Economic/Commercial Section

2007 Investment Climate Statement for Mauritius

Openness to Foreign Investment 

Mauritius is among the most competitive and successful economies in Africa and actively seeks foreign investment.  In the World Bank’s 2007 Doing Business Survey, Mauritius ranks 32nd among 175 countries and second in Africa, after South Africa, for ease of doing business.  The government of Mauritius' (GOM’s) objective is for Mauritius to rank among the top ten most investment- and business-friendly locations in the world.
 
ECONOMIC REFORM: The government which took office in July 2005 has embarked on a bold economic reform program aimed at moving Mauritius from a reliance on trade preferences to global competitiveness.  The reform strategy, outlined in the budget for fiscal year 2006-07 (July-June), is designed not only to remedy fiscal weaknesses but also to open up the economy, facilitate business, improve the investment climate, mobilize foreign direct investment and expertise, attract the Mauritian diaspora back to the country, and introduce structural reforms to support sustainable growth.

The budget also proposes fundamental reforms to the tax system, aiming to make it simple, transparent and easy to comply.  Both the personal and corporate tax rates will be gradually lowered within the next three years and brought to a single flat rate of 15 percent by July 2009. 

Tariff liberalization, which started several years ago in an effort to transform Mauritius into a duty-free island, will be complete in the next three years.  In FY 2006-07, the budget brought down the top tariff rates of 65, 55, and 40 percent to 30 percent.

Another important element of investment climate improvement measures is labor market reform aimed at substantially increasing flexibility, replacing the current tripartite wage-setting mechanism with a National Wages Council, and relaxing the need to seek approval for lay-offs.

BUSINESS FACILITATION: To eliminate bureaucratic obstacles to start a business, the Business Facilitation Act 2006, which was passed by Parliament after the budget, abolishes the need for trade licenses.  It also provides that, effective October 1, 2006, entrepreneurs can start new activities within three working days on the basis of self-adherence to guidelines set by the authorities, who will exercise ex-post control for compliance.  Also, residence permits and work permits for foreign investors and professionals have been combined into an occupation permit, which is now processed within three working days. 

Investment in Mauritius is governed by the Business Facilitation Act of 2006 and the Investment Promotion Act of 2000.  Investment regulations are consistent with the WTO's Agreement on Trade Related Investment Measures (TRIMS).  The government of Mauritius (GOM) does not discriminate between local and foreign investment.  Foreigners are allowed to own 100 percent equity in a local company.

The GOM has designated the Board of Investment (BOI) as a one-stop focal agency for business registration.  BOI acts as the facilitator for all forms of investment in Mauritius and guides investors through the necessary processes for doing business in the country.

Regulations governing incorporation are contained in the Companies Act of 2001.  After receipt of a certificate of incorporation from the Registrar of Companies, all companies must register their business activities with the BOI to be able to apply for occupation permit and other facilities offered to investors. 

INVESTMENT OPPORTUNITIES: Mauritius has realized a remarkable economic transformation from a mono-crop economy based on sugar production to a diversified economy resting on export-oriented manufacturing, tourism, and financial and business services sectors.  Mauritius has also embarked on an ambitious program to make Mauritius the financial and business hub for high value-added technology and other intellectually advanced industries.  The emerging sectors are: (i) Information and Communication Technology, (ii) Seafood and Marine Industry, (iii) Textile and Fashion, (iii), Manufacturing and Light Processing, (iv) Logistics and Distribution, (v) Biomedical Industry, (vi) Knowledge Industry, (vii) Hospitality and Property Development, (viii) Agro-Processing and Biotechnology, (ix) Financial Services, and (x) Land-Based Oceanic Industry.

The location of Mauritius, situated in the Indian Ocean between Africa, Asia, and Australia, offers a successful business base for both regional and international trade.  U.S. companies can use Mauritius as a platform to tap regional markets through Mauritius’ membership in the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), which offer preferential access to a market of 380 million consumers.  U.S. businesses can also use Mauritius to get preferential access to the Indian market through the recent Comprehensive Economic Cooperation and Partnership Agreement signed between Mauritius and India.

INVESTMENT INCENTIVES: Government incentives for investment include: a low corporate tax rate of 15 percent; exemption from customs and excise duties on imports of equipment and raw materials; exemption from tax on dividends and capital gains; a low rate of 5 percent registration duty for notarial deeds; free repatriation of profits, dividends, and capital; and reduced tariffs for electricity and water. 

