Seychelles

Bureau of Economic and Business Affairs
Report
June 29, 2017

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Executive SummaryShare    

With a population of over 96,000, Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial center. Although the World Bank has designated Seychelles as a “high income” country, its wealth is not evenly distributed. The United Nations Development Program’s Human Development Report for 2016 found that Seychelles still experiences income inequality, with a Gini coefficient of 46.8. However, this is a significant improvement from 2015.

Seychelles experienced a socialist coup in 1977 which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debts contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a USD $230 million bond in 2008, the Government of Seychelles (GOS) turned to the IMF for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR) and eliminating all foreign exchange controls. As a result, the country has experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt and increased international reserves. Economic growth in 2016 was 4.5 percent, although IMF estimates it will decline slightly to 4 percent in 2017.

Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which encompasses 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small, but growing, offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.

Seychelles welcomes foreign investment. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social or industrial benefits will not compromise the country’s international reputation for environmental stewardship.

Since multi-party elections began in Seychelles in 1993, the ruling Parti Lepep has traditionally won elections by large margins. However, as a result of recent elections, the government and the National Assembly are controlled by different parties. On the one hand, President Michel of Parti Lepep was re-elected in the closely contested presidential election in December 2015. However, in the parliamentary elections of September 2016 the opposition alliance won a majority in the National Assembly for the first time in 40 years. While the President’s party continues in government, it is weakened by its loss of control of the legislature. In October 2016 President Michel resigned and was succeeded by then Vice-President Danny Faure.

Table 1

Measure

Year

Index/Rank

Website Address

TI Corruption Perceptions Index

2015

40 of 168

http://www.transparency.org/
research/cpi/overview

(No ranking available for 2016)

World Bank’s Doing Business Report “Ease of Doing Business”

2016

93 of 190

doingbusiness.org/rankings

Global Innovation Index

2015

65 of 141

https://www.globalinnovationindex.org/
analysis-indicator
 
(No ranking available for 2016)

U.S. FDI in partner country ($M USD, stock positions)

2015

$39

http://data.imf.org/CDIS

World Bank GNI per capita

2015

14,760

http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Policies Towards Foreign Direct Investment

Seychelles has a favorable attitude toward foreign direct investment. The Seychelles Investment Bureau (SIB) is the national single gateway agency for the promotion and facilitation of investment in Seychelles. The government’s objective is to promote economic and commercial relationships to sustain its tourism and fishing industries, which are currently the main drivers of economic growth, as well as to diversify the economy. However, the GOS reserves certain types of business activities for domestic investors only. The Seychelles Investment (Economic Activities) Regulations provides a detailed list of such activities as well as those businesses foreigners can invest in. The list is available through the SIB website.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Seychelles Investment Act of 2010 governs foreign direct investment (FDI) in Seychelles, the text of the Act can be found online. Since the financial crisis of 2008 and the implementation of IMF reforms, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows in 2015 amounted to USD $114 million, up from USD $108 million in 2014. The Seychelles Investment Board (SIB), the investment promotion agency for Seychelles, advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.

Seychelles does not place limits on foreign ownership or control of resident companies. While SIB and the government of Seychelles encourage foreign investors to collaborate with a local partner, there is no formal requirement. There are some restrictions on the types of activities foreign entities can engage in, mainly in the tourism sector.

SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles. More information is available at http://www.sib.gov.sc/index.php/investment-guide/investment-appeals.

Other Investment Policy Reviews

To date, Seychelles has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD), or the United Nations Conference on Trade and Development (UNCTAD). Seychelles became the 161st World Trade Organization (WTO) member in April 2015.

Business Facilitation

Seychelles is ranked 93rd in the World Bank’s 2017 Ease of Doing Business Report. It takes 8 days to obtain a Certificate of Incorporation and 14 days on average to obtain a business license in Seychelles. Details on starting a business in Seychelles are available on the World Bank website.

Information on registering a business in Seychelles can be obtained on the SIB website. Companies, including foreign ones, can register online through the SIB business registration portal.

The Small Enterprise Promotion Agency (SEnPA) is responsible for promoting small enterprises in Seychelles. Services provided by SEnPA include business planning, training, mentoring, marketing expertise and identification of business opportunities for SMEs.

