisia. Transparency International’s Corruption Perceptions Index 2016 gave Tunisia a score of 41 out of 100 and a rank of 75 among 175 countries. Regionally, Tunisia is ranked 9th among MENA countries and first in North Africa, ahead of Morocco, Algeria, Egypt, and Libya. Most U.S. firms involved in the Tunisian market do not identify corruption as a primary obstacle to foreign direct investment.

Tunisia’s penal code devotes 11 articles to defining and classifying corruption and assigns corresponding penalties (including fines and imprisonment). Several other regulations also address broader concepts of corruption. Detailed information on the application of these laws and their effectiveness in combating corruption is not publicly available, and there are no GOT statistics specific to corruption. The Independent Commission to Investigate Corruption, created in 2011, handled corruption complaints from 1987-2011. The commission referred 5 percent of cases to the Ministry of Justice. In 2012, the commission was replaced by the National Authority to Combat Corruption, which has the authority to forward corruption cases to the Ministry of Justice, give opinions on legislative and regulatory anti-corruption efforts, propose policies and collect data on corruption, and facilitate contact between anti-corruption efforts in the government and civil society.

In February 2017 the Parliament passed a new law (#2017-10) on corruption reporting and whistleblower protection. The law is considered a significant step in the fight against corruption, as it establishes the mechanisms, conditions, and procedures for denouncing corruption. Article 17 of the law provides protection for whistleblowers, and any act of reprisal against them is regarded as a punishable crime.

For public servants, the new law also guarantees that whistleblowers are protected against possible retaliation by their superiors.

Recent government efforts to combat corruption include: the seizure and privatization of assets belonging to Ben Ali’s family members; assurances that price controls on food products, gasoline, etc., are respected; enhancement of commercial competition in the domestic market; establishment of a division within the Prime Minister Office dedicated to the fight against corruption; and harmonization of Tunisian laws with those of the European Union.

Since 1989, a comprehensive law designed to regulate each phase of public procurement has governed the public sector. The GOT also established the Higher Commission on Public Procurement (CSM – Commission Supérieure des Marchés publics) to supervise the tender and award process for major government contracts. The government publicly supports a policy of transparency. Public tenders require bidders to provide a sworn statement that they have not and will not, either themselves or through a third party, make any promises or give gifts with a view to influencing the outcome of the tender and realization of the project. Despite the law, competition on government tenders appears susceptible to corruptive behavior. Pursuant to the Foreign Corrupt Practice Act (FCPA), the U.S. Government requires that American companies requesting U.S. Government advocacy certify that they do not participate in corrupt practices.

Resources to Report Corruption

Contact at GOT agency responsible for combating corruption:

Mr. Chawki Tabib
The National Anti-Corruption Authority (Instance Nationale de Lutte Contre la Corruption – INLUCC) 
71 Avenue Taieb Mhiri, 1002 Tunis Belvédère – Tunisia
+216 71 840 401 / Toll Free: 80 10 22 22

Contact at “watchdog” organization:

Mr. Achraf Aouadi
I WATCH Tunisia
14 Rue d’Irak 1002 Lafayette, Tunisia
+ 216 71 844 226

10. Political and Security Environment

Tunisia has a history of political stability. Incidents involving politically-motivated damage to economic projects or infrastructure are extremely rare. In December 2010 and January 2011, however, civil unrest in the underserved interior regions eventually forced former President Ben Ali to flee Tunisia on January 14, 2011.

Post-revolution instability in 2013, including two high profile political assassinations, resulted in widespread public protests. Political calm was restored in early 2014 with the successful conclusion of Tunisia’s National Dialogue; a new constitution; and the installation of an interim, technocratic government that paved the way for free and fair parliamentary and presidential elections at the end of that year. The next national-level elections are scheduled to take place in 2019; local elections will take place before that; they are scheduled for December 2017.