Moreover, the government has set up the Integrated Resorts Scheme (IRS) to attract high net worth non-citizens desiring to acquire an immoveable property of not less than USD 500,000 in Mauritius (within a resort approved by the BOI) for personal residence.  The investor and his/her spouse and dependents are granted resident permits to live in Mauritius.  More detailed information on the incentives is available on BOI’s website: http://www.investmauritius.com.

Conversion and Transfer Policies

The GOM abolished foreign exchange controls in 1994.  Consequently, no approval is required for the repatriation of profits, dividends, and capital gains earned by a foreign investor in Mauritius.  In general, businesses have no difficulty obtaining foreign exchange.  However, the domestic foreign exchange market has remained tight during 2006 mainly due to expanding current account and government budget deficits as well as the shortfall in sugar export proceeds as a result of the announced sugar export price reduction by the European Union.  Exporters have been holding on to their export proceeds thereby causing a gap between supply and demand for foreign exchange.

An inter-bank foreign exchange market in U.S. dollars was established in July 1994 through a page on the Reuters screen.  Prior to that, the Mauritian rupee was pegged to a basket of currencies, which included the U.S. dollar, the pound sterling, the French franc, and others.  The exchange rate is market-determined, but the market is dominated by a small number of institutions.  The Central Bank occasionally intervenes to stabilize the market.  There is convertibility on both capital and current accounts.  Settlement can be done in foreign currency, and foreign currency accounts can be opened in Mauritius.  There is no legal parallel market in Mauritius for investment remittances.

Mauritius has a well-developed and modern banking system.  At the end of September 2006, net international reserves amounted to approx. USD 2.2 billion, representing close to nine months of imports.  Between October 2005 and October 2006, the Mauritian rupee, on average, appreciated vis-a-vis the Japanese yen (0.9 percent) but depreciated against the U.S. dollar (6.1 percent), the euro (4.5 percent), and the pound sterling (4.8 percent).

Expropriation and Compensation

Legislative guarantees against nationalization exist and are respected.  The GOM has never nationalized an industry.

Dispute Settlement

A joint venture involving a U.S. investor has been engaged in a lengthy dispute with Mauritius Telecom, its cellular subsidiary, Cellplus, and the former Telecommunications Authority, over allegations of unfair competitive practices by Mauritius Telecom and Cellplus.  The case remains in the courts.  There has been no case of expropriation in Mauritius thus far.  Mauritius is a member of the International Center for the Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency of the World Bank. 

The Mauritian legal system is largely based on English and French law.  Criminal and civil litigation is mainly English while substantive law is modeled on the French Napoleonic code.  The domestic legal system is generally non-discriminatory and transparent.  Members of the judiciary are independent of the legislature and the government.  The highest court of appeal is the judicial committee of the Privy Council of England.  Mauritius is a member of the International Court of Justice.

Right to Private Ownership and Establishment

Under the Non-Citizens (Property Restriction) Act of 1975, foreign citizens wishing to acquire real estate in Mauritius must obtain written permission from the Prime Minister's Office (PMO).  This is difficult unless the real estate is connected with the trade for which the foreigner has been given permission to invest.  Under recent investment incentive programs such as the Integrated Resort Scheme and the Permanent Residence Scheme, foreigners are able to acquire property subject to certain restrictions.  

Protection of Property Rights (reached here.....)

Property rights are respected.  Mauritius maintains a sophisticated and impartial legal system based on both Napoleonic code and British common law.  The system protects all tangible property.  Intellectual property rights have been strengthened by recent trade mark, patent, and industrial design laws, which are in line with international norms.  Mauritius is a member of the World Intellectual Property Organization (WIPO) and party to the Paris and Bern conventions for the protection of industrial property and the Universal Copyright Convention.

The implementing regulations of the Patents, Industrial Designs and Trade Marks Act of 2002 were published in April 2004.  The following related laws were also adopted by the government in July 2002 but have not been implemented: the Layout-Designs (Topographies) of Integrated Circuits Act and the Geographical Indications Act. 

The new legislation was, in part, a response to the rise in the production and trade of counterfeit goods such as Ralph Lauren, Nike, Reebok, Caterpillar, Guess, Diesel, Calvin Klein, and Oakley.  In 2004, Polo Ralph Lauren (PRL) successfully sued local manufacturers and retailers of PRL counterfeit products in Mauritian courts, which forced a settlement resulting in the closure of the counterfeit operations.  The new trade mark legislation provides for fast civil remedies (such as injunction or compensation for certain loss resulting from the illegal use of an intellectual property right) and criminal sanctions (which normally take longer). 

