Minister of Industry Issues Decree Amending Controls on Disposition Prohibition, Activity Changes, and Grace Period Grants for Struggling Industrial Projects
Eng. Khaled Hashem:
Demonstration of commitment satisfied by obtaining Operating Permit and Industrial Registry, settling full land price, and commencing production to execute ownership transfers, assignments, or leases, replacing previous 3-year operational timeline requirement for projects
- Facilitation provided in industrial activity change controls to allow sector transfers on land handover minutes based on reasoned feasibility studies, subject to IDA approval
- Application of grace periods restricted exclusively to committed projects, excluding lands exceeding timeline programs with active cancellation or withdrawal decisions
- Maximum final 3-month grace period granted to projects previously awarded extensions prior to initiating land withdrawal proceduresMinister of Industry Eng. Khaled Hashem issued Decree No. 171 of 2026 amending certain provisions of Decree No. 107 of 2026 to introduce a new package of facilitations aimed at eliminating obstacles for committed investors and accelerating production cycles.
Minister of Industry recently announced temporary suspension of Decree No. 107 of 2026 from mid-August through end of December, regarding prohibition of ownership transfers or factory leasing, to regulate industrial land transactions and provide necessary private sector flexibility alongside tightening oversight and establishing commitment. The New Decree No. 171 of 2026 formally regulates this direction by abolishing previously stipulated timeline requirements of 3 operational years for industrial land assignments and 1 operational year for leasing, satisfying conditions by demonstrating commitment, commencing actual operations, and settling full price for land disposition or leasing, alongside reorganizing grace period rules for struggling projects based on actual execution rates on ground.
The minister stated that Article 1 of decree focused on defining grace periods and facilitations as follows:
- Projects holding Building Permit and achieving execution rate of 75% or higher are granted maximum 6-month grace period, with complete exemption from delay fines and obligation to pay standard prescribed costs, to finalize execution, procure machinery, and obtain Operating Permit and Industrial Registry.
- Projects holding Building Permit and achieving execution rate between 50% and under 75% of Building Permit are granted maximum 12-month grace period, with exemption from delay fines for first 6 months only, while paying prescribed fines and costs for remaining delay period.
● Projects holding Building Permit with no construction execution or achieving under 50% execution are granted maximum 18-month grace period, with exemption from delay fines for first 6 months only, alongside obligation to pay fines and costs for remaining period.
- Projects previously granted extensions that failed to demonstrate commitment are granted maximum final 3-month grace period alongside payment of costs and fines; in case of non-compliance, allocation is canceled and land is withdrawn immediately for re-offering.
The minister of Industry emphasized that under all circumstances, facilitations and grace periods do not apply to industrial land plots whose holders failed to demonstrate any commitment, exceeded end of timeline program, and received active decisions canceling allocation or executing withdrawal.
Regarding Article 2 of the decree on regulating dispositions and assignments, the Minister clarified that the decree abolished requirement of 3 years of actual operation to dispose of land. The decree prohibits allocated party—whether under sale, usufruct, or lease-to-own systems—from executing ownership transfers, assignments, or leases prior to settling full land price and due amounts, obtaining Operating Permit and Industrial Registry, commencing actual operations, and paying standard costs.
The minister added that amendments included qualitative flexibility in industrial activity change controls. The decree allows approval for activity transfers from one sector to another on land handover minutes within industrial zones and Industrial Developer zones, conditional upon obtaining IDA approval based on reasoned feasibility study submitted by investor detailing circumstances justifying activity modification, provided land nature and location suit new activity alongside payment of standard costs.
It is worth noting that facilitations contained in Decree No. 171 of 2026 remain effective through end of December 2026. Effective January 1, 2027, prohibition barring industrial land disposition, assignment, or leasing applies until demonstration of commitment, passage of 3 operational years, and settlement of full land price.