Two major terrorist attacks targeting the tourism sector occurred in 2015, killing dozens of foreign tourists at the Bardo National Museum in Tunis and a beach hotel in Sousse. Travelers are urged to visit for the latest travel alerts and warnings regarding Tunisia. In addition, a presidential guard bus was bombed by terrorists in Tunis in November 2015, and the border town of Ben Guerdan in south Tunisia was attacked by armed militants in March 2016.

11. Labor Policies and Practices

Tunisia has a highly literate labor force of approximately 3.9 million. The official 2016 unemployment rate was 15.5 percent; however, unemployment is estimated at over 30 percent among university graduates. Official statistics do not count underemployment or provide disaggregated data by geography.

In order to keep the unemployment rate at current levels, 60,000 new private sector jobs must be created each year. Over the past two decades, the structure of the workforce remained relatively stable, and as of the last quarter of 2016 stood at 15 percent agriculture and fishing, 33 percent industrial, and 52 percent commerce and services. Tunisia has successfully developed its industrial sector and created low-skilled employment, but has been unable to absorb educated entrants into the job market.

The right of labor to organize is protected by law. Currently, four national labor confederations operate in Tunisia. The oldest and largest is the General Union of Tunisian Workers (UGTT – Union Générale des Travailleurs Tunisiens). Three newer ones are the General Confederation of Tunisian Workers (CGTT – Confederation Générale des Travailleurs Tunisiens), the Tunisian Labor Union (UTT – Union Tunisienne du Travail), created in May 2011, and the Tunisian Labor Organization (OTT – Organisation Tunisienne du Travail), created in August 2013. UGTT claims about one third of the salaried labor force as members, although more are covered by UGTT-negotiated contracts. Wages and working conditions are established through triennial collective bargaining agreements between the UGTT, the national employers’ association (UTICA – Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat), and the GOT. These tripartite agreements set industry standards and generally apply to about 80 percent of the private sector labor force, regardless of whether individual companies are unionized.

The most recent private sector wage increase agreement was signed in March 2017 and stipulates an increase of 6 percent. An emboldened labor movement has also increased its demands for private sector reforms. Labor unrest is still an issue although at a smaller scale than in 2011 and 2012. The official national minimum monthly wage (based on 40 hour/week) in the industrial sector is 302.75 dinars (~$150), and 348 dinars (~$175) for a 48 hour week.

In December 2016, the GOT and UGTT reached a wage increase agreement in the public sector that enters into force starting January 2017.

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) has been active in the Tunisian market since 1963. OPIC provides political risk insurance and financing to U.S. companies. OPIC has designed a number of investment funds that include Tunisia. These funds cover, among other sectors, franchising and small and medium enterprise development. OPIC supports private U.S. investment in Tunisia and has sponsored several reciprocal investment missions. In 2015, OPIC signed a credit guarantee facility agreements totaling $50 million with three Tunisian banks to increase access to capital for SMEs.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2015 43,141 2015 43,020 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 4.04 2015 311 BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2015 17 BEA data available at
Total inbound stock of FDI as % host GDP 2015 2.32% N/A N/A N/A

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA) End 2015 and End 2016.

Table 3: Sources and Destination of FDI

Direct Investment from/in Tunisia in 2016 (excluding energy)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 510.85 100% Total Outward Amount 100%
France 169.75 33.2% N/A
Germany 72.43 14.2% N/A
UK 42.85 8.4% N/A
Libya 37.86 7.4% N/A
Qatar 27.73 5.4% N/A
“0” reflects amounts rounded to +/- USD 500,000.

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA), yearend 2015 and yearend 2016.

Table 4: Sources of Portfolio Investment

Tunisia was not covered by the IMF’s Coordinated Portfolio Investment Survey (CPIS).

Portfolio Investment Assets in Tunisia in 2016
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 40.89 100% All Countries Amount 100% All Countries Amount 100%

* Source: Tunisia’s Foreign Investment Promotion Agency (FIPA), yearend 2015 and yearend 2016.

14. Contact for More Information

Embassy Tunis Commercial Section
Commercial Officer
U.S. Embassy Tunis, Les Berges du Lac, 1053, Tunisia
+216 71 107 000

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The Lessons of 1989: Freedom and Our Future