The new trade mark and patent laws comply with the WTO's Trade Related Aspects of Industrial Property Rights (TRIPS) agreement and give unambiguous signals to the local and international business community that designs, brands, and technological inventions are now protected.  The new legislation contains clear enforcement procedures and provides for heavy penalties, such as steep fines and imprisonment, which are expected to act as a deterrent to the importation and sale of counterfeit goods.  Another key feature of the new laws is that well-known international trademarks are protected, whether they are registered in Mauritius or not.  This will help prevent future incidents of foreign trademarks being improperly registered, such as in the case of Ralph Lauren.

A trademark is initially registered for 10 years and may be renewed for successive periods of 10 years.  A patent is granted for 20 years and cannot be renewed.  The law also provides for the establishment of an Industrial Property Office as well as an Industrial Property Tribunal, both of which are operational.

The government plans to amend the Copyright Act of 1997 to make it compatible with the WIPO Internet treaties (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty).  The amendment is being finalized by the State Law Office and the Ministry concerned hopes to introduce it in Parliament before May 2006.  The full text of the Act is available online at: http://ncb.intnet.mu/mitt/ministry/download/copyrite.doc.  

Transparency of the Regulatory System

Mauritius has built its success on a free market economy.  The business environment is one of the most inviting in Africa.  Mauritius also has a long-standing tradition of government-private sector dialogue which allows the private sector to effectively voice its views on the development strategy of the country.  The Joint Economic Council is a key vehicle in this regard.

Business regulations are generally transparent but sometimes cumbersome.  Business community complaints relate more to bureaucratic delays than transparency shortfalls.  To streamline the bureaucratic procedures, the government set up the Board of Investment, which acts as a one-stop-shop for all relevant permits from various public sector agencies.  One of the priorities of the government that took office in July 2005 is the elimination of unnecessary delays and administrative hurdles for business/investment permits. 

Over the past five years, the GOM has adopted a series of legislative and other measures to modernize the business regulatory framework.  Companies in Mauritius are regulated by the Companies Act of 2001, which incorporates international best practices and promotes accountability, openness, and fairness.  In order to combat money laundering and terrorist financing, the government also enacted the Prevention of Corruption Act, the Prevention of Terrorism Act, and the Financial Intelligence and Anti-Money Laundering Act.

In 2001, the government appointed a Committee on Corporate Governance in Mauritius, with the purpose of providing a framework for improved corporate governance.  In October 2003, after a series of consultations with stakeholders and advice from international experts, the Committee published a Code of Corporate Governance in Mauritius.  
 
Capital Markets and Portfolio Investment

The financial services sector is one of the pillars of the Mauritian economy.  Mauritius aims to become a regional financial center.  The Stock Exchange of Mauritius (SEM) has shown a satisfactory record of performance in terms of the volume of transactions, the number of listed companies, market capitalization, and the fairness and efficiency of its operations since its launch in 1989.  In December 2005, the Stock Exchange of Mauritius had 41 companies plus two mutual funds listed on the Official Market and 76 Over-the-Counter companies.  Market capitalization grew from USD 92 million in 1989 to USD 2.7 billion in December 2005.

The Stock Exchange established a Central Depository System in 1997 to provide centralized depository, clearing, and settlement services for equities and debts.  In 2001, the SEM introduced the Automated Trading System, which incorporates Internet trading facilities, enabling investors to follow the stock market on a real-time basis.  The SEM's listing rules have been harmonized with the rules of various stock markets of the Southern African Development Community (SADC) countries and members of the African Stock Exchanges Association to facilitate cross-border listings.  On November 1, 2005, the SEM was admitted as a member of the World Federation of Exchanges (WFE).  Membership of the WFE identifies the SEM as having assumed the commitment to prescribed business standards, recognized as such by users of stock exchanges, as well as by regulators and supervisory bodies.  

The Mauritius stock market was opened to foreign investors following the lifting of the foreign exchange controls in 1994.  No approval is required for the trading of shares by foreign investors unless investment is for the purpose of legal and management control of a Mauritian company or for the holding of more than 15 percent in a sugar company.  Incentives to foreign investors include free repatriation of revenue from the sale of shares and exemption from tax on dividends and capital gains.