Outward Investment

The GOS does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.

2. Bilateral Investment Agreements and Taxation TreatiesShare    

Currently, the U.S. and Seychelles do not have a bilateral investment agreement. However, the U.S. signed a Trade and Investment Framework Agreement (TIFA) with the Common Market for Eastern and Southern Africa (COMESA) in 2001, and Seychelles is a COMESA member. Seychelles has signed Bilateral Investment Treaties with Cyprus, Egypt, China, France, and India.

There is no bilateral taxation treaty between the U.S. and Seychelles. Seychelles has signed a total of 24 Double Taxation Avoidance Agreements with the following countries: Bahrain, Barbados, Belgium, Bermuda, Botswana, China, Cyprus, Ethiopia, Guernsey, Indonesia, Isle of Man, Jersey, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, San Marino, Singapore, South Africa, Sri Lanka, Swaziland, Thailand, United Arab Emirates, Vietnam, and Zambia. Seychelles has also signed Tax Information Exchange Agreements with Denmark, Faroe Islands, Finland, Greenland, Guernsey, Iceland, India, Netherlands, Norway, Sweden, and the Swiss Confederation.

3. Legal RegimeShare    

Transparency of the Regulatory System

Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. While the legal and regulatory framework is in place for transparent governance, many Seychellois believe that those well-connected to the government of Seychelles, whether foreign or local, receive preferential treatment. There is potential for this to change with the new government. For example, President Danny Faure has appointed supporters of the opposition in positions such as Ombudsperson.

In an attempt to promote greater transparency in the public procurement system, Seychelles’ National Tender Board publishes all its tenders on its website (http://www.ntb.sc ) and local newspapers. It also publicizes the contracts that have been awarded, including the name of the successful bidder as well as the bid amount in all local newspapers. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body.

During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In particular, there has been an unprecedented legislative debate on the 2017 Budget which was presented in December 2016. This debate, which lasted for more than three months, resulted in changes to the budget such as proposed cuts to the military and the Ministry of Tourism. This is a significant change from previous budget debates, which typically lasted only several hours. Furthermore, the preparation of the 2017 budget involved a series of focus group discussions with stakeholders such as the business community and NGOs.

Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed a number of new laws, including a Freedom of Information Act. Additionally, Ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.

International Regulatory Considerations

The Seychelles National Assembly ratified WTO accession in March 2015, making Seychelles the 161st member. Seychelles has also signed trade agreements with regional blocs such as the Common Market for Southern and Eastern Africa (COMESA), Southern African Development Community and the Interim Economic Partnership Agreement with the European Union.

Legal System and Judicial Independence

Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the Company Law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Although the judicial branch is independent of the executive branch, many Seychellois believe that well-connected individuals receive special treatment in the courts. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by the Foreign Judgments (Reciprocal Enforcement) Act of 1961, Section 3. The World Bank ranked Seychelles 129th out of 190 in enforcing contracts in its 2017 Ease of Doing Business Report.

Laws and Regulations on Foreign Direct Investment

The GOS established the Seychelles Investment Board as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and to facilitate the investment process within the administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The Embassy has received no formal comments from U.S. businesses in Seychelles with regard to the foreign direct investment screening mechanism. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles. More information is available at http://www.sib.gov.sc/index.php/investment-guide/investment-appeals.

Competition and Anti-Trust Laws

The SIB reviews all transactions for competition-related concerns (whether domestic or international in nature).

Expropriation and Compensation

The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the new GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. There have been no expropriations since the 1990s aside from public works and infrastructure projects, and in these cases there is a process for obtaining compensation. We see no indications of possible major expropriation in the future and no pattern of discrimination against U.S. persons.

Dispute Settlement

ICSID Convention and New York Convention

In 1978 Seychelles became a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Seychelles has not signed the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act of 2010 created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Supreme Court (Court of Appeal) in the event they are not satisfied with the decision of the Investment Appeal Panel. In the World Bank’s 2017 Ease of Doing Business Report, Seychelles ranked 106th out of 190 for protecting minority investors.

International Commercial Arbitration and Foreign Courts

Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act of 2010.

