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Bahrain

Executive Summary

The investment climate in Bahrain is generally good and has remained relatively stable in the last year.  Bahrain takes a liberal approach to foreign investment and actively seeks to attract foreign investors and businesses.

In an economy largely dominated by state-owned enterprises, the Government of Bahrain (GOB) aims to promote a greater role for the private sector in economic growth.  Government efforts focus on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, and tourism sectors.  Inbound FDI into the Kingdom jumped 138 percent to a record USD 830 million in 2018, compared to USD 733 million in 2017. Manufacturing and logistics comprised most of the new investments into the country, as investors sought to take advantage of Bahrain’s close proximity to Saudi Arabia’s large and diverse market.

To strengthen Bahrain’s position as a startup hub and to enhance the Kingdom’s investment ecosystem, the GOB in 2018 launched Bahrain FinTech Bay, the largest FinTech hub in the Middle East & Africa; issued four new laws covering data protection, competition, bankruptcy, and health insurance; established the USD 100 million Al Waha venture capital fund for Bahraini investments; and a USD 100 million ‘Superfund’ to support the growth of start-ups.

The U.S.-Bahrain Bilateral Investment Treaty (BIT) entered into force in 2001.  The BIT provides benefits and protection to U.S. investors in Bahrain, such as most-favored nation treatment and national treatment, the right to make financial transfers freely and without delay, international law standards for expropriation and compensation cases, and access to international arbitration.

Bahrain permits 100 percent foreign-ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without local sponsors.  In 2017, the GOB expanded the number of sectors in which foreigners are permitted to maintain 100 percent ownership stakes to include tourism services, sporting events production, mining and quarrying, real estate activities, water distribution, water transport operations, and crop cultivation and propagation.

The U.S.-Bahrain Free Trade Agreement (FTA) entered into force in 2006.  Under the FTA, Bahrain committed to world-class Intellectual Property Rights (IPR) protection.

Despite the Government of Bahrain’s transparent, rules-based government procurement system, U.S. companies sometimes report operating at a perceived disadvantage compared with other firms when competing for certain government procurements.  Many ministries require firms to pre-qualify prior to bidding on a tender, often rendering firms with little or no prior experience in Bahrain ineligible to bid on major tenders. 

Since 2017, the Central Bank of Bahrain (CBB) has operated a financial technology (FinTech) regulatory “sandbox” that enables the testing and launching of non-conventional FinTech startups in Bahrain, including cryptocurrency and blockchain technologies.  The CBB also issued regulations to enable conventional and Sharia-compliant financing-based crowdfunding businesses.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 99 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2018 62 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 72 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $423 http://www.bea.gov/international/factsheet/

https://www.selectusa.gov/country-fact-sheet/Bahrain

World Bank GNI per capita 2017 $21,150 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

Brunei

Executive Summary

Brunei is a small, energy-rich Sultanate on the northern coast of Borneo in Southeast Asia. Brunei boasts a well-educated, largely English-speaking population, excellent infrastructure, and a government intent on attracting foreign investment and projects.  In parallel with Brunei’s efforts to attract foreign investment and create an open and transparent investment regime, the country has taken steps to streamline the process for entrepreneurs and investors to establish businesses and has improved its protections for intellectual property rights (IPR).

Despite senior Bruneian leaders’ repeated calls for diversification, Brunei’s economy remains dependent on the income derived from sales of oil and gas, contributing about 60 percent to the country’s GDP.  Substantial revenue from overseas investment supplements income from domestic hydrocarbon production. These two revenue streams provide a comfortable quality of life for Brunei’s population. Citizens are not required to pay taxes and have access to free education through the university level, free medical care, and subsidized housing and car fuel.

Brunei has a stable political climate and is generally sheltered from natural disasters.  Brunei’s central location in Southeast Asia, with good telecommunications, numerous airline connections, business tax credits in specified sectors, and no income, sales, or export taxes, offers a welcoming climate for potential investors.  Sectors offering U.S. business opportunities in Brunei include aerospace and defense, agribusiness, construction, petrochemicals, energy and mining, environmental technologies, food processing and packaging, franchising, health technologies, information and communication, Islamic finance, and services.