Mauritius has a relatively sophisticated banking sector with 20 banks licensed to carry on banking business.  The Banking Act of 2004, which was passed in October 2004, removed the distinction between domestic (Category 1) and offshore (Category 2) banks and provided for banking business to be conducted under a single banking license regime.  Accordingly, all banks are free to conduct business in all currencies, including the Mauritian rupee.  There are also several non-bank financial institutions which are authorized to conduct deposit-taking business.  Two Mauritian banks, the Mauritius Commercial Bank Ltd and the State Bank of Mauritius Ltd, account for about 75 percent of the market share.  Both banks are among the 10 largest banks in Africa.  Foreign banks present in Mauritius include the Hong Kong and Shanghai Banking Corporation (HSBC), Barclays Bank, Bank of Baroda, Habib Bank, South East Asian Bank, and Banque des Mascareignes.  The Bank of Mauritius, the central bank, carries out the supervision and regulation of banks as well as non-bank financial institutions authorized to accept deposits.

The banks focus mostly on trade financing and on provision of working capital.  Accounts may be opened in all major currencies as well as the Mauritius rupee.  Several commercial banks offer card-payment services such as credit and debit cards and direct debits.  Other facilities such as phone banking, home banking, internet banking, and PC banking are also provided by some banks.  Commercial banks offer spot and forward transactions in all major currencies.

Commercial banks have diversified into non-banking business through subsidiaries and affiliates.  Banks are engaged in the provision of leasing, stock brokering, asset and fund management, investment and private banking business, insurance agency, and portfolio and custodial management.  As of June 2005, commercial banks' total assets amounted to close to USD 6.5 billion.

Political Violence

Mauritius has a long tradition of political and social stability and is internationally recognized for its well-established democracy.  However, inter-ethnic tensions led to four days of rioting in February 1999, following the death of a popular minority singer in police custody.  Governments since then have sought to calm ethnic tensions and stress national unity. 

Strikes and politically motivated violence are rare.  Three political activists were murdered in 1996.  The leader and several members of the local Hizbullah Party were arrested in December 2000 and charged with this crime. One of them was found guilty and sentenced to 21 years imprisonment for the crime.  General elections in July 2005 brought about a new government and were carried out without any major incident.

Corruption 

Mauritius is one of Africa's least corrupt countries.  However, the uncovering of major fraud at the Mauritius Commercial Bank in 2003, which is still under investigation, has given the perception that corruption is on the rise.  In 2005, Transparency International ranked Mauritius 51 out of 158 countries with a score of 4.2 on a 10-point scale.  Corruption is not seen as an obstacle to foreign direct investment.

In February 2002, the government passed the Prevention of Corruption Act in the National Assembly.  Under this legislation, an Independent Commission Against Corruption (ICAC) was set up in June 2002 with the power to detect and investigate corruption and money laundering offenses.  Provision has also been made to forfeit the proceeds of corruption and money laundering.  In February 2002, the government also passed the Financial Intelligence and Anti-Money Laundering Act, which provided for the establishment of a Financial Intelligence Unit, which is operational.

One of the main policies of the GOM elected in July 2005 is to fight corruption.  On September 15, 2005, the National Assembly amended the Prevention of Corruption Act of 2002 to provide for changes in the management and working process of the ICAC.  During the past year, ICAC has received strong criticism primarily for failing to close a number of outstanding investigations.  The amendment will allow the government to replace the ICAC’s Commissioner and his two assessors.  In presenting the amendment bill in Parliament, the Prime Minister reiterated the political will of his government to fight corruption and money laundering in both the public and private sectors. 

There has been much emphasis on good governance in the last few years by both the government and the private sector.  In 2001, the government appointed a joint public and private sector Committee on Corporate Governance in Mauritius.  In October 2003, Mauritius published and adopted a Code of Corporate Governance. 

Bilateral Investment Agreements 

Mauritius does not have a bilateral investment treaty with the United States.  A revised investment incentive agreement was signed with the Overseas Private Investment Corporation (OPIC) in 1997.  The new agreement clarifies the tax and regulatory treatment afforded to OPIC in Mauritius and applies to the full range of OPIC's programs.

Mauritius has signed Investment Promotion and Protection Agreements with 31 countries: Barbados, Benin, Botswana, Burundi, Cameroon, Chad, China, Comoros, the Czech Republic, India, Indonesia, France, Germany, Ghana, Kenya, Madagascar, Mauritania, Mozambique, Nepal, Pakistan, Portugal, Romania, Rwanda, Senegal, Singapore, South Africa, Swaziland, Sweden, Switzerland, U.K., and Zimbabwe.  Agreements with the following countries are awaiting signature: Chile, Egypt, Ethiopia, Korea, Lesotho, Luxemburg, Malawi, Tanzania, Turkey, Uganda, and the United Arab Emirates.
 