Bankruptcy Regulations

Bankruptcy in Seychelles is governed under the Insolvency Act of 2013. According to the Act, an individual may be discharged from bankruptcy 3 years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2017 World Bank’s Doing Business Report, Seychelles ranks 62nd out of 190 countries on the Resolving Insolvency index. It takes on average two years to complete a bankruptcy.

4. Industrial PoliciesShare    

Investment Incentives

The GOS has enacted legislation providing for incentives for investment in several sectors: the Fisheries Incentives Act; the Tourism Incentives Act; the Seychelles International Trade Zone Act; as well as fiscal incentives under the Investment Code. Incentives under these Acts most often take the form of tax credits, tax holidays, duty-free access for the import of materials required for the initial investment, and expedited work permits for foreign employees that move to Seychelles.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Seychelles International Trade Zone (SITZ) Act of 1995 provides for the establishment of free trade zones, which aim to combine the benefits of a Freeport and an export processing zone. So far a number of locations have been declared International Trade Zones. A wide range of export oriented business activities is permissible. The concessions available to license holders in SITZ include the following:

  • Exemption from customs duties on capital equipment to be used in SITZ;
  • Exemption from Business Tax, Trades Tax and Withholding Tax;
  • Exemption from social security contributions;
  • Exemption from fees with respect to work permits;
  • Entitlement to full foreign ownership;
  • Entitlement to employ 100 percent foreign labor

The activities of the SITZ are regulated by the Seychelles Financial Services Authority, formerly known as the Seychelles International Business Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ.

Performance and Data Localization Requirements

The government of Seychelles does not mandate local employment, nor are there local employment mandates for senior management or directors. Visa, residence, and work permit requirements are not excessively onerous. However, investors operating in Seychelles are expected to abide by the following obligations:

  • To comply with the provisions of the governing laws on investment procedures and to carry out investment activities correctly in accordance with the approvals granted. This includes the responsibility of the investor for accuracy and truthfulness in materials submitted in investment proposals and registration;
  • To discharge fully their financial obligations, including taxation, in accordance with the law;
  • To carry out the provisions of the laws on accounting and auditing; and
  • To carry out the provisions of the laws on registration of companies and other legal entity;
  • To carry out the provisions of the employment laws and regulations.

The Embassy has no information regarding the requirements, if any, for foreign IT providers to turn over source code or to provide access to surveillance. Similarly, the Embassy has no information on the mechanisms which are used to enforce any rules on maintaining a certain amount of data storage in Seychelles.

5. Protection of Property RightsShare    

Real Property

The courts enforce interests in real property. Mortgages and liens are enforced and the land registrar is relied upon to resolve land disputes. All lands in Seychelles are either publicly or privately held. According to the World Bank’s 2017 Doing Business Report, Seychelles ranked 66th out of 190 countries in the Registering Property index. In 2014, the GOS discontinued selling state land to non-Seychellois. In his 2017 Budget Speech, the Minister of Finance announced that a Property Tax will be introduced later this year on land owned by foreigners. Additionally, private land sold to foreigners is expected to have a high Stamp Duty.

Intellectual Property Rights

The Republic of Seychelles respects intellectual property rights, and regards laws and other measures to protect them as crucial for long-term economic development. The GOS considers efficient and effective protection of Intellectual Property Rights to be vital for promoting foreign investment, the transfer and dissemination of technology, and protecting local business and artists as well as facilitating the integration of Seychelles' into the regional and global economies. Seychelles joined the World Intellectual Property Organization (WIPO) in March 2000. In addition, the country became a contracting party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT) in November 2002. Seychelles is also a member of the African Regional Intellectual Property Organization (ARIPO). In 2013, the GOS established an Intellectual Property Office to enable the registration of patents, trademarks and copyrights.

The Copyright Act, the Trade Marks Decree and the Patents Act contain provisions that set forth the laws relating to infringement of intellectual property rights. In compliance with WTO principles, foreign nationals and Seychellois citizens are treated equally in regard to IP laws. Enforcement of IPR protection laws is limited due to the fact that very few international brands and trademarks have local or even regional representatives.

While no statistics are publicly available, the Seychelles Revenue Commission’s customs officials monitor incoming shipments for counterfeit goods. However, its focus is on counterfeit products that pose a public health risk, such as medications and electrical appliances. Counterfeit (or unlicensed sale of) apparel, CDs, and DVDs are generally available.

