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FY 1998 Country Commercial Guide: Mauritius

Report prepared by U.S. Embassy Port Louis, released August 1997*.

I: EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at the commercial environment in Mauritius, using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. government agencies.

Mauritius is well-positioned to benefit from the revival of foreign business interest in Africa. Its political, legal, and economic systems are among the most advanced in the region. Its telecommunications and banking infrastructure support sophisticated trade and financing activities. The government is business-friendly and the private sector is trade-oriented. South African and European companies dominate the local market, but there is growing interest in U.S. technology -- particularly in telecommunications, computers, software, and farm machinery.

Although an island with a population of only 1.2 million, Mauritius presents three opportunities of potential interest to U.S. companies. First, it is trying to establish itself as a commercial bridge between Asia and Africa. Generous incentives are available to foreign companies that establish operations in the Mauritius Freeport or otherwise use the country as a platform for their Africa operations. Potential activities include transshipment and re-exportation, offshore banking and other financial services, light manufacturing, and information technology. Several U.S.-affiliated companies use bilingual Mauritius as a base to reach both English- and French-speaking markets in Africa.

Second, Mauritius is set to invest upwards of $1.5 billion in infrastructure over the next decade. Projects include airport and port development, energy, telecommunications, health, sewage, road and dam construction, and computerization. U.S. companies won significant telecommunications and engineering contracts in 1996-97, and are positioned to compete for others.

Third, textiles and sugar offer continuing sales opportunities. Some 275 garment factories operate in Mauritius, most selling to Europe and the United States. Many are modernizing, creating demand for machinery and computerized production systems. Mauritius is among the world's ten largest exporters of sugar, and there is substantial demand for machinery and irrigation systems. Further, the biggest sugar mills are investing heavily in the production of energy from bagasse (sugar cane waste).

Competition is keen. The United States is Mauritius' third largest market but ranks 13th in terms of exports to Mauritius, well behind South Africa, France, India, and the United Kingdom. The largest U.S. subsidiaries are Caltex Oil Mauritius and Esso Mauritius. U.S. brands are sold widely. Several franchises, notably Kentucky Fried Chicken and Pizza Hut, have opened in recent years.

Dollar amounts in this report are based on an exchange rate of 20 Mauritian Rupees - 1 U.S. Dollar. Annexes address the commercial environment in the Seychelles and Comoros, both covered from the United States Embassy in Port Louis.

II: ECONOMIC TRENDS AND OUTLOOK

Major Trends and Outlook

The economy is among the strongest in Africa, with a 1996 GDP $3.7 billion and per capita income of $3,400. It is heavily reliant on exports of sugar and textiles, but services like tourism, offshore business, and financial services are growing. Economic performance has been impressive for the past 15 years, with real growth averaging 7 percent between 1985-1990 and 5.4 percent during the last six years.

GDP grew 5.8 percent in 1996, with strong performances in sugar (up 9%), textiles and other light manufacturing (7%), and tourism (21%). Growth will hover between 5% and 6% annually over the medium term; neither a recession nor a boom is forecast.

Inflation reached 7.9% in 1996, up from 6% in 1995. The government announced measures in June 1997 that are designed to reduce the budget deficit to 3.6% of GDP from the current 4.6%, and to drive inflation down to 6%.

Unemployment is growing but manageable. The jobless rate reached 5.5% in 1996, nearly double previous estimates. Although this figure represents only 27,000 job seekers in a labor force of nearly 500,000, the upward trend is causing concern in a society grown accustomed to full employment. The current level of unemployment will hinder efforts to reduce government staffing and delay needed privatizations.

Mauritius's chronic trade deficits are normally offset by surpluses in the services accounts. In mid-1997, foreign exchange reserves at the Bank of Mauritius stood at $840 million, representing six months of import cover. They are expected to reach $875 million by mid-1998. The Mauritian rupee is freely convertible.

The Ministry of Finance posts current economic data on its web page (http://www.intnet.mu/ncb/finance/mof.htm), as does the local office of the United Nations Development Program (http://www.intnet.mu/undp).

Long-Term Prospects: Mauritius faces daunting challenges. Its two principal exports -- sugar and textiles -- are gradually losing their preferential access to markets in Europe and the United States. As WTO regulations come into force and textile quotas disappear, Mauritius will face increased competition from low-cost producers in Asia and South America. The price it receives for its sugar in Europe and the United States --two or three times the world market price-- will almost certainly fall. Both industries are responding by placing more emphasis on productivity. Also, many of the country's most successful companies and banks are turning multinational, establishing operations in India and southern and eastern Africa.

For its part, the government is encouraging investment in services. Its primary goal over the next decade is to establish Mauritius as a regional trade and financial center and focal point for commerce between Africa and the Far East. As part of this effort, the government is moving to privatize several parastatals and to reform outdated labor laws and other regulations that restrict growth. Political constraints -- a large, unskilled agricultural work force, for example -- have delayed action to boldly open the economy to greater competition. The government is moving in the right direction, but cautiously.

Principal Growth Sectors: The economy is based primarily on light manufacturing, sugar and tourism. Financial and business services are emerging as a fourth pillar. Mauritius is among the world's ten largest exporters of sugar and the second largest exporter of woolen knits. Some 90 hotels operate on the island, with more under construction.

Manufacturing: Light manufacturing represents 23% of GDP. Nearly 500 companies operate in the Export Processing Zone; of these, 275 produce apparel, mainly for sale in Europe and the United States. EPZ exports exceeded $1 billion in 1996. A number of factories have failed in recent years, but overall production continues to grow between 6-7% a year, the result of efforts to modernize, move toward high-value textiles and branch into areas like pharmaceuticals, publishing, software, light engineering, and jewelry. The transition has created new opportunities for U.S. exporters of machinery and computerized production systems.

Sugar: The sugar industry, which includes 17 mills and large plantations and thousands of small planters, offers substantial opportunities for U.S. exporters of farm machinery (particularly to clear fields of rocks and boulders), irrigation equipment and power generating equipment for use in plants fired by bagasse (sugar cane waste). The market for environmental and engineering consultancy is growing.

Sugar's relative importance has declined, but cane still covers 45% of the island's land area and 85% of its cultivated land. It accounts for 7.7 percent of GDP and 12 percent of all jobs. Normal production varies between 600,000 and 700,000 metric tons, although adverse weather has reduced production in recent years. Production was 589,000 tons in 1996, up 9% from 1995.

Mauritius has guaranteed access to the EU market, at zero tariff, for an annual quota of 507,000 tons of sugar. A recently negotiated agreement provided an additional quota of 85,000 tons through 2001. While Europe is its primary market, Mauritius exports between 15,000 and 20,000 tons of sugar annually to the United States.

The government recently tabled a blueprint that specifies the conditions under which owners may close inefficient sugar mills; currently government approval to do so is granted only in exceptional cases. If the blueprint is approved, five to seven of the country's 17 mills are likely to close in the coming years. At least nine mills are investing in the generation of electricity from bagasse.

The Public Relations Office of the Sugar Industry maintains an extensive online file of information on the industry (http://prosi.intnet.mu).

Tourism: Tourism is Mauritius's third largest foreign-exchange earner. The number of visitors surged to 489,000 in 1996, a 15% increase over 1995. Gross earnings rose to $453 million from $374 million. Tourism accounts for 5% of GDP and provides direct and indirect employment to about 50,000 people.

Half of all visitors come from France and the neighboring French territory of Reunion Island; other European countries, South Africa, and India account for the remainder. At the end of 1996, there were 90 licensed hotels with a total of 7,000 rooms. The occupancy rate was 74% for large hotels and 68% overall.

Official figures estimate that arrivals will reach 550,000 in 1997, bringing gross earnings to $525 million. The government's goal is to expand the industry 10% a year. Most of the country's 90 hotels are owned by Mauritian, South African, European, and South East Asian concerns; none is U.S.-owned or operated.

Opportunities for U.S. firms exist in restaurant and food-processing equipment and design consulting.

Offshore Financial Sector/Freeport: Financial and business services, including offshore banking and Freeport activities, have expanded rapidly in recent years. By end-1996, more than 4,600 companies were registered in the offshore sector, including 92 stock funds mostly invested in India, with an asset base estimated at $3.5 billion. These funds are the reason Mauritius is sometimes listed as the fourth largest source of foreign investment in India. Offshore non-banking services include insurance, funds management, aircraft leasing, consultancy, and data processing. The Freeport is also growing; re-exports in 1996 were up 127 percent over 1995, and are expected to increase further in 1997.

Government Role in the Economy

The government is generally pro-business, although senior officials tend to be more helpful than the bureaucracy, which is less responsive to business needs and frequently causes unnecessary delays.

Government's share of GDP is modest but it controls several key sectors directly or through parastatals, including electricity, water, postal services, telecommunications (except cellular), and broadcasting. The State Trading Corporation controls imports of rice, flour, petroleum products, and cement, and the Agricultural Marketing Board controls imports of potatoes, onions and some spices that compete with locally grown produce.

The Government recently announced it intends to review the trading monopolies, particularly cement and petroleum, to promote more competition. It is also finalizing legislation to liberalize telecommunications and broadcasting. In addition, it plans to table a paper on privatizing parastatals. Potential candidates include Mauritius Telecom, State Bank of Mauritius, and the State Insurance Corporation of Mauritius. In July 1997, the government approved legislation allowing private firms to build and operate projects on state lands and transfer them to the government at the end of the contract period. Among projects of potential foreign interest: power-generation (wind, gas, and diesel oil), extension of the airport terminal building, a 15-mile light rail or monorail along the island's most densely populated corridor, and construction of a tunnel and highway around Port Louis. The government is also licensing independent power producers, including those using bagasse.

Balance of Payments

Mauritius imports more than it exports but bridges the difference with revenue from tourism and other services.

The trade deficit reached $455 million by mid-1997 and is expected to rise to $645 million by mid-1998, higher than normal due to the purchase of aircraft and ships. The current account will register a higher deficit of $120 million by mid-1998, compared to only $4 million in June 1997. The overall balance of payments, which includes foreign investment on the Mauritius Stock Exchange, showed a surplus of $60 million in June 1997; it is expected to fall to $33 million by mid-1998.

