Competitivenese Strategies for Small States Case of Mauritius. Presentation by Mrs P. Rampadarath

Transcription

1 Competitivenese Strategies for Small States Case of Mauritius Presentation by Mrs P. Rampadarath

2 Where is Mauritius located?

3 Government Population GDP Economic Growth (2012) FACTS ABOUT MAURITIUS Parliamentary Democracy 1.3 million USD 11.5 billion 3.4% Per Capita Income USD 8,240 Unemployment Rate (2012) 8% Inflation Rate (2012) 4.4% FDI (2012) Literacy Rate 85% Tertiary Enrollment Rate Life Expectancy Languages USD 327 M 43.4% 74 years English, French, Creol

4 Index of Economic Freedom 2012 International Benchmark 8 th out of 184 countries And 1 st among 46 countries in sub saharan africa World Bank Doing Business Survey 2012 Democracy Index 2010 Global Enabling Trade Index 2012 Human Development Index 2011 Global Competitiveness Index Global Information Technology Report Mo Ibrahim Index of African Governance th out of 185 countries and 1 st in Africa 24 th out of 167 and 1 st in Africa 33 rd out of 167 countries and 1 st in Africa 77 out of 189 and 3 rd in Africa 54 out of 142 countries and 2 nd in Africa 47 th Internationally and 1 st in Africa 1 st in Africa for the 6th consecutive year

5 Relations with other countries Mauritius has strong and friendly relations with the West, Asian Countries as well as the Eastern and Southern Africa Mauritius is a member of African Union; World Trade Organisation; Commonwealth; Francophonie; Southern African Development Community (SADC); Common Market for Eastern and Southern Africa (COMESA); Indian Ocean Commission; and Indian Ocean Rim Association

6 The main pillars of the economy over the years Post Independence (1970s) Agricultural based Concentration on Sugar Industrialisation (late 1970 throughout the 1980s) Sugar, textile, Tourism 1990s Sugar, Textile, Tourism, Financial Services; Freeport 2000s Sugar, Textile, Tourism, Financial Services, Seafood, ICT/BPO, IRS 2010 to-date Agro-Industry, Tourism, Financial Services, ICT, BPO, Seafood, Renewable Energy, Ocean Economy, Textile and Fashion

7 Move since Independence Diversification Setting up of the EPZ in 1970 (huge success in Mauritius) Surplus labour proved highly beneficial to Mauritius Growth (unemployment dropped to 3% by end of 1980s) Took advantage of privileged access with EU and the US (accounted for 90% of exports) Multi-fibre Agreement Adopted concerted strategy of nation building Strong and inclusive institutions High Level of Public Investment in human development(free education and health services) Avoided social and political tensions and supported solidarity and equity Liberalisation and diversification Duty free access for imported inputs Tax incentives to firms operating in EPZ (effect of subsidizing exports) Consistency and stability in approach to economic management Diversification of political and economic power ensured productive economic policy Ethnic diversity provided economic linkages with the world

8 Economic Reform Strategy Fiscal consolidation and improving public sector s efficiency Democratise economy by promoting participation and social inclusion Reform Policy Package Improve trade competitiveness Improve Investment Climate

9 Facts on the different sectors The financial services - one of the most important economic pillars of the economy with a sustained GDP contribution of over 10% and an average growth of 4.8% over the last 3 years. Manufacturing is still considered as one of the biggest contributor to national wealth with 17.7% GDP share and the biggest employer with 15.1% of total workforce. The ICT-BPO industry has proved its importance as a key driver to economic growth and productivity. It has experienced remarkable innovation over the last 5 years and has demonstrated its resilience amidst multiple crises. This industry contributes 6.7% to GDP, and employs nearly 17,000 people. In 2012, gross tourism receipts was Rs 4.4 billion. Emerging markets, namely Russian Federation and People Republic of China, registered positive growths of 58.9% and 38.0% respectively. The forecast number of tourist arrival for 2013 is 1 million.

10 Facts on the different sectors The Mauritius seafood industry has undergone major expansions over the past three years. The sector's contribution to GDP was 1.3%; total exports amounts to 15% of total goods exports; cumulative investment till date amounts to Rs. 18 billion; and provides 6,000 direct jobs and ancillary services to this industry make up for some 10,000 jobs. Agro industry accounts for 3.7% of the GDP and comprises the sugar cane cluster and non-sugar cluster which covers fresh vegetable products, fruits, livestock, fisheries and flowers. The employment in the Agro Industry represents nearly 7.9% of total employment in Mauritius. The sector has experienced a growth rate of 3.4% in 2011 and is moving towards sustainable through adoption of best agricultural and environmental conservation practices.