In 2014, Brunei began implementing sections of its Sharia Penal Code (SPC) that expanded preexisting restrictions on activities such as alcohol consumption, eating in public during the fasting hours in the month of Ramadan, and indecent behavior, with possible punishments including fines and imprisonment.  The SPC functions in parallel with Brunei’s common law-based civil penal code. The government commenced full implementation of the SPC on April 3, 2019, introducing the possibility of corporal and capital punishments including, under certain evidentiary circumstances, amputation for theft and death by stoning for offenses including sodomy, adultery, and blasphemy.  Government officials emphasize that sentencing to the most severe punishments is highly improbable due to the very high standard of proof required by the SPC. While the SPC does not specifically address business-related matters, potential investors should be aware that there is controversy surrounding the SPC issue. Thus far there have been no recorded incidents of U.S. citizens or U.S. investments directly affected by sharia law. 

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 31 of 180 https://www.transparency.org/cpi2018 
World Bank’s Doing Business Report 2019 55 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 67 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $19 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2017 $29,600 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

Gabon

Executive Summary

Gabon is a historically stable country located in a volatile region of the world and has significant economic advantages:  a small population (roughly 2 million), an abundance of natural resources, and a strategic location along the Gulf of Guinea.  After taking office in 2009, President Ali Bongo Ondimba introduced reforms to diversify Gabon’s economy away from oil and from traditional investment partners and to position Gabon as an emerging economy.  Gabon promotes foreign investment across a range of sectors, particularly in the oil and gas, infrastructure, timber, ecotourism, and mining sectors. Despite these efforts, Gabon’s economy remains dependent on revenue generated by the exportation of hydrocarbons.  Gabon’s commercial ties with France remain very strong, but the government continues to seek to diversify its sources by courting investors from the rest of the world. In 2018, the Gabonese government lifted exit visa requirements for U.S. citizens.

Although Gabon is taking steps towards making the country a more attractive destination for foreign investment, it remains a difficult place to do business, especially without in-country or francophone experience.  Foreign firms are active in the country, particularly in the extractive industries, but the difficulty involved in establishing a new business and the time it takes to finalize deals are impediments to increased U.S. private sector investment.  Although the Gabonese government is taking a more active role to ensure transparency in extractive industries, investors are still waiting for key reforms to be established in law and in practice. Gabon enacted a new mining code in 2015. Gabon proposed revisions to its 2014 hydrocarbons code to draw more investors with greater flexibility and attractive financial terms.  The Gabonese government expects to implement the new hydrocarbons code in 2019.   

Increased investment is constrained due to limited bureaucratic capacity, unclear lines of decision-making authority, a lack of a clearly-established and consistent process for companies to enter the market, lengthy bureaucratic delays, high production costs, a small domestic market, rigid labor laws, and limited and poor infrastructure.  The judicial system at times fails to enforce the rule of law and limits access to justice. Corruption and lack of transparency remain an impediment to investment. The Gabonese government inconsistantly applies customs regulations.

Economic conditions in Gabon weakened throughout 2017 and 2018.  In addition to budget constraints due to low oil prices, the government lacks fiscal transparency.  Many international companies, including U.S. firms, continue to have difficulties collecting timely payments from the Gabonese government, and some companies in the oil sector have closed down operations.  To address fiscal imbalances, Gabon signed in June of 2017 a three-year Extended Fund Facility arrangement of USD 642 million with the IMF.  While opportunities exist, the investment climate in Gabon will remain difficult as the government must have the politcal will to make prudent decisions.  In 2018, higher oil prices, new investment in the oil sector and export processing zones, and the increasing manganese production helped support a modest recovery of economic growth of about 2 percent (according to the IMF September 2018 report).

Table 1

Measure Year Index/ Rank Website Address
TI Corruption Perceptions Index 2018 124 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report “Ease of Doing Business” 2019 169 of 190 www.doingbusiness.org/rankings
Global Innovation Index 2018 N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country (M USD, stock positions) 2017 – $251 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2017 $6,650 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Morocco

Executive Summary

Morocco enjoys political stability, robust infrastructure, and a strategic location, which have contributed to its emergence as a regional manufacturing and export base for international companies.  Morocco is actively encouraging and facilitating foreign investment, particularly in export sectors like manufacturing, through macro-economic policies, trade liberalization, investment incentives, and structural reforms.  Morocco’s overarching economic development plan seeks to transform the country into a regional business hub by leveraging its unique status as a multilingual, cosmopolitan nation situated at the tri-regional focal point of Sub-Saharan Africa, the Middle East, and Europe. In recent years, this strategy increasingly influenced Morocco’s relationship and role on the African continent. The Government of Morocco has implemented a series of strategies aimed at boosting employment, attracting foreign investment, and raising performance and output in key revenue-earning sectors, such as the automotive and aerospace industries. 