Infrastructure

Infrastructure is adequate but nearing capacity. The port, airport, telephone system and road network are all being expanded.

Telecommunications is highly developed. International connections are reliable and mobile phones and pagers are widely used. Mauritius Telecom opened a direct high-speed 512K satellite line with U.S. Sprint in March 1997, providing faster Internet access; further upgrades are planned. MT recently chose U.S.-developed Code Division Multiple Access technology to install 50,000 lines for a wireless local loop telephone network.

Port Louis offers normal harbor services like transshipment, container handling, and warehousing. Operations should become more efficient over the next several years as the World Bank-funded modernization project is completed. A new container terminal and three container-handling cranes are to be operational by mid-1998.

Air transportation is adequate but expensive. Cargo service is to be liberalized this year to reduce costs. Some ten airlines with more than 150 passenger flights a week serve the country.

III: POLITICAL ENVIRONMENT

Mauritius is a republic with a titular president and a parliamentary form of government headed by a prime minister. Ruled by France from 1715 to 1810 and by Britain from 1810 to independence in 1968, Mauritius is an established democracy whose citizens enjoy a full range of democratic freedoms, including freedom of speech and assembly and recourse to an independent judiciary. The press is free and energetically participates in the country's political life. Although a republic, Mauritius maintains the British Privy Council as its court of final appeal.

Prime Minister Navin Ramgoolam was elected to a five-year term in December 1995. He and coalition partner Paul Berenger split in June 1997, and Berenger took his MMM party into opposition. The government has generally pursued business-friendly policies designed to attract foreign investment and help Mauritius compete effectively in the WTO era. The Ramgoolam government has energetically developed new political relations and markets in Africa, particularly with Mozambique, Madagascar and South Africa, even as it has sought to preserve traditional relations with India, the European Union and the United States. It has moved forward on needed infrastructure projects involving telecommunications, the port and roads, albeit more slowly than the business community wishes. It has also addressed inefficiencies in the sugar industry and tabled legislation affording greater protection to intellectual property rights.

Ramgoolam and Berenger were often at odds during the 18 months their coalition governed. Political debate will remain heated with Berenger in opposition. Their disputes have tended to delay important decisions and to politicize issues that would otherwise be handled routinely and without controversy. Savvy local and foreign executives cultivate contacts from both camps.

Relations between the United States and Mauritius are friendly. Given Mauritius' reliance on the U.S. market for its exports, trade issues dominate the relationship.

V: MARKETING U.S PRODUCTS AND SERVICES

Distribution and Sales Channels

Distribution of goods is uncomplicated given Mauritius's size: Forty-two miles north to south, and 28 miles east to west. Port Louis has a population of 145,000 and is the island's commercial center. There are four other major towns. Goods are distributed through the standard channels of importers, wholesalers, retailers, supermarkets, and one hypermarket.

Use of Agents/Distributors; Finding a Partner

The use of an established agent is strongly recommended.

Nearly 150 U.S. companies are represented by local agents and distributors. For products requiring servicing, qualified personnel and a reasonable supply of parts are essential. The Embassy's Commercial Section can help identify suitable agents or partners.

Several trading concerns dominate the market for products as varied as food, heavy equipment, automobiles and pharmaceuticals. These include the Rogers Group, the country's largest company and one of its oldest, with interests in automobiles, appliances, computers, industrial equipment, shipping, aviation, engineering, and agriculture. Ireland Blyth Ltd., the country's third largest, markets consumer goods, computers, pharmaceuticals, textiles, chemicals, appliances, and agricultural and construction equipment. Currimjee Group --fourth largest-- manufactures or markets soft drinks, soap and toiletries, margarine, textiles, cellular phones, paper, appliances, computers, chemicals, and agricultural products. Other trading firms include Food and Allied Industries Group, Harel Group, Happy World Ltd., Espitalier Noel Group, and Leal Group.

Franchising

Franchising is relatively new and involves mainly fast food outlets. With per capita income of $3,400 and two-income families leading increasingly hectic lives, the market for family restaurants and similar conveniences is growing. Kentucky Fried Chicken and Pizza Hut have opened in recent years, as have several South African chains.

Direct Marketing

Direct marketing is limited to big-ticket items requested through government tenders. Shopping by mail order and Internet is rare.

Joint Ventures

Joint ventures are seldom used except for construction and civil engineering projects. Foreign architects are required to enter into a joint venture with a Mauritian architect or firm to work on local projects.

Licensing

Mauritian firms manufacture several U.S. products under license, including paints and chemicals. Licensing agreements, including royalties, are typically negotiated between the local firm and the foreign partner. There is no requirement for central bank approval. The tax on royalties was abolished in 1995.

Steps to Establish an Office

Regulations governing incorporation are contained in the Companies Act 1984, which is based on the British legal system. The most common type used by foreigners is the private limited company. Foreign investors may be founder-members of a limited company provided they obtain authorization from the Prime Minister's Office to subscribe for shares.

The registration of a company with the Registrar of Companies requires that the Memorandum and Articles of Association of the company be drawn up by a notary and embodied in a notarial deed. Founder members, of whom there must be at least two, must sign the notarial deed.

A common procedure is to nominate two residents to form the company as founder-members with a minimum paid-up share capital. The shares are then transferred to the foreign investor when approval from the Prime Minister's Office is obtained.

The percentage of foreign participation in a company requires prior approval; 100 percent ownership is possible. A company can usually incorporate within two weeks unless foreign investors are involved as founder-members; in that case, the process takes longer because of the need to obtain authorization from the Prime Minister's Office.

Selling factors/Techniques

Effective advertising, competitive pricing, prompt delivery and after-sales servicing are all important.

For meat, provision must be made for halal (slaughtered according to Muslim rites) to cater to the Muslim community. Many Hindu Mauritians do not eat beef. About 52 percent of the population is Hindu and 16 percent Muslim.

Advertising and Trade Promotion

U.S. exporters should be prepared to provide promotional support, particularly when introducing a product. Advertising can be in English or French but French is preferred. Circulation figures are not audited.

Media include television, radio, newspapers, and magazines. Television is the most effective. Annual advertising expenditures are estimated at $8 million. Consumer goods account for most advertising, followed by durables and services (banking, insurance, information technology).

There is only one broadcasting organization, but private channels could emerge by next year if liberalization plans are implemented. There are three large newspapers and many weeklies. Most are in French.

Members of the Agencies of Mauritius provide standard Association of Advertising services, including media planning, market surveys, and creation of advertising materials. Fees are normally paid directly to the agency, which retains 20% commission. Agencies may be contacted at:

Association of Advertising Agencies of Mauritius

6 St. Georges Street
P.O. Box 287
Port Louis, Mauritius
Tel: (230) 208-1030; Fax: (230) 212-4128

Major newspapers and business journals include:

Le Mauricien
8 St. Georges Street
Port Louis, Mauritius
Tel: (230) 208-7805; Fax: (230) 208-7059
http://www.mauritius-online.com/lemauricien/index.html

Week-end
8 St. Georges Street
Port Louis, Mauritius
Tel:(230) 208-7805; Fax: (230) 208-7059

L'Express
3 Brown Sequard Street
Port Louis, Mauritius
Tel: (230) 212-1826; Fax: (230) 208-8174
http://www.lexpress-net.com

Le Quotidien
12 Dr. Seetulsing Street
Port Louis, Mauritius
Tel: (230) 211-4800
Fax: (230-) 211-7479
http://lequotidien.intnet.mu

Business Magazine
St. Georges Street
Port Louis, Mauritius
Tel: (230) 211-1925; Fax: (230) 211-1926

Pricing Product

The Mauritian market is generally price sensitive, although middle- and high-income brackets increasingly look for quality.

The government controls prices and/or markups on a range of goods. Imports subject to price control include rice, flour, cement, cooking gas, infant milk powder, cheese, fertilizer, frozen fish, iron and steel bars, petroleum products, coconut oil, and salted fish. Maximum markups apply to refrigerators and certain appliances, tires, pharmaceuticals, sporting goods, tiles, crash helmets, glass panes, plywood, sanitary wares, textbooks and timber. Markup limits vary between 20-50%.

Sales Service and Customer Support

After-sales servicing and availability of spares are essential for successfully marketing certain goods, particularly machinery and equipment. U.S. manufacturers should be prepared to train local staff to provide efficient servicing.

Selling to the Government

Until 1995, government procurement in Mauritius was decentralized. Now, major government contracts are handled through an autonomous Central Tender Board.

Tender notices are published in the Government Gazette and local media. Tenders open to foreign participation are transmitted by the Embassy to the U.S. Department of Commerce which in turn publishes them in the Economic Bulletin Board and the National Trade Data Bank.

Successful foreign bidders generally work with local partners in pursuing major contracts.

Protecting Your Product from IPR Infringement

The Trade Marks Act, the Patents Act, and the Copyright Act govern the administration and protection of trade marks, patents, and copyrights in Mauritius.

Copyright: In July 1997, the Government approved a new Copyright law which is in conformity with WTO's Trade Related Aspects of Intellectual Property Rights (TRIPS). The new Copyright Act specifically provides for the protection of computer software and electronic databases while at the same time extending the scope of protection of audio and video production.

Mauritius is a member of the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention, and the Bern Convention.

Patents and Trademarks: Patents and trademarks must be registered in Mauritius to receive full legal protection. Applications are made to the Ministry of Trade & Shipping through a local attorney or trade mark agent.

Patent applications must be made before the product has been used in Mauritius. Patents are granted for 14 years and can be extended for a similar term. Trademarks are issued for an initial period of seven years and are renewable.

Need for a Local Attorney

The legal system is based on French and English law. Company law is based on the British system. Nearly all major companies retain a legal adviser. U.S. companies doing business on a regular basis in Mauritius are advised to do the same. A list of local lawyers and attorneys is available at the Embassy.

