The morning sun breaks through the haze over the Suez Canal – a 193-kilometer-long bottleneck through which around ten percent of global trade passes. While giant containers slowly glide through the waterway, there is a lot of activity on both banks. Here, between Sokhna on the Red Sea and Port Said on the Mediterranean, something is being built that Egypt’s government describes as the “new engine of the economy”: the Suez Canal Economic Zone (SCZone) – a mega-project covering an area of around 461 square kilometers that puts Egypt in the focus of the international economy. What used to be desert is now a landscape of harbor cranes, factory halls and new industrial parks. In Sokhna, Chinese, European and Arab companies work side by side. Textile factories, solar module plants, logistics centres – they all benefit from a location that is located directly at the eye of the needle of globalisation.

“In a world of increasingly fragmented supply chains, location diversification is becoming strategic. If you want to make production capacities resilient today, you should not only look at Eastern Europe – but also seriously examine what role Egypt can play in this,” says Yusef Ahmed in an interview with the Board Journal. The management consultant, who comes from Germany and is based in Egypt, supports companies from all over the world in setting up locations and business locally.

A special economic zone with a geopolitical mandate

The SCZone was created to strengthen Egypt’s role in global supply chains – not only as a transit country, but as a production location. It includes six seaports and four industrial and logistics zones , and operates with special tax and regulatory regimes to attract investors. The strategy is clear: foreign companies should not only smuggle goods through here, but also produce, assemble and export. For a country with a chronic shortage of foreign currency, this is a geopolitical project.

Billions of euros in investments – and thousands of new jobs

The figures are impressive – and politically intended.

• In the past three and a half years alone, 383 investment contracts have been concluded, with a total volume of 14.21 billion US dollars.
• These projects created around 134,300 direct jobs.
• In the first half of the 2025/26 financial year alone, 80 new projects worth over 5.1 billion US dollars were  signed.

As of 2022/23, the projects add up to over 334 projects worth more than $10.4 billion, most of which are located in industrial parks and logistics centers. These figures make SCZone one of Africa’s largest industrial investment clusters.

“A significant part of the industrial space has already been allocated to international investors. This shows how dynamically the location is developing – and that strategic decisions should not be postponed at will,” explains Ahmed.

Opportunities and advantages for international companies

For international investors, SCZone offers a package of financial, tax and administrative benefits that go beyond the Egyptian average:

• Tariff advantages: 0% customs duty on imports and intermediate consumption for projects in the zone – including imports from within the country.
• Tax advantages: 0% VAT on procurements and operating goods in the context of production. In addition, companies benefit from a 50% reduction in income tax for up to seven years.
• No restrictions on repatriation of profits: 100% of profits can be transferred abroad.
• 100% foreign ownership of companies in the zone is allowed.
• Goods from the SCZone receive an Egyptian certificate of origin, which facilitates access to countries with which Egypt has free trade agreements (e.g. GAFTA, EU Association Agreements).
• There is a one-stop-shop structure that centrally coordinates company registration, customs declarations, licenses and regulatory approvals.
• Land use: Land can be allocated on a long-term basis (up to 50 years, extendable) with rights of use.

Subsidies and additional incentives

In addition to standard incentives for companies, SCZone itself has the right to provide additional support – such as:

• Partial compensation of energy and supply costs if companies finance infrastructural connections themselves.
• Support for the training of workers through cost sharing.

Special programmes for green technologies and projects, such as green hydrogen, that benefit from additional tax exemptions and reduced fees.