OPIC and Other Investment Insurance Programs

Mauritius is eligible for the full range of OPIC's investment insurance programs.  It is also a member of the Multilateral Investment Guarantee Agency.

Labor

As of June 2005, Mauritius had a total labor force of 538,800, including 347,800 males and 191,000 females.  Total employment stood at 482,700, including about 16,000 foreign workers, mainly from China, India, Madagascar, Sri Lanka, Bangladesh, and South Africa, and mostly employed in textile factories but also in construction, tuna canning, and hotel and catering sectors.  The unemployment rate has risen steadily since 1991 to reach 10.4 percent in June 2005, representing about 56,100 unemployed. 

The GOM administratively establishes minimum wages, which vary according to the sector of employment, through the National Remuneration Board (NRB) and it mandates minimum wage increases based on inflation.  However, most trade unions negotiate wages higher than those set by the NRB.  The NRB issues Remuneration Orders for more than 90 percent of the workforce in the private sector.

Wages are low by Western standards but high by most Asian and African standards.  Factory workers in the Export Processing Zone generally earn between USD 200-USD 250 per month.  Middle managers earn between USD 700 and USD 1,000 per month.  Fringe benefits, including transport and meal allowances, paid leave, and bonuses, represent about 25 percent to 30 percent of the basic payroll of employees.

Although Mauritius has an active trade union movement, labor-management relations are generally good.  Unions, which account for less than 25 percent of the workforce, act responsibly and rarely disrupt business.  There has not been a major strike since 1979.  Under the Industrial Relations Act, unions have the legal right to strike.  However, the government seeks to preempt strikes through a system which promotes settlement through negotiation or arbitration by the Permanent Arbitration Tribunal and the National Remuneration Board.

Workers' rights are protected under the Mauritius Labor Act of 1975.  Mauritius participates actively in the annual ILO conference in Geneva and adheres to ILO conventions protecting worker rights.

Foreign Trade Zones/Freeports 

The Mauritius Freeport (free trade zone) was established in 1992 as a customs-free zone for goods destined for re-export.  The government's objective is to promote the country as a regional warehousing, distribution, marketing, and logistics center for Eastern and Southern Africa and the Indian Ocean rim.  Through its membership in the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the Indian Ocean Commission (IOC), Mauritius offers preferential access to a market of 350 million consumers, representing an import potential of USD 90 billion.

Situated in 50 hectares of land adjacent to port facilities and a modern container terminal, the Freeport offers 115,000 square meters of world-class infrastructure, including cold rooms, dry storage, an international trade exhibition center, processing units, and office space for transshipment, consolidation, storage, and processing activities.  Freeport facilities are also available at the airport.  Port Louis is increasingly used by major shipping lines (Maersk/Sealand, P&O Nedloyd, and MSC) as a regional container transshipment hub.

Activities that can be carried out in the Freeport include warehousing and storage, breaking bulk, sorting, grading, cleaning and mixing, labeling, packing and re- packing, minor processing, transshipment, cash & carry sales, export-oriented port based activities, export- oriented airport based activities, freight forwarding, express courier services, mail order, simple assembly, reshipment, quality control, and inspection services.

As of December 2005, 359 companies were licensed to operate in the Freeport.  Out of these, about 234 were operational in such activities as re-export, transshipment, minor processing, and assembly.  In the financial year ending June 2005, the Freeport imported USD 272 million and re-exported USD 351 million worth of goods.  Main products re- exported include machinery and electronic equipment (41 percent), textiles (22 percent), seafood (13 percent), chemical and pharmaceutical products (5 percent), textile accessories (4 percent), plastic goods (3 percent), and foodstuffs (2 percent).  The principal export markets for the Freeport were the United Arab Emirates, France, Madagascar, Italy, Reunion Island, Spain, and Japan.

Finland, China (including Hong Kong), Taiwan, Spain, South Africa, and India are the main sources of supply for traders involved in the Freeport.  The main products traded include telecommunication equipment, textile fabrics and accessories, ready-made garments, electrical goods, bicycles, hardware, footwear, cosmetics, chemicals, industrial sewing machines, and plastic products.