V: LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT

Best Prospects for Non-Agricultural Goods and Services

TEL: Telecommunications and Broadcasting Equipment

The market for telecommunications equipment was about $53 million in 1996 and will grow at least 50% annually over the next several years. U.S. companies made significant inroads into the market in 1996-97 with products and services ranging from modems to pair-gain technology. The most significant development was Mauritius Telecom's decision in May 1997 to choose a U.S. company as the top bidder to install 50,000 wireless local loop telephone lines. In doing so, it selected U.S.-developed CDMA technology over other rivals. MT plans to extend the wireless network to 350,000 lines over the next 5-10 years, a projected investment of some $350 million. A contract for another 50,000 lines is expected to be issued in 1998. Mauritius has made a WTO commitment to end by 2004 the monopoly MT enjoys over most telephone services.

Emtel, a competing cellular phone company, has just embarked on a $5 million expansion. Ninety percent of the equipment will come from the United States.

Government has pledged to table legislation in 1997 to liberalize telecommunications, television and radio broadcasting. Several firms are awaiting government approval to operate TV and radio channels.

France was the leading supplier of telecommunications and broadcast equipment in 1996 with 44% market share. Other suppliers include Japan (6.5%), Malaysia (6%), South Korea (4.7%), and the United States (4.3%). U.S. market share will show a significant increase in 1997.

Best sales prospects include fixed wireless telephone network equipment, switching equipment and relay stations, satellite earth stations, telephone sets, cellular terminals, radio and television transmission equipment and programming, antennas, paging equipment, modems, mobile radios, and fiber optic cables.

ELP: Energy

Mauritius is in the midst of a major expansion of its electrical grid and is looking at both traditional and non-traditional sources of energy.

The Central Electricity Board is currently evaluating tenders for two 29 MW diesel generators for the extension of Fort George Power Station, the first to be operational in 1998. A prequalification notice for the production of wind energy in the range of 10-30MW was issued recently by the Ministry of Public Utilities. In addition, the ministry plans to develop a 300MW combined cycle gas turbine power plant by the year 2002.

The Board recently issued a prequalification notice for the first phase of a transmission expansion program that includes 52 km of three double-circuit 132 KV transmission lines and the supply of sub-station equipment. This $19 million project will be funded by the African Development Bank.

To reduce dependency on imported fuel, the government is encouraging production of electricity from renewable resources such as bagasse and wind power. It has also negotiated purchase agreements with independent power producers. Already, the Central Electricity Board has signed agreements with about 10 sugar factories for electricity produced from bagasse. Five plan to be operational by end-1997. These projects have created demand for turbo-alternators, boilers, machinery to handle bagasse, coal and ash, and associated electrical equipment. With planned investment of $140 million between 1997 and 2000, the sugar industry is expected to produce 40% of Mauritius's energy by 2000, compared to 12% now.

These projects represent significant opportunities for consultancy services as well as equipment. Interested firms should contact Mr. R. Bikoo, Secretary for Energy Development, Ministry of Public Utilities, Government Center, Port Louis. Tel: (230) 201-1096; Fax: (230) 208-6497 or Mr. Sashi Desai, General Manager, Central Electricity Board, Curepipe, Mauritius. Tel: (230) 675-5010; Fax: (230) 675-7958.

CPT: Computer Hardware and Software

Computers are widely used and demand is growing. The rapid growth of financial services and the transition from labor-intensive manufacturing and agriculture to capital-intensive and knowledge-intensive services has created substantial demand for hardware, software, and consulting. The Ministry of Education plans to install at least one Internet-ready PC in every school. Government ministries and most large businesses plan to establish Internet web sites over the next several years.

The modernization of Port Louis harbor and construction of warehouses at the Freeport have generated additional demand. A tender for warehouse management software was recently launched by Freeport Operations of Mauritius, a private company building 35,000 square meters of warehousing and distribution facilities. Other private companies in similar endeavors will need to computerize their operations as well. The Mauritius Marine Authority will soon request bids for a computerization study of a new container terminal; the system is to be in place in 1998.

The new Copyright Act passed by the National Assembly in July 1997 has made the information technology sector more attractive to U.S. companies. It provides legal protection to computer software and electronic database and curbs software piracy. The Government also is working on an Information Technology Bill that would provide against computer misuse and make electronically-produced documents acceptable in court. Both are WTO-consistent.

According to the National Computer Board, 75% of the revenue in the IT sector is generated by the sale of hardware and 25% from software. However, the market is shifting toward software and consultancy. Imports of data processing machines and parts in 1996 amounted to $32 million. The United States and Singapore are the leading exporters, with a share of 25% and 20% respectively, followed by U.K. (10%), France (9%), and Ireland (6%). The market is dominated by U.S.-based companies like Microsoft, IBM, Gateway 2000, HP, AT&T, AST, Dell, Compaq, Cisco, Apple, and Digital. Many of their products are made in third countries and thus not recorded as U.S. exports in Mauritian trade statistics.

TLS: Textile Industry Machinery and Raw Materials

There are about 275 textile manufacturers in Mauritius. Competition from lower cost producers is forcing them to modernize production, creating a market for state-of-the-art machinery for sewing, knitting, spinning, cutting, washing and dyeing. The industry is shifting increasingly towards high-quality, high-value products, and using computer-aided design and manufacturing operations. Germany and Japan are the leading suppliers of textile machinery, each with a 25% market share in 1996, followed by Switzerland (9%), Taiwan (8%), Hong Kong (4%), and the United States (1.3%).

Main imported raw materials are textile yarn and fabrics (55%), cotton, wool and synthetic fibers (6%), and chemicals (4%). India is the leading supplier of raw materials with 25% market share, followed by Hong Kong (11%), China (7%), Pakistan (5%), and Taiwan (5%).

AGM: Sugar Industry Machinery and Equipment

The industry, comprising 20 estates, 17 mills, and 35,000 small planters, is embarked on a major program to increase productivity and reduce costs. In the last two years, it has invested at least $80 million in machinery and equipment; in the next five years it is likely to invest several hundred million dollars more.

In addition to upgrading machinery and equipment (boilers and turbines) at mills, the industry is mechanizing field operations, creating demand for derocking tractors, excavators, cane loaders, harvesters, planters, and sprayers. Demand for derocking equipment should remain strong for at least 10 years. Most large estates have derocked enough to permit mechanical loading but not mechanical harvesting, planting and irrigating. Small planters have barely begun derocking. Caterpillar is the biggest supplier of derocking machinery. Others include John Deere (U.S.), Massey Ferguson(U.K), Case (U.S.), Fiatallis (Italy), Komatsu (Japan), and Libher (Germany).

There are significant opportunities for sale of irrigation equipment, particularly pivot and drip systems. The Irrigation Authority plans to double the area of agricultural land under irrigation to 33,000 hectares by 2015. About 3,500 hectares will be converted from sprinkler to drip in the next five years. Sugar estates, which cultivate 70% of sugar-cane land, are increasingly investing in pivot systems of irrigation, for which the United States is the leading supplier.

PGA: Printing Machinery and Supplies

Printing and publishing has grown significantly in recent years; there is neither Customs duty nor sales tax on imported machinery and supplies. About 30 companies operate in the industry, including five engaged mainly in pre-press activities. Several work primarily for the export market in Africa and the Indian Ocean region. Book Printing Services Ltd., a subsidiary of Mauritius Stationery Manufacturing Ltd., the country's largest printing firm, expects its export services to increase 200 percent annually in the next few years.

Imports of machinery and equipment were approximately $6 million in 1996. Germany led with a 60% market share. Other suppliers include India (6.4%), the United States (6%), and Japan (4.4%). Imports of materials are estimated at $18 million per year. In addition to the above countries, inputs are imported from Hong Kong, Singapore, and South Africa.

The industry is expected to grow 25 percent annually.

MED: Pharmaceuticals and Medical Equipment and Supplies

There are 200 private drugstores and seven wholesalers of pharmaceuticals, medical equipment and consumables in Mauritius. They import about $20 million in pharmaceuticals and $3 million in equipment and consumables annually. The country's 12 government hospitals and 10 private clinics purchase an additional $14 million in medicines, disposables, and equipment.

An annual tender for pharmaceuticals and dressings -- normally valued at $9 million -- is issued every October. Tenders for medical disposables and equipment are issued as required. Interested U.S. suppliers should contact: Mr. D. Cumlajee, Chief Hospital Supplies Officer, Ministry of Health, E. Anquetil Building (7th Floor), Port Louis. Tel: (230) 201-2524; Fax: (230) 208-8305. The private clinics' annual medical supplies and equipment needs are estimated at $3 million. They normally purchase through local agents.

France is the main supplier of pharmaceuticals, with 37% of the market, followed by U.K (20%), India (8.3%), Switzerland (7.4%), and South Africa (5%). Imports from the United States are less than 1% but some European imports originate from U.S. subsidiaries. Equipment and consumables are imported from U.K., France, Germany, the United States, and Japan.

Mauritius Pharmaceutical Manufacturing Ltd, the only company manufacturing for the local market, supplies up to 60% of the government's requirements for certain types of pharmaceuticals, valued at $2.2 million. This contract will be reduced to 30% in 1998, after which the government plans to open the market to foreign suppliers.

The government has recently finalized plans to expand health care facilities over the next 10 years at an estimated cost of $100 million. Projects include construction of a general hospital, renovation of existing facilities, and purchase of new equipment.

In addition to equipment, there will be demand for architectural and engineering services.

BEST PROSPECTS FOR AGRICULTURAL PRODUCTS

Wheat and Flour

This market includes the State Trading Corporation (STC), a government agency, Les Moulins de la Concorde (LMLC), a private flour mill, and 70 bakeries. STC is the sole buyer and distributor of flour. LMLC operates the only flour mill. STC's annual flour tender, long limited to French and Australian suppliers, was opened to the United States and India in 1995. The tender is launched every September.

LMLC buys most of its wheat from France and Australia but considers offers from the United States as well. Based on an agreement between STC and the local mill, the latter is assured 50% of the flour contract provided it can match the lowest bidder's price. Since coming into operation in 1989, LMLC has succeeded in obtaining at least 85% of the flour tender. U.S. companies can either bid directly for flour in response to STC's tender or indirectly by offering wheat to LMLC. Principal contact is Mr. Armand Maudave, General Manager, Les Moulins de la Concorde Ltd. Cargo Peninsula, Port Louis. Tel: (230) 240-8180; Fax: (230) 240-8171.