Seychelles is not listed on USTR’s 2015 Special 301 report or in the State Department’s Notorious Markets Report. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en.

Embassy Contact for IPR:

Shariff Jathoonia
Economic/Commercial Specialist
U.S. Embassy Port Louis, Mauritius
+230 202 4464
jathoonisx@state.gov

Some Law Firms in Seychelles Also Handling IPR:

KAREN DOMINGUE
Room 8, Trinity House
Huteau Lane 41
Victoria, Mahe
Seychelles
+248 422 6243
icsey@sechelles.net

A.G. AMESBURY
Room 104, Premier Building
Victoria, Mahe
Seychelles
+248 423 28 41
a.g.amesburyattorney@gmail.com

ANTONY G. DERJACQUES
Suite 5 & 6, Trinity House
Huteau Lane
Victoria, Mahe
Seychelles
+248 432 19 00
dec@seychelles.net

FRANK ALLY LAW CHAMBERS
Suite 213, Premier Bldg.,
Albert Street
Victoria, Mahe
Seychelles
+248 432 30 80
frankally@seychelles.net

6. Financial SectorShare    

Capital Markets and Portfolio Investment

Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act (http://www.fsaseychelles.sc/images/files/Securities_Act_2007.pdf) provides the legal framework for the Seychelles stock market. The Seychelles Securities Exchange (Trop-X), owned by South Africa’s Quote Africa Group, has operated since 2012. Listing and trading is available in U.S. Dollars, Euros, Pound Sterling, Seychelles Rupees and South African Rand. However, portfolio investment in Seychelles is limited by the small size of the economy and banking sector. The buying and selling of sizeable positions may have an outsized impact on the Seychelles Rupee and the economy in general. As of February 2017, the shares of 9 companies were listed on the three equities boards of Trop-X and total market capitalization amounted to $11.2 million USD as of September 2016. Trop-X is also a partner exchange of the Sustainable Stock Exchanges Initiative.

Existing policies do facilitate the free flow of financial resources in and out of the economy. The government of Seychelles respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Foreign investors are able to obtain credit on the local market and through the Seychelles banking system, and a variety of credit instruments are available to both local and foreign investors.

Money and Banking System

Seychelles has a two-tier banking system that separates the central and commercial bank functions and roles. The commercial banks, both domestic and foreign, are regulated and supervised by the Central Bank of Seychelles (CBS). According to the Central Bank of Seychelles Act 2004, the CBS is responsible for the formulation and implementation of the Seychelles' Monetary and Exchange Rate policies. The Central Bank of Seychelles is the only administrative body responsible for receiving applications for banking licenses, whether domestic or offshore, and issuing the corresponding licenses.

There are nine commercial banks: Bank of Baroda, Barclays Bank, Habib Bank, Mauritius Commercial Bank, Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, Bank of Ceylon, and Bank Al Habib Ltd. According to a report on the CBS website, 94 percent of Seychellois use banks and half of those who don’t are aged 18-29 years. Seychelles also has three non-banking financial institutions. The Seychelles Credit Union and the Development Bank of Seychelles provide flexible financing for businesses and projects to promote economic growth and employment. Additionally, the Housing Finance Corporation is a government owned company that provides financing to Seychellois for the purchase of land, the construction of houses and financing home improvements.

Seychelles has a number of laws that govern the financial services sector: Financial Institutions Act 2004, Anti-Money Laundering Act 2006, Data Protection Act, Mutual and Hedge Fund Act 2007 and Central Bank Act 2004. The Seychelles banking sector is generally healthy, although it is limited by its small size and is reliant on correspondent bank relationships. In this regard, as an offshore jurisdiction, Seychelles is considered high risk. To limit their risk, major U.S. banks (and some European banks) are refusing to enter into new correspondent banking relationships with Seychelles’ banks, making it difficult for local banks to perform international transactions.

According to the Central Bank of Seychelles, in January 2017 non-performing loans to total gross loans in the Seychelles banking sector stood at 7.3 percent, and foreign currency deposits at SCR 5,182 million (USD $385 million).

