The Tenders Law is currently being discussed in the Egyptian Parliament and may be approved within a month, member of parliament’s housing committee Mohamed Abdel Ghany told Daily News Egypt.
Daily News Egypt sat down with Abdel Ghany to discuss the laws which are expected to be issued during the current session of parliament.
What laws are being discussed in your committee?
The most discussed law is the one concerning amendments to the Tenders Law. The draft law consists of about 84 articles and is being discussed in the planning and budget committee with a joint committee gathering the Ministries of Housing, Energy, and Local Development to redraft the law and send it to the general committee for approval.
The old law was full of problems such as long procedures, corruption in assignments, and sometimes wrong direct orders or assignments by direct order to sovereign authorities to avoid falling under the law.
The current law does not address these problems. Furthermore, the awarding of bids and tenders is not clear and can cause corruption instead of eliminating it.
I think the law may be approved within a month.
Regarding the amendment of the Unified Building Law, the law has not been discussed yet and was not issued by parliament so far, after two years of the current parliament’s term.
Two months ago, the government submitted a draft law for amending the Unified Building Law and I submitted a parallel law to amend it. However, the government demanded delaying the discussion because they have further amendments to the law.
Moreover, a law was supposed to be issued but it was not; specifically the Reconciliation of Building Violations, which was being discussed during the first session of the parliament. I myself submitted another law to tackle all building violations including those on agricultural lands which was discussed in a joint committee of the housing, planning and budget, local development, constitutional and legislative affairs, and agriculture committees in April 2017. Although the joint committee approved the law more than eight months ago, it was not submitted to the general committee. Moreover, the government’s draft law on Reconciliation of Building Violations was discussed by the same joint committee and was not referred to the general committee for approval.
The Reconciliation of Building Violations is a temporary law as it will be applied for only 10 months from its issuance.
The government disagrees with parliament members on two issues. The first issue is building on agricultural land, as members see that it has never been that any building on such land was demolished and then rehabilitated to be planted. I put forward a solution for reconciliation where a violator would have to pay five times the reclamation cost for each metre built on, in addition to the building violation cost. This would be applied on violations prior to January 2017, while buildings constructed after that date will be demolished and fines will be imposed on violators.
The government disagrees with this solution.
Secondly, the method of calculating the fines on violation, as the government demanded the fine to be calculated based on the cost of construction but members see that this method of calculation is unjust because the value of land and building differ in different areas and that it should be linked to the value of the unit not the cost of construction. Members see that the fine should range between 10-15% of the value of the unit.
We also have the Developers Union draft law, which was submitted by the Real Estate Development Chamber at the Federation of Egyptian Industries. The draft law’s name was changed to Real Estate Development Law.
The law is being discussed as there are some disputes around the law, in addition to some reservations by developers on the period of completing projects, their delivery, and the fines imposed on them. There is a case of silence around discussing the law.
What are the top priority laws for the committee?
The highest priority is completing discussions on the Reconciliation of Building Violations Law, which in case of issuing, is expected to provide about EGP 150bn to the government.
Second is the Unified Building Law as it is one of the important laws that will handle the issues of building violations, besides the Tenders Law.
Currently, the housing committee is discussing the Social Housing draft law to establish an authority commissioned to oversee social housing projects and their organisation, as well as their financial resources. The draft was submitted by the Ministry of Housing.
I believe this law will be issued soon. Additionally, the real estate appraisal draft law, which was submitted by an MP, will be discussed.
When will the Unified Building Law be issued?
We held about 50 sessions inside parliament to discuss that law. Also, several sessions were held inside the Ministry of Housing to discuss the draft law.
MPs suggested some amendments to the draft law. However, the final version of the law neglected all these suggestions.
Currently, the law submitted by the government has not yet been discussed in parliament.
There were talks that parliament will discuss the amendment of the Old Rental Law. Why has it not been discussed so far?
There is a draft law submitted by some members, but this law is very crucial as there are about 2.5 million people who will be affected by that law. Thus, we should find real solutions for those people.
Therefore, handling this issue is supposed to be done in phases. First, we should start with commercial and administrative units and then housing units, through increasing the value of the rent or finding other alternatives for people with low finances who have rented units at a low value.
In addition, the government has to create a database for supporting people with low financial capabilities, providing them units from people who have them but do not inhabit them.
The draft law has never been discussed in parliament.
By the end of the current legislative session, which laws are expected to be issued?
Three laws are supposed to be issued: the Tenders Law, the Unified Building Law, and the Reconciliation of Building Violations Law before the end of December.
Once these laws are issued, what will be the effect on the real estate sector?
If we achieve progress in issuing the Reconciliation of Building Violations Law, the government will gain a large amount of money to be secured for the government budget and directed to infrastructure and land reclamation projects. Furthermore, the issuing of a Unified Building Law will organise and restrict building on agricultural lands, especially in rural areas. In addition, the Tenders Law will improve competitiveness between real estate companies and decrease corruption.
What are problems that hinder investments in the sector?
The sector’s main problem is the high price of land, which directly affects unit price. The second problem is price hikes with regards to construction materials due to the recent economic decisions taken by the government.
Within the past two years, the prices of construction materials doubled. The third problem is the lack of qualified manpower in the sector and in other sectors in general.
Add this to lack of using technology in the sector, which would decrease the cost of construction.
Do you think the government is a competitor to real estate companies?
The government trades in land. Further, the government’s role in providing middle-income housing is incomprehensible, in the context of providing lands for companies at high prices at the same time while providing these projects in the same areas that companies build in.
How did the devaluation of the Egyptian pound affect the sector?
The devaluation directly increased the prices of the raw materials necessary for construction. Developers were affected by the devaluation because they had already sold units based on the old prices and had to compensate the contractors due to increases in building material prices.
What are your expectations for real estate prices in the current year?
I think the prices will increase by 10% to 15% in the current year.
What is your opinion regarding launching new mega projects in the real estate sector such as New Alamein and the New Administrative Capital?
There is no doubt that these projects add to the development and renaissance of the country. However, I hoped that these projects would’ve been accompanied with industrial and commercial projects or to be prior to real estate projects, which should follow them.