Mauritius imported 124,000 metric tons of wheat in 1996, up from 112,000 metric tons in 1995. 1997 imports are estimated at 140,000 metric tons. About 80% was imported from France, the remainder from Australia. Mauritius imported 12,000 tons of flour in 1996; the same level is forecast for 1997.

Crude Vegetable Oil

Mauritius imported 26,000 MT of bulk vegetable oil in 1996, valued at $16 million. Soya bean oil constituted 90%, sunflower oil the remainder. Imports of pre-packaged refined oil are estimated at 500 tons annually -- 2% of the market.

Crude vegetable oil is imported by Mauritius Oil Refineries Ltd (MOROIL), which supplies 85% of the market. Ramdenee Oil Products Ltd, the only other refinery, has the remaining 15%. MOROIL imported 26,000 MT from Brazil and Argentina in 1996. Most pre-packaged refined oil is from Singapore and Malaysia.

Local refineries are prepared to buy from the United States, provided the price is competitive. MOROIL has purchased crude vegetable oil from the United States in the past. Contact: Mr. Paul Clarence, Managing Director, Mauritius Oil Refineries Ltd., Quay Road, Port Louis. Tel: (230) 240-2147; Fax: (230) 240-8320.

OPPORTUNITIES FROM MAJOR INFRASTRUCTURE PROJECTS

Airport Modernization

The government has embarked on an $80 million program to modernize the airport, and is considering an additional $100 million investment in air cargo facilities to support the Mauritius Freeport.

A New Zealand firm, Airways Consulting Ltd., is conducting an engineering study for an area control center to improve traffic management. A tender for construction and related communications equipment will be issued in early 1998. This project, estimated at $15 million, is scheduled for completion in 1999. Interested U.S. companies should contact Mr. Anand Gungah, Director, Civil Aviation Department, SSR International Airport, Plaisance, Mauritius; Tel:(230) 637-3531; Fax: (230) 637-3164.

Another major project is the new passenger terminal building. Design studies have already been completed by a local architecture firm Siew-Lam Po Tang and the French consulting firm Sofreavia. The Airport Development Corporation expects to issue a tender for constructing and equipping the terminal in July-August 1997. The project will include extending the power distribution network and supplying passenger loading bridges, escalators, elevators, luggage conveying belts, flight display systems, security systems, and furniture. The project, estimated at $50 million, is scheduled to be operational in 2000. Contact: Mr. Jagadish Soobarah, General Manager, Airport Development Corporation, Phoenix, Mauritius. Tel: (230) 686-3654; Fax: (230) 696-3718

Regional Airline

A Mauritian industrialist has announced plans to set up a regional airline to serve 13 destinations in southern Africa and the Indian Ocean. Although government approval and landing rights in the region have yet to be negotiated, the company hopes to become operational by mid-1998.

A feasibility study has been undertaken by Speedwing, a division of British Airways. The Australian Institute of Transport has analyzed of the macro-economic impact of the project. Promoters estimate an initial investment of between $32-50 million, depending upon whether aircraft are purchased or leased. AIA is looking for two 120-seat aircraft.

In addition, AIA seeks consulting services, particularly management consultancy. Interested U.S. banks and consultants should contact Mr. Nimesh Mehta, Project Manager, African Islands Airways, c/o T-Printers Ltd., Beau-Bassin, Mauritius. Tel: (230) 464-9798; Fax: (230) 454-3420; Email: amsun@bow.intnet.mu

Sewage Treatment

Mauritius plans to spend $400 million upgrading its sewage system in the next decade, creating opportunities for engineering and design consultants and construction companies. Projects worth $170 million are under way.

Several projects will receive funding from international donors: Baie du Tombeau treatment plant, $40 million by the German KFW and European Investment Bank; St. Martin treatment plant, $23 million by the European Development Fund); Grand Baie treatment plant, $20 million by Caisse Francaise de Developpement; Plaines Wilhems trunk sewer, $29 million by the Arab Bank for Economic Development in Africa; and $30 million by the Nordic Investment Bank, the Arab Bank, and the European Investment Bank for various other projects. Given these sources, tenders for several projects will be limited to European firms.

However, the World Bank is coordinating financing of a larger plant at Montagne Jacquot in Pointe aux Sables which will be open to U.S. companies. U.S.-based Black & Veatch recently won the contract for the design study of this project. The construction tender is to be issued end-1997. Interested U.S. firms should contact Mr. Reshad Laulloo, Director, Waste Water Authority, Aisha Building, Port Louis, Mauritius. Tel: (230) 241-5544; Fax: (230) 242-1649; Email: wa@bow.intnet.mu

Concessions Projects

By the approval of the Concessions Projects Bill in July 1997, the Government is also actively encouraging both local and foreign private investment in major infrastructure projects, which so far have been financed by public funds only. The new law provides for four general categories of projects: (i) Build, Operate and Transfer (BOT), (ii) Build, Own and Operate (BOO), (iii) Build, Own, Operate, and Transfer (BOOT), and (iv) Design, Build, Finance and Operate (DBFO).

Projects requiring a total investment of $550 million in energy, roads, and public transport sectors have been identified by the government for implementation under the new law within the next several years. Projects in the energy sector ($250 million) include the production of wind energy in the 10-30mw range and the development of a 300mw combined cycle gas turbine power plant. To ease the traffic congestion in Port Louis, the government is inviting proposals for the construction of a ring road around the capital which will include construction of a tunnel in Signal mountain ($50 million). A second road project will link suburban Moka to Port Louis through another tunnel to be built under Le Pouce mountain ($50 million). The most ambitious concession project envisaged by the government concerns a 15-mile mass transit system between the suburban areas in the district of Plaines Wilhems and Port Louis and which could take the form of either a light metro or monorail system ($200 million).

The Government has also recently announced plans to carry out feasibility studies on the construction of a new airport in the north of the island as well as the re-opening of the harbor in Mahebourg in the south. Interested U.S. companies should contact the Concessions Project Division, Ministry of Finance, Government House (2nd Floor), Port Louis, Mauritius; Tel: (230) 201-1256; Fax: (230) 201-9123

VI: TRADE REGULATIONS AND STANDARDS

Tariffs and Import Taxes

Mauritius operates a relatively streamlined trade regime, although peculiarities remain. The most significant is a two-tiered system whereby imports from certain countries are given preferential duties. Countries on the preferred list include the United States, members of the European Union and India. Countries not afforded preferential rates include Japan, Switzerland, and South Korea.

Under a 1994 reform, three separate import levies were combined into one, and the number of rates reduced to eight from 60. Combined duties on most imports, which once ranged from 17 to 250 percent, now vary between O and 80 percent for countries on the preferred list. Imports of goods with duty at 55% or more from countries currently under general tariff (i.e., non-preferential tariff) are subject to an additional duty of 20 percent. A sales tax of eight percent is payable by importers on the CIF value of their imports. Vehicles, petroleum, alcohol, cigarettes, and furniture are subject to excise duties in addition to the basic import duties.

Customs Valuation

In general Customs valuation is based on the price paid for identical or comparable goods. In practice, Customs accepts the declared value on the invoice in most cases. For used goods, a sliding scale is employed that reduces duties up to a maximum of 60 percent for most goods except vehicles, where the maximum reduction is 48 percent.

Mauritius is signatory to the WTO Valuation Agreement of July 1994 and plans to implement WTO-consistent practices by January 2000.

Import Licenses

Import permits are required for foodstuffs (milk, potatoes, corn, rice, beans, wheat, fruits, infant formulas, food additives, spices, fats and oils), pharmaceuticals, cigarettes, insecticides, petroleum products, cement, PVC pipes, plastic feeding bottles, corrugated iron sheets, gold, weighing machinery, baking equipment, syringes, electric water heaters, motor vehicles (including used vehicles, parts and accessories), crash helmets and fireworks.

Importation of animals, animal feed, plants, and seeds must satisfy phytosanitary conditions and are subject to rigorous quarantine regulations.

The following state enterprises control the import of several commodities: State Trading Corporation (rice, wheat flour, petroleum, cement), Agricultural Marketing Board (products that compete with domestic goods), Tea Board, Tobacco Board and the Mauritius Sugar Syndicate.

Export Controls

Mauritius permits the export of all items except products of strategic importance or whose market access is restricted by quota. Products requiring export licenses include sugar, tea, vegetables, fruits, meat, fish, textiles, pharmaceuticals, gold, live animals, corals, and shells.

Import/Export Documentation

The following are necessary for imported goods: commercial invoice, bill of lading/airway bill, certificate of origin, and phytosanitary or veterinary certificates where applicable. An import permit is required for the goods noted above.

The following export documents are required: EUR1 Certificate for export of goods to the European Union, PTA Certificate of Origin for exports to the Common Market for Eastern and Southern Africa (COMESA), G.S.P Form A for GSP-eligible goods destined for the United States, ordinary certificate of origin for other exports, export bill of entry, and the export invoice.

Imports from the United States that are transshipped through third countries are eligible for preferential tariff rates provided they are accompanied by a certificate of origin from a recognized chamber of commerce or a government agency in the third country.

Temporary Entry

Authorities may authorize the temporary admission of goods when the importer furnishes adequate security to cover duty and taxes otherwise payable. The importer may be exempted from furnishing security provided the goods are covered by documents for temporary admission issued under any international convention approved by the Government of Mauritius. Additional information can be obtained from the Comptroller of Customs, Customs and Excise Department, IKS Building, Port Louis, Mauritius, Phone: (230) 240-3475, Fax: (230) 240-0434.

Goods destined for re-export normally enter duty-free. Such goods must be held in bonded warehouses. Items for trade fairs may be imported duty-free.

Labeling/Marking Requirements

Weights and measures must be in metric form. Food labels should include the name of the food, name and address of the manufacturer, ingredients, country of origin, and manufacture and expiration date. Weights and measures must be in metric form. Further information is available from the Permanent Secretary, Ministry of Industry and Commerce, Commerce Section, New Government Center, Port Louis, Mauritius, Phone: (230) 201-1985; Fax: (230) 212-6368.