The Freeport facilities for warehousing, breaking bulk, and re-export should be of particular interest to American companies.  These services enable businesses to ship containerized goods to Mauritius, warehouse them in secure low-cost facilities, then break bulk and re-export them in an efficient and timely manner to African and Indian Ocean rim destinations.  Modern computerized warehouse/logistics facilities are provided by the private developers: Freeport Operations of Mauritius (http://www.Freeport-mauritius.com) and Mauritius Freeport Development Co. Ltd (http://www.mfd.mu).  Goods can also be assembled in the Freeport for export to the African and Indian Ocean markets.  Current assembly and processing activities in the Freeport include jewelry and precious stones, PET plastic bottles, transformation of fish into fillets, aluminum frames and fittings, sorting and packing of spices.

Three U.S. companies are present in the Mauritius Freeport.  Expeditors International (Mauritius) Ltd, a subsidiary of Expeditors International of Washington Inc., is a freight logistics company, providing freight forwarding services, supplier consolidation, and quality control.  Boxmore Plastics (Mauritius) Ltd, with significant U.S. shareholding, produces PET plastic bottles for the local soft drink industry and for export to neighboring Reunion island, Madagascar, Tanzania, and Kenya.  Casamar (Mauritius) Ltd., a subsidiary of U.S.-based Casamar Holdings, Inc., which specializes in the assembly and repair of nylon-braided tuna purse seine nets, has set up its assembly facilities and will start operations in February 2006.

The government, in collaboration with the private sector, is promoting the Freeport as a seafood hub, in particular the transshipment, processing, storage, distribution, and re-exportation of high value-added seafood products using the modern port and Freeport facilities and logistics.  A one-stop shop was established in August 2004 by the government in the port area to help facilitate administrative clearances related to the seafood industry.  In June 2005, a leading Mauritian company in partnership with Spanish investors has opened a tuna loin processing plant (Thon des Mascareignes Ltd.), with a capacity of 25,000 tons of loin annually for export to Europe and the U.S. for final processing and packaging.  U.S. company Bumble Bee has a tuna supply and processing agreement with Thon des Mascareignes Ltd.

The Board of Investment (in collaboration with Airports of Mauritius Ltd) plans to develop an air cargo logistics center at the airport.  The main activities targeted include re-export of high value/low volume products, light assembly operations, warehousing, labeling and repackaging, sea-air/air-sea and transshipment cargo, express courier, and freight forwarding services. 

Foreign Direct Investment

While Mauritius was very successful in attracting foreign direct investment (FDI) in the 1970's, there has been a decline in the growth of FDI since the mid-1980's.  The decline in FDI in the manufacturing sector has been particularly significant.  According to the Bank of Mauritius' statistics, FDI in the Export Processing Zone manufacturing sector accounted for only 4 percent of total FDI in Mauritius in 2002 and 2003, down from 54 percent in the period 1983-93.  Although FDI in that sector increased to USD 8.7 million in 2004, it remained relatively low compared to previous decades.

The banking sector has attracted regular inflows and the cumulative FDI stock between 2002 and 2005 is higher than in the EPZ, tourism, and telecommunications sectors combined. 

The following statistical tables, supplied by the Bank of Mauritius (Central Bank), show inflow of FDI in Mauritius by sector and country of origin (2002-2005).  However, these figures may under-represent the actual amounts of FDI because foreign investors' dealings no longer have to go through the central bank since the abolition of foreign exchange controls in 1994.

- Foreign Direct Investment by Sector, 2002-2005 (USD millions)

2002

2003

2004

2005*

                                                     

                                                                  

Export Processing Zone	1.3	2.7	8.7	2.3
Tourism	3.3	3.4	4.2	1.7
Banking	10.5	46	10.9	14.7
Telecommunications	0	0	1.3	5.5
Other	17.3	16.8	37.8	22
Total	32.4	68.9	62.9	46.2

 

 

 

 

- Foreign Direct Investment by Country of Origin, 2002-2005 (USD millions)

	2002	2003	2004	2005
China	0.6	1.2	-	1.2
Dubai	0.3	1.6	0.3	0.2
France	7.7	5.5	17.2	9.5
Germany	0.1	-	3.3	1.5
Hong Kong	0.3	-	0.1	0.2
India	0.06	5	5.3	11
Luxembourg	-	-	1.0	0.1
Malaysia	1	2.5	-	-
Panama	-	-	0.5	0.1
Reunion Island	-	6.1	0.2	2.5
Singapore	0.4	0.03	-	-
South Africa	11	35.3	0.7	0.6
Switzerland	-	0.07	1.5	3.5
U.K.	1.9	5.7	5.0	7.2
U.S.	1	1.3	18.2	1
Others	4.7	3.9	9.7	5.8
Total	32.4	68.9	62.9	46.2

                             
                     

 

 

 

 

 

 

 

 

Source: Bank of Mauritius
* Figures for 2005 are for the period January-September only.

