Free Zones in Egypt and Qatar

In May, the Egyptian government approved a new free zone in Aswan as part of plans to develop cities in Upper Egypt. Apart from the domestic impact, the zone is designed to boost Egypt’s trade with Sudan and other Nile Basin countries. Industries ranging from gemstones and granite to textile manufacturing will be major beneficiaries.

The Aswan free zone is one of seven new free zones that the Ministry of Local Development plans to open by 2022 with capital of up to USD 12B. The others will be located in New Ismailia, elHerafien in Giza governorate, Gamasa in Dakahlia governorate, Mutubas in Kafr El Sheikh governorate. The overall plan is designed to meet the ministry’s goal of equal distribution of free zones in all Egyptian governorates to create jobs and development.

Minister of Investment and International Cooperation Sahar Nasr expects the Aswan free zone to contribute 0.4% to Egypt’s GDP and increase exports through free zones by 3.4% a year from 2018’s USD 17.9B. Exports from free zones make up about 60% of Egypt’s total exports globally, so adding new one should have a direct impact on GDP growth.

The Aswan free zone will become Egypt’s 10th zone. Currently, the nine zones incorporate over 1,000 projects worth about USD 12B in capital and over USD 2B in foreign direct investment. The zones have also provided over 190,000 jobs.

Qatar plans to spend USD 3B to attract foreign companies to its new zones. Logistics, chemicals, plastics and artificial intelligence are among the industries intended for the zones.The government plans to spend an additional USD 2B as the free zones expand. Additional benefits include a 20- year exemption from corporate tax, no individual income tax and zero customs duties on imports

To date, Qatar’s only free zone is the Qatar Science and Technology Park, an incubator for technology start-ups. However, business owners and sole investors can setup companies within the Qatar Financial Centre, which (although it is not a free zone) allows 100% foreign ownership.

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