Prohibited Imports

Imports of the following are prohibited: ball valve bottles, caps for toy guns, recapped tires, white phosphorous matches, certain firecrackers, kerosene stoves, water scooters, ivory and tortoise shell, underwater fishing guns, candy in the form of cigarettes, toy crash helmets, cigarette papers, used motor vehicle spare parts, and electric water heaters with bare elements.

Standards

The Mauritius Standards Bureau manages the ISO 9000 series. MSB is responsible for certifications, but exporters may use foreign certification bodies if requested by their clients overseas. The objective of the National Quality System Certification Scheme is to recognize companies that meet the requirements of MS ISO 9001, MS ISO 9002, MS ISO 9003, or MS ISO 9004.

A registration certificate is valid for two years and may be renewed. Additional information can be obtained from the Director, Mauritius Standards Bureau, Moka, Mauritius, Phone: (230) 433-3648, Fax: (230) 433-5051.

Free Trade Zones/Warehouses

Mauritius Freeport: The Mauritius Freeport was created in 1992 as a regional warehousing, distribution, and marketing center. There are 12,500 square meters of warehousing and storage at the port and 2,500 square meters at the airport. An additional 40,000 square meters of commercial space, including a 4,000 square-meter merchandising center, are expected to be available by end-1997. Plans are to expand the total to 130,000 square meters by the year 2003, including cold storage facilities.

The Freeport has grown substantially in recent years. As of mid-1997, 413 companies had been granted licenses and 130 were conducting such activities as transshipment/re-exportation, processing and assembly, and ship repair. Goods are imported mainly from China, India, Thailand and re-exported to Madagascar, Zimbabwe, Reunion Island, and South Africa. Main products re-exported include textiles and accessories, machinery and electrical equipment, vehicle spare parts and chemicals.

Freeport companies receive benefits that include exemption from company tax, preferential rates for warehousing and storage, reduced port charges, and exemption from duty and sales tax on machinery, equipment and materials imported into the zone. There is no restriction on foreign ownership.

One government authority and two private concerns are developing the Freeport: Mauritius Freeport Authority, Deramann Tower, Sir William Newton Street, Port Louis (Tel: 230-212-9627; fax: 230-212-9626; e-mail: :freeport@bow.intnet.mu Freeport Operations Mauritius, Ltd. La Capitainerie, Quay D, Port Louis (Tel: 230-240-2688; fax: 230-240-2296; e-mail: fom@bow.intnet.mu and Mauritius Freeport Development, Ltd., Fifth Floor, Ken Lee Building, Edith Cavel Street, Port Louis (Tel: 230-211-0853; fax: 230-211-0936).

Export Processing Zone: The Export Processing Zone was established in 1970 to encourage manufacturing for export. There is no formally designated zone, and EPZ companies are located throughout the island.

Textiles and apparel account for 80% of EPZ exports, but there has been diversification into manufacture of watches, electronic measuring instruments, jewelry, leather goods, toys, and optical goods. The government is now promoting printing and publishing, information technology, high-precision plastics, electronics, light engineering, and pharmaceuticals.

An information technology park was established several years ago for firms engaged in typesetting and other pre-press operations, data processing, CD-ROM publishing, image processing and related activities. The park provides ISDN and other high bandwidth services.

EPZ companies are exempt from import duties and sales tax on machinery, equipment, and spare parts, and from corporate tax as well as tax on dividends.

Membership in Free Trade Arrangements

Mauritius is a member of the Southern African Development Community, the Common Market for Eastern and Southern Africa, the Indian Ocean Commission, and the Indian Ocean Rim Association for Regional Cooperation, and signatory to the World Trade Organization, United Nations Conference on Trade and Development, and the Lome Convention. Mauritius benefits from the GSP schemes of Australia, Austria, Canada, the EU, Japan, Switzerland and the United States.

Southern African Development Community

Mauritius joined SADC in 1995. Members include South Africa, Lesotho, Swaziland, Botswana, Namibia, Angola, Mozambique, Malawi, Zimbabwe, Zambia and Tanzania. Zaire and Seychelles joined in September 1997. The main objective is economic cooperation and the creation of a free trade area by the year 2005. SADC currently has projects in transport and communications, tourism, industry, trade, agriculture, and energy, among others.

Common Market for Eastern and Southern Africa

The 20-member COMESA comprises Angola, Burundi, Comoros, Ethiopia, Eritrea, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Somalia, Sudan, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. As a member, Mauritius enjoys preferential rates of duty in the COMESA market and participates in a clearinghouse that guarantees payments in local currency for settlement of transactions between member countries. COMESA is increasingly seen as an important market for products from the Mauritius Freeport.

Indian Ocean Commission

The IOC includes Mauritius, Madagascar, Seychelles, Reunion and the Comoros. Projects have been implemented in meteorology, tourism, environmental protection, fishing, and compilation of trade statistics. The IOC was recently allocated $35 million in assistance from the EU.

EU-ACP Lome Convention

Mauritius is signatory to the Lome Convention whose main objective is to promote trade between the European Union and the African, Caribbean and Pacific states (ACP). Under the convention, ACP products that satisfy rules-of-origin criteria enter the EU duty- and quota-free. Mauritian sugar and textile exports enter the EU under this agreement.

Indian Ocean Rim Association

The Indian Ocean Rim Association for Regional Cooperation was established in March 1997. It comprises Mauritius, Madagascar, Mozambique, Tanzania, Kenya, South Africa, Australia, India, Sri Lanka, Singapore, Malaysia, Indonesia, Oman and Yemen. The Association's main objective is to promote trade and investment.

VII: INVESTMENT CLIMATE

Openness to Foreign Investment

The government welcomes foreign investment, especially export-oriented industries. Tax concessions and other incentives, introduced in 1970 to attract manufacturers to the Export Processing Zone, have since been extended to services and to companies in the Mauritius Freeport and the offshore banking and business center. The Mauritius Export Development and Investment Authority was established in 1984 to assist investors and promote exports.

Foreign direct investment is governed by the provisions of the Non-Citizen (Property Restriction) Act 1975. The government has notified the WTO it does not maintain any measures prohibited under the Agreement on Trade Related Investment Measures (TRIMS).

Right to Private Ownership and Establishment

All foreign investment-- except in the Offshore Business Center and on the Stock Exchange-- must obtain approval from the Prime Minister's Office. A foreign investor in export-oriented manufacturing is permitted 100% equity, although the government encourages local participation. Foreign participation may be limited to 49% for investments serving the domestic market, and is generally not encouraged in areas where Mauritius has already mastered the technology.

Foreign ownership of services such as accountancy, law, medicine, computer services, international marketing, and management consultancy, is limited to 30%.

Foreign citizens cannot acquire property. However, a foreign investor who has incorporated a company locally can apply for permission to acquire real estate in the name of the company. The acquisition must be connected with the investment and the purchase contract executed in the name of the locally incorporated company.

Protection of Property Rights

Mauritius maintains a sophisticated and impartial legal system based on both Napoleonic code and British common law. The system protects the acquisition and disposition of all property, including land, buildings, and mortgages. Long-standing legislation, inherited from the United Kingdom, protects patents and trademarks.

Mauritius is a member of the World Intellectual Property Organization and party to the Paris and Bern Conventions for the Protection of Industrial Property and the Universal Copyright Convention.

Assuming the foreign patent has not expired, patents are granted to the inventor only. Exclusive rights are granted for a period of 14 years and may be extended for a further 14 years. Trademarks are issued for an initial period of seven years and are renewable.

Legislation protecting artistic, literary, and scientific works, was enacted in 1986 and amended in 1988 to bring the period of copyright protection into conformity with the Bern Convention. A new Copyright Bill was approved by the National Assembly in July 1997 which specifically provides for the protection of computer software and electronic databases while at the same time extending the scope of protection of audio and video production. With the new Copyright Act, which is in conformity with WTO's Trade Related Aspects of Intellectual Property Rights (TRIPS), Mauritius is now on a par with developed countries as far as IPR protection is concerned.

Incentives/Performance Requirements

The government offers local and foreign investors the same fiscal and other incentives if they qualify for the Export Processing Zone certificate or other related programs. These include exemption from corporate tax and tax on dividends, free repatriation of capital, profits, and dividends, and no customs duty or sales tax on raw materials, machinery, spare parts, and on export products. The incentives are specified in the Industrial Expansion Act of 1993.

Contrary to the practice in many other countries, the Export Processing Zone in Mauritius is not limited to a specific geographical area; firms eligible for EPZ certificates can operate anywhere on the island.

Companies in the Mauritius Freeport receive exemption from company tax and tax on dividends, preferential rates for warehousing and storage ($20 per square meter per annum), reduced port handling charges (50% of normal rates), and exemption from import duty and sales tax on finished goods, machinery, equipment and materials. Freeport operations may be 100% foreign-owned and use offshore banking facilities.

Companies in the offshore business center also receive incentives. Profit is taxed at zero rate but companies can elect to pay income tax at a positive rate of up to 35%. There is no withholding tax on dividends; no tax on capital gains; and no foreign exchange control.

The 23 double taxation avoidance treaties between Mauritius and other countries are a major attraction to offshore businesses. As of June 1997, treaties had been signed with France, U.K., Germany, India, Sweden, Zimbabwe, Malaysia, Swaziland, Italy, China, Pakistan, Madagascar, Luxembourg, Botswana, Namibia, Belgium, Russia, South Africa, Indonesia, Sri Lanka, Singapore, Mozambique, and Kuwait. Treaties with Lesotho, Malawi, Oman, and Vietnam are awaiting signature while negotiations are going on with four other countries.

Incentives do not carry performance requirements.

Transparency of the Regulatory System

Business regulations are generally transparent. Applications for incentives certificates are screened by a committee chaired by the Ministry of Industry and composed of representatives of other ministries and government agencies. After committee consideration, the application is sent to Cabinet for decision.

Decision on a formal application usually takes six weeks. Approval for an Offshore or Freeport License normally is done within two weeks as they are approved directly by the Mauritius Offshore and Business Activities Authority and the Mauritius Freeport Authority, respectively and do not require Cabinet approval.