Major sources of FDI in Mauritius are France, India, South Africa, and U.K.  However, with USD 18.2 million, the United Sates was the most important source of foreign investment in 2004.  According to the Bank of Mauritius, the FDI inflow from the United States in 2004 was the result of the purchase of equity by U.S. firm Covenance Laboratories Ltd in a local monkey breeding company. 

There are two U.S. investors in the Mauritius Export Processing Zone.  Adamas Ltd, owned by a U.S. investor, was one of the first companies to operate in the EPZ more than 30 years ago.  It is involved in diamond cutting and polishing as well as jewelry.  American & Efird Inc. is a joint venture partner of a Mauritian company in a thread dyeing plant, which started operations in February 2000.

As indicated in the Freeport section above, three U.S. companies (Expeditors Expeditors International, Boxmore Plastics, and Casamar) are present in the Freeport zone.

MIC-USA Inc., a wholly owned subsidiary of Millicom International Cellular, is a joint venture partner (50 percent shareholding) with local company Emtel Ltd in the provision of cellular phone service in Mauritius.  Other U.S. businesses operating in the domestic Mauritian market include Caltex, which is a wholly-owned subsidiary of U.S. Texaco Corporation.  Esso Mauritius, the other U.S. petroleum company, was bought by Total in 2005.  Microsoft, IBM, HP, and Oracle have regional distribution offices in Mauritius, serving the Indian Ocean region.  In the textile sector, encouraged by the Africa Growth and Opportunity Act (AGOA), Mast Industries Ltd. (a subsidiary of The Limited), GAP, Eddie Bauer, and William E. Connor opened regional buying offices in Mauritius in the 1990’s.  However, Mast Industries, Eddie Bauer, and GAP have now closed their offices due to changes in world trade agreements in textile.  KFC, Pizza Hut, McDonald’s, and Toys-R-Us have been operating in Mauritius for a number of years, all through local franchisees.  UPS and Fedex also have offices in Mauritius.

Several French and British companies in joint ventures with Mauritian partners have invested in the ICT sector in Mauritius as a result of the government’s determination at the beginning of this decade to develop Mauritius into a cyber island.  Other leading international companies, including Accenture, Ceredian Centerfile (U.S.), InfoSys and Hinduja (Indian), have started Business Process Outsourcing (BPO) activities, call centers, disaster recovery and business continuity centers, and software development.  As of early 2005, another U.S. company, Teleforma, employing 211 people, is also engaged in BPO activities (mainly processing of claims) for U.S. clients. 

The most significant foreign investment in 2005 has come from Indian companies.  Indian Oil Ltd invested USD 18 million in fuel storage terminals and retail distribution outlets in 2005 and plans to double its investment to USD 35 million by increasing its storage capacity and creating up a product testing laboratory.  Universal Breweries Ltd opened up a beer factory with a total investment of USD 9 million.  Mahanagar Telephone Mauritius Ltd (MTML) started international long distance telephone service in July 2005 and is also set to provide fixed and cellular phone services in competition with the local utility (Mauritius Telecom), beginning in the first quarter of 2006.  By the end of 2006, Mahanagar will have invested USD 25 million in its network with a capacity of 100,000 lines.  The State Bank of India has recently acquired 51 percent equity in a local domestic bank for the sum of USD 8 million and is planning investment in a second bank in the next few months.

Investment opportunities in Mauritius are available in the following sectors: ethanol, spinning, information and communication technology, tourism, seafood, land-based oceanic industry (exploiting deep-sea cold water), integrated resort/luxury villas, energy, education and training, and healthcare.  Chandni Oil, an Indian company, has obtained the GOM’s approval for the construction of its USD 20 million ethanol production factory.  The factory, scheduled to be operational in November 2006, will export 80 percent of its production.  Another Indian company plans to invest USD 14 million by the end of the year in wind energy production under the Build Operate Own (BOO) scheme.  Apollo, an Indian hi-tech hospital, has signed a joint venture agreement with a local partner to build a USD 23 million hi-tech hospital in Mauritius in 2006.  The Pakistani group Madadgaar will invest USD 23 million in a spinning mill in Mauritius.  The mill, scheduled to be operational in December 2006, will produce 6,000 tons of cotton yarn annually.  The Paradise Group of Malaysia plans to invest USD 20 million in a 120-room hotel and a restaurant.