Morocco attracts the fifth-most foreign direct investment (FDI) in Africa, a figure that increased 23 percent in 2017.  As part of a government-wide strategy to strengthen its position as an African financial hub, Morocco offers incentives for firms that locate their regional headquarters in Morocco, such as the Casablanca Finance City (CFC), Morocco’s flagship financial and business hub launched in 2010.  CFC intends to open a new, 28-story skyscraper in 2019, which will eventually house all CFC members. Morocco’s return to the African Union in January 2017 and the launch of the African Continental Free Trade Area (CFTA) in March 2018 provide Morocco further opportunities to promote foreign investment and trade and accelerate economic development.  In late 2018, Morocco’s long-anticipated high-speed train began service connecting Casablanca, Rabat, and the port city of Tangier. Despite the significant improvements in its business environment and infrastructure, insufficient skilled labor, weak intellectual property rights (IPR) protections, inefficient government bureaucracy, and the slow pace of regulatory reform remain challenges for Morocco.

Morocco has ratified 69 bilateral investment treaties for the promotion and protection of investments and 60 economic agreements – including with the United States and most EU nations – that aim to eliminate the double taxation of income or gains.  Morocco’s Free Trade Agreement (FTA) with the United States entered into force in 2006, eliminating tariffs on more than 95 percent of qualifying consumer and industrial goods. The Government of Morocco plans to phase out tariffs for a limited number of products through 2030.  Since the U.S.-Morocco FTA came into effect, overall annual bilateral trade has increased by more than 250 percent, making the United States Morocco’s fourth largest trading partner. The U.S. is the second largest foreign investor in Morocco and the U.S. and Moroccan governments work closely to increase trade and investment through high-level consultations, bilateral dialogue, and the annual U.S.-Morocco Trade and Investment Forum, which provides a platform to strengthen business-to-business ties.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 73 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 60 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 76 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $412 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2017 $2,860 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

Tunisia

Executive Summary

Tunisia continues to make progress on its democratic transition and will hold its second round of parliamentary and presidential elections since the 2011 revolution in October and November 2019, respectively.  Tunisia’s economy experienced a modest recovery in 2018, with GDP growth of 2.6 percent, but the country still faces high unemployment, high inflation, and rising levels of public debt.  

In recent years, successive governments have advanced much-needed structural reforms to improve Tunisia’s business climate, including an improved bankruptcy law, an investment code and initial “negative list,” and a law enabling public-private partnerships.  The Government of Tunisia (GOT) has also encouraged entrepreneurship through the passage of the Start-Up Act. The GOT also passed the “organic budget law” to ensure greater budgetary transparency and make the public aware of government investment projects over a three-year period.  These reforms will help Tunisia attract both foreign and domestic investment.

Tunisia’s strengths include its proximity to Europe, sub-Saharan Africa, and the Middle East, free-trade agreements with the EU and much of Africa, an educated workforce, and a strong interest in attracting foreign direct investment (FDI).  Sectors such as agribusiness, aerospace, renewable energy, telecommunication technologies, and services are increasingly promising. The decline in the value of the dinar has strengthened investment and export activity in the electronic component manufacturing and textile sectors.

Nevertheless, substantial bureaucratic barriers to investment remain.  State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment.  The informal sector, estimated at 40 to 60 percent of the overall economy, remains problematic, as legitimate businesses are forced to compete with smuggled goods.

The United States has provided more than USD 500 million in economic growth-related assistance since 2011, in addition to loan guarantees in 2012, 2014, and 2016 that enabled the GOT to borrow nearly USD 1.5 billion.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 73 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 80 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 66 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $279 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita ($ USD) 2017 $3,490 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 
Investment Climate Statements
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