Most foreign firms starting business in Mauritius use existing buildings offered by government agencies or private owners. Those who build their own facilities may face delays of six months obtaining permits for utilities. With regard to work permits, operators have sometimes faced delays of up to three months in obtaining permits for groups of foreign workers. Permits for professionals are normally processed within one month; attention must be given to filling out all forms completely.

Corruption

Some corruption exists at all levels of government but does not present an obstacle for most investors.

The penal code provides punishment for giving or accepting bribes. It is to be strengthened soon by a new legislation, based on laws in Hong Kong and Australia, establishing an Anti-Corruption Commission aimed at curbing corruption among "officers of public authority", including ministers, civil servants, employees of parastatal bodies, and members of government-appointed boards.

Labor

Mauritius experienced a labor shortage in the late 1980s and early 1990s but unemployment is now about 5.5%. The government permits foreign labor. About 10,000 foreign workers, mainly from China, India, South Africa and Sri Lanka, are employed in textiles, sugar and construction. Even so, several textile firms have moved their labor-intensive operations to Madagascar.

Some 10,000 people enter the job market each year, mainly high school graduates, but also about 700 graduates from the University of Mauritius and overseas universities. Many high school graduates follow short training courses in computers, electronics, fashion design, jewelry, hotel, catering, and other technical fields offered by private training institutions and the Industrial and Vocational Training Board, set up by the government in 1988. It is not difficult to recruit workers with basic secondary education and some technical training. One investor recently recruited 300 telephone operators and data processing workers for a new operation in the country's Informatics Park. There is, however, shortage of skills in financial services and management, especially human resource management.

Labor-management relations are generally good. Labor unions, which account for less than 25 percent of the workforce, act responsibly and rarely disrupt business. There has been no major strike since 1979. The government discourages 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. Mauritius participates actively in the annual ILO conference in Geneva and adheres to ILO conventions protecting worker rights.

Efficient Capital Markets and Portfolio Investment

The Stock Exchange of Mauritius, which opened in 1989, has an official market with 45 listed companies (including two foreign) and an over-the-counter market with 60 companies. Capitalization grew from $55 million in July 1989 to $1.8 billion in June 1997. The National Investment Trust, a mutual fund which invests in public enterprises, was launched in 1993.

The Stock Market was opened to non-Mauritians in 1994. Foreign investors do not need approval to trade shares on the official market, with two stipulations: individual holdings in a sugar company of 15 percent or more need prior authorization, and investment for the purpose of obtaining legal or management control of a local company is barred.

The Stock Exchange of Mauritius Ltd. launched a central depository system in February 1997. This computerized clearing and settlement system represents a step forward in the internationalization of investment. Trades are now settled on a rolling T+5 basis. Once the Bank of Mauritius completes its project to set up a central clearing house, it will clear the way for the international T+3 standard.

Mauritius has a relatively sophisticated banking sector with 10 commercial banks (seven foreign-owned) and about 10 financial intermediaries, including the Development Bank of Mauritius, the State Investment Corporation, the Mauritius Leasing Company (a joint private-public venture), and two private leasing companies. In addition, there are seven offshore banks. An Indonesian bank has recently applied for an offshore banking license. As of March 1997, commercial banks held assets worth $3.4 billion. There is no discrimination between foreign and local firms with regard to access to credit.

Conversion and Transfer Policies

The government abolished foreign exchange controls in July 1994.

The Mauritian rupee is linked to a trade-weighted basket of currencies which includes the French franc, the U.S. dollar, the Deutschmark, the pound sterling and others. The exchange rate is market-determined. 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.

The Mauritian rupee depreciated sharply against major currencies in 1996. The U.S. dollar reached RS20.82 in October 1996 from RS18.44 in December 1995. Following interventions in the foreign exchange market by the Bank of Mauritius, the rupee stabilized; it has appreciated slightly this year. The Minister of Finance has said he is determined to prevent any further sharp fluctuations in the value of the rupee.

Expropriation and Compensation

There are legislative guarantees against nationalization.

Dispute Settlement

The Embassy is not aware of any investment disputes. Mauritius is signatory to the UN-sponsored Convention on Settlement of Investment Disputes, the 1958 New York Convention on the Recognition or Enforcement of Foreign Arbitral Awards, and the Multilateral Investment Guarantee Agency (MIGA) of World Bank.

The domestic legal system is generally open, 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 the United Kingdom. Mauritius is a member of the International Court of Justice.

Political Violence

Mauritius is politically and socially stable.

Bilateral Investment Agreements

A number of the double taxation treaties Mauritius has signed include investment protection provisions.

Mauritius signed an Investment Guarantee Treaty with the United States in 1970. The agreement is still in force.

Capital Outflow Policy

There are no restrictions on capital outflows.

OPIC and Other Investment Insurance Programs

Mauritius is eligible for OPIC programs.

Foreign Direct Investment

Foreign direct investment has fallen sharply since the early 1980s when many Hong Kong textile manufactures relocated for quota reasons. Hong Kong has been the leading investor in Mauritius, followed by France. There are only two U.S. investors in the Export Processing Zone (diamond cutting/polishing and garment manufacturing).

Between 1983 and 1990, annual inflows grew from S1 million to $29 million. By 1993, these leveled off to $14 million as growth in the EPZ and hotel construction slowed. Cumulative inflows of foreign direct investment over the ten-year period 1983-1993 amounted to $155 million, with 54% destined for EPZ industries and 24% to tourism. Total FDI in 1996 increased to $33 million, largely as a result of the transfer of funds from a Singaporean firm for a property development project.

In the EPZ, foreign direct investment fell significantly from an annual average of $12 million over the period of 1987-90 to $4.6 million in 1993 and $3 million in 1994. It increased exceptionally to $20 million in 1995, largely as a result of the taking over of two large ailing textile companies in the EPZ sector by Indian investors, but fell back to $6 million in 1996.

Most recent foreign direct investment has gone into information technology, printing and publishing, pharmaceuticals, light engineering, high-quality garments, and jewelry. India, U.K., and France are the main sources of current investment, followed by Germany and South Africa.

VIII. TRADE AND PROJECT FINANCING

The Banking System

The Bank of Mauritius (http://www.bankofmauritius.co.uk) serves as the central bank, overseeing domestic and offshore banks and implementing monetary policies. The Banking Act 1988 regulates banking activities in Mauritius.

There are 10 commercial banks in Mauritius. Three are locally owned; the remainder are incorporated overseas or locally incorporated with foreign ownership. The Mauritius Commercial Bank Ltd. and the State Bank of Mauritius Ltd., both locally owned, dominate the market; both have overseas branches. Facilities provided by commercial banks include short-term finance, term loans of five to seven years, discounting of export bills, letters of credit, guarantees, and post-shipment finance for exporters at preferential rates.

The government-controlled Development Bank of Mauritius Ltd. provides loans to large and medium-sized industrial enterprises and manages various concessionary lending schemes for small-scale enterprises.

Seven offshore banks form the core of the government's program to establish Mauritius as a regional financial center offering merchant banking, insurance, fund management, and securities services. Offshore banking is conducted primarily with non-residents in freely convertible foreign currencies; banks are permitted to hold both domestic and offshore licenses, provided the two businesses are kept separate. Much of the country's offshore business involves U.S. investment in India, which is channeled through Mauritius to take advantage of favorable tax agreements between India and Mauritius.

While the Bank of Mauritius supervises offshore banks, non-banking offshore services (e.g., funds management, insurance, leasing) are supervised by the Mauritius Offshore Business Activities Authority (http://www.intnet.mu/ncb/finance/mobaa/home.htm)

Foreign Exchange Controls Affecting Trading

There are no foreign exchange controls.

Financing Availability

Local and foreign companies both have access to trade financing provided by commercial banks.

How to Finance Exports/Methods of Payments

Imports are paid for by irrevocable letters of credit (50%), bills for collection (25%), prepayments (15%), and open accounts (10%). Importers normally request 90 days credit from the date of shipment.

Prime lending rates vary between 11-12.5%; commercial rates range from 12.5-17.5%.

Types of Available Export Finance and Insurance

Mauritius: Import and export loans are available from commercial banks to both local and foreign firms in Mauritius. The Development Bank of Mauritius (DBM) administers credit extended by bilateral and multilateral sources, e.g., the Caisse Francaise de Developpement, Eximbank of India, the European Investment Bank, the World Bank, and the African Development Bank.

The United States: Export-Import Bank of the United States finances U.S. exports in the form of loans, guarantees, and insurance. Mauritius qualifies for the full range of EXIM loans. In 1993, Eximbank provided a mixed credit to the government for the purchase of Caterpillar tractors. The contact address of Eximbank headquarters follows:

Export-Import Bank of the United States

811 Vermont Avenue, N.W.

Washington , D.C. 20571-0999

Contact: AnneMarie Emmet, Business Development Officer

Tel: 1-800-565-Exim or (202) 565-3380

Fax: (202) 565-3380

U.S. Department of Agriculture (USDA) Export Credit Guarantee Program (GSM-102): Four Mauritian banks have been approved to open letters of credit for sale of U.S. agricultural commodities to 19 countries in the Eastern and Southern African region (including Mauritius) under USDA's $50 million Export Credit Guarantee Program for FY 1996. Commodities include oil seeds, wheat, wheat flour, breeder livestock, feed grains, dairy products, vegetable oils, and treenuts. For more information, please contact:

Gene Philhower
U.S. Department of Agriculture
Program Development Division
Export Credits
Washington, D.C 20250
Tel: (202) 720-3038; Fax: (202) 690-3077

Project Financing

Most major infrastructure projects are financed by institutions such as the World Bank, the African Development Bank, the European Investment Bank/European Development Fund, the Kuwait Fund, and the Arab Bank for Economic Development in Africa. Some are funded through bilateral assistance from France, Luxembourg, Belgium, Malaysia, India, China, Germany, and Japan. These sources fund a broad portfolio of projects, including port and airport upgrades, sewage treatment, road, bridge and dam construction, energy, telecommunications, and hospital construction.

The United States Trade and Development Agency promotes U.S. exports through funding of feasibility studies and other services. Recently, TDA has been active in projects involving telecommunications, power and environmental protection. Projects must hold the potential for substantial sales of U.S. goods and services. For more information, contact:

U.S. Trade and Development Agency

Country Manager, Africa
SA-16, Room 309
Washington, D.C. 20523-1602
Tel: (703) 875-4357; Fax: (703) 875-4009

The Overseas Private Investment Corporation is an independent U.S. government agency that supports projects through loans, loan guarantees, and insurance programs.