The GOM is determined to develop Mauritius into a seafood hub, more specifically as a platform for industrial fishing, fish farming, trading, warehousing, processing, distribution, and export of fresh, chilled, and frozen raw or value-added seafood products.  The Mauritius seafood sector already includes aquaculture, warehousing, processing and tuna canning, dry dock facilities for shipbuilding, and a net repair yard for purse seine vessels.  The Mauritian authorities, in collaboration with the private sector, are organizing an international seafood conference March 2-3, 2006, to position Mauritius as a world-class seafood hub and to attract foreign investors and facilitate strategic partnerships with local operators.

The government is also seeking to develop Mauritius into a regional knowledge hub by attracting internationally renowned educational institutions and universities to establish off-campus branches in Mauritius. 

There are no restrictions on capital outflows.
The central bank’s statistics indicate a significant increase in outward investment from USD 2.8 million in 2001 to USD 41 million in 2003, the bulk being channeled into the banking and manufacturing sector.  In 2004, however, it fell to USD 34 million, with tourism accounting for more than 40 percent of the total outward investment.  Latest figures indicate that total outward investment for the period January-September 2005 amounted to close to USD 45 million, well above the amount for the whole year of 2004.  Mozambique, Madagascar, and Seychelles received more than half of Mauritian investments, which mainly focused on tourism and manufacturing.  The government strongly supports regional integration and has established a Regional Development Certificate Scheme, which grants tax incentives to local entrepreneurs investing in the region.

The Mauritius Commercial Bank Ltd, the largest banking corporation in Mauritius, has established a strong presence in the Indian Ocean region with operations in Reunion, Madagascar, Seychelles, and Mozambique as well as in France.  The State Bank of Mauritius, another important local bank, has established banking operations in India and Madagascar. 

Outward FDI in the garments industry emerged in 1990, when the low-end operations were relocated to lower wage countries in the region.  The first major move was by Floreal Knitwear, one of the largest apparel manufacturing entities in Mauritius, which began relocating to Madagascar in 1990 and is the largest textile manufacturer there.  CIEL Textile Group, which owns Floreal Knitwear, also opened a shirt factory in India in May 2005 and plans to invest in a sweater factory in China.  The African Growth and Opportunity Act (AGOA) also provided the impetus for several other textile companies operating in Mauritius to open factories in the region, mainly Madagascar and Mozambique.

In the tourism sector, where Mauritian companies have developed core competence in hotel management and travel services, they have expanded their operations to Seychelles, Comoros, and Maldives.  Other Mauritian investments on the African mainland relate to the use of expertise in the sugar industry to rehabilitate sugar production in Mozambique, Tanzania, Ivory Coast, and Madagascar.  Long-established conglomerates like the Rogers Group, IBL Group, the Currimjee Group, the Food and Allied Industries Group, the Happy World Group, and the British American Investment Ltd have established foreign subsidiaries in commerce, poultry, and financial non-banking services, principally in Madagascar.  Mauritius Telecom and Emtel, a subsidiary of the Currimjee group, have also invested in the telecommunications sector in Madagascar and Seychelles.

The following tables provide statistics on FDI outflows by countries and sectors of investment during the period 2002-2005.

Direct Investment Abroad by Sector, 2002 - 2005 (USD millions)

	2002	2003	2004	2005*
Tourism	0	4.8	14.8	15.3
Banking	0	15.6	0	-
Manufacturing	8.1	1.4	3.5	7.1
Other	1.1	19	15.7	22.4
Total	9.2	40.8	34	44.8

         

 

 

 

Direct Investment Abroad by Host Country, 2002-2005 (USD millions)

	2002	2003	2004	2005*
France	-	-	0.3	0.9
Reunion Island	0.1	0.2	1.3	0.8
USA	-	-	0.3	-
Madagascar	7.9	1.7	6.8	4.6
South Africa	-	0.2	0.2	-
Seychelles	-	20.2	2.6	3
Mozambique	-	18.5	8.9	18
Others	1.2	0.07	13.5	17.5
Total	9.2	40.8	34	44.8

 

 

         

 

 

Source: Bank of Mauritius
* Figures for 2005 are for the period January-September only.