Investor Country Report Mauritius Mauritius October 2015
Contents: 1. Country Overview 2. The Mauritian Economy 3. The Mauritian Business Environment 4. The Mauritian Fiscal Regime 5. The Financial Services Sector 6. The Tourism Sector 7. Air Connectivity 8. International Trade Relations 9. Infrastructure Developments 10. Investment Opportunities 11. The Real Estate Scheme 12. The Property Finance Appendix 1 2
1. Country Overview Mauritius is a sub-tropical island in the Indian Ocean with an area of 1,900 sq kms. The Republic of Mauritius includes also the island of Rodrigues, about 560 kms east of Mauritius, and other smaller islands. The capital is Port Louis, located in the north west of the island. It has a population of 1.3 million, made up of different ethnic origins, namely Indian, African, European and Chinese. Practised languages are English, French and Mauritian Creole. Since its independence from Britain in 1968, Mauritius has been an exemplary parliamentary democracy, with an active free press, and an independent judiciary. The National Assembly consists of 70 MPs, with 62 directly elected under a first-pas the-post system, and the remaining 8 distributed according to a Best Loser System designed to ensure the equitable ethnic representation in Parliament. The Head of the Government is the Prime Minister. Elections are held every five years. The underlying law of Mauritius is the French law based Code Civile while the country maintains recourse to the Judicial Committee of the Privy Council (UK) as the Supreme Court of Appeal. Mauritius is a member of the Commonwealth of Nations. The country is also a member of L Organisation Internationale de la Francophonie. 2. The Mauritian Economy Mauritius has strong economic fundamentals-open to FDI (USD 441m in 2014-3.6% of GDP), high standards of governance, and business friendly environment. It has an estimated GDP of 12 billion USD and is considered to be an upper middle class income country with its GNI per capita of USD 9300. Mauritius has rapidly emerged from a mono-crop economy into a robust and diversified economy resting on export oriented manufacturing, tourism, financial services and ICT sectors. Government is also actively promoting the emerging sectors, namely, real estate, life sciences and health care, medical tourism, and tertiary education. The country has recorded a real GDP growth of about 3.3% until 2012, 3.3% in 2013, and 3.7% in 2014, meaning that Mauritius has been quite resilient to the recent financial economic shocks. 3
Inflation has been under control during the past few years, with a rate of 2.9% in 2010, 3% in 2011 and most recently 3.5% (June 2014). Budget deficit has been in the region of 3%, while unemployment rate has been around 7.2-8% during 2009-2014. 3. The Mauritian Business Environment The Government of Mauritius has introduced a series of major economic reforms to facilitate business in Mauritius, especially through the various business facilitation and investment promotion legislations. These reforms have resulted in making Mauritius one of the most investor friendly Countries, as acknowledged by various international institutions, namely (just to mention a few): a. Index of Economic Freedom 2015: 1st in Africa and among the top 10 in the world, out of 179 countries. b. World Bank - Ease of Doing Business: 1st in Africa and 28 in the world, out of 183 countries. c. Mo Ibrahim Index of African Governance: 1st in Africa out of 46 African Countries. d. World Bank: 13th in the World for Investor protection. e. Moody s: Baa1 rating for Mauritian Sovereign Debt. 4. The Mauritian Fiscal Regime Government has over the years introduced a series of fiscal measures to make Mauritius a low tax jurisdiction and one of the most attractive investment and business destination, as evidenced by the following principal tax measures: a. Corporate tax at the uniform rate of 15%. b. Income tax also at the uniform rate of 15%. c. No tax on dividends earned by individuals and companies. d. No capital gains tax. e. No inheritance tax. Furthermore, there are no foreign exchange controls in Mauritius, and no restrictions on repatriation of capital invested, and profits. 5. The Financial Services Sector The Mauritian financial services sector has registered significant growth for more than a decade. The country has developed its reputation as a well regulated, serious and credible international financial centre and is increasingly favoured by investors around the world. 4
While the banking sector is regulated by the Central Bank, ie the Bank of Mauritius, all non-banking activities are governed by the Financial Services Commission. Mauritius fully complies with the prescribed international norms, namely, the Financial Action Task Force (FATF), the International Organisation of Securities Commissions (IOSCO), the International Association of Insurance Supervisors, the Basel Committee, and the OECD rulings. The financial services sector has enjoyed a sustained and commendable growth to become one of the main pillars of the Mauritian economy, with an average contribution of 11% to the GDP. The type of activities includes banking (both retail and investment banking), global business, trust services, capital markets, insurance/reinsurance, legal services and FPO & disaster recovery. There are about 20 commercial banks operating in Mauritius, including 14 leading international banks like HSBC, Barclays, Standard Bank, Standard Chartered, etc. There are more than 28,000 global business companies and around 600 global investment funds operating in the Mauritian offshore. 6. Tourism Sector The tourism and hospitality sector is a major industry in Mauritius, commonly referred to as the third pillar of the economy. It contributes significantly to the economic growth of the Mauritian economy and has been a key enabler in its overall development strategy. The hospitality sector is quite diversified and encompasses hotels, leisure parks, green and health tourism, restaurants, tour operators, airline industry, etc. Developing the tourism and hospitality sector as a robust and vibrant industry is a top priority of the Government. Tourist arrivals during 2010 reached 934,800, and increased by nearly 5% in 2011 to reach 980,000. Tourist arrivals are increasing annually with 1,300,000 reached in 2014. The tourism sector generates about 10% of the GDP. There are flights to London, 2 flights daily to Johannesburg, 12 flights weekly to Dubai, regular flights to India, Australia, Moscow, Rome, Frankfurt, Geneva, Malaysia, Singapore, Hong Kong and Shanghai. Regional connections include Reunion Island, Madagascar, Kenya and Seychelles. 5
7. International Trade Relations Mauritius is a member of several regional and international organisations, including the African Union, the Common Market for Eastern and Southern Africa (COMESA), the Indian Ocean Commission (IOU) and the Southern African Development Community (SADC). Mauritius has concluded 42 tax treaties through DTAA s with its major trading partners including UK, France, Germany, Luxembourg, India, Singapore and about 15 African countries. Mauritius has also signed Investment Promotion and Protection Agreements (IPPA) with 40 countries. Furthermore, Mauritius is an active and influential member of the various regional groups mentioned above, thus enjoying preferential access to the huge regional markets of 350 million people. 8. Infrastructure Developments Mauritius enjoys excellent infrastructure due to successive development projects undertaken during the past decades in key sectors. Furthermore, the airport has been extended and modernised to cope with the increasing air traffic, the port will be further developed and road networks are extended and modernised with several projects being executed (budget Mur21b). Developments in the energy sector are also in the pipeline, while several shopping malls have recently been developed. 9. Investment Opportunities The country offers attractive investment opportunities in various sectors of the economy, namely the traditional sectors-manufacturing, agro industry, the financial services and ICT/BPO, the emerging sectors like real estate, and the new sectors namely the tertiary education, health, and medical tourism. 10. The Real Estate Sector Property development or the real estate sector has developed significantly over the last few years and has seen the development of new market segments. These schemes are currently being improved in the latest Budget and Financial Act to simplify the system further and to attract investment. 6
11. Property Finance Debt finance and construction guarantees are available from a number of local and international banks whilst purchaser mortgage is available through on-island banks such as Barclays, HSBC, Mauritius Commercial Bank and Standard Bank. 7