Overseas Private Investment Corporation
1100 New York Avenue, N.W.
Washington , D.C. 20527
Tel: (202) 336-8799; Fax: (202) 408-5142

Banks with Correspondent U.S Banking Arrangements

Mauritius Commercial Bank Ltd.

Sir William Newton Street
Port Louis
Tel: (230) 208-2807; Fax: (230) 208-7054

http://mcb.intnet.mu
E-Mail: mcb@bow.intnet.mu

State Bank of Mauritius Ltd.
State Bank Tower
1 Place d'Armes
Port Louis
Tel: (230) 202-1111; Fax: (230) 202-1234

http://www.mauritius-island.com/sbm
E-Mail: reddy@sbm.intnet.mu

The Hong Kong and Shanghai Banking Corp.

Place d'Armes
Port Louis
Tel: (230) 208-1801; Fax: (230) 208-8449

Barclays Bank PLC
Sir William Newton Street
Port Louis
Tel: (230) 212-1816; Fax: (230) 208-2720

Indian Ocean International Bank Ltd.

34 Sir William Newton Street
Port Louis
Tel: (230) 208-0121; Fax: (230) 208-0127

Bank of Baroda
Sir William Newton Street
Port Louis
Tel: (230) 208-3891; Fax: (230) 208-3892

Banque Internationale Des Mascareignes
Moorgate House
Sir William Newton Street
Port Louis
Tel: (230) 212-4978; Fax: (230) 212-4983

IX: BUSINESS TRAVEL

Business Customs

Business customs are similar to those in Europe and the United States. For men, normal business wear is suit and tie. During the cooler months -- June through September -- light woolens are recommended. Lunches and cocktail receptions are common business functions.

Prospective visitors should bring an adequate supply of business cards as well as brochures and other literature.

Local Time and Business Hours: Local time is four hours ahead of Greenwich Mean Time and nine hours ahead of Eastern Standard Time. Business hours are as follows:

Government Offices: 0900-16.00 Monday-Friday

Banks: 09.15-15.15 Monday-Friday

09.15-11.15 Saturday

Businesses 09.00-16.30 Monday-Friday

09.00-13.00 Saturday

Travel Advisory and Visas

Visas are not required for U.S. citizens, but travelers should have onward or return tickets. Immunization certificates are not required unless the traveler arrives from an infected area. An airport service charge of MRS. 300 ($15) is levied on departing passengers.

Travelers may bring in any amount of foreign currency or traveler's checks. Passengers 16 years of age and above may import duty free: 250 grams of tobacco (including cigars and cigarettes), 1 liter of spirits, 2 liters of wine, ale or beer, one quarter liter of toilet water and a quantity of perfume not exceeding 10 CL. In addition, foreign travelers can bring in MRS. 4,000 ($200) worth of goods tax-free; the allowance for Mauritians is MRS 8,000 ($400). The import of plants is tightly controlled and requires a permit from the Ministry of Agriculture and Natural Resources (tel: 230-454-1091 or (230) 637-3194).

Holidays

There are 13 public holidays. The following are fixed: New Years, January 1 and 2; Independence Day, March 12; Labor Day, May 1; All Saints' Day, November 1; and Christmas, December 25. The remaining holidays are religious festivals whose dates vary.

Transportation

Regular flights serve Europe, East and Southern Africa, India, East Asia, and Australia. There are no direct flights between the United States and Mauritius. Airlines include Air Mauritius, British Airways, Air France, South African Airways, and Singapore Airlines, Air Zimbabwe, Condor, and Aeroflot.

Rental cars and taxis are readily available. Taxis are equipped with meters, but fares may be negotiated before setting out. Traffic drives on the left. Port Louis is a 50-minute drive from the airport and easily accessible from other parts of the island except during morning and evening rush hours.

Communications

Reliable international mail, telephone, fax and e-mail services are available. Visitors can rent cellular telephones. AT&T offers USA-Direct service from Mauritius.

The tariff for international calls varies, but reduced rates are available from 10 p.m. until 6 a.m., Monday through Friday and from noon Saturday through Sunday night. The normal tariff for calls to the United States is currently at MRS35 ($1.75) per minute.

Mail service is inexpensive and generally reliable. Quick overseas deliveries can be effected through the post office's express mail service or services such as FedEx, DHL and Airborne Express.

Language

The official language is English but French and Creole are used in everyday life. Most business executives are bilingual in English and French. A number of oriental languages (Hindi, Urdu, Mandarin) are also spoken.

Housing/Accommodation

Hotels: Mauritius has several hotels of international standard. Five-star hotels include Royal Palm, Le Saint Geran and Tousserok Sun. Four-star hotels include the Labourdonnais Waterfront; Trou aux Biches, La Pirogue, Maritim, Le Mauricia, Shandrani, Meridien Brabant, Coco Beach and Sugar Beach. Small privately-owned seaside establishments include Villas Caroline, Tamarin, and Verandah. Most beach hotels provide amenities for water sports such as swimming, snorkeling, water skiing, sailing, and fishing. The daily rate starts at about $115 for a single room and $170 for a double.

Residential: A variety of rental accommodation is available, ranging from houses and apartments in the main towns to beach houses in coastal areas. Accommodation normally has three to four bedrooms and two bathrooms; some coastal houses have swimming pools. Many expatriates live on the central plateau, where monthly rent for a 200-square-meter apartment is about MRS15,000-20,000 ($750-1000).

Health

Mauritius has no major health hazards. Malaria has been eradicated. Public medical facilities are adequate and free; in addition, private clinics offer good medical care. Pharmacies are located throughout the island.

Food

Mauritian cuisine blends European, Chinese and Indian influences. There are a variety of restaurants, including two U.S. franchises (Kentucky Fried Chicken and Pizza Hut). It is common practice to tip in restaurants, starting at $1.

French and South African wines are widely available. Mauritius also produces its own wines, rum, and beer. Tap water is not recommended but bottled water is widely available.

Currency

The local currency is the Mauritius rupee, which is divided into 100 cents. Notes are issued in denominations of 10, 50, 100, 500, and 1,000 rupees. In August 1997, the exchange rate was one U.S. dollar to MRS21.95.

X: APPENDICES

A. COUNTRY DATA

Population (December 31, 1996): 1,142,513

Population growth rate (1996): 1.2 percent

(Source: Government Economic Indicators Bulletin)

Religions: Hinduism, Christianity, Islam

Government system: Republic (Westminster-type parliamentary democracy) where power rests with the Prime Minister and the Cabinet

Languages: English (official language), French, Creole (local dialect)

Work week: 5-day week, Monday through Friday, 9.00 am to 4.00 p.m. Many private businesses remain open Saturdays (9.00 am to noon)

B. DOMESTIC ECONOMY: (Exchange Rate Used $1 = Rs20)

U.S. $ Million except where noted
Year	1995	1996	1997
GDP (at factor cost)	3019	3395	3744
GDP (at market price)	3436	3850	4250
GDP Growth Rate (%)	5.6	5.8	5
GDP per capita ($) (at factor cost)	2690	2995	3270
GDP per capita ($) (at market price)	3062	3397	3712
Government Spending as % of GDP	12.2	12.2	12
Inflation (%)	6	6.6	8
Unemployment (%)	5.2	5.5	5.8
Foreign Exchange Reserves as at June	585	778	840
Average Exchange Rate for USD 1.00 (MRS)	18.44	20.03	20.30
Debt Service Ratio (%) (as of June 30)	7.7	8.5	8
U.S. Economic/Military Assistance(Self-Help, Human Rights & IMET - $)	113,000	100,000	110,000

C. TRADE:

U.S. $ Million except where noted
Year	1995	1996	1997
Total Mauritian Export (f.o.b.)	1366	1600	1839
Total Mauritian Imports (c.i.f.)	1718	2045	2357
Exports to U.S. (f.o.b.)	198	205	213
Imports from U.S. (c.i.f.)	45	51	59

D. INVESTMENT:

U.S. $ Million
Year	1994	1995	1996
Foreign Direct investment	15	N/A	33
Outward Direct Investment	1	3	2.5

E. US AND COUNTRY CONTACTS:

U.S. EMBASSY CONTACTS:

Chat Blakeman
Deputy Chief of Mission
American Embassy
Rogers House
President John Kennedy Street
Port Louis
Phone: (230) 208-2347; Fax: (230) 208-9534
E-Mail address: mailto:chat.e.blakeman@dos.us-state.gov

Shariff Jathoonia
Senior Trade Specialist
(Address, phone and fax: Same as above)
E-Mail address: shariff.a.jathoonia@dos.us-state.gov

ASSOCIATIONS:

Mauritius Chamber of Commerce & Industry

Address: 3, Royal Street
Port Louis
Contact: Mr. Jean Claude Montocchio
Title: General-Secretary
Phone: (230) 208-3301
Fax: (230) 208-0076
http://mns.intnet.mu
E-Mail: mcci@bow.intnet.mu

Mauritius Chamber of Agriculture
Address: Plantation House
Port Louis
Contact: Mr. Jean-Noel Humbert
Title: General-Secretary
Phone: (230) 208-9852
Fax: (230) 208-1269
http://prosi.intnet.mu
E-Mail: mca312@bow.intnet.mu

Mauritius Export Processing Zone
Association
Address: 42, Sir William Newton Street
Port Louis
Contact: Mrs. Danielle Wong
Title: Director
Phone: (230) 208-5216
Fax: (230) 212-1853
E-Mail: dsmepza@bow.intnet.mu

TRADE-RELATED GOVERNMENT MINISTRIES/OFFICES:


Ministry of Foreign Affairs and International Trade
International Trade Division
New Government Center
Port Louis
Contact: Mr. Harry Ganoo
Title: Permanent Secretary
Phone: (230) 201-1985
Fax: (230) 212-6368

Ministry of Industry and Commerce
New Government Center
Port Louis
Contact: Mr. Loganaden Ramsamy
Title: Permanent Secretary
Phone: (230) 201-1068
Fax: (230) 212-8201

Mauritius Export Development and Investment Authority
British American Insurance Building
25, Pope Hennessy Street
Port Louis
Contact: Mr. Chand Bhadain
Title: Director
Phone: (230) 208-7750
Fax: (230) 208-5965
E-mail: media@bow.intnet.mu

Export Processing Zone Development Authority
Les Cascades Building
Edith Cavell Street
Port Louis
Contact: Mr. Nikhil Treebhoohun
Title: Director
Phone: (230) 212-9760
Fax: (230) 212-9767
Web Site: http://epzda.intnet.mu
E-Mail:epzda@compuserve.com
Customs and Excise Department
IKS Building
Port Louis
Contact: Mr. Sarawan Gunnoo
Title: Comptroller of Customs
Phone: (230) 240-3475
Fax: (230) 240-0434

Appendix One: Seychelles Commercial Guide

Executive Summary: With a population of 75,000 and per capita income of nearly $6,500, Seychelles is one of Africa's smallest but wealthiest countries. Its economy is dependent on tourism, fish-processing, and foreign assistance, primarily from Europe. In recent years, Seychelles has begun to move away from the statist economic policies it followed for two decades after independence from Great Britain in 1976, but onerous regulations and controls remain. The government has recently undertaken an intensive review of trade and investment policies in connection with its application to join the World Trade Organization, and business-friendly reforms may be in the offing. A severe shortage of foreign exchange is currently the biggest constraint on conducting business with the Seychelles.