11 Fiscal Incentives for Investment Abolition of AGOA levy Tax-free status for global funds which do not require benefits under our Double Tax Avoidance Agreement network Solidarity levies maintained on banks and telecom operators up to 2014 VAT registration threshold raised from a turnover of Rs2 million to Rs4 million per annum Modulated excise duty on electrical appliances on the basis of their energy consumption. Extension of the VAT Refund Scheme for agro-industrial and fisheries sector for one additional year 2013 Medical/health insurance premium tax deductible as from 1 January 2013

12 Fiscal Incentives for Investment No land conversion tax on the conversion of land from agricultural use for the purpose of: a. Setting up a manufacturing company as certified by the Board of Investment b. Setting up a power station for generation of energy using 'green'/renewable sources c. Construction of a building to be used for provision of Technical & Vocational education and Training Incentives offered to retail shops and restaurants for the purchase of fitting, equipment and furniture: a. Financing at the rate of 7.25% b. Accelerated capital allowances c. VAT refund within 7 days of claim For investment above 10 million rupees, 50% reduction on customs duty on a scheduled list of items

13 Strength and Opportunities Strengths Political Stability Open Economy High literacy rate both bilingual and educated workforce Government commitment for change visà-vis a dynamic global business environment Favourable trade agreements Strong business climate with favourable fiscal incentives World class tourism industry Strategic location Good infrastructure International connectivity Opportunities Ocean Economy Petroleum Hub and liberalisation of bunkering activities Investment in product and design innovation Unexploited regional trade advantages Investment in Technology/skills upgrade Product/Market diversification Attracting potential investors from the Mauritian diaspora Adoption of cleaner production techniques. Optimise on the provision of the EPA which provide for less stringent rules of origin for textile and canned tuna and improved market access in the EU. Tapping up-market tourism

14 Constraints and Challenges Constraints Significant current threats (energy cost, global financial crisis, increase in costs of inputs) Little flexibility in view of employment structure Trade Liberalisation - emergence of low cost competitive producers Zero tariff rate through implementation of duty free island concept Economy highly dependent on few sectors that are sensitive to global crisis Weak technology/innovation base Insufficient R&D Product and market concentration Financial and infrastructural constraints Challenges Elimination of trade preferences: After 2015, possibility for AGOA benefits to be extended to LDCs such as Bangladesh and Vietnam Mauritius will be reverted to the Generalised System of Preferences (GSP) Scheme which offers less favourable benefits than the AGOA. Exchange rate fluctuations Slow pace of restructuring and diversification Rising costs of air and sea freight Increase in costs of inputs Low penetration of new markets Inequality is rising Country s competitive advantage on the international market is shrinking Climate change

15 New Avenues Ocean Economy Mauritius has an exclusive economic zone (EEZ) of 1.9 million km2 plus an additional 396,000 km2 co-managed with the Republic of Seychelles. This vast extent of ocean represents an area bigger than the combined land area of France, Germany, Italy, Spain and the United Kingdom. The ocean economy is a promising economic sector. The Government of Mauritius has a vision to transform the island into an ocean state by exploring and exploiting the ocean resources.

16 New Avenues - Petroleum Hub Government is proposing to invest in the development of a Petroleum Hub as another economic pillar of the country Investment will be made in the construction of storage facilities and liberalisation of bunker activities

17 Mauritius an ideal platform for investment into and trading with Africa The Double Taxation Treaties ( DTA s) The Investment Promotion and Protection Agreements (IPPAs) Mauritius has signed IPPAs with 20 African member states. IPPA typically offers the following: Free repatriation of investment capital and returns; Guarantee against expropriation; Most favoured nation rule with respect to the treatment of investment; Arrangement for settlement of disputes between investors and the contracting states.

18 Mauritius an ideal platform for investment into and trading with Africa Mauritius being a member of SADC, COMESA and IOR-ARC and a signatory to all the major African conventions make Mauritius the best offshore financial service centre for establishing any Africa Fund, Holding Company or a trading company. Benefits are - 0% tax rate on corporate profits. A low corporate tax of 15% applies for processing and transformation activities. Exemption from Customs duties and VAT on all goods and equipment imported into the Freeport zone Reduced port handling charges for all goods destined for re-export Free repatriation of profits 100% foreign ownership allowed (No immovable property to be held in Mauritius) Possibility to sell a quota of 20% of total goods re-exported on local market. (normal tax rate will apply)

19 Way Forward Bring down cost of energy as a strategy to remain competitive Leverage on the Improved Business Climate (promote Mauritius as an attractive investment destination) Branding Mauritius Identify and invest in new growth poles Identify the right products in the value chain for production in Mauritius Diversify our market base Restructuring Identify niche markets where Mauritius has a comparative advantage that could be turned into competitive advantages Invest in intangible assets (logistics, original designs, innovation, packaging, branding, R&D) Optimise on opportunities emanating from regional and international markets Comparative advantage has to be based on qualitative factors (technology, creativity, knowledge and innovation) Leverage on its location as a gateway between Africa, Asia and Europe Invest in education Maurice Ile Durable Vision

20 Thank you