A wide range of financial services such as checking accounts, savings accounts, loans, transactions in foreign currencies and foreign currency accounts are available in the banking system. Foreigners and foreign/offshore firms must establish residency or proof of business registration to obtain a bank account.

Foreign Exchange and Remittances

Foreign Exchange

Since the IMF reform package of 2008-2013, the GOS places no restrictions or limitations on foreign investors converting, transferring, or repatriating funds associated with investment. Funds are freely converted. Seychelles maintains a floating exchange rate for the Seychelles Rupee, which has mostly fluctuated between SCR 11 and SCR 15 to USD 1 over the past five years.

Remittance Policies

Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. The Embassy is unaware of any planned changes to remittance policies, time limits on remittances, or use of any legal parallel market. According to the Department of State’s Bureau for International Narcotics and Law Enforcement Affairs International Narcotics Control Strategy Report for 2016, Seychelles was listed as a country/jurisdiction “of concern.”

http://www.state.gov/documents/organization/253983.pdf

Sovereign Wealth Funds

Seychelles does not maintain any sovereign wealth funds.

7. State-Owned EnterprisesShare    

Seychelles is one of 14 countries participating in the State Owned Enterprises (SOE) Network for Southern Africa, which was launched in 2007 to support, in collaboration with the OECD, the southern African countries in their efforts to improve the performance of SOEs.

The government has shares in a number of enterprises, including Air Seychelles, the Indian Ocean Tuna Company, Seychelles Commercial Bank, and Seychelles Trading Company. Seychelles’ SOEs are active in housing, civil aviation, energy, tourism, banking, import/export, retail, and public utilities.

In the Seychelles fiscal year 2017 budget address, the GOS highlighted its policy of reducing investments in SOEs and indicated that the shares of the following companies will be made available to individual Seychellois investors as follows:

  • Nouvobanq – 20 percent
  • Indian Ocean Tuna – 10 percent
  • Land Marine Ltd – 15 percent
  • European Investment Bank Shares in Development Bank of Seychelles – 15.9 percent
  • Agence Francaise de Developpement Shares in Development Bank of Seychelles – 20 percent

The Seychelles economy is so small and focused on fishing, tourism, and offshore finance that there is often little space for more than one major operator, whether private or public. SOEs are free to purchase and/or supply goods and services from private sector and foreign firms, depending on the sector and situation. However, there is a growing concern in the business community that SOEs such as Seychelles Trading Company have been allowed to exceed their explicit mandate and compete unfairly.

The governance of SOEs varies depending on their purpose and structure but Seychellois SOEs do not adhere to the OECD Guidelines on Corporate Governance. Most SOEs and parastatal bodies maintain a board of directors and make regular reports to the corresponding Minister/Ministry. The Public Enterprise Monitoring Commission (PEMC), set up in 2013 through the PEMC Act, is an independent institution that is responsible for monitoring financial, governance and transparency issues in relation to public enterprises. Asset registers of SOEs are published annually on the PEMC website (http://www.pemc.sc/index.php). The GOS has published a Code of Governance for Public Entities to provide guidelines to improve the governance, monitoring and control of the public entities in Seychelles. The Code, which was developed by the PEMC along with other stakeholders, can be accessed on its website.

Privatization Program

The GOS remains a major participant in the local economy although the private sector is expanding, especially into the tourism and services sectors. A key aspect of the government’s reform program relates to increasing the economy’s market orientation and supporting private sector development. In this context, the government worked closely with the IMF and the World Bank to accelerate its privatization program and improve the business climate through a comprehensive review of the legal and regulatory framework. In the past the GOS carried out privatization programs through the partial sale of shares in state owned enterprises to the public.

After the privatization of an insurance company in 2014, the Government has been taking steps to privatize the Seychelles Commercial Bank (SCB). In April-May 2016, the Government was accepting bids from account holders and staff of the bank for the sale of 100,000 shares of the SCB. While the Government is still a majority shareholder of the bank with a 60 percent stake, the long-term aim is to fully privatize the SCB. In its fiscal year 2017 budget address, the GOS also expressed interest in attracting more telecommunication companies to the island to promote competition. The Embassy is not aware of any formal legal barriers to foreign investors participating in privatization.

8. Responsible Business ConductShare    

Seychelles has a reasonable awareness of Corporate Social Responsibility (CSR), especially in environmental protection and social programs, but it is generally regarded as a function of government. Since 2013, the Seychelles Revenue Commission has collected a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. Officially, there are no waivers available for foreign investors with regard to labor, employment rights, consumer protection, or environmental protections.

The Citizens Engagement Platform Seychelles, an umbrella organization for Seychelles’ NGOs, provides a list of NGOs active in the country to the Ministry of Finance, which then decides which organizations would benefit most from the CSR tax revenues. The GOS announced a review of the CSR guidelines in its 2017 budget speech, and the new guidelines will focus on programs that are linked to the current social needs. In particular, five sectors will benefit from the CSR fund: environment; health and social; community, youth, sports and arts; and drug rehabilitation and substance abuse.

Seychelles currently has no production in the extractive sector, but international companies have undertaken petroleum exploration activities off-shore. The Extractive Industries Transparency Initiative (EITI) accepted Seychelles as a candidate country in August 2014 and Seychelles’ validation against the standard will commence on 1st January 2018. The EITI annual progress report 2015 can be accessed on the EITI website.

9. CorruptionShare    

The Seychelles’ Penal Code provides a legal framework for combatting corruption. In 2016, the GOS established the Anti-Corruption Commission (ACC) with a mandate to investigate, detect and educate on the issue of corruption. A CEO has been appointed to the ACC, but it is still not fully functioning as of April 2017. Seychelles signed the UN Convention against Corruption in February 2004 and ratified in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

In 2003, the government of Seychelles published the Public Service Code of Ethics and Conduct, the stated purpose of which is to provide guidance to public sector employees on the standards of behavior required of them. The Public Officer’s Ethics Act of 2008 prohibits personal enrichment through public office, defines and outlaws bribery, provides guidelines for avoiding conflict of interest, and mandates declaration of financial assets for public officials including members of the National Assembly. The government does not require private companies to establish internal codes of conduct.

The constitution provides for an Ombudsperson, but in practice the Ombudsperson has not been proactive in investigating allegations of corruption. However, the National Assembly appointed a new Ombudsperson in March 2017. Also, a local chapter of Transparency International, Seychelles Transparency Initiative, was set up in 2017.

Resources to Report Corruption

Anti-Corruption Commission
May De Silva
Chief Executive Officer
Docklands Building, Latanier Road

Victoria, Mahe
Office of the Ombudsperson
Nicole Tirant
Room 306, Aarti Chambers, Mont Fleuri, Mahé
+248 225147
ombuds@seychelles.net

10. Political and Security EnvironmentShare    

The constitution provides citizens the right to change their government peacefully, and citizens exercise this right in practice through periodic elections based on universal suffrage. Seychelles has not experienced large-scale political violence since the late 1970s. The People’s Party, commonly known as Parti Lepep, governed Seychelles since the 1977 coup and, until 2016, has won every election since introducing multi-party democracy in 1993. However, in September 2016 a coalition of opposition parties won the majority of the National Assembly seats. Shortly afterward President James Michel resigned in favor of his hand-picked successor, President Danny Faure.

11. Labor Policies and PracticesShare    

According to the National Bureau of Statistics, the labor force as at the third quarter of 2016 stood at 45,776 out of which 66 percent were employed by the private sector. The unemployment rate increased to 4.5 percent in the third quarter of 2016 from 4.2 percent for the corresponding period in 2015, with a high concentration of unemployed among women and youth. The youth unemployment rate also increased from 10.6 percent in the third quarter of 2015 to 13.3 percent for the same period in 2016.

Foreign labor made up 25 percent of the labor force, working mostly in the fishing and construction sectors. The 2015 annual report of the Central Bank of Seychelles highlights that labor-intensive and specialized businesses faced a major challenge to recruit from the local market and remained dependent on expatriate labor. Since 2014, a quota system is applied to industries for which demand of foreign labor is high. The latest revised guidelines for the recruitment of non-Seychellois workers can be found online.

Seychelles has been a member of the International Labor Organization (ILO) since 1977, and has ratified all of the International Labor Organization (ILO) fundamental conventions. Under Seychellois law, all workers, with the exception of police, military, prison, and firefighting personnel, have the right to form and organize unions of their own choosing, to participate in collective bargaining, and to conduct legal strikes. However, these rights are limited or restricted by other provisions of law. Although collective bargaining is legal it rarely happens because the law gives the right to the government to review and approve all collective bargaining agreements in both the private and public sector. Strikes are illegal in Seychelles unless all other arbitration procedures have been exhausted. The International Labor Organization has reported insufficient protection for collective bargaining and urged the government to review the Industrial Relations Act concerning trade union registration and the right to strike. Although the law prohibits antiunion discrimination, there were unofficial reports that such discrimination occurred. The law allows employers or their organizations to interfere by promoting the establishment of worker organizations under their control. Furthermore, the Public Order Act of 2014 restricted gatherings of more than one person without permission from the Seychelles Police. That law was ruled unconstitutional by the Seychelles Constitutional Court, and the GOS subsequently repealed it. In October 2015 the GOS passed the Public Assembly Bill which requires public assemblies of ten or more people to provide advance notice to the Seychelles Police, but police permission for the assembly is no longer required. Between 15 and 20 percent of the workforce was unionized in 2015.

Seychelles has a government-mandated minimum wage of SCR 5,050 (USD $380) per month based on a 35-hour work week. In the event of layoffs where there is no employee misconduct, the employer must provide the worker with one month’s notice or the equivalent of one month’s salary. Additionally, for workers that have been employed for five years or more, the employer is obligated to pay a day’s pay for each month that the employee has worked for the employer. There is no distinction between layoffs and firing with severance.

The Employment Tribunal handles employment disputes for private-sector employees. The Public Services Appeals Board handles employment disputes for public-sector employees, and the Financial Services Agency deals with employment disputes of workers in the Seychelles International Trade Zone. The law authorizes the Ministry of Employment and Human Resources Development to establish and enforce employment terms, conditions, and benefits, and workers frequently obtained recourse against their employers through the ministry or the Employment Tribunal.

The Government of Seychelles introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. Seychelles Police and customs personnel have traveled to USG-led training at the International Law Enforcement Academy in Gaborone, Botswana. However, there are very few health or labor inspectors in Seychelles and they are limited by meager public resources and the vast ocean distances they are expected to cover.

In November 2011, Seychelles and the ILO signed the 2011-2015 Decent Work Country Program, which seeks to address such issues as employment creation, consolidation and protection of workers’ rights, enhancing social protection, and strengthening social dialogue. The Embassy is not aware of any gaps in compliance with international labor standards that may pose a reputational risk to investors.

12. OPIC and Other Investment Insurance ProgramsShare    

Seychelles and the United States signed an OPIC investment agreement in 2012, the text of which is available on OPIC’s website. Due to the small size of the economy, there is little potential for OPIC programs in Seychelles, although Seychellois firms and investors may seek OPIC financing or insurance for joint ventures elsewhere in Africa and Asia.

13. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical Source

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2015

$1,110

2016

$1,419

http://www.imf.org/external/pubs/ft/weo/
2016/02/weodata/weoselgr.aspx

Foreign Direct Investment

N/A

N/A

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2015

N/A

2015

$39

http://data.imf.org/CDIS

Host country’s FDI in the United States ($M USD, stock positions)

2015

N/A

2015

N/A

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2015

N/A

2015

87%

http://unctad.org/sections/dite_dir/
docs/wir2016/wir16_fs_sc_en.pdf

* Source: http://www.nbs.gov.sc/seychelles-in-figures-2015-edition-2/
Data not available for Seychelles


Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

973

100%

N/A

100%

Mauritius

360

37%

N/A

N/A

Cyprus

212

22%

N/A

N/A

Russian Federation

127

13%

N/A

N/A

United Kingdom

50

5%

N/A

N/A

British Virgin Islands

42

4%

N/A

N/A

"0" reflects amounts rounded to +/- USD $500,000.


Table 4: Sources of Portfolio Investment

Data on the sources of portfolio investment in Seychelles are unavailable.
 

14. Contact for More InformationShare    

Shariff Jathoonia
Economic/Commercial Specialist
+230 202-4464
jathoonisx@state.gov

Smita Bheenick
Economic/Commercial Assistant
+230 202-4430
BheenickS@state.gov