The best opportunities for trade and investment lie in tourism, fishing and light industry. Seychelles offers tax and other concessions to export-oriented manufacturers. New investment opportunities may arise if the government continues its privatization program; several years ago a subsidiary of U.S.-based Heinz and Company invested in an ailing government-run tuna-processing plant; the business has grown rapidly, and the company is now the largest private-sector employer in the country.

The United States does not maintain an embassy in Seychelles, but a consular agent is based in Victoria to provide assistance and answer queries. Official inquiries should be directed to the United States Embassy in Port Louis, Mauritius.

Economic Trends and Outlook: A severe shortage of foreign exchange and a decline in foreign assistance have slowed economic growth in recent years. Growth averaged 3.8 percent between 1990 and 1995. Provisional government figures put real growth at 3 percent in 1996, up markedly from 1995's 1.1 percent. Leading sectors are tourism and fishing. Major exports are canned tuna, fish, and frozen shrimp. Government plays a large role in the economy, accounting for 40 percent of GDP, and tightly controls foreign exchange transactions and the level of imports. Infrastructure is generally good, with transportation and communications adequate for most purposes. Indicators of social development (e.g., health and education) are high.

Political Environment: The United States enjoys cordial relations with the Seychelles, despite disappointment over Washington's 1996 decision to close the U.S. Embassy in Victoria and a nearby Air Force tracking station. Political life is dominated by President Albert France Rene and his Seychelles Peoples Progressive Front. Rene took power by coup d'etat in 1977; after 16 years of one-man rule, he was elected president in 1993 in multiparty elections. Opposition parties function freely but are largely ineffective. Basic liberties, such as freedom of the press and freedom of assembly, are respected. From a business perspective, the government is interventionist, although this is changing. The government welcomes foreign investment and is prepared to discuss tax and other concessions with prospective investors.

Marketing U.S. Products and Services: Marketing U.S. products is extremely difficult given the inability of importers to obtain adequate foreign exchange. Government policy restricts non-essential imports. The parastatal Seychelles Marketing Board has a monopoly on the import of essential products such as rice, sugar and dairy products. Importers of other foodstuffs are Krishnamart 7 Co., Chez Deenu, Continental Stores, Chaka Brothers. The government-run Seychelles Petroleum Company is the only organization authorized to import petroleum products. Price controls apply to most imported goods, but not services.

Leading Sectors for U.S. Investment: A subsidiary of Heinz and Company operates a large tuna processing plant that has become the country's largest private-sector employer. New investment opportunities could be created if the government proceeds with plans to privatize a number of government-run enterprises, including several hotels, a mineral water company and a telecommunications unit now attached to the Ministry of Defense. Companies interested in export-oriented light manufacturing can obtain further information from the Seychelles International Business Authority (http://www.seychelles.net/siba).

Trade Regulations and Standards: Trade regulations are restrictive and many are at variance with World Trade Organization standards. Imports require one form or another of government approval; price controls apply to imports but not items produced locally; and access to foreign exchange is administratively controlled. Other deficient areas include Customs valuation, intellectual property protection and some sanitary and phytosanitary measures. Import permits for "essential" goods, including raw materials, are automatically approved, according to the government; non-essentials are subject to quota. Capital goods can be imported without restriction. Some imports require additional approval from relevant ministries, including insecticides, fungicides, weapons, alcohol, chemicals, plants and animals. Imports of basic foods and petroleum are controlled by the Seychelles Marketing Board and the Seychelles Petroleum Company, respectively. There are no export restrictions. In line with its application to join the World Trade Organization, the government has indicated it plans to liberalize many of the restrictive trade practices noted above; prospective exporters should confirm the status of these regulations with government officials, commercial banks or other local sources.

Investment Climate: The Seychelles government is courting foreign investment, particularly in the Seychelles International Trade Zone, which provides tax benefits and other advantages to export-oriented manufacturers. Details may be obtained from the Seychelles International Business Authority (http://www.seychelles.net/siba) or Investment and Development Advisory Services, Ministry of Finance and Communications (Tel: 248-382000; fax: 248-225565). Investment is sought in tourism, fishing, light industry, business and professional services and communications. Petroleum exploration is another priority; several U.S. companies have engaged in this activity but without success. In addition to Heinz, other foreign investors include Cable and Wireless (Seychelles) Ltd., which has a monopoly on telephone communications; two U.K. companies that manufacture medical and dental equipment; and several companies from South Africa, Great Britain, Malaysia and Mauritius in the hotel and tourism industry.

Bilateral Investment Agreements: Seychelles does not have any bilateral investment agreements with the United States.

Trade and Project Financing: The foreign exchange shortage is among the chief obstacles to doing business in the Seychelles; government controls are modified from time to time so potential investors will wish to confirm their status with reliable local contacts. Major infrastructure investments are typically financed by bilateral donors such as France, Kuwait and China and multilateral agencies such as the World Bank, the European Development Bank and the African Development Bank. Commercial banks with offices in the Seychelles include Barclays Bank (tel: 248-224101; fax: 248-322676); Bank of Baroda (tel: 248-323038; fax: 248-324057) Banque Francaise Commerciale (tel: 248-323096; fax: 248-322676); Nouvobanq (tel: 248-225011; fax: 248-224670); and Habib Bank (tel: 248-224371; fax: 248-225614).

Business Travel: Most business is conducted in English but French is widely spoken. Seychelles is extremely informal and casual dress is the norm even at the most senior levels. Serious crime is rare, and visitors need not take more than common-sense precautions. Hotels are plentiful, and range from international resorts to bed-and-breakfasts. Telephone, fax and e-mail is available. American citizens do not require visas to visit Seychelles.

U.S. AND COUNTRY CONTACTS

Ms. Patricia Sinon
U.S. Consular Agent
Victoria House
Victoria, Seychelles
Tel: 248-225256
Fax: 248-225189
E-mail: usoffice@seychelles.net

Mr. P. Kumar
Director
Investment Development Advisory Services
Ministry of Finance and Communication
Central Bank Building
Box 313
Victoria, Seychelles
Tel: 248-38200
Fax: 248-225265

Mr. Conrad Benoiton
Managing Director
Seychelles International Business Authority
Central Bank Building
Box 991
Victoria, Seychelles
Tel: 248-225402
Fax: 248-225851
E-mail: siba@seychelles.net

Seychelles Chamber of Commerce and Industry
Premier Building
Box 599
Victoria, Seychelles
Tel: 248-223812
Fax: 248-224226

Appendix Two: Comoros Country Commercial Guide

The Federal Islamic Republic of Comoros is an impoverished archipelago with a population of 600,000 spread across three principal islands at the northern end of the Madagascar Channel. Although currently ruled by a democratically elected president, the country has had a tumultuous political history since independence in 1975, one marked by numerous coups and coup-attempts. The country's fragile economy relies heavily on external aid, tourism, and the export of vanilla, cloves and oils used in the manufacture of perfume. Physical infrastructure is poor: Power outages are frequent, many villages lack potable water, and international transportation and communication are unreliable. The Banque Nationale de Paris Intercontinentale is the country's only international financial institution.

Foreign investment is minimal. The country's two principal hotels are owned and operated by a South African concern. A French company in mid-1997 took over management of the country's ailing electrical utility and other French companies are likely to enter the market if there are additional privatizations. Commerce between the United States and Comoros is minuscule. The government has a stated policy of welcoming foreign investment and is prepared to offer tax and other concessions to foreign investors.

France's diplomatic presence is the largest in the country. The United Nation's Development Program, the European Union, China and Libya also maintain missions in Comoros. The United States closed its embassy in Moroni in 1994 and now covers the country from its embassy in Port Louis, Mauritius. Relations between the United States and Comoros are amicable.

French is the language of business and daily life in Comoros, although some Arabic and Swahili are spoken. Comoros is a Muslim country, and visitors should observe conservative norms of dress and behavior.

U.S. AND COUNTRY CONTACTS

Mohamed Ali Soilihi
Minister of Finance
BP 324
Moroni, Comoros
Tel: 269-74-4141
Fax: 269-74-4140

Chamber of Commerce and Industry
BP 763
Moroni, Comoros
Tel: 269-73-0958

Central Bank
BP 405
Moroni, Comoros
Tel: 269-73-1002
Fax: 269-74-0349

Hotels Sun International
BP 1027
Moroni, Comoros
Tel: 269-73-8119
Fax: 269-73-2846

Comoros Vanilla Organization
BP 472
Moroni, Comoros
Tel: 269-73-2709
Fax: 269-73-2719

*International Copyright, United States Government, 1997 ( or other year of first publication.) All Rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside of the United States. United States copyright is not asserted under the United States Copyright Law, Title